A distrained asset held by the URA in enforcement of the very tax in dispute qualifies as a realised security and must be credited toward the Section 15(1) TAT Act deposit requirement; the word "pay"

A distrained asset held by the URA in enforcement of the very tax in dispute qualifies as a realised security and must be credited toward the Section 15(1) TAT Act deposit requirement; the word "pay" does not mean "cash only." High Court Rules.

FACTS

The appeal arose from a tax dispute between Dr. Jaala Higenyi Alfred and the Uganda Revenue Authority (URA). Dr. Higenyi, a retired civil servant and director of the now-defunct Ntinda View College Limited, had sold the school as a going concern to Dr. Lawrence Mulindwa in 2018 for UGX 11.02 billion.

Following a tax audit conducted in 2021, URA issued an additional income tax assessment against Dr. Higenyi personally for capital gains tax amounting to UGX 4.35 billion, inclusive of interest.

After the Appellant objected to the assessment, URA rejected the objection and commenced recovery proceedings through a warrant of distress issued under the Tax Procedures Code Act. URA subsequently impounded the Appellant’s armored Toyota Land Cruiser bearing the personalized registration “NAMUSWA.”

The Appellant later filed an application before the Tax Appeals Tribunal (TAT) challenging the assessment. However, URA raised a preliminary objection contending that the Appellant had failed to comply with Section 15(1) of the Tax Appeals Tribunal Act, which requires payment of 30% of the tax in dispute before a matter may proceed.

The Tribunal dismissed the application on the grounds that the impounded vehicle did not constitute payment of the mandatory 30% deposit and that the statutory requirement had to be satisfied by cash payment.

Aggrieved by the dismissal, the Appellant appealed to the High Court.

ISSUES

The High Court considered the following issues;

1. Whether the Tribunal erred in law by requiring the Appellant to pay the entire 30% afresh without considering the value of the distrained motor vehicle.

2. Whether the Tribunal erred in law when it held that the distrained or impounded property did not constitute the 30% of the tax in dispute.

3. Whether the Tribunal erred in law by failing to hold that justice required the Appellant to top up any balance after valuation of the distrained motor vehicle.

LEGAL REPRESENTATION

1. The Appellant was represented by Angura Joseph of M/s E. Angura & Co. Advocates.

2. The Respondent was represented by Amanya Rodney Mishambi and Eva Kakuuma from URA’s Department of Legal Services and Board Affairs.

SUBMISSIONS OF THE PARTIES

The Appellant’s Submissions

The Appellant submitted that the Tribunal adopted an unduly rigid interpretation of Section 15(1) of the Tax Appeals Tribunal Act by insisting on fresh cash payment despite URA already being in possession of a high-value distrained asset.

The Appellant argued that the Commissioner General possesses discretion to accept alternative forms of security in lieu of cash payment and relied on the Supreme Court decision in Uganda Projects Implementation & Management Centre v Uganda Revenue Authority, Civil Appeal No. 2 of 2019, where the Court held that the Commissioner may accept “any other thing in lieu of the deposit of cash.”

The Appellant further submitted that the impounded vehicle, which remained under URA’s custody, constituted realized security toward the 30% requirement. Counsel argued that insisting on additional cash payment amounted to oppressive tax administration and effectively denied the Appellant access to justice.

The Appellant also relied on Elgon Electronics v Uganda Revenue Authority, HCCA No. 11 of 2007, where the Court encouraged the Tribunal to consider other forms of security besides cash to accommodate taxpayers.

Additionally, the Appellant argued that the Tribunal should, at the very least, have ordered valuation of the vehicle and directed payment of any outstanding balance rather than summarily dismissing the application.

The Respondent’s Position

URA maintained that Section 15(1) of the Tax Appeals Tribunal Act specifically requires “payment” of 30% of the tax in dispute and that mere impoundment of property did not satisfy this statutory requirement.

The Respondent argued that the value of the vehicle was insufficient to cover the required statutory deposit and that the Tribunal had correctly dismissed the application for non-compliance.

COURT’S FINDINGS

On Whether Distrained Property Can Constitute the 30% Requirement

The learned Judge reaffirmed that the “pay now, argue later” principle remains a cornerstone of Uganda’s tax administration framework and is codified under Section 15(1) of the Tax Appeals Tribunal Act.

However, the Court clarified that tax administration must be balanced against the constitutional rights to access justice and a fair hearing under Articles 28 and 44(c) of the Constitution.

Justice Susan Odongo found that the Tribunal adopted an excessively narrow and rigid interpretation of the law by insisting that only cash payment could satisfy the statutory requirement.

The Court clarified that judicial precedent had already established that the Commissioner may accept alternative forms of security in lieu of cash payment. In reaffirming the Supreme Court’s position in Uganda Projects Implementation & Management Centre v URA, the Court noted that the Commissioner possesses discretion to “take any other thing in lieu of the deposit of cash.”

The learned Judge further found that once URA had exercised its distress powers and taken possession of the taxpayer’s property, such property became realized security toward the tax obligation.

The Court held that;

“If the asset is good enough to be seized for recovery, it must be good enough to satisfy the deposit required for justice.”

On Harmonious Interpretation of Tax Laws

The Court found that the Tax Appeals Tribunal Act must be interpreted harmoniously with the Tax Procedures Code Act.

Justice Odongo clarified that it was legally inconsistent for URA to seize property under recovery provisions while simultaneously refusing to recognize the same property as security for purposes of satisfying the statutory deposit.

The Court also relied on Eram Uganda v URA, where the Tribunal had previously recognized offsets and non-cash recoveries as satisfying the 30% requirement.

On Access to Justice

The Court reaffirmed that procedural requirements should not become instruments for denying litigants access to justice.

The learned Judge found that dismissing the Appellant’s case while URA continued to hold a vehicle worth over UGX 1 billion amounted to an oppressive and unjust application of the law.

Justice Odongo emphasized that the Tribunal ought to have adopted a compliance-oriented approach by ordering valuation of the vehicle and directing payment of any shortfall instead of summarily dismissing the application.

The Court stated that;

“Justice is not a game of all-or-nothing when a substantial effort to comply has been made.”

The Court further held that where a taxpayer has substantially complied through surrender of a valuable asset, the Tribunal should facilitate compliance rather than foreclose access to justice through technicalities.

HOLDING

The High Court allowed the appeal and set aside the ruling and orders of the Tax Appeals Tribunal. The Court ordered the TAT to hear the Appellant’s application on its merits, subject to the Appellant paying any remaining balance required to satisfy the 30% requirement after taking into account the verified value of the distrained motor vehicle. Costs of the appeal were awarded to the Appellant.

Read the full case below

Dr Jaala Higenyi Alfred v Uganda Revenue Authority 2026 UGCommC 219 (30 April 2026).pdf

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Key Takeaways

1. A distrained asset held by the URA in enforcement of the very tax in dispute qualifies as a realised security and must be credited toward the Section 15(1) TAT Act deposit requirement; the word "pay" does not mean "cash only."

2. The principle of harmonious construction requires the TAT Act and the Tax Procedures Code Act to be read as a coherent whole — the Commissioner cannot invoke distraint powers and then disavow the seized asset's value for procedural gateway purposes.

3. The Commissioner General retains discretion, confirmed by the Supreme Court in Uganda Projects v URA, to accept things other than cash in satisfaction of the 30% deposit, and the TAT should exercise its own discretion to accommodate taxpayers with arguable cases and temporary liquidity constraints.

4. Where a shortfall exists between a distrained asset's value and the full 30% threshold, the appropriate judicial response is a top-up compliance order with a fixed deadline, not summary dismissal.

5. A rigid cash-only application of Section 15(1) that bars a taxpayer from a hearing while the URA holds that taxpayer's property violates the right to a fair hearing under Articles 28 and 44(c) of the Constitution and the duty to render justice to all under Article 126.

6. Tax practitioners should advise clients facing TAT proceedings where the URA has initiated distraint to formally place the value of any seized assets before the Tribunal as partial satisfaction of the deposit, supported by independent valuation evidence.