Court Orders URA to Pay Shs 1.66 Billion for Improper Auction of Medical Equipment

A significant ruling by the High Court in Kampala has seen the Uganda Revenue Authority (URA) ordered to pay a substantial Shs 1.66 billion. This penalty stems from the URA’s mishandling of a consignment of donated medical equipment, which was illegally auctioned for only Shs 4 million despite its actual value being approximately Shs 1.46 billion.

Justice Bernard Namanya, presiding over the case brought by the charitable organization Babaana Children of Uganda Ltd, determined that URA violated key provisions of the East African Community Customs Management Act, 2004. The court emphasized the unjustified nature of the disposal and the lack of a coherent defense from URA regarding its actions.

The auctioned items were high-tech medical equipment, including dental, rehabilitation, and gynaecology apparatus, donated from Switzerland to enhance healthcare services in Uganda. The ruling highlighted that beyond the financial loss, the unlawful sale deprived intended beneficiaries of crucial medical services and caused distress to the plaintiff and its benefactors.

Babaana Children of Uganda Ltd had imported the equipment, valued at over 364,000 Swiss francs, with an approved tax exemption. Although URA had acknowledged the exemption, the organization later discovered the goods had been auctioned when attempting to clear them, citing an alleged failure by URA to adhere to proper notification procedures and warehousing extensions.

URA’s defense argued that the exemption only applied to specific medical items, and other non-exempt goods in the consignment were subject to taxes. They also claimed the goods had exceeded the statutory warehousing period. However, Justice Namanya found URA’s procedures flawed, noting the failure to produce evidence of a legally required one-month public notice before the sale and significant discrepancies in the recorded weight and description of goods sold versus those received.

The court awarded Babaana Children of Uganda Ltd Shs 1.46 billion for the value of the goods and an additional Shs 200 million in general damages. URA was also ordered to pay interest on these amounts and cover the legal costs of the suit.