The High Court has ordered the Uganda Revenue Authority (URA) to pay Shs600 million in general damages to 10 companies over the illegal detention of their agricultural produce and unlawful demands for withholding tax on rice imported from Tanzania.
High Court Judge Susan Odongo ordered URA to pay Shs50 million to each of the 10 companies as compensation for business losses, deterioration of agricultural produce, anguish and inconvenience caused by the detention of their goods.
The companies are Nakabira Logistics (U) Limited, Abasi Balinda Transporters Limited, Nkutu General Contractors Limited, Xtreme Uganda Limited, Nyanga Oburofa Enterprises Limited, Harry Transporters Limited, Rapada Uganda Limited, Tesla Technical Services Limited, Gersa Holdings Company Limited and Gold Coast Cargo Haulies Limited.
The companies are engaged in the importation of agricultural produce, particularly assorted rice, from Tanzania.
The dispute arose after URA assessed and demanded withholding tax on the companies’ consignments despite the importers holding valid withholding tax exemptions issued by the tax authority.
Aggrieved by the assessments, which they argued had no basis in law, the companies filed applications before the Tax Appeals Tribunal in 2024.
The Tribunal ruled that URA had unlawfully charged withholding tax and directed the authority to refund any taxes paid under the disputed assessments.
URA challenged the Tribunal’s decision before the High Court and also applied for a stay of execution of the Tribunal’s orders. The stay application was subsequently granted.
In the meantime, the companies sought the release of their detained consignments after a court order provided for their release upon payment of 30 percent of the assessed amount.
However, when the companies presented the order at Mutukula Border Post and sought to clear their consignments under the 30 percent payment arrangement, URA customs officers reportedly refused to comply.
The officers told the companies that they had not received instructions from management to honour the court-approved payment terms.
The companies subsequently petitioned the Commissioner General, Commissioner of Customs and Commissioner of Legal Services, but were informed that URA had decided to await the ruling on the main stay application before implementing the interim release of the goods.
Justice Odongo found that the court order providing for the release of the goods upon payment of 30 percent was valid and binding on URA from the date it was issued until it was superseded by the ruling delivered on January 30, 2026.
The judge criticised URA’s handling of the matter, saying the applicants had been subjected to an unnecessary process of moving between different URA offices in an attempt to have a valid court order enforced.
“The Applicants have been put through a rigorous and unnecessary process of ploughing the road between URA offices only to be met with insolence. They are therefore entitled to the costs of this application,” the court observed.
In addition to the Shs600 million in general damages, the court imposed a Shs100 million fine on URA and directed the authority to deposit the money in court within 30 days from the date of the order.
Justice Odongo also ordered URA to immediately and unconditionally release all the applicants’ agricultural produce covered by the disputed customs entries, without making any further demand for withholding tax, in accordance with the final judgment.
“The Respondent is ordered to pay general damages of Shs50 million to each of the ten applicants as pecuniary recompense for the business loss, rot of agricultural produce, and the anguish and inconvenience caused by the illegal detention of their goods,” the judge ruled.
The court further awarded the applicants the costs of the application, noting that under the Civil Procedure Act, costs should ordinarily follow the outcome of the case.
