The High Court has dismissed the application for a temporary injunction by 5 supermarket owners which sought to stop the roll out and operation of the Kakasa E-Invoicing solution (EFRIS) to particular tax payers on grounds that public interest should prevail over the private rights among many other reasons.
The five applicants, owners of Capital Shoppers Limited, Quality Uganda Limited, Kenjoy Enterprises Limited, Jazz Supermarket Limited and Mega Standard Supermarket Limited sought to stop URA from enforcing the decision of experimenting on the applicants as ‘Pilot Candidates for the pilot exercise’ for the implementation of EFRIS; from proceeding with the ‘selective roll out and discriminatory enforcement of EFRIS’ on the 1st July, 2020 until all businesses in Uganda have been on boarded and registered onto the system/platform; from gazetting the applicants as mandatory taxpayers to issue e-invoices or e-receipts or employing electronic fiscal devices that are linked to a centralized invoicing and receipting system or devices authenticated by the URA and, from subjecting the applicants to penal tax for not using the e-receipting and e-invoicing system until the underlying issues listed above have been addressed.
URA through an Affidavit opposed their application on the grounds that the applicants’ prayers for temporary injunction sought to deter URA from performing her statutory duties by enforcing tax laws, namely Tax Procedure Code Act, 2014 as Amended and the Tax Procedures Code (E-Invoicing and E-Receipting) Regulations, 2020.
Under the Tax Procedures Code (E-Invoicing and E-Receipting) regulations, 2020, URA is mandated to use centralized invoicing and receipting system to monitor and manage the issuance of fiscal documents for purposes of among others carrying out efficient tax administration purposes.
URA has already published in the gazette a public notice specifying that it is mandatory to issue e-invoices or employ electronic fiscal devices which shall be linked to the centralized invoicing and receipting system.
EFRIS is a government solution that shall be used by all businesses to transmit transaction details to the URA in real time and issue e-receipts and e-invoices. The system encourages record book keeping and real time authentication of business transactions and shall aid URA in confirming the accuracy of self-assessments made by taxpayers including all the applicants.
The EFRIS project was piloted with 58 selected taxpayers and the applicants nominated and sent representatives who attended the training on EFRIS.
The High Court has ruled that an injunction is by its very nature a coercive order, and compliance with the court order will often have adverse economic as well as institutional consequences for URA and the country at large.
The courts should be slow in granting injunctions against government projects which are meant for the interest of the public at large as against the private proprietary interest or otherwise for a few individuals. Public interest is one of the paramount and relevant considerations for granting or refusing to grant or discharge of an interim injunction.
The circumstances of the case are that Parliament enacted The Tax Procedure Code Act (Amendment) Act, 2018 which provides Section 73A, Section 1 of the Tax Procedure Code Act (Amendment) Act, 2018 provides that; “this Act shall come into force on publication”.
High court also ruled that the respondent’s counsel rightly submitted that URA has gone ahead to gazette the General No. 595 of 2020, making it mandatory for all VAT registered taxpayers (including the Applicants) to issue e-invoices or e-receipts or employ electronic fiscal devices.
The applicants are all VAT registered and therefore by the notice General No. 595 of 2020 which is already gazetted, the applicants are already bound to abide by the law to issue e-invoices or e-receipts or employ electronic fiscal devices adding that this court should not exclude the applicants from the application of the law. Since the applicants are VAT registered, then they are statutorily mandated to issue e-invoices or e-receipts.
The court also ruled that the public interest considerations justify the refusal to grant a temporary injunction and public interest should prevail over the private rights adding that the court should not restrain URA in collecting revenue or managing revenue collections save under very exceptional circumstances.
The grant of an injunction should therefore be an exception and not a rule. The application by the 5 supermarket owners was dismissed in favor of URA.
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