The High Court has ordered the Uganda Revenue Authority (URA) to pay Shs1.66 billion in compensation after ruling that the tax body unlawfully disposed of donated medical equipment worth Shs1.46 billion by auctioning it for only Shs4 million.
In a judgment delivered by Justice Bernard Namanya, the court found that URA breached mandatory procedures under the East African Community Customs Management Act, 2004, when it auctioned the consignment belonging to Babaana Children of Uganda Ltd.
The medical equipment had been donated by well-wishers from Switzerland to support improved access to modern healthcare services in Uganda. The shipment included sophisticated dental surgery equipment, rehabilitation hospital equipment and gynaecology practice equipment intended for a charitable health facility.
Court records show that Babaana Children of Uganda Ltd secured a tax exemption from the Ministry of Health, which URA confirmed in November 2017 before the consignment arrived in Uganda.
The charity later requested an extension of the warehousing period because construction of the health facility where the equipment was to be installed had not been completed. According to the organisation, URA did not object to the request. However, when it later sought to clear the goods, it was informed that they had already been auctioned.
Justice Namanya faulted URA for failing to follow the law before disposing of the goods. The judge noted that although URA claimed it had published the mandatory one-month auction notice in the Uganda Gazette, no evidence was produced in court to support that claim.
“The defendant sold the plaintiff’s goods without issuing the statutory one-month notice required by law. Had such notice been issued, the plaintiff would have been allowed to take remedial action,” the judge ruled.
The court also questioned how medical equipment valued at approximately Shs1.46 billion could have been sold for only Shs4 million without any satisfactory explanation.
Justice Namanya observed that URA’s warehouse exit records described the auctioned items as worn clothing and miscellaneous goods weighing 2,500 kilograms, despite the original consignment weighing about 6,600 kilograms and containing high-value specialised medical equipment.
The ruling concluded that URA failed to properly account for the missing medical equipment and did not comply with the legal requirements governing the disposal of warehoused goods.
The court awarded Babaana Children of Uganda Ltd Shs1.46 billion as compensation for the value of the lost equipment and an additional Shs200 million in general damages for the losses suffered.
Justice Namanya also ordered URA to pay interest on the awards until full payment is made, in addition to meeting the costs of the suit.
The case stems from a lawsuit filed in 2020 after the charity accused URA of unlawfully disposing of tax-exempt medical equipment that was intended to improve healthcare services for Ugandans, particularly vulnerable children and patients who would have benefited from the specialised facility.