Likewise where we cite an authority, there should be no doubt that the Tribunal found the said authority convincing. Coming back to the issue at hand, the question is, was Article 23.5 of the EA2 PSA intra vires or ultra vires? The Tribunal has already held in issue 1.2 that it was ultra vires. We referred to the decision, inter alia, of His Lordship Madrama in Kampala Nissan Uganda Limited V Uganda Revenue Authority Appeal 7 of 2009, [2011] UGHC 80, which we would like to repeat: “For emphasis I need to state that no tax can be imposed except under the authority of an Act of `Parliament neither can an authority waive tax except under a law enacted by Parliament.” He further stated that: “Disobedience to a statute enacted in public interest and couched in mandatory language in terms of what it commands to be done renders anything done in disobedience of the statute null and void.” Therefore if Article 23.5 of EA2 PSA was ultra vires, no act at all, then the applicants cannot rely on the doctrine of estoppel so as to create a tax liability.
However the applicants argued that the respondent is estopped by the principle of legitimate expectation. The applicants argued that: “Legitimate expectation is [thus] firmly established as the public law principle where a state (or its agency) has represented that it will act in a particular manner (contrary to a statutory rule and even if acting ultra vires) where the individual is entitled to expect that the state will keep its words.” Legitimate expectation arises from a conduct, practice or treatment whereby one reasonably expects a benefit to arise. In the Kenyan case of Republic and others v Attorney General and another [2006] 2 EA 265 the court commenting on legitimate expectation stated: “A legitimate expectation arises where a person responsible for taking a decision has induced in someone who may be affected by the decision a reasonable expectation that he will receive or retain a benefit or that he will be granted a hearing before the decision is taken…”
In the English case of Council of Civil Services Unions v Minister for Civil Service [1985] AC 374 Lord Fraser said: “A legitimate expectation may arise from an express promise given on behalf of a public authority or from the existence of a regular practice which the claimant can reasonably expect to continue.” He continued that: “Legitimate expectations such as are now under consideration will always relate to a benefit or privilege to which the claimant has no right in private laws, and it may even be to one which conflicts with his private law rights. In re Preston [1985] AC 1835, it was held that: “…unfairness in the purported exercise of a power could amount to an abuse or excess of power if it could be shown that the Commissioners had been guilty of conduct equivalent to a breach of contract or breach or representation.”
The principle of legitimate expectation arose from the need to ensure fairness in transactions involving public authorities and other persons. The applicants’ whose right to an exemption, arising from private contractual law rights under the EA2 PSA, being extinguished by the public doctrine of estoppel, wish to rely on the principle of legitimate expectation. The applicants argued that “the exercise of a statutory power must be restricted where to exercise it would frustrate a legitimate expectation.” In essence, the respondent’s attempt to invoke the exercise of the ITA against the applicants should be restricted by the legitimate expectation the latter had by virtue of the purported exemption granted by Article 23.5 of the EA2 PSA.
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