They also prayed that the Tribunal finds that Article 23.5 of the EA2 PSA does not purport to provide an exemption to the imposition of tax pursuant to the ITA. If the Tribunal were to find that Article 23.5 of the EA2 PSA purported to provide an income tax exemption it would be null and void ab initio under the laws of Uganda. The Tribunal should find that the respondent is not estopped from imposing tax from the disposal of the interests in the EA2. The respondent also prayed that the Tribunal finds that the concept of legitimate expectation provides no basis for not imposing tax as imposed by the ITA. The respondent also wanted the Tribunal to find that the applicants disposed 66.67% of its 100% interest and not the 50% acquired from Heritage. It was also prayed that the Tribunal applies the average cost accounting method or in the alternative the FIFO’ method as the basis of calculating the gain obtained by the applicants.

The respondent also wanted the Tribunal not to include the exploration, development or production costs including the excess costs acquired from Heritage in their cost base. The respondent also wanted the Tribunal to find that the applicants are not eligible for reinvestment relief. In the event the Tribunal finds otherwise, it should exercise its power under S. 19 of the TAT Act and remit the matter to the respondent for reconsideration. The respondent also prayed for costs of the application.   In its reply to the respondent’s submissions, the applicants complained about the approaches used by the former. They argued the respondent has raised new issues and arguments that were not raised before. They complained about the language use by the respondent.. The applicants argued that the respondent’s use of authorities from other jurisdictions does not take into consideration the weight such decisions may have and their relevance to the Tribunal. The applicants argued that some of the said authorities should be considered as evidence and not law.

The respondent should not have relied on evidence improperly submitted to the court to which the applicants were not given an opportunity to challenge.   In respect of issue 1, the applicants replied that the respondent’s application of the principles of statutory interpretation in the analysis of Article 23.5 was flawed and simplistic. They argued that Article 23.5 of the PSA is a contractual provision and not a provision of a statute. What should be applied are the rules of interpretation of contracts and not statutory interpretation. The applicants argued that Article 23.5 of the PSA is not limited to transfer tax. The applicants argued further that it has never been any part of their case that income tax under Part IXA is a ‘transfer tax’. They do not dispute that income tax on gains imposed by the ITA is not a transfer tax. The applicants argued that Article 23.5 does not restrict itself to a transfer tax. To them, the issue before the Tribunal is whether or not the income tax charge or gains under the ITA is “any tax, fee or other impost or fee”.

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