A legal dispute between the Uganda Revenue Authority (URA) and Babaana Children of Uganda Ltd over auctioned medical equipment has ended after the High Court awarded the charity Shs1.66 billion, following a disagreement over the handling of donated medical supplies.
The dispute dates back to 2017 when specialised medical equipment donated from Switzerland arrived in Uganda for a children’s health facility. The consignment included dental surgery equipment, rehabilitation hospital equipment, and gynaecology tools valued at about Shs1.46 billion.
According to URA, the goods qualified for tax exemption because they were medical in nature. However, the equipment remained in a URA warehouse for about one year as the charity completed construction of the medical facility where the items were intended to be installed.
URA explained that under customs regulations, goods that remain in a bonded warehouse beyond the legally allowed period are subject to disposal through auction. Based on this requirement, customs officials proceeded with the auction of the goods after the statutory warehousing period had expired.
However, the charity later raised concerns about the auction, arguing that the equipment should not have been sold because it was meant for a medical facility and had already received tax exemption approval.
Following the complaint, URA launched an internal investigation into the matter. The investigation identified concerns in the handling of the auction process, leading to action against officials who were involved, with the responsible staff later leaving the institution.
In an effort to resolve the matter amicably, URA offered compensation to the charity, initially proposing Shs2.5 billion, which was later increased to Shs2.8 billion. However, the charity rejected the settlement offer and instead demanded Shs22 billion in compensation, taking the matter to court.
During the court proceedings, Justice Bernard Namanya ruled that while the auction process had issues, the charity was not entitled to the Shs22 billion it had demanded. The court awarded the organisation Shs1.46 billion, representing the value of the medical equipment, plus Shs200 million in general damages and interest.
URA Assistant Commissioner for Corporate and Public Affairs Robert Kalumba said the authority had acted within the customs framework regarding the warehousing period, but acknowledged that mistakes were made during the auction process.
He explained that the equipment had stayed in storage for the required period while the taxpayer completed preparations for the medical facility, and that the auction was initiated based on existing customs procedures.
Kalumba said URA’s decision to offer compensation showed its commitment to resolving disputes and protecting taxpayers, adding that the authority had already taken corrective action against officers found responsible for the errors.
“The taxpayer refused, asking for Shs22 billion instead and took URA to court. The court dismissed the Shs22 billion claim and awarded Shs1.4 billion plus interest,” Kalumba said.
Despite the court decision, URA confirmed that it would respect the ruling and comply with the judgment.
“The matter is closed, and we shall comply,” Kalumba said.
The case shows URA’s efforts to enforce customs regulations while also responding to concerns raised by taxpayers. It also shows the importance of following proper procedures at every stage of government operations to avoid disputes, even when decisions are made within established legal frameworks.
