The High Court has ordered the Uganda Revenue Authority (URA) to pay Shs1.66 billion to Babaana Children of Uganda Ltd after ruling that the tax body unlawfully auctioned donated medical equipment intended for a health facility in Uganda.
Justice Bernard Namanya found that URA violated provisions of the East African Community Customs Management Act, 2004, when it disposed of the consignment, which had been donated by well-wishers in Switzerland.
The court awarded the charity Shs1.46 billion as compensation for the value of the equipment and Shs200 million in general damages. URA was also ordered to pay interest on both sums and meet the legal costs.
“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 ruled.
The judge noted that the consignment included modern dental surgery equipment, rehabilitation hospital equipment and gynaecology practice equipment meant to improve healthcare services in Uganda.
“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.
According to court records, Babaana Children of Uganda Ltd imported donated medical equipment and assorted items valued at 364,817 Swiss francs after securing a tax exemption from the Ministry of Health that URA confirmed in November 2017.
The charity later asked URA to extend the warehousing period until December 2018 because the health facility where the equipment was to be installed was still under construction. It said URA raised no objection.
However, when the organisation later attempted to clear the goods, it discovered they had already been auctioned.
URA defended its actions, arguing that the tax exemption covered only medical equipment and supplies, while other items in the shipment remained taxable. It also maintained that the goods exceeded the maximum warehousing period and had not been redeemed before disposal.
Justice Namanya rejected the defence, saying URA failed to prove it had issued the mandatory one-month 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,” he said.
The judge also questioned how goods worth about Shs1.46 billion were sold for only Shs4 million and noted that official records failed to account for the specialised medical equipment.
