Brief Facts:
The Applicant deals in mining and quarrying. In December 2014, the Applicant registered for VAT, and on July 31st, 2015, it was de-registered. On January 1, 2018, the Applicant was reactivated. In 2019, the Applicant applied for a VAT refund of UGX 1,432,545,975. The input tax of UGX 917,824,985 was disallowed, hence the current Application.
Issues for Determination:
- Whether the Applicant is entitled to the refund claim of UGX 917,824,985?
- What remedies are available to the parties?
Tax Appeals Tribunal Decision:
- Section 28(3) of the VAT Act, which allows a person to claim an input tax credit six months prior to registration, did not apply to the Applicant who deals in the supply of services. Input VAT of UGX 187,103,135 was therefore rightly disallowed by URA.
- Where deemed VAT is actually paid, the contractor is the right person to claim the input tax credit since they are the ones making the supply and declaring it to URA.
- The Applicant did not show that the contractors did not claim the tax paid in error. Input VAT of UGX 195,784,535 was, therefore, to be allowed and paid upon verification that the contractor did not claim it.
- However, the input tax credit of UGX 531,784,535 was rightly disallowed since the Applicant was not entitled to credit for a period when she was deregistered.
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