The High Court in Kampala has ruled that the Uganda Revenue Authority (URA) acted unlawfully when it auctioned donated medical equipment intended for a Ugandan health project, ordering the tax authority to pay Shs1.66 billion in compensation.
Justice Bernard Namanya found that URA failed to comply with legal procedures under the East African Community Customs Management Act, 2004, before disposing of the equipment.
The donated consignment, valued at about Shs1.46 billion, had been sent from Switzerland to Babaana Children of Uganda Ltd and included specialised dental, rehabilitation and gynaecology equipment.
“The unlawful disposal of the plaintiff’s goods was unjustified and constituted a serious breach of…the East African Community Customs Management Act, 2004, for which the defendant offered no satisfactory explanation at the hearing,” Justice Namanya said.
He added:
“Beyond the loss of the equipment itself, the unlawful disposal deprived the intended beneficiaries of the anticipated medical services and caused inconvenience, disappointment and loss to the plaintiff and its donors.”
Court documents show the charity obtained tax exemption approval before importing the equipment and later requested additional time to keep it in a bonded warehouse while construction of its health facility was completed.
When the organisation later sought to clear the goods, it found they had already been sold.
URA maintained that the disposal was lawful, arguing that the goods had exceeded the legal warehousing period and that some items in the shipment did not qualify for tax exemption.
The court disagreed, saying URA failed to provide evidence that it issued the required one-month public notice before the auction.
“I therefore find that the defendant sold the plaintiff’s goods without issuing the statutory one-month notice required by law. Had such notice been issued, the plaintiff would have been allowed to take remedial action,” the judge ruled.
Justice Namanya also questioned why the authority sold goods worth about Shs1.46 billion for only Shs4 million and found that official disposal records did not account for the specialised medical equipment.
URA was ordered to pay Shs1.46 billion for the value of the goods, Shs200 million in general damages, interest on both awards and all legal costs.
