Court orders URA to pay Shs1.66bn over unlawful auction of donated medical equipment
The High Court in Kampala has ordered the Uganda Revenue Authority (URA) to pay more than Shs1.66 billion to a charity after finding that it unlawfully auctioned donated medical equipment intended to improve healthcare services in Uganda.
In a judgment delivered by Justice Bernard Namanya, the court ruled that URA breached provisions of the East African Community Customs Management Act, 2004, when it disposed of the equipment, which had been donated by individuals in Switzerland.
The court awarded Babaana Children of Uganda Ltd Shs1.46 billion, representing the value of the equipment, and an additional Shs200 million in general damages. URA was also directed to pay interest on both awards and cover the costs of the suit.
“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.
The judge noted that the consignment contained specialised medical equipment, including dental surgery, rehabilitation and gynaecology equipment, which had been donated to improve access to modern healthcare services.
Click here to join our WhatsApp Group and Receive Daily News
“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,” the ruling stated.
Court records show that Babaana Children of Uganda Ltd imported a consignment of donated medical equipment and other items valued at 364,817 Swiss francs.
Before the shipment arrived, the organisation applied for a tax exemption through the Ministry of Health, which URA approved in November 2017.
The goods were later placed in a bonded warehouse, and the charity requested an extension of the storage period until December 2018 because construction of the health facility where the equipment was to be installed had not yet been completed.
According to Babaana, URA did not object to the extension request. However, when the organisation later attempted to clear the goods, it was informed that the consignment had already been auctioned.
The charity sued URA in 2020, arguing that the tax authority had illegally disposed of tax-exempt goods despite being aware of the approved extension. It sought Shs17.26 billion in damages.
URA denied wrongdoing, maintaining that the importation, storage and disposal of the goods were carried out in accordance with customs laws.
The authority argued that the tax exemption applied only to medical equipment and supplies intended for licensed hospitals, while other items in the consignment, including toys, shoes, milk, toilet supplies and office materials, did not qualify for exemption.
URA also said the goods had remained in the bonded warehouse beyond the statutory nine-month period, which expired on 7 September 2018. It argued that Babaana neither cleared the goods, paid taxes on the non-exempt items nor formally applied for redemption before they were sold.
Justice Namanya, however, found that URA had failed to follow the legal procedures required before disposing of warehoused goods.
“Fiona Tubeine, [URA] manager, customs department, stated during cross-examination that a one-month notice of sale had been issued in the Uganda Gazette before the sale of the plaintiff’s goods. However, no copy of the alleged Gazette notice was produced in evidence.
“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.
The court also questioned how goods worth approximately Shs1.46 billion could have been auctioned for only Shs4 million.
“The Exit Note issued by the defendant records the goods sold to Mr Isma Mpindi as worn clothing and other items with a gross weight of 2,500 kilograms, whereas the goods received into the warehouse weighed 6,600 kilograms. The high-value medical equipment is not reflected in that Exit Note.
“In light of this evidence, which the defendant did not satisfactorily controvert, I find that the defendant failed to account for the plaintiff’s medical equipment in the manner required by law,” the ruling states.
In addition to the compensation, the court ordered URA to pay interest at six percent per year on the Shs1.46 billion from 2018 until the amount is fully paid. Interest of six percent per year will also apply to the Shs200 million in general damages from the date of judgment until payment in full.
Also Read: Amama Mbabazi’s Daughter Wanted Over Unpaid Shs 450m Loan
