THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT KAMPALA

CIVIL DIVISION
MISC. APPLIC. NO. 00301 OF 2023
(ARISING OUT OF MISC. CAUSE NO. 0111 OF 2023)

NIVED ENTERPRISES LIMITED :::::::::::::::::::::::::::::::::::::::::::::::::::::: APPLICANT

VERSUS
UGANDA REVENUE AUTHORITY :::::::::::::::::::::::::::::::::::::::::::::::: RESPONDENT

BEFORE: HON. JUSTICE SSEKAANA MUSA

RULING
The applicant brought this suit by way of motion under Section 64 (e) and 98 of the
Civil Procedure Act, Section 33, 37 and 38 (1) of the Judicature Act and Order 52,
Rules 1, 2 and 3 of the Civil Procedure Rules, seeking for orders that;
a) An interlocutory mandatory injunction be issued directing the respondent to
allow the applicant to import 8,540 tonnes of rice without charging
withholding tax on the said imports, as that was the legal position &
applicant’s equitable legitimate expectation as at the 12th of March, 2023
(the date of the peaceable or non-contested status quo that was prevailing
immediately before the dispute/ contention between the parties herein
arose.

b) Costs of this application be in the main cause.

The grounds supporting this application are contained in the affidavit of Mr. Isaac
Kashaija, the director of the applicant herein attached to the application which
briefly states that;
1. In the application for judicial review (Miscellaneous Cause No. 0111 of 2023),
the applicant seeks to assert its inherent and constitutionally guaranteed
fundamental rights and freedoms that the respondent violated and
 contravened and which are issues of great importance as they relate to the
respect of the supremacy of the constitution by public bodies in performing
their duties;
a) The applicant is challenging a decision taken to revoke the
applicant’s withholding tax exemption status, to the detriment of
the applicant, without according the applicant a fair hearing in
violation and contravention of Articles 28 (1) which right is non
derogable under Article 44 (c) of the constitution of the republic of
Uganda.

b) The applicant is challenging the respondent for arbitrarily and

unreasonably depriving the applicant of its economic right to carry
on lawful trade/ business, a right bestowed on it by Article 40 (2) of
the Constitution of the republic of Uganda.

c) The applicant is challenging the respondent for failure to treat it

justly and fairly yet as the respondent is expected to do under
Article 42 of the Constitution of the republic of Uganda.

d) The applicant is challenging the respondent for breach of its

constitutional mandate to respect, uphold and promote the
fundamental rights and freedoms of the applicant as articulated
above, which the respondent is mandated to respect, uphold and
promote as directed under Article 20 (2) of the Constitution of the
republic of Uganda.

2. In the main application, the applicant raises a prima facie case of abuse of
court process by the respondent, namely: stamping a wrong date of receipt
of court documents to buy time to defeat justice.

3. In the main application, the applicant raises a prima facie case of contempt
of court orders by the respondent, which is an issue that lies at the core of
administration of justice in this country.
4. In the main application, the applicant has raised a prima facie of an equitable
right of legitimate expectation which the respondent owed the applicant but
violated.

5. In the main application has not sought the remedy of general or specific
damages because the imminent loss it will suffer if this application is not
granted includes incalculable good will and other damages that cannot be
recompensed for by damages either now or in the future or forever.

6. From a just, rational, practical and logical perspective, the respondent will
not in any way be prejudiced or suffer any damages or any form of injustice
whatsoever, if this application is granted.

7. Since minimizing the risk of injustice is the essence of the court’s jurisdiction
to grant an interlocutory injunction, in advance of determination of the main
application/ suit, on the assessment of risk of injustice in deciding this
application, it can be observed that,

a) The grant of this application is what guarantees the least risk of

injustice even if it later transpires that the injunction should not
have been granted; or alternatively rephrased.

b) If this application is denied, the risk of injustice significantly and

fundamentally far outweighs the risk of injustice if it is granted.

8. The respondent will not face any hardship whatsoever in implementing the
interlocutory mandatory order, if granted.

9. The chronology of events as listed below are glaring incidences of illegality,

irrationality, malicious abuse of power and deliberate mal-administration.

a) The clearing of rice imports at Nil withholding tax, then

subsequently refusing to physically release them on an informal
demand that the applicant pays withholding tax.
 b) Formally assessing withholding tax on the applicant’s goods while
the withholding tax exemption was existing, after the applicant had
written seeking clarification on the same.
c) The respondent later writing a self-contradictory letter that the
exemption status was valid and applicable on imports, but the
same letter failing to address the issue of why the goods were not
being given exit notice.
d) Wrongly stamping a date of receipt of court documents to buy time
that to alter the status quo that the court documents sought to
preserve.
e) Revoking the applicant’s withholding tax exemption without giving
the applicant a right to a fair hearing.
f) Revoking the applicant’s withholding tax exemption status without
any valid reason.
g) Frustrating the administration of justice by disregarding court
orders.

10. On all four corners of justice, the balance of convenience is in favour of the
applicant as there is a high likelihood of success of the main application.

11. On the face of the application, the respondent has committed many
illegalities that it has no justified defenses to.

12. This application raises sufficient grounds that tilt the balance in favour of the
grant of the injunction and for this court to exercise its inherent powers to
grant the prayer sought as the best remedy to make the ends of justice to
meet.
The respondent filed its affidavit in opposition of this orders sought in this
application deponed by Ms. Mpumwire Christine wherein she raised preliminary
objections that the applicant has not exhausted existing remedies available within
the respondent and the law, is in contempt of the Tax Appeals Tribunal’s orders
and is not entitled to audience before this court and that the application
contravenes the lis pendens rule. The respondent also stated that the affidavit in
support of the application contains material falsehoods and ought to be struck out
and that the application is an abuse of court.

The respondent further contended that this application is res judicata for having
been considered by the Tax Appeals Tribunal vide TAT Misc. Applic. No. 59 of 2023.
In further opposition to the application, the respondent deponent stated that the
applicant applied for withholding tax exemption status on grounds that it was an
importer of agricultural products and needed the facility to complete favorably and
it was granted. The certificate was subject to revocation in the event of non-tax
compliance and stated that the tax audits and tax clearance certificates are not
conclusive and irrebutable evidence of a tax payers tax compliance.

The respondent issued withholding tax assessments on the said rice amounting to
Ugx. 576, 831,130/= which the applicant has never objected to. the applicant
instead filed TAT Misc. Applic. No. 40 of 2023 for temporary injunction restraining
the respondent from enforcing tax collection measures against it in respect of the
assessed taxes, release of its rice consignments and the costs of the application.
The Tax Appeals Tribunal granted the temporary injunction on condition that the
applicant pays 30% of the tax assessed. The Tribunal never gave any orders in
respect of the 10,000 tonnes of rice that had not yet been imported into Uganda.

The respondent further deponed that it had since complied with the Tribunals
injunctive orders and released the applicant’s 5000 tonnes of rice which were
subject of the respective applications. The applicant has never paid the 30% of the
tax in dispute TAT Application No. 47 of 2023 and is thus in contempt of the
Tribunal’s orders and should not be accorded audience by this court.

The respondents further stated that the applicant does not have a prima facie case
with a likelihood of success. The respondent further stated that by the time this
application for judicial review was filed, the applicant’s withholding tax exemption
and certificate on its rice imports had been revoked.

Consequently, the status quo at the time this application was instituted was that
the applicant was liable to pay withholding tax on its rice imports and the same has
not changed to warrant an order for restoration of the same. The application is
overtaken by events since the withholding tax exemption the applicant purports to
rely on has since expired.

The respondent further stated that the applicant shall not suffer irreparable injury
which cannot be adequately compensated for by an award of damages. It was
further contended that the balance of convenience lies in favour of denying the
applicant’s prayers and dismissal of this application.

The applicant was represented by Mr. Atwiine Allan whereas the respondent was
represented by Mr. Sam Kwerit, Ms. Sheba Tayebwe and Mr. Ahabwe Stuart.
The following issues were proposed for determination by this court by the parties.
1. Whether the applicant fulfills the conditions for the grant of the
interlocutory mandatory injunction.
2. Whether the grant of the mandatory injunction would be disposing off the
main application.
3. Whether the applicant is entitled to the remedy of interlocutory mandatory
injunction that it seeks.
4. Whether the respondent is in contempt of the court order dated the 5 th day
of April, 2023 granting a temporary injunction to the applicant to import
goods at the border.
5. Whether the preliminary objections raised by the respondent are
meritorious?

Order 15, Rule 5 of the Civil Procedure Rules SI.71-1 gives this court the power to
amend and strike out issues at any time before passing a decree as it thinks fit as
may be necessary for determining the matters in controversy between the parties.
In the interest of adequate discussion of the legal issues at hand, the court
rephrases the issues for determination to reflect as;
Whether the applicant fulfills the conditions for the grant of the interlocutory
mandatory injunction.

The parties were ordered to file written submissions which was accordingly done.
The respondent raised several preliminary objections to this application which I will
consider in the determination of the main cause.
Whether the applicant fulfills the conditions for the grant of the interlocutory
mandatory injunction.

Applicant’s Submissions
The applicant in its submission relied on section 14 (2) and 33 of the Judicature Act,
64 (e) and 98 of the Civil Procedure Act and the case of Alcon International Ltd vs
the New Vision Publishing Co. Ltd & Ors SCCA No. 4 of 2010 where the Supreme
Court held that every court has inherent power to make any order as may be
necessary for achieving the ends of justice or to prevent abuse of its process. It also
relied on section 37 of the Judicature Act as to grant an interlocutory order in all
cases in which it appears to be just or convenient to do so.
The applicant cited the case of Xing Wang Company Ltd vs Zheng Zupig Misc. Co.
Cause No.001 of 2018 where the High court held that the grant of an interlocutory
mandatory injunction is in the discretion of the court taking into consideration the
facts and circumstances of a particular case and the extent of the injury or
inconvenience caused to the applicant by the conduct of the respondent and the
extent of injury or hardship that will be cause to the respondent by the grant.
The applicant also submitted that an interlocutory mandatory injunction is to
restore parties to the status quo that existed on the date of the institution of the
suit. it relied on the case of Sudhir Ruparelia vs Crane Bank Uganda (in
receivership) & Anor. The applicant defined status quo to mean the existing state
of things, existing prior to a particular point in time.
As to whether the respondent prejudicially altered the status quo intending to
defeat a court proceeding already instituted, the applicant submitted that the
respondent revoked the applicant’s withholding tax exemption on the 23 rd March,
2023 a day after being served with court documents seeking for a temporary
injunction not to alter that status quo.
The applicant submitted that the respondent’s alteration of the status quo after
being served court documents to maintain the same was an abuse of court process
and thus prayed for the restoration of the status quo to what it was as at 23 rd
March, 2023 before the email of the 29th March, 2023 revoking the applicant’s
withholding tax exemption.
The applicants relied on the case of Saleh Kamba & Anor (supra) to state that the
principle to guide court in whatever course to take is what is likely to cause the lest
irremediable prejudice to one party or the other. The most important consideration
for court to bear in mind in case of this nature is as to which of the parties bore the
greater risk of suffering injustice if the remedy sought was to be withheld by the
court.it was submitted that those circumstances outweighed the risk of injustice if
the injunction is refused.
The applicant submitted that it has 8000 tonnes of rice stuck in stores in Tanzania
and the longer it takes, the more uncertainty of collecting it since this is cross
border trade with its risks. It further submitted that it has 540 tonnes of rice stuck
at Mutukula border which were in transit after being paid for and their import
approved by the respondent according to court order of 5th April, 2023 but could
not proceed after the consignment was illegally intercepted ad impounded for
court orders.
The applicant further submitted that the respondent wants it to pay Ugx.
985,227,570.04 which is contrary to its legitimate expectation established when
the withholding tax exemption was granted and later illegally revoked. It was
submitted that the principle of legitimate expectation according to the case of Alex
Agandru vs Etoma Francis & Ors Civil Suit No. 07 of 2011 is said to arise as a result
of promise, representation, purpose or policy made, adopted or announced by or
on behalf of government or a public authority. It extends to a benefit that an
individual has received and can legitimately expect to continue or a benefit he
expects to receive.
The applicant submitted that had the respondent not awarded the applicant a
withholding tax exemption, it would not have bothered to enter into the business
of would have done so on different terms.
The applicant also submitted that its non-quantifiable good will is at stake and
defined good will according to the Halsbury’s Laws of England Vol 80 (2013) at 807
as cited in Primus International Holding Co. Ltd & Anor vs Triumph Controls UK Ltd
(2020) EWCA Civ 1227 to mean the whole advantage of the reputation and
connection formed with customers together with the circumstances.
The applicant noted that the its business is that save for what is already paid for
now for future trade, the applicant’s suppliers of rice can stock for the applicant
without pay on the basis of its good will hoping that it will soon purchase. The
implication is that the trading partners of the applicant will think that the applicant
is not a credible entity to deal with because it’s not tax compliant. It therefore
submitted that the applicant will continue to suffer if this injunction is not granted.
The applicant submitted that the respondent’s argument that this application
would have the effect of determining the main application baseless as it seeks for
order remedies under judicial review in the main application.
Respondent’s submissions.
The respondent submitted that there are no sufficient grounds for the grant of an
interlocutory mandatory injunction. In regards to status quo, counsel submitted
that injunctions are equitable remedies intended to maintain the status quo.
Counsel relied on Thugitho Festo vs Nebbi Municipal Council HCMA No. 0015 of
2017 where the court noted that mandatory injunctions are granted for the
purposes of maintenance of the status quo which prevailed at the date of the suit
or immediately preceding thereto.
Counsel further relied on Xing Wang Company Ltd vs Zeng Zuping HCMC No. 0001
of 2018 where court held that a temporary mandatory injunction is not a remedy
that is easily granted. It is an order that is ordinarily passed in circumstances which
are clear and the prima facie materials clearly justify a finding that the status qou
has been altered by one of the parties to litigation. He argued that the applicant’s
withholding tax exemption certificate was revoked on the 29 th March, 2023 and
HCMC No. 0111 of 2023 from which this application arises was lodged in court on
the 22nd June, 2023.
He therefore submitted that the status quo prevailing at the date of filing HCMC
No. 0111 of 2023 or immediately preceding that date was that; the applicant was
liable to pay withholding tax on its rice imports. The respondent has not done
anything to alter that status quo as to warrant the grant of an interlocutory
injunction for restoration of the same.
Counsel submitted the principles for the grant of a temporary injunction as stated
in Xing Wang Co. Ltd (supra) are; the presence of a prima facie case with a likelihood
of success, danger of suffering irreparable damage and where in doubt, the balance
of convenience.
In respect of a prima facie case with a likelihood of success, counsel submitted that
HCMC No. 0111 of 2023 from which this application arises cannot be said to be one
with a prima facie case for reasons that the purported lawful attorney of the
applicant does not have a company resolution allowing him to represent the
applicant, he has not exhausted the existing remedies as required under judicial
review rules, this court does not have jurisdiction to hear and determine the tax
disputes raised by the applicant and that the application offends the lis pendens
rule.
On irreparable damages, or injustice, the respondent submitted that taxes are
creatures of statutes and there are procedures for refund of any taxes overpaid or
wrongly paid which the applicant can explore. Counsel further submitted that the
applicant has not adduced any evidence of purchase or ownership of the 8540
tonnes of rice alleged to be stuck in Tanzania. Consequently, the applicant will not
suffer any irreparable damage or injustistice if its compelled to pay taxes which it
is presently liable to pay.
In regards to the balance of convenience, counsel submitted that the respondent
and the general public stand to suffer greater harm if this application is granted. He
stated that the grant of this application would tantamount to determining the main
application in the applicant’s favour as it would lead to the restoration of the
applicant’s withholding tax exemption which is what the applicant seeks.
The respondent’s counsel further submitted that the grant of the application would
deprive the respondent of revenues to the benefit of the applicant and loss to it
and the nation at large. The grant of the application would further allow the
applicant to import into Uganda large sums of rice that would distort the rice
market and perpetuate unfair trade practices to outcompete the applicant’s
counterparts.
Counsel further submitted that the applicant was using its exemption to help third
parties import rice into Uganda without paying taxes and granting this application
would enable the applicant to continue being an enabler of tax evasion to the
detriment of the respondent and nation.
Her therefore submitted that the implications compared to what the applicant
alleges it would suffer if the application is granted and prayed that it is dismissed
with costs.
Analysis
An injunction is by its very nature a coercive order. The main question for this court
establish is whether in such circumstances in this case the grant of an Interlocutory
mandatory injunction or a temporary injunction can still be justified. The legal
principles upon which Court exercises its discretion to grant a temporary injunction
in all actions pending determination of the main suit is now well settled as seen in
the wealth of authorities.
Injunctive reliefs whether Mandatory or Temporary must always be granted on
sound reasons and not gratuitously. A mandatory injunction can be granted under
the inherent jurisdiction of the court and not under Order 41 of the Civil Procedure
Rules. A Mandatory injunction is often a means of undoing what has already been
done so far as possible and requires taking positive steps to undo what has been
done and therefore the case has to be unusually strong before the court can grant
the same. Its purpose is to preserve the status quo and the status quo to be
preserved is the one that existed before the wrongful act(s) of the respondent. It
can only be issued in special circumstances and in clear and obvious cases. See East
African Spinners Ltd & Others v Bedi Investments Ltd Civil Appeal No. 72 of 1994

The granting of an Interlocutory mandatory injunction or temporary injunction is

an exercise of judicial discretion as was discussed in the case of Equator
International Distributors Ltd v Beiersdorf East Africa Ltd & Others Misc.
Application No.1127 of 2014.
Discretionary powers are to be exercised judiciously as was noted in the case of
Yahaya Kariisa vs Attorney General & Another, S.C.C.A. No.7 of 1994 [1997] HCB
29.
It should be noted that where there is a legal right either at law or in equity, the
court has power to grant an injunction in protection of that right. Further to note,
a party is entitled to apply for an injunction as soon as his legal right is invaded. See
Titus Tayebwa –vs- Fred Bogere and Eric Mukasa Civil Appeal No.3 of 2009. In the
case of Noor Mohamed Janmohamed v. Karamali Virji Madhani (1953) 20 EACA
8, the court held that the whole purpose of a temporary injunction is that parties
ought to be preserved in status quo until the question to be investigated in the suit
can be finally disposed of.
The grant of an interlocutory Mandatory injunction just like a temporary injunction
is an equitable remedy and parties seeking an intervention of equity must show
expression of good faith and clean hands. Equally a court of equity would grant an
injunction if it is satisfied that the respondent’s conduct is below the expectation
of equity. It must be noted that a court of equity would frown and refuse an
injunction when the person seeking it is not acting in good faith. The underpinning
factor is whether the applicant has brought itself in the realm of Giella v Cassman
Brown and Co Ltd [1973] EA 358
The respondent contend that the applicant has not come to court with clean hands
since the Withholding Exemption Certificate was withdrawn due to the applicant’s
transgressions and failure to comply with the tax law. The respondent was acting
and exercising their discretion depending on the circumstances and extent of what
the tax law allows it to do.
The court cannot exercise discretion in granting an Interlocutory mandatory
injunction or temporary injunction without recourse to the law and the facts of the
case. Such discretion must be exercised on the strength and basis of the law and
facts of the particular case and though the powers are wide, they are also
restrictive. The mandatory Injunction sought by the applicant would equally have
the effect of perpetuating a continuous breach of the tax law where the applicant
wants to import rice without withholding any tax.
Where the remedy of mandatory injunction is sought at the interlocutory stage, it
ought not to be granted save in exceptional circumstances such as in plain and
obvious cases. Moreover, before granting a mandatory injunction the court had to
feel a high degree of assurance that at the trial it would appear that the injunction
had rightly been granted. See Locabail International Finance Ltd v Agro Export and
Others [1986] 1 All ER 901
The courts should be reluctant to restrain the public body from doing what the law
allows it to do. In such circumstances, the grant of an injunction may perpetrate
breach of the law which they are mandated to uphold. The main rationale for this
is rooted in the fact that the courts cannot as matter of law grant an injunction
which will have the effect of suspending the operation of legislation. See R v
Secretary of State for Transport ex.p Factortame Ltd [1990] 2 AC 85.

The courts should consider and take into account a wider public interest. The public
bodies should not be prevented from exercising the powers conferred under the
statute unless the person seeking an injunction can establish a prima facie case that
the public authority is acting unlawfully. The public body is deemed to have taken
the decision or adopted a measure in exercise of powers which it is meant to use
for the public good. See Alcohol Industry Association of Uganda & others v AG &
URA High Court Miscellanoeus Application No. 744 of 2019

The question here now is; what was the status quo at the time of the filing of this
application. It is undisputed that the applicant’s withholding tax exemption
certificate was revoked by the respondent on the 29th of March, 2023. It is further
undisputed that this application was filed before this court after the 22 nd of June,
2023. At that material time, the status quo prevailing was the revocation of the
withholding tax exemption certificate of the applicant and the latter’s liability to
pay withholding tax on its rice imports.
In the circumstances, the applicant seeks an order for mandatory injunction
directing the respondent to allow it import 8540 tonnes of rice without charging
withholding tax as was the case as of 12th March, 2023. However, as discussed
above, the purpose of this remedy is to preserve the status quo of the subject
matter.
In the circumstances, what can the court do as a temporary remedy to rectify or at
least to ameliorate the situation. The applicant deposed that the situation prior to
the filing of the suit ought to be maintained which situation is set out in paragraph
17 and 25 of the it’s affidavit in support of the application. From the reading of this,
the status quo sought to be maintained, I would suppose; is the revoked
withholding exemption tax certificate and the applicant’s withholding tax liability
since this was the situation as at the time of filing this application.
As such, there is no status quo to be maintained in the circumstances before this
court to warrant the issuance of the mandatory injunctive orders. It is also argued
by the respondent that the applicant’s tax exemption certificate which was revoked
has equally expired and would not be operational in any event. This court would
act cautiously not to reverse the discretion exercised by the respondent in revoking
the Withholding Tax Exemption Certificate before determining the main cause.
The applicant has not made out a case to warrant this court’s orders on the reliefs
sought in the application and there are no special circumstances to warrant the
grant of Interlocutory Mandatory Injunction.
This application fails and is dismissed with costs to the Respondent.

I so order.

SSEKAANA MUSA
JUDGE
17th May 2024