[2024] KETAT 753 (KLR)

Blowplast Limited v Commissioner of Legal Services and Board Coordination (Tax Appeal E340 of 2023) [2024] KETAT 753 (KLR) (9 May 2024) (Judgment)

Neutral citation: [2024] KETAT 753 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E340 of 2023

E.N Wafula, Chair, Cynthia B. Mayaka, RO Oluoch, AK Kiprotich & T Vikiru, Members

May 9, 2024

Between

Blowplast Limited

Appellant

and

Commissioner of Legal Services and Board Coordination

Respondent

Judgment

Background 1. The Appellant is a private limited company incorporated as such under the laws of Kenya whose principal activity is the manufacturer of plastics within the EAC and its surrounding environs.

2. The Respondent is a principal officer appointed under and in accordance with Section 13 of the Kenya Revenue Authority Act, and KRA is charged with the responsibility of among others, assessment, collection, accounting and the general administration of tax revenue on behalf of the Government of Kenya.

3. The Respondent on 16th March 2023, issued the Appellant with a tax demand for tax arrears for the period of November & December 2022 and January 2023 in respect to Excise Duty.

4. The Appellant being dissatisfied with the assessments lodged objections on 4th April, 2023 for the stated period.

5. The Respondent vide a letter dated 2nd June, 2023 issued an objection decision upholding the assessments.

6. The Appellant being dissatisfied with the objection decision, lodged a Notice of Appeal dated 14th June, 2023.

The Appeal 7. The Appeal is premised on the following grounds as stated in the Memorandum of Appeal dated 27th June, 2023 and filed on 29th June, 2023:a.That the Respondent erred in law and fact by imposing Excise duty on locally manufactured articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90. b.That the Respondent erred in law and fact by failing to appreciate that Finance Act, 2022 as read with the Excise Duty Act No. 23 of 2015 imposes Excise duty solely on imported Articles of plastics of tariff heading 3923. 30. 00 and 3923. 90. 90. c.That the Respondent erred in law and fact by disregarding the provisions of the Hansard and Order Paper of the National Assembly dated 2"d June 2022 establishing parliament' intention that Excise Duty should be solely on imported articles of plastics 3923. 30. 00 and 3923. 90. 90. d.That the Respondent erred in law and fact by disregarding the letter from the National Assembly dated 28th July 2022 averring that the intention of parliament was to introduce Excise duty solely on imported articles of plastic of tariff heading 3923,30. 00 and 3923. 90. 90. e.That the Respondent erred in law and fact by imposing Excise duty on the Appellant's locally manufactured articles of plastic in contravention of the Finance Act 2022, the Excise Duty Act, No.23 of 2016, the directives by the Clerk of the National Assembly, and the intention of parliament as evidenced by the Hansard and Order Paper of 2nd June 2022. f.That the Respondent erred in law and fact by failing to appreciate that the introduction of Excise duty solely on imported plastics was a measure meant to protect and preserve the dwindling local manufacturing industry as well as reduce cost of living.g.That the Respondent erred in law and fact by failing to appreciate that only Parliament is mandated and imbued with the obligation, duty and power to introduce laws in Kenya. Inspite of the same, the Respondents are blatantly refusing to abide by the will of the Legislature by imposing Excise duty on locally manufactured articles of plastics contra to Parliament's intention.

Appellant’s Case 8. The Appellant’s case is premised on the following documents:a.The Appellant’s Statement of Facts dated 27th June, 2023 and filed on 29th June, 2023 together with the documents attached thereto.b.The Appellant’s witness statement of Hadi Sheikh dated 12th April, 2023, filed on 13th April, 2023 and admitted as evidence under oath on 17th October, 2023. c.The Appellant’s written submissions dated 31st October, 2023 and filed on 7th November, 2023 together with the authorities attached thereto.

9. That the Appellant and the Respondent herein are at loggerheads regarding the interpretation of Section 35(b)(xiv) of the Finance Act, 2022. That the provision relates to the imposition of Excise duty on plastics with the main bone of contention between the Appellant and the Respondent being whether the provision sought for the imposition of the tax head solely on imported articles of plastics, or both imported and locally manufactured articles of plastics.

10. That the amendment introduced in Section 35 of the Finance Act was indeed a culmination of years of jurisprudence being laid down to govern the introduction and eventual imposition of Excise duty on plastics. That indeed, owing to the long and convoluted nature of the changes in law leading up to the Finance Act, 2022 the Appellant established a brief chronology of the events and amendments that transpired.

11. That prior to doing the same, it should be noted from the onset that both the Finance Act, 2022 and the Excise Duty Act, 2015 unequivocally provide that Excise duty should only be imposed on imported articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90. The aforementioned provision in the Finance Act, 2022 reads as follows:“(xiv)by inserting the expression “and 3923. 90. 90” immediately after the expression "3923. 30. 00” appearing in the tariff description “Imported Articles of plastic of tariff heading 3923. 30. 00”

12. That equally, the Excise Duty Act, 2015 states as follows:“Imported Articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90”

13. That despite this being the case, the Respondent is demanding from the Appellant, as per the Excise duty assessments dated 27th September, 2022 issued for the months of July and August, principal taxes of Kshs.14,953,178 plus the accruing interests.

14. That understandably, the Appellant objected to the assessments and demands raised by the Respondent understanding and appreciating that it is being victimized for following the provision of the law to the letter. That it cannot be overstated that contrary to the assertions in the Respondent’s objection decision, the current provision of the Excise Duty Act, 2022 provides that Excise duty at the rate of 10% is to be levied on imported articles of plastics.

15. That to the Appellant's great consternation, sometime in 2023 the clause in the First Schedule to the Excise Duty Act providing that the Excise duty be imposed solely on imported articles of plastics of tariff heading 3923. 30. 00 and 3923. 90. 90 was mysteriously and clandestinely deleted and/or removed.

16. That it cannot be overemphasized that the deletion and removal of the clause was not done through a Gazette Notice, Legal Notice nor any known amendment channels; meaning that the removal of the clause is the handiwork of persons and individuals wishing to usurp the constitutional powers of the National Assembly and instead impose their will on the people of Kenya.

17. That to establish the brief background, it should be noted that Excise Duty was first introduced on plastics through Section 32 of the Finance Act, 2021 which amended the first schedule to the Excise Duty Act, 2015. That an Excise duty of 10% was accordingly imposed on articles of plastics of tariff heading 3923. 30. 00.

18. That when introducing the provision, the intentions of Parliament were quite benign, seeking to curb the negative environmental impact of single-use plastics. That indeed, this is not a whimsical nor naive assertion of the Appellant as it can in fact peer into the mind of the legislature through the Hansard of the National Assembly dated 24th June, 2021. “In (d) and (e) as per the Order Paper, we are proposing to increase Excise Duty on certain items. I propose to move a further amendment to remove the term “single use plastic bottles” and just have it as that. Single use plastic bottles are those we use every day. Because of environmental issues, we propose to impose a 10 per cent Excise Duty on them but change that particular paragraph to read “articles of plastics tariff heading 3923. 30. 00”.This is for the purposes of ease of administration of tax to ensure that the Kenya Revenue Authority can find it and impose that particular Excise Duty.”

19. That from the above, it is clear that while crafting this provision, the main factor considered was the environmental impact arising from single-use plastic. That however, noting the difficulty in segregating single-use and reusable plastics and for purposes of ease of administration and taxation, the legislature resorted to imposing the duty on articles of plastics of tariff heading 3923. 30. 00.

20. That in doing so, Parliament defeated the purpose for which the law was introduced. That it should be noted that by imposing the Excise duty on all articles of plastics of tariff heading 3923. 30. 00, Parliament had levied taxes on both single use plastics which were excessively detrimental to the environment and reusable plastics which were more environmentally friendly.

21. That ideally, despite the intention of the Legislature being to levy excise only on single-use plastics, all articles of plastics, both reusable and non-reusable were now excisable leading to a sharp increase in cost of living, and equally, an increased cost of production for Kenya's local manufacturing industry.

22. That it should be noted that plastics have a wide range of applications and cuts across all industries, from the food industry to the pharmaceutical industry with packaging being one of the most common applications. That in the food industry, plastics are an integral part of the packaging process and help maintain sterility of highly perishable goods such as milk. That in the pharmaceutical industry it protects the medicines from adverse effects e.g. through chemical reactions, leaching of packaging materials or absorption.

23. That accordingly, any erratic changes or adjustments to the pricing of this crucial commodity would likely impact the whole economy, and unfortunately, the introduction of this excise duty brought about the need to re-assess key variables considered in the pricing of products to factor in this prudently incurred production costs.

24. That consequently, as a result of the 2021 Finance Act amendment, the cost of basic and household commodities skyrocketed. That for example, Kenyans ended up paying an additional 10% for the same packet of brookside milk among other essential commodities.

25. That for the manufacturing sector, the effects were equally detrimental. That considering that imported articles of plastics did not suffer the same fate of having Excise duty imposed on it as goods produced in Kenya, local manufacturers became uncompetitive both regionally and globally as a result of the additional operational and production costs.

26. That indeed, the Legislature and particularly the Departmental Committee on Finance and Planning at their sitting in December 2021, took cognizance of the dire situation in their Report on the petroleum products (Taxes and Levies) (Amendment) Bill (National Assembly Bill No. 42 of 2021). That quoting the relevant section from the report, the Committee noted as follows:“The Excise Duty Act, 2015 be therefore amended in order to delete the proposal levy excise duty on locally manufactured sugar confectionery of tariff HS Code: 1704 and Chocolates (HS Code: 1806) and reusable articles of plastic of tariff heading 3923. 30. 00 with the intended objective of levying Excise Duty on imported products from countries other than EAC countries. The amendments were introduced to the Excise Duty Act, 2015 through the Finance Act, 2021. This has resulted in detrimental effects for the local manufacturers of this commodity as the operational and productions costs for supply of chocolates by local manufacturers have increased, rendering the Kenyan manufacturers uncompetitive in both the local market and exports markets which in turn also leads to over-reliance on imports.Committee's ObservationThe above Amendments were noted as having been erroneously captured. However, the Committee agreed to rectify the anomalies in the review of the Finance Bill, 2022”

27. That cognizant of the outcry from the public, and the effects of the additional excise duty on plastics, Parliament sought to ameliorate the situation by introducing an amendment in the Finance Act, 2022.

28. That accordingly, both the Finance Bill 2022 and subsequently the Finance Act 2022 introduced amendments to First Schedule of the Excise Duty Act, 2015. The Finance Bill provided:“(xviii) by inserting the expression “and 3923. 90. 90” immediately after the expression "3923. 30. 90" appearing in the tariff description Articles of Plastic of tariff heading 3923. 30. 00. ”

29. That the Finance Act, 2022 similarly provided as follows:“35. Amendment of First Schedule to No. 23 of 2015The First Schedule to the Excise Duty Act, 2015, is amended-..·(b)in the table appearing in paragraph 1 of Part I-(xiv) by inserting the expression "and 3923. 90. 90" immediately after the expression “3923. 30. 00” appearing in the tariff description “Imported articles of plastic of tariff heading 3923. 30. 00”.

30. That looking at the Hansard report dated 2nd June, 2022, and the Final Order Paper of the even date, it will be noted that the National Assembly intended to introduce a 10% Excise Duty on “Imported” articles of plastic as a measure to resuscitate the dwindling local manufacturing industry and reduce the cost of living.“Clause 34The Temporary Deputy Chairman (Hon. Christopher Omulele): Hon. Chair, you have a proposed amendment together with Hon. Aden Duale and Hon. Kimani Ichung'wah. We will start with the amendment by Hon. Chairperson. Hon. (Ms.) Gladys Wanga (Homa Bay(CWR),ODM):Hon. Temporary Deputy Chairman, I beg to move:That, the Clause 3+ of the Bill be amended-“a.in paragraph (b)-i.by deleting sub paragraph {iii};ii.by deleting sub paragraph(v);iii.in sub paragraph (viii) by deleting the expression "13,296. 6" and substituting therefor the expression “15,296. 6”;iv.by deleting subparagraph(xii);v.in subparagraph (xiv) in the new tariff description by deleting the word“White chocolate" and inserting the words “Imported White chocolate, including”;vi.by deleting sub paragraph(xvi);vii.in subparagraph (xviii) by inserting the word “Imported” immediately before the word "Articles" in the tariff description "Articles of plastic of tariff heading 3923. 30. 00"viii.by inserting the following new sub paragraph immediately after sub paragraph (xix)-ix.by deleting the following tariff description and the corresponding rates Tariff description Rate of Excise Duty of Imported furniture of any kind used 25% in offices, kitchen, bedroom and other furniturexx.by deleting the following tariff descriptions and the corresponding rates and substituting therefor the following…”

31. That indeed, this assertion was reiterated in the Order Paper dated 2nd June,2022. That quoting the relevant part from the order paper, the same provides:“(No.52)Thursday, June 02,2022v.in subparagraph (xiv) in the new tariff description by deleting the word"White chocolate" and inserting the words “Imported White chocolate, including";vi.by deleting sub paragraph (xvi);vii.by deleting subparagraph (xvii);viii.in subparagraph (xviii) by inserting the word “Imported" immediately before the word “Articles" in the tariff description "Articles of plastic of tariff heading 3923. 30. 00”

32. That it is thus clear from the Parliamentary record that the National Assembly intended to amend the relevant provision of the Excise Duty Act to provide that “Excise Duty would be applicable only on “Imported articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90". That indeed as per the Hansard and the Order Paper, it can be noted that Parliament's intent was to exclude domestic articles of plastic from the application of Excise Duty at the rate specified in the Excise Duty Act.

33. That despite the aforementioned, the Respondent through their various assessments and demands intend to impose Excise duty on the plastics manufactured locally by the Appellant. That this goes not just against the spirit of the law and the mischief the Legislature intended to solve, but also the very letter of the law.

34. That it cannot be overstated that provisions of Section 35 of the Finance Act, 2022 as read with the First Schedule to Excise Duty Act No 23 of 2015 are couched in very mandatory terms, that is Excise duty is to be imposed solely on imported articles of Plastics. That despite this being the case, the Respondent is demanding from the Appellant Kshs. 14,953,178 being undeclared Excise Duty on locally manufactured plastics.

35. That through various correspondences with the Respondent, the Appellant's representative association, the Kenya Association of Manufacturers urged the Respondent to consider that the intention of Parliament in using the word“imported” was to exclude Excise duty on domestic articles of plastics. That unfortunately, their pleas fell on deaf ears.

36. That the Respondent has indeed been arguing that the amendment sought to expand the scope of Excise duty on plastics under tariff 3923. 90. 90. That furthermore, it was its argument that the word “imported” mentioned in the Finance Act, is not in the current provision of the law and accordingly, the Excise duty is applicable on all articles of plastic under the two tariffs, whether manufactured locally or imported. That despite having stated this in the Respondent’s various correspondences, it cannot be overstated that this was not a ground nor a factor for rejecting the Appellant's objection dated 18th October, 2022.

37. That indeed, the Respondent is clinging on to the fact that the Excise Duty Act contains a manifest error. That notably, despite the introduction of the new tariff description, “Imported Articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90”, the tariff description “Articles of Plastic of tariff heading 3923. 30. 00” as introduced by the Finance Act 2021 was still retained.

38. That the Respondent even while disputing the introduction of the tariff heading “Imported Articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90” is still making demands for excise duty on Articles of plastic of tariff heading 3923. 90. 90. That this is indeed a contradiction as one hand the Respondent is saying that owing to the clerical error, the new tariff code cannot be used and yet on the other hand, the Respondent is still demanding for Excise duty under the new tariff heading.

39. That fundamentally, as established in the Hansard and Order Paper, the intention of the legislative body in Kenya was to impose Excise duty solely on imported articles of plastics as a response to the hue and cry from the public. That inspite of being made aware of that fact, the Respondent is still making demands on the basis of the manifest clerical error in place.

40. That, it is worth remembering that a change in law is always driven by a motive, be it one to enhance revenue collection or as a trade remedy to support local manufacturers against cheaper imports, among others. That the intention of the law makers must therefore be understood, and the starting point to understand the amendment in question can be obtained first-hand from the National Assembly of Kenya's Hansard report.

41. That this was the position laid out in the Supreme Court case of Gatirau Peter Munya vs Dickson Mwenda Kithinji & 2 Others Petition 2B of 2014 [2014] eKLR adopting the words of Lord Griffiths in the case of Pepper vs. Hart [1992] 3 WLR. That in the aforementioned case, the Honorable Justices observed that:“purposive approach to legislative interpretation" has evolved to resolve ambiguities in meaning. In this regard, where the literal words used in a statute create an ambiguity, the Court is not to be held captive to such phraseology. Where the Court is not sure of what the legislature meant, it is free to look beyond the words themselves, and consider the historical context underpinning the legislation. The learned Judge thus pronounced himself: “The object intention of the legislature. If the language proves to be ambiguous, I can see no sound reason not to consult Hansard to see if there is a clear statement of the meaning that the words were intended to carry. The days have long passed when courts adopted a strict constructionist view courts now adopt a purposive approach which seeks to give effect to the true purpose of legislation and are prepared to look at much extraneous material that bears upon the background against which the legislation was enacted.”

42. That equally, the Court of Appeal in County Government of Nyeri & Anor. vs. Cecilia Wangechi Ndungu [2015] eKLR pronounced itself as follows:“Interpretation of any document ultimately involves identifying the intention of Parliament, the drafter, or the parties. That intention must be determined by reference to the precise words used, their particular documentary and factual context, and, where identifiable, their aim and purpose. To that extent, almost every issue of interpretation is unique in terms of the nature of the various factors involved. However, that does not mean that the court has a completely free hand when it comes to interpreting documents; that would be inconsistent with the rule of law, and with the need for as much certainty and predictability as can be attained, bearing in mind that each case must be resolved by reference to its particular factors.”

43. That for the avoidance of doubt, it cannot be overstated that as per the Hansard and Order Paper dated 2nd June, 2022, Parliament had made its intent very clear, that Excise duty was to be introduced solely on imported articles of plastics. That this position would indeed later be reiterated by the Clerk of the National Assembly in a letter dated 28th July. 2022.

44. That despite several correspondences and deliberations between the Appellant and the Respondent, a stalemate was reached culminating in the decision to refer the matter to the Attorney General for guidance on the correct interpretation of the Section. That accordingly, the Appellant's consultants wrote to the Attorney General's office on 13th July, 2022 seeking guidance on the correct interpretation of clause 35 of the Finance Act, 2022.

45. That failing to receive a response by the Attorney General, the Kenya Association of Manufacturers wrote to the Clerk of the National Assembly on 8th August, 2022 seeking its intervention and guidance on the correct interpretation of the provision in light of the actions by the Respondent. That a prayer was indeed made to the National Assembly that should they agree in favor of the Appellant's interpretation of the provision, they should write and direct the Attorney General to make a correction to the provision using the revisionary powers vested by the Revision of Laws Act.

46. That the request by the Kenya Association of Manufacturers was not ludicrous as it was made cognizant of the Honorable Attorney General's powers imbued by Section 13 of the Revision of Laws Act allowing for the rectification of formal, clerical and printing errors by the Attorney General.

47. That this power had already been exercised by the good offices of the Attorney General. That it should be noted that when the Finance Bill 2022 was published had referenced HS Code 3923. 30. 90 which is not in existence, yet this error was corrected in the Finance Act 2022.

48. That on 16th August, 2022, the Clerk of the National Assembly wrote to the Kenya Association of Manufacturers and indicated that he had received a similar request from the Attorney General to whom a substantive response had been issued in a letter dated 28th July, 2022.

49. That the aforementioned letter to Clerk of the National Assembly averred as follows:“We wish to confirm the National Assembly considered and passed the particular amendment to clause 34 of the Finance Bill, 2022 as proposed by the Departmental Committee on Finance and National Planning. In this regard, the amended item should read as follows:Tariff Description RateImported Articles of plastics of tariff heading 3923. 30. 00 and 3923. 90. 90 10%”

50. That this meant that in addition to the Hansard and the Order Paper, the National Assembly had indeed confirmed as per its intention, Excise duty was only to be imposed on imported articles of plastics of tariff heading 3923. 30. 00 and 3923. 90. 90.

51. That in light of all that has been mentioned, the Respondent is indeed subverting the will of the Legislature as the duly elected representatives of the people of Kenya and is further blatantly refusing to adhere to the correct provision of Excise Duty Act No 23 of 2015 as read with the Finance Act, 2022.

52. That the grundnorm of the Country, the Constitution of Kenya 2010, unequivocally provides that it is only Parliament that is mandated and imbued with the obligation, duty and power to introduce laws; this is in fact the very foundation of the doctrine of separation of powers.

53. That in light of this legislative mandate, it and it alone is responsible for the legislation of laws within Kenya. That this mandate is manifested to a great extent in Parliament’s duty to legislate laws that raise revenue collection as enshrined by Section 209 of the Constitution of Kenya and empowered by Section 94(5) which provides:“No person or body, other than Parliament, has the power to make provision having the force of law in Kenya except under authority conferred by this Constitution or by legislation.”

54. That as such, where the National Assembly has indeed stated that Excise duty should only be levied on imported articles of plastics of tariff heading 3923. 30. 00 and 3923. 90. 90, it is baffling why the Respondent would insist on collecting Excise duty on the Appellant's locally manufactured articles of plastics, in blatant disregard of the will of the Legislature.

55. That from the above, it is clear that the Respondent has erred in fact and in law by imposing Excise duty at the rate of 10% on the Appellant's locally manufactured articles of plastics of tariff headings 3923. 30. 00 and 3923. 90. 90 considering that the law and the Legislature clearly provide that Excise duty should only be levied on imported articles of plastic.

56. That the Respondent's erroneous imposition of Excise duty is the most pertinent and fundamental issue at the crux of the matter. That the Appellant indeed finds itself in a very unique position wherein it is being punished for following the provisions of the law to the letter. That not only is the Respondent seeking to rely on an illegal provision of the law not known to, nor supported by the Country's laws or lawmakers, but also that the same constitutes a manifest breach of the Appellant’s rights including but not limited to the Appellants right to Fair Administrative Action.

57. That Section 3 of the Judicature Act, Cap. 8 of the Laws of Kenya provides the law applicable within Kenya and the hierarchy in application of those laws. That obviously, the Constitution being the grundnorm of the Country, reigns first in the supremacy and the same is subsequently followed by all other written laws within the country.

58. That the Interpretation and General Provisions Act, Cap. 2 Laws of Kenya defines written law as an “Act of Parliament for the time being in force.” That indeed, of importance to note from the above provision is the element that written laws are Acts of Parliament. That this is indeed in recognition of the legislative powers of the National Assembly being the arm of government charged, imbued and mandated with the authority to create laws in Kenya.

59. That Article 94 of the Constitution of Kenya, 2010 speaks to this wherein it states under sub-article 5 that (5) “No person or body, other than Parliament, has the power to make provision having the force of law in Kenya except under authority conferred by this Constitution or by legislation.”

60. That this means that it is only the Parliament wielding and clothed with the will of the people who can create laws within the Country. That crucially, this duty and power of only the people's duly elected representatives to create laws form the basis of any mature democracy. That it also serves as the basis for the doctrine of separation of powers. That therefore the Respondent is attempting to usurp the powers of the Legislature by enforcing laws that go against written laws and explicit intention of the National Assembly.

61. That Article 209 of the Constitution further provides that only the National Government is imbued with the authority and mandate to levy taxes as part of the revenue-raising powers of the Government. That accordingly, the National Assembly is required to draft and legislate statutes governing the imposition and collection of Income Tax, Value Added Tax, Customs duties, and crucial to our case, Excise tax.

62. That certainly, the Parliament of Kenya discharged that statutory burden when the Finance Act 2022 was drafted and implemented. That the Legislature in the aforementioned Act took note of the woes and cries of its people regarding the cost of living and cost of production and sought to introduce Excise duty solely on imported articles of plastics as a means to resuscitate the dwindling manufacturing industry and reduce the cost of living. That despite the aforementioned, the Respondent proceeded to issue demands and attempts to collect Excise duty on locally manufactured plastics.

63. That like all other laws, the Finance Act, 2022 passed through the legislative process before it became law. That it is necessary to briefly touch on the same to demonstrate that the Act met all the necessary procedures and protocols before being assented into law. That generally speaking, the legislative process provides the several key stages a bill must pass through before becoming law.That this process starts with the introduction of a bill in either house of Parliament, which can be done by any Member of Parliament or by the government itself. That once a bill is introduced, it goes through three readings in each house of Parliament. That during these readings, Members of Parliament debate the bill and propose amendments to it. That if the bill is passed, it is sent to the President for assent upon which it becomes law.

64. That records of these reading of the bills are stored in what is termed as the Parliamentary Hansard wherein the extensive negotiations and discussions by the Members of the National Assembly are recorded verbatim. That in fact, it should be appreciated that the Hansard is a term used in Commonwealth countries referring to the official report of parliamentary debates.

65. That the Hansard therefore notifies and informs us of the thought process, the intent and reasoning the Legislature was using when proposing certain changes to the law.

66. That looking at the Hansard report dated 2nd June, 2022, and the Final Order Paper of the even date, it will be noted that the National Assembly intended to introduce a 10% Excise duty on “Imported” articles of plastic as a measure to resuscitate the dwindling local manufacturing industry and reduce the cost of living.

67. That the Legislature stipulated and provided in no uncertain terms as per the Parliamentary record that it intended to amend the relevant provision of the Excise Duty Act to provide that “Excise duty would be applicable only on“Imported articles of plastic of tariff heading 3923. 30. 00and 3923. 90. 90”.That from the Hansard and the Order paper, it can be noted that Parliament's intent was to exclude domestic articles of plastic from the application of Excise Duty at the rate specified in the Excise Duty Act.

68. That certainly the Legislature in Kenya is responsible for making laws and overseeing the work of the executive branch and representing the interests of citizens in government. That accordingly, only the Legislature is empowered and imbued with the power to make laws in Kenya. That any policies that go contra to the written laws as passed by parliament are illegal and void ab initio.

69. That the Respondent herein is disregarding the explicit provision of the Excise Duty Act, necessitating the Appellant herein to adduce the Hansard and Order Paper to demonstrate the intent of Parliament when introducing the law. That in addition to the aforementioned, the Appellant through its representative body even got confirmation from the Clerk of the National Assembly that the Excise duty should be imposed solely on imported articles of plastics and not locally manufactured ones, and yet despite the aforementioned, the Respondent is still demanding from the Appellant Excise duty on locally manufactured plastics.

70. That in any event, even assuming that the Hansard, Order Paper and the letter from the National Assembly had not indicated and guided the Appellant on the correct provision of the Excise duty to apply, the Appellant would wish to highlight the legal maxim of lex posterior derogat priori and the principle of abrogation of the law would apply in the Appellant’s favor in relation to the dispute.

71. That the Court of Appeal in the case of Independent Electoral and BoundariesCommission & 6 others v Ndii & 346 others; Ojwang & 4 others (Amicus Curiae) (Petition E291 of 2021 & Civil Appeal E292, E293 & E294 of 2021 (Consolidated)) [2021] KECA 363 (KLR) (20 August 2021)(Judgment) (with dissent) covered the definition of abrogation of law and its various forms. That the learned justices in the aforementioned case stated;“Turning for assistance elsewhere, the Black's Law Dictionary (Tenth Edition) defines Amendment as follows:-“A formal and usu. minor revision or addition proposed or made to a statute, constitution, pleading, order, or other instrument; specif., a change made by addition, deletion, or collection, esp., an alteration in wording.2. The process of making such a revision.”This can be contrasted with a repeal or abrogation which are:-“Repeal - Abrogation of an existing law by express legislative act.express repeal- Repeal by specific declaration in a new statute or main motion.implied repeal - Repeal by irreconcilable conflict between an old law or main motion and a more recent law or motion - Also termed repeal by implication.Abrogation - The abolition or repeal of a law, custom institution, or the like.express abrogation - The repeal of a law or provision by a later one thatrefers directly to it; abrogation by express provision or enactment.implied abrogation- The unannounced or none-explicit repeal of a legal doctrine, legal power, or other rule, esp’ resulting from an old law's incompatibility with a new one; specific, the nullification of a law or provision by a later one that is inconsistent with or contradictory to the first, without an express repeal.”

72. The Appellant reiterated that, even at the risk of sounding pedantic, the conflicting provisions in the dispute at hand relate to the Second Schedule of the Excise Duty Act wherein despite the introduction of the new tariff description, “Imported Articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90”, the tariff description “Articles of Plastic of tariff heading 3923. 30. 00” as introduced by the Finance Act 2021 was still retained.

73. That the issue the Appellant seeks to address herewith is whether the tariff description as introduced in the Excise Duty Act by the Finance Act, 2021 will be subject to the doctrine of subrogation and/or implied repeal in light of changes introduced by the Finance Act, 2022.

74. That the Appellant sought guidance from the wise counsel of the learned judges in the case of Republic vs Kenya School of Law & another Ex Parte Kithinji Maseka Semo & another [2019] eKLR. That in the aforementioned case it was stated that;“The doctrine of implied repeal is a concept in constitutional theory which states that where an Act of Parliament (or of some other legislature) conflicts with an earlier one, the later Act takes precedence and the conflicting parts of the earlier Act becomes legally inoperable.This doctrine is expressed in the Latin phrase “leges posteriores priores contrarias Abrogant”.66. When Parliaments repeals legislation, it generally makes its intentions both express and clear. Sometimes, however, Parliament enacts laws that are inconsistent with existing statutes. A. L. Smith J set out the courts' traditional response in cases of this nature in Kutner v Philips.49 He said that “if... the provisions of a later enactment are so inconsistent with or repugnant to the provisions of an earlier one that the two cannot stand together, the earlier is abrogated by the later. "That is, the later statute impliedly repeals the earlier one to the extent of the inconsistency.···........71. Bennion on Statutory interpretation 4 states that the classic statement of the test for implied repeal was set out by A L Smith Jin West Ham (Churchwardens, etc) v Fourth City Mutual Building Societyl55} as follows:-“The test of whether there has been a repeal by implication by subsequent legislation is this: are the provisions of a later Act are so inconsistent with, or repugnant to, the provisions of an earlier act that the two cannot stand together?”72. In AOO & 6 others v Attorney General & another|56 the High Court observed that “according to principles of construction if the provisions of a later act are so inconsistent with or repugnant to those of an earlier act that the two cannot stand together, the earlier act stands impliedly repealed by the latter Act. It is immaterial whether both Acts are Penal Acts or both refer to Civil Rights. The former must be taken to be repealed by implication.”This principle was adopted in Martin Wanderi & 19 others vs. Engineers Registration Board of Kenya & 5 Others,157 where the court, rendered itself as follows:-“...Where provisions of one Act of Parliament are inconsistent or repugnant to the provisions of an earlier Act, the later Act abrogates the inconsistency in the earlier one....73. The requirement for a positive repugnancy between the conflicting statutes was explained in United States vs. Borden Col8 where the court rendered itself as follows:-“...There must be 'a positive repugnancy between the provisions of the new law and those of the old; and even then the old law is repealed by implication only, pro tanto, to the extent of the repugnancy'...”

75. That in determining if the doctrine of abrogation and implied repeal will apply to the Appellant’s case, one simply has to consider whether the provisions introduced are so inconsistent that they cannot stand together. That is to say, are the provisions repugnant and offensive to the existence of the other?

76. That in translating the same to the issue in dispute, on one hand we have the provision introduced by the Finance Act, 2021 stipulating that Excise duty should be levied on all articles of plastics, while on the other hand, the provision introduced by the Finance Act, 2022 stipulates that Excise duty should be levied solely on imported articles of plastics. That manifestly, these are two very different, inconsistent and repugnant clauses.

77. That in the event of such an occurrence, decisional law is very clear that the new provision abrogates and impliedly repeals the contradictory, inconsistent and repugnant provisions. That accordingly, when the Finance Act, 2022 was assented into law, and the Excise Duty Act was consequently amended, all inconsistent provisions, whether formally repealed or not were deemed to be abrogated and impliedly repealed on account of inconsistency. That one such provision was the Excise duty on "articles of plastics of heading 3923. 30. 00. ”

78. That consequently, the operative law became that Excise duty would be applicable solely on “Imported Articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90. ” That accordingly, the demands raised by the Respondent herein thus constitute a manifest illegality.

79. That the Respondent has in its Statement of Facts urged this Honorable Tribunal not to adopt a purposive approach in the interpretation of the statutes before it. That however, what the Respondent fails to appreciate is that the Appellant was forced to resort to utilizing the purposive approach as the Respondent failed to consider the literal interpretation of the provision in dispute.

80. That for the avoidance of doubt, and as stated earlier, it was only because the Respondent's argument(s) that the Appellant's interpretation of the amendment in the Finance Act, 2022 sought to expand the scope of excise duty on plastics under tariff 3923. 90. 90, and that the word “imported” mentioned in the Finance Act, is not in the current provision of the law and thus accordingly, the Excise Duty is applicable on all articles of plastic under the two tariffs, whether manufactured locally or imported. That the Appellant resorted to even utilizing the purposive approach to demonstrate to the Respondent that they had erred. That it is crucial to point out that however despite having stated the aforementioned grounds in their various correspondences, that was not a ground nor a factor for rejecting the Appellant’s objection dated 19th October, 2022.

81. That it thus became necessary to look past the literal meaning of the words and demonstrate to the Respondent the intention and the mischief Parliament sought to resolve when introducing the amendment in the Finance Act, 2022. That crucially however, this does not mean that the literal interpretation of the provision could not be applied to the case at hand. That in fact, the Appellant appreciates that a literal interpretation should first be attempted before resorting to any other method. That the courts have indeed severally spoken on this. That notably, in the case of James Gacheru Kariuki & 19 others vs County Government of Mombasa & 56 others [2019] eKLR the learned justices averred as follows;“19. It should be noted in the statutory interpretation, it is a cardinal rule, that when interpreting a statute, first regard must be paid to the literal words of the legislation. This has been underscored by renown devolution expert Mutakha Kangu, in his seminal book. Constitutional law of Kenya on Devolution, where he states that:-“The establishment of the meaning of a constitutional provision begins with the literal words of the provision. This approach holds that the meaning of the constitutional provision can and must be deduced from the very words in which the provision is couched. The provision must be taken to mean what the ordinary meaning of the words used discloses and which is assumed to be clear. Such ordinary meaning would be the standard grammatical dictionary meaning of the words. Grammatical interpretation focuses on the natural language and meaning of the words used in the constitutional provision in the hope of avoiding the proliferation of meanings that could be attached to the provision.”20. In the case of County Government of Kiambu vs The Senate & Others (2017) the court stated:-“There are numerous rules of interpreting a statute, but in my view and without demeaning the others, the most important rule is the rule dealing with the statutes plain language. The starting point of interpreting a statute is the language itself. In the absence of an expressed legislative intention to the contrary, the language must ordinary be taken as conclusive. Thus, when the words of a statute are unambiguous, then this first canon is also the last, judicial inquiry is complete. The implication is that when the language is clear, then it is not necessary to be labor examining other rules of statutory interpretation.”

82. That the Finance Act, 2022 explicitly provided that the Second Schedule to the Excise Duty Act be amended to provide that Excise duty be levied on“Imported Articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90. ”That the Excise Duty Act was amended to provide the same. That accordingly, for purposes of literal interpretation, the wording of the Finance Act, and the Excise Duty Act are very clear. That crucially, it was only in light of the ambiguity and uncertainty created by the Respondent's actions that the Appellant had to demonstrate the intent of Parliament using the purposive approach. That even as going by the literal interpretation, the law is with the Appellant.

83. The Appellant submitted that it is not reinventing the wheel in asking the Respondent and this Tribunal to consider a purposive approach in the interpretation of the provisions in dispute as the law is clear that where there is inconsistency, uncertainty and ambiguity, the courts may adopt a purposive approach in the interpretation of statutes. It was indeed stated in the case of EG & 7 others vs Attorney General; DKM & 9 others (Interested Parties); Katiba Institute & another (Amicus Curiae) that;“256. It is trite law that in interpreting the provisions of a statute the Court should apply the golden rule of construction. The plain meaning of the language in a statute is the safest guide to follow in construing the statute. According to the golden or general rule of construction the words of a statute must be given their ordinary, literal and grammatical meaning and if by so doing it is ascertained that the words are clear and unambiguous, then effect should be given to their ordinary meaning unless it is apparent that such a literal construction falls within one of those exceptional cases in which it would be permissible for a court of law to depart from such a literal construction, e.g. where it leads to a manifest absurdity, inconsistency, hardship or a result contrary to the legislative intent.257. The Supreme Court of India in Reserve Bank of India vs. Peerless General Finance and Investment Co. Ltd. and others/1601 observed that:-“Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual.”258. The touchstone of interpretation is the intention of the legislature. The legislature may reveal its intentions directly, for example by explaining them in a preamble or a purpose statement. The language of the text of the statute should serve as the starting point for any inquiry into its meaning. To properly understand and interpret a statute, one must read the text closely, keeping in mind that the initial understanding of the text may not be the only plausible interpretation of the statute or even the correct one. Courts generally assume that the words of a statute mean what an “ordinary” or “reasonable” person would understand them to mean. If the words of a statute are clear and unambiguous, the court need not inquire any further into the meaning of the statute. One can confidently assume that Parliament intends its legislation to be interpreted in a meaningful and purposive way giving effect to the basic objectives of the legislation.259. The court, as an independent arbiter of disputes, has fidelity to the Constitution and must be guided by the letter and spirit of the Constitution. Similarly, in interpreting a statute, the court should give life to the intention of the lawmaker instead of stifling it. This position was appreciated by the Supreme Court of Kenya in Judges & Magistrates Vetting Board & 2 others v Centre for Human Rights & Democracy & 11 others.”

84. That as stated by the learned justices, where there is inconsistency and ambiguity, the courts have the liberty to look beyond the words of the statutes and instead focus on the intention of the Legislature when drafting the statute.That the intention of the lawmakers must therefore be understood, and the starting point to understand the amendment in question can be obtained first-hand from the National Assembly of Kenya's Hansard report.

85. That indeed, this was the position laid out in the Supreme Court case of Gatirau Peter Munya vs. Dickson Mwenda Kithinji & 2 Others Petition 2B of 2014 [2014] eKLR adopting the words of Lord Griffiths in the case of "In Pepper vs. Hart [1992] 3 WLR. In the aforementioned case, the Honorable Justices observed that:““purposive approach to legislative interpretation” has evolved to resolve ambiguities in meaning. In this regard, where the literal words used in a statute create an ambiguity, the Court is not to be held captive to such phraseology. Where the Court is not sure of what the legislature meant, it is free to look beyond the words themselves, and consider the historical context underpinning the legislation. The learned Judge thus pronounced himself: “The object of the court in interpreting legislation is to give effect so far as the language permits to the intention of the legislature. If the language proves to be ambiguous, I can see no sound reason not to consult Hansard to see if there is a clear statement of the meaning that the words were intended to carry. The days have long passed when courts adopted a strict constructionist view of interpretation which required them to adopt the literal meaning of the language. The courts now adopt a purposive approach which seeks to give effect to the true purpose of legislation and are prepared to look at much extraneous material that bears upon the background against which the legislation was enacted.”

86. That equally, The Court of Appeal in County Government of Nyeri & Anor. vs. Cecilia Wangechi Ndungu [2015] eKLR pronounced itself as follows:“Interpretation of any document ultimately involves identifying the intention of Parliament, the drafter, or the parties. That intention must be determined by reference to the precise words used, their particular documentary and factual context, and, where identifiable, their aim and purpose. To that extent, almost every issue of interpretation is unique in terms of the nature of the various factors involved. However, that does not mean that the court has a completely free hand when it comes to interpreting documents; that would be inconsistent with the rule of law, and with the need for as much certainty and predictability as can be attained, bearing in mind that each case must be resolved by reference to its particular factors.”

87. That accordingly, whether going by a literal or purposive approach, the law is clear that Excise duty should be levied on imported articles of plastics, and to close off on this issue, the Appellant relied on the sentiments of the learned justices in the case of James Gacheru Kariuki & 19 others vs County Government of Mombasa & 56 others [2019] eKLR:“22. We therefore find that in the instant matter the Literal Rule plain language meaning should be adopted in interpreting the disputed meaning and intention of the statute. In the instant petition, it is alleged by the petitioners the principle of implied Repeal should apply. In the case of Martin Wanderi & 19 others vs Engineers Registration Board of Kenya & 5 others (2014)eKLR the court held:-“This is because of the canons of interpretation with regard to the timing of legislation, and the doctrine of implied repeal, which is to the effect that where provisions of one Act of Parliament are inconsistent or repugnant to the provisions of an earlier Act, the later Act abrogates the inconsistency in the earlier one...."23. The doctrine of implied Repeal serves as a precautious measure against existence of two contrasting statutes. The general rule is normally, that when parliaments repeal legislation, they generally make their intentions both express and clear; however sometimes parliament may enact laws that are inconsistent with existing statutes. This preposition was established by Smith Ji n Kutner vs Philips (1891) 2 QB 2 267 (QB) where the court stated:-“[i] f...the provisions of a later enactment are so inconsistent with or repugnant to the provisions of an earlier one that the two cannot stand together, the earlier is abrogated by the later, that is, the later statute impliedly repeals the earlier one to the extent of the inconsistency.””

88. That the Appellant is not oblivious to the Respondent's assertion that the word“imported” is not in the current provision of the law. That however, it should be emphasized that, sometime in 2023 the clause in the First Schedule to the Excise Duty Act providing that the Excise duty be imposed solely on imported articles of plastics of tariff heading 3923. 30. 00 and 3923. 90. 90 was mysteriously and clandestinely deleted.

89. The Appellant emphasizes that the deletion and removal of the clause was not executed though a Gazette Notice, Legal Notice, or any known amendment channels; meaning the Appellant is at a loss as to who wishes to usurp the constitutional powers of the National Assembly and instead imposed their will on the people of Kenya.

90. That indeed, the Appellant has established in the course of these submissions, the purview of creating and deleting laws rest squarely with the Legislature, accordingly the subsequent removal and deletion of provision from statutes without the involvement of the Legislature is manifestly illegal.

91. That at any rate. it cannot be disputed that the illegal deletion of the clause occurred in 2023, and accordingly, in the entirety of the period for which the demand has been sent by the Respondent, the provision was still in the Excise Duty Act. That this is evidenced by the fact the Excise Duty Act attached in the Appellant's bundle of documents contained the clause “imported articles of plastics”. That accordingly, in the entirety of the demand period, the Excise Duty Act explicitly provided that Excise duty is to be levied on imported articles of plastics.

92. That it should be appreciated that whereas the law was clear that Excise duty be applied solely on imported articles of plastic, the Respondent has created a landscape of great confusion marred with ambiguity by insisting Kenyan manufacturers of plastic should equally pay Excise duty on locally manufactured articles of plastics. That the Respondent’s actions have single-handedly left the taxpayers in a state of disarray, especially since even the Legislature has confirmed that it should only be applied on imported articles of plastics.

93. That it is a cardinal and fundamental aspect of a taxation system that the tax laws of a Country be certain and leave no room for inconsistency, uncertainty and ambiguity. That ideally, tax certainty calls for clear and simple rules and regulations that minimize disputes.

94. That this is not simply a whimsical or the naive position of the Appellant, but rather a crucial corner stone of tax law in a Country, and to that effect, reference is made to the case of Waweru & 3 others (suing as officials of Kitengela Bar Owners Association) & another vs National Assembly & 2 others; Institute of Certified Public Accountants of Kenya (ICPAK) & 2others (Interested parties) (Constitutional Petition E005 & E001 (Consolidated) of 2021) [2021] KEHC 58 (KLR) wherein it was stated that:“Article 10 (1) (b) and (c) of the Constitution provides that the National values and principles of governance bind all State organs, State officers, public officers, and all persons whenever any of them enacts, applies, or interprets any law or makes or implements public policy decisions. The said national values and principles of governance are provided for under Article 10 (2) and include the rule of law, equality, and non-discrimination. The fundamental principle of rule of law as encapsulated in Article 10 of critical in legislation that imposes taxes on members of the public.”

95. That at the moment, whereas the Excise Duty Act, Finance Act, Hansard, Order Paper and the National Assembly themselves confirmed that Excise duty should be levied solely on imported articles of plastics, the Respondent is demanding for said Excise duty from local manufacturers based in Kenya. That this is the textbook definition of creating confusion, uncertainty and ambiguity in the application of a tax law, as the taxpayers are confused whether they should pay an illegal tax just because the Respondent has demanded for the same.

96. That bearing the aforementioned in mind, the question of what happens when a law is uncertain or ambiguous arises. That case law providing an answer to this are numerous. That essentially, where the law is uncertain, indeterminate or ambiguous, typically it should be interpreted in favor of the citizen or in this case the taxpayer. These sentiments were stated in the case of Commissioner of Income Tax vs. Westmont Power (K) Ltd Nairobi High Court Income Tax Appeal No. 626 of 2002, the Court while citing Inland Revenue vs. Scottish Central Electricity Company [1931] 15 TC 761 expressed itself as follows:“Even though taxation is acceptable and even essential in democratic societies, taxation laws that have the effect of depriving citizens of their property by imposing pecuniary burdens resulting also in penal consequences must be interpreted with great caution. In this respect, it is paramount that their provisions must be express and clear so as to leave no room for ambiguity...any ambiguity in such a law must be resolved in favor of the taxpayer and not the Public Revenue Authorities which are responsible for their implementation.”

97. That a similar position was also held in the case of Keroche Industries Ltd vs KRA & 5 others [2007]eKLR; wherein it was held that the effect of the Judge's finding was to give rise to ambiguity on the provision of a tax law and that any such ambiguity must be resolved in favor of the taxpayer as held by the High court (Visram, J as he then was) in Commissioner of Income Tax vs Westmont Power (K) Ltd [2006] eKLR.

98. That in the circumstance at hand, the entire legislative drafting machinery is in agreement, that is, the Finance Act, Finance Bill, Excise Duty Act, Hansard, Order Paper and confirmation from the legislatures themselves all provide that Excise duty should be levied on imported plastics. That despite the aforementioned, the Respondent is creating uncertainty and ambiguity in the law.

99. That additionally, in the case of Stanbic Bank Kenya Ltd vs Kenya Revenue Authority [2009] eKLR, Nyamu, J A adopted with approval the words of Lord Simonds in Scott v Russell [1948]2A11E R 1 that the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him. In the case at hand, the legislative machinery has lucidly stated that Excise duty be levied solely on imported plastics and not locally manufactured plastics like those manufactured by the Appellant herein.

100. That in light of the aforementioned, the words of Justice E. K. O. Ogola in the case of Ecobank Kenya Limited vs Commissioner of Domestic Taxes [2012] eKLR have never rang truer. The Honorable Justice averred that:“In my finding, that expectation became so legitimate, and so strongly grounded, that it established an economic right that only an express, concise, and specific waiver clearly communicated and delivered, could uproot. The Appellant and other businesspeople have a right of certainty and predictability in the applicability of conduct, rules, policies and procedures which underlie the proper regulation of economic activities. This right necessarily militates against policies, regulations and procedures which are haphazardly resorted to by public regulatory bodies without adequate notice to those whose conduct or behavior is to be regulated.In an environment of business, that certainty and predictability is so crucial that to deny the same amounts to a denial of an economic right. Now, when such haphazard regulation affects a citizen's income the effect will be felt well beyond the comfort or discomfort of the two parties before the court. It is an issue which a court of law must tread on carefully, and where possible, restore the rights of the appellant and to reduce, as far as possible, the cascading negative impacts on all the parties associated with that income.”

101. That the importance of tax certainty as a key component of a good tax system is therefore irrefutable as it helps to reconcile the expectations of taxpayers and Governments and enable for the provision of a tax environment which is conducive to growth and Foreign Direct Investment.

102. That two key concepts are indeed raised under this issue, the first one being that a tax system should be certain meaning that the tax law should be clear, with simple rules and regulations that minimize disputes. That manifestly, the Respondent's actions in this matter are not in the spirit of ensuring certainty of the law.

103. That the second and perhaps most pertinent point, however, is that, in the event of uncertainty and ambiguity of the law which the Respondent has created, the same should be resolved and interpreted in the taxpayer's favor.

104. The Appellant asserted that the Respondent's action in this case constitutes a breach of the Appellant’s right to fair administrative action. The Constitution of Kenya, 2010 provides in Article 47 that “Every person has the right to administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair”.

105. That the Constitution of Kenya under the aforementioned Article indeed clothes one with the right to administrative action that is expeditious, efficient, lawful, reasonable, and procedurally fair. That the Fair Administrative Action Act thereafter reiterates and emphasizes the same principles before adding additional rights a citizen is entitled to.

106. That the Fair Administrative Action Act defines an administrative action to mean:i.the powers, functions and duties exercised by authorities or Quasi-judicial tribunals; orii.any act, omission or decision of any person, body or authority that affects the legal rights or interests of any person to whom such action relates.

107. That the Respondent's actions constitute an illegality as it is demanding a tax that goes against the explicit provisions of the Finance Act, 2022, the Excise Duty Act and the explicit intent of the Legislature as provided in the Hansard, Order Paper and the letter from the National Assembly. That by virtue of demanding an illegal tax, the Respondent’s actions are illegal, unreasonable, unprocedurally fair and violate fundamental principle of fair administrative action as laid out in Article 47 of the Constitution.

108. That the importance of adhering to the doctrines, and principles and stating of fair administrative action were highlighted in the Court of Appeal case of Judicial Service Comission vs Mbalu Mutava & another [2015] eKLR where it was stated that:“(23)...... Article 47(1) marks an important and transformative development of administrative justice for, it not only lays a constitutional foundation for control of the powers of state organs and other administrative bodies, but also entrenches the right to fair administrative action in the Bill of Rights. The right to fair administrative action is a reflection of some of the national values in article 10 such as the rule of law, human dignity, social justice, good governance, transparency and accountability. The administrative actions of public officers, state organs and other administrative bodies are now subjected by article 47(1) to the principle of constitutionality rather than to the doctrine of ultra vires from which administrative law under the common law was developed.”

Appellant’s Prayers 109. The Appellant prayed:a.That this Appeal be allowed.b.That the Respondent's demands and subsequent objection decision dated 2nd June, 2023 be set aside in their entirety.c.That the Respondent be compelled to impose Excise duty solely on imported articles of plastics of tariff heading 3923. 30. 00 and 3923. 90. 90 as per the intentions of Parliament.

Respondent’s Case 110. The Respondent’s case is premised on the hereunder filed documents:-i.The Respondent’s Statement of Facts dated 28th July, 2023 and filed on 31st July, 2023 together with the documents attached thereto.ii.The Respondent’s written submissions dated 27th October, 2023 and filed on 31st October, 2023 together with the authorities attached thereto.

111. The Respondent contended that the below are the issues for determination in this Appeal;a.What the applicable law was on assessment and payment of Excise duty at the time the Respondent made the assessment;b.Whether the goods manufactured by the Appellant were subject to Excise duty; andc.Whether the Commissioner erred in assessing Excise duty on the goods manufactured by the Appellant.

112. The Respondent averred that amendment sought to widen the scope of articles of plastic that are subject to Excise duty to include those of tariff 3923-90. 00 in addition to those of tariff 3923. 30. 00 that were already excisable as per Finance Act 2021,whether locally produced or imported.

113. The Respondent further averred that Section 5(1) (a) of the Excise Duty Act provides that Excise duty shall be charged on excisable goods manufactured in Kenya by a licensed manufacturer. That further Section 5(2) of the Excise Duty Act provides that Excise duty shall be charged at the rate specified in the First Schedule for the excisable goods or services.

114. The Respondent stated that it is statutorily mandated under Section 5 of the Kenya Revenue Act to administer and enforce all provisions of written laws under Parts 1 and 2 of the Act;“5. In the performance of its functions under subsection(1),the Authority shall-(a)administer and enforce-i.all provisions of the written laws set out in Part I of the First Schedule and for that purpose, to assess, collect and account for all revenues in accordance with those laws;ii.the provisions of the written laws set out in Part II of the First Schedule relating to revenue and for that purpose to assess, collect and account for all revenues in accordance with those laws;”

115. The Respondent urged that it enforces the law as prescribed and not the intention of the law.

116. The Respondent submitted that the First Schedule to the Excise Duty Act, 2015 provides that “articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90" are charged Excise duty at a rate of 10%.

117. The Respondent averred that a strict reading of the First Schedule of the Excise Duty Act,2015 depicts that the Appellant being a manufacturer of plastics of tariff heading 3923-30. 00 is liable to pay Excise duty at a rate of 10%,

118. The Respondent urged the Tribunal to adopt the doctrine of strict interpretation in interpreting the Excise Duty Act.

119. The Respondent stated that it is allowed to make additional assessments based on the available information to the best of his judgment pursuant to Section 31 of the Tax Procedures Act.

120. The Respondent further stated that under Section 56 of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act, the Appellant herein bears the burden to demonstrate that it has discharged a tax liability.

121. That Article 94 of the Constitution of Kenya 2010 vests upon Parliament with the exclusive power to make the law.

122. That Article 209(1) of the Constitution of Kenya gives the National Government power to impose Income tax, Value-Added Tax, Customs duties and other duties on import and export goods, and Excise tax.

123. That further, Article 210(1) of the Constitution of Kenya provides that no tax may be imposed, waived, or varied except as provided for by legislation. That it is apparent therefore that under the Constitution of Kenya, the power to impose tax reposes with the National Assembly. That such power, needless to say, will normally be exercised in consonance with the economic and other policies of the country.

124. That the Respondent is empowered under the Kenya Revenue Authority Act, as an agency of the Government, to collect and receive all revenue. That Section 5 of the Act provides that the Respondent has a function of the administration and enforcement of all written laws relating to the assessment, collection and accounting of all revenues.

125. That paragraph 32(iv) of the Finance Act 2021 (amended), provided that Excise duty should be charged at the rate of 10% on the articles of plastic of tariff 3923. 30. 00.

126. That the Parliament sought to amend the said provision in the Finance Bill 2022 and Finance Act 2022. That Paragraph 35(b)(iv) of the Finance Act 2022 amended Paragraph (32)iv of the Finance Act 2021 by inserting the expression“and 3923. 90. 90” immediately after the expression “3923. 30. 00” appearing in the tariff description “Imported Articles of plastic of tariff heading 3923. 30. 00”.

127. That a reading of the Finance Act 2021 establishes that there was no use of the word “imported”. That therefore, the amendment introduced by the Finance Act 2022 was the insertion of the words 'and 3923. 90. 90' the intention of which was to widen the scope of the tax.

128. That Section 5 of the Excise Duty Act provides that:“1. Subject to this Act, a tax, to be known as excise duty, shall be charged in accordance with the provisions of this Act on-a.excisable goods manufactured in Kenya by a licensed manufacturer;b.excisable services supplied in Kenya by a licensed person; orc.excisable goods imported into Kenya.2. Excise duty shall be charged at the rate specified in the First Schedule for the excisable goods or services in force at the time the liability arises for excise duty as determined under section 6. ”17. The First Schedule of the Excise Duty Act provides that Articles of plastic of tariff heading 3923-30. 00 and 3923. 90. 90 are to charge Excise Duty at 10%.”

129. It was the Respondent’s submission that all goods that fall within the description in aforementioned, are subject to Excise duty.

130That it therefore follows that the Finance Act 2022, amended the Finance Act 2021 and the Excise Duty Act to widen the scope of the tax and not to limit the scope to imports. That this therefore means that the Excise duty payable on goods manufactured in Kenya remained unchanged.

131. That the Appellant through different letters to the Clerk of the National Assembly sought to know the intention of the National Assembly in amending the Finance Act 2021. That the Clerk communicated that the intention of Parliament was to have Excise duty on imports and not on goods manufactured in Kenya.

132. That therefore, the Appellant wrote to the Attorney General requesting the Attorney General to exercise his powers to amend the law to include the amendment as was intended by the National Assembly.

133. That once a Bill is published in the Kenya Gazette it becomes law as is and in the words published in the Kenya Gazette. That there are only two ways that such a law can be amended; by Parliament or by the Attorney General through the revisionary powers.

134. That Section 13 of the Revision of Law Act vests the Attorney General with revisionary powers to revise clerical errors on any law as follows:“The Attorney-General may, by order in the Gazette, rectify any clerical or printing error appearing in the Laws of Kenya, or rectify in a manner not inconsistent with the powers of revision conferred by this Act any other error so appearing.”

135. That as of the date of the assessment, the only amendment made to the Excise Duty Act was to include 3923. 90. 90 as goods subject to Excise duty and none to exclude goods manufactured in Kenya. That the request to the Hon. Attorney General to amend the law had not been honored as of the date of the assessment.

136. That a communication of the intention of Parliament and a request to amend a statute cannot operate as the law. That until the amendment or rectification is done, by the National Assembly or the Attorney General in an order in the Gazette, the law stands, as it did as at the time the Respondent made the assessment.

137. That the Court of Appeal in the case of Mount Kenya Bottlers Ltd & 3 others vs Attorney General & 3 others [2019] eKLR stated that;““The above principles apply to general interpretation of statutes.However, when it comes to interpretation of tax legislation, the statute must be looked at using slightly different lenses. With regard to tax legislation, the language imposing the tax must receive a strict construction. Judge Rowlett in his decision in Cape Brandy Syndicate v I.R. Commissioners [1921]1KB(cited by the appellants), expressed the common law position in this area when he stated;'...in a taxing Act one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied.One can only look fairly at the language used'.Similar statements have been made in several judgments on tax cases. In Scott v. Russell (Inspector of Taxes), [1948] 2 All ER Lord Simonds expressed: “... there is a maxim in Income tax law which, though it may sometimes be over-stressed, yet ought not to be forgotten. It is that the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him.””

138. That the Author of Bennion on Statutory Interpretation, 5th Edition as quoted with authority in Mount Kenya Bottlers Ltd & 3 others vs Attorney General & 3others [supra) stated as follows:“I find that they cannot tax the applicant twice over Bennion adds: -'Nevertheless taxation is clearly “penal” within this section of the Code, and must not be enforced by the courts unless clearly imposed. As Evans L J said in the context of tax legislation it is necessary to consider the legal analysis with the utmost precision so that the taxpayer shall not become liable to tax unless this is clearly and unequivocally the object of the statutory provisions ... The Courts are reluctant to adopt an administrative discretion....' This is how this court has regarded the assessment of tax on an arbitrary input-output formulae because it is not supported by any law nor is its retroactivity permitted by law...The same principles as above, were accepted and applied in the case of Cape Brandy Syndicate vs. Inland Revenue Commissioners [1921] KB 64 where Ronlat J, restated the principle in these words: 'in a taxing Act clear words are necessary in order to tax the subject. Too wide and fanciful a construction is often to be given to that maxim, which does not mean that words are to be unduly restricted against the Crown or that there is to be any discrimination against the crown in those Acts. It simply means that in a taxing Act one has to look merely at what is clearly said. There is no reason for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing to be implied. One can only look fairly on the language used.'... Again, in the case of Ramsay Ltd vs. Inland Revenue Commissioner [1992] AC 300 the same upon intendment, or upon the “equity” of an Act'. Any taxing Act of Parliament as to be construed in accordance with this principle.”

139. That there should be no room for presumption or assumptions in this case. That the amendment was on the Finance Act 2021 and Excise Duty Act to include a wider scope of the tax. That if the intention was to amend and limit the tax to imports, then the statute should have specifically stated so and the requisite amendment made after the error was established. That nothing is to be read in or implied in tax law and a strict constructionist interpretation must be adopted. That the Excise Duty Act was and should be applied as it is.

140. That Section 5(2) of the Excise Duty Act provides that;“Excise duty shall be charged at the rate specified in the First Schedule for the excisable goods or services in force at the time the liability arises for excise duty as determined under section 6”

141. That Section 2 of the Excise Duty Act defines an excisable good as goods under Part I of the First Schedule and goods manufactured in Kenya or imported into Kenya on which an Excise duty is imposed under the Act.

142. That the First Schedule to the Excise Duty Act provides that articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90 shall be charged Excise duty at 10%.

143. That the Appellant is a manufacturer of plastics in Kenya. That plastics are excisable goods under the Excise Duty Act and accordingly, the goods manufactured by the Appellant are subject to Excise duty.

144. That the Respondent is mandated under Section 5(2) of the Kenya Revenue Authority Act, as part of its functions under Section 5(1), to administer and enforce all provisions of the written laws set out in Parts 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. That the Respondent is therefore an agency of the Government for collection of revenue.

145. That at all times, the Kenya Revenue Authority has drawn its powers to levy taxes from legislation as enacted by the National Assembly, the body mandated to make and enact laws as per Articles 94, 209 and 210 of the Constitution of Kenya, 2010.

146. That the Appellant failed to declare Excise Duty returns for the months of July and August 2022 despite having manufactured plastics during the said months.

147. That Section 24(2) of the Tax Procedure Act provides that;“The Commissioner shall not be bound by a tax return or information provided by, or on behalf of, a taxpayer and the Commissioner may assess a taxpayer's tax liability using any information available to the Commissioner.”

148. That Section 31(1)(C) of the Tax Procedure Act provides that;“Subject to this section, the Commissioner may amend an assessment (referred to in this section as the "original assessment") by making alterations or additions, from the available information and to the best of the Commissioner's judgement, to the original assessment of a taxpayer for a reporting period to ensure that-c.in any other case, the taxpayer is liable for the correct amount of tax payable in respect of the reporting period to which the original assessment relates.”

149. That the Respondent's responsibility is to implement the law as published in the Gazette notice. That it is not upon the Respondent to make or amend the law. That by enforcing and collecting taxes as mandated by a law that was duly enacted, it cannot be said that the Respondent has violated any law or Constitutional right of the Appellant.

150. That as at the date of the assessment and demand, none of the requisite bodies had amended the law. That taxes accrue and are levied according to the provisions of the law and cannot be waived except according to the provisions of the law.

151. That therefore the Respondent was within its mandate to implement the Excise Duty Act as it was and the assessment was justified and within the law.

Respondent’s Prayers 152. The Respondent prayed that the Tribunal:a.Upholds and affirms the Respondent's Objection decision dated 2nd June, 2023b.Dismisses the Appeal with costs to the Respondent.

Issues for Determination 153. The Tribunal has carefully studied the pleadings and documentation filed by both parties and is of the respectful view that the issues for its determination are as follows:-a.What was the applicable law at the time of assessmentb.Whether the Respondent’s assessment was justified

Analysis and Findings 154. The Tribunal having established the issues for its determination, proceeds to analyse them as hereunder.

a. What was the applicable law at the time of assessment 155. The genesis of this dispute was the imposition of Excise duty by the Respondent on the Appellant’s plastic products in the months of November and December 2022.

156. The Appellant argued that as per the Hansard and Order Paper dated 2nd June, 2022, Parliament had made its intent very clear, that Excise duty was to be introduced solely on imported articles of plastics. That this position would indeed later be reiterated by the Clerk of the National Assembly in a letter dated 28th July. 2022.

157. The Appellant averred that it should be noted that when the Finance Bill 2022 was published it referenced HS Code 3923. 30. 90 which is not in existence, yet this error was corrected in the Finance Act 2022.

158. That it is clear that the Respondent erred in fact and in law by imposing Excise duty at the rate of 10% on the Appellant's locally manufactured articles of plastics of tariff headings 3923. 30. 00 and 3923. 90. 90 considering that the law and the Legislature clearly provide that Excise duty should only be levied on imported articles of plastic.

159. The Respondent, on its part, submitted that the First Schedule to the Excise Duty Act provided that articles of plastic of tariff heading 3923. 30. 00 and 3923. 90. 90 shall be charged Excise duty at 10%. That the Appellant is a manufacturer of plastics in Kenya and hence plastics are excisable goods under the Excise Duty Act and accordingly, the goods manufactured by the Appellant are subject to Excise duty.

160. The Respondent further submitted that Paragraph 32 (iv) of the Finance Act 2021 (amended), provided that Excise duty should be charged at the rate of 10% on the articles of plastic of tariff 3923. 30. 00. That the Parliament sought to amend the said provision in the Finance Bill 2022 and Finance Act 2022. That Paragraph 35 (b) (iv) of the Finance Act 2022 amended Paragraph 32 (iv) of the Finance Act 2021 by inserting the expression “and 3923. 90. 90” immediately after the expression “3923. 30. 00” appearing in the tariff description “Imported Articles of plastic of tariff heading 3923. 30. 00”.

161. That therefore a reading of the Finance Act 2021 establishes that there was no use of the word “imported”. That therefore, the amendment introduced by the Finance Act 2022 was the insertion of the words 'and 3923. 90. 90' the intention of which was to widen the scope of the tax.

162. The Tribunal notes that the issue as to what law was applicable at the time of the assessment required it to look at the Excise Duty Act which is the statute enacted by the Kenya Parliament to enforce Excise duty in Kenya.

163. Section 5 of the Excise Duty Act, 2015 states as follows regarding imposition of Excise duty:“Imposition of excise duty1. Subject to this Act, a tax, to be known as excise duty, shall be charged in accordance with the provisions of this Act on—(a)excisable goods manufactured in Kenya by a licensed manufacturer;(b)excisable services supplied in Kenya by a licensed person; or(c)excisable goods imported into Kenya.”

164. Further, Section 5(2) of the EDA states as follows regarding chargeability of Excise duty:“2. Excise duty shall be charged at the rate specified in the First Schedule for the excisable goods or services in force at the time the liability arises for excise duty as determined under section 6. 3.The excise duty payable—a.under subsection (1)(a), shall be payable by the licensed manufacturer;b.under subsection (1)(b), shall be payable by the licensed person making the supply: orc.under subsection(1)(c), shall be payable by the importer of the excisable goods.”

165. Further, the Tribunal notes that tax laws are amended each year through the Finance Act which lays out any amendments/ changes to the taxation statutes. In this regard, the Finance Act 2021 made the following amendment to the Excise Duty Act in regard to Excise duty rates:“The First Schedule to the Excise Duty Act, 2015 is amended—a.in paragraph 1 of Part I—iii.by inserting the following item at the end of the second table—Description Rate of Excise DutyArticles of plastic of tariff heading 3923. 30. 00

166. Tariff heading 3923 of the East African Community Common External Tariff (EACCET) which lists all commodities by tariff codes which tax statutes borrow from for commodity descriptions, at the time, covered “Articles for the conveyance or packing of goods, of plastics stoppers, lids, caps and other closures, of plastics”. Specifically, tariff code 3923. 30. 00 covered “Carboys, bottles, flasks and similar articles”.

167. The Tribunal further notes that the above description in the Excise Duty Act covered all plastic items that fell under the description however sourced; whether locally manufactured or imported.

168. Further, the Finance Act 2022 was amended in the following manner in regard to items of plastic:“The First Schedule to the Excise Duty Act, 2015 is amended — in the second table appearing in paragraph 1 of Part I—xiv.by inserting the expression “and 3923. 90. 90” immediately after the expression “3923. 30. 00” appearing in the tariff description “Imported Articles of plastic of tariff heading 3923. 30. 00”;

169. The Tribunal notes that the word “imported” appeared in the 2022 amendment to the Excise Duty Act whereas it was not in the amendment that introduced Excise duty to the items falling under tariff code 3923. 30. 00 in the Finance Act 2021.

170. In this regard, it is discernible that the Finance Act introduced the word "imported” ahead of the description of the articles falling under the tariff code 3923. 30. 00. The literal interpretation of this is that this change in the Finance Act 2022 was intended to levy this duty only on items that fall within the description of imported plastic items of the specified tariff codes. This means that only imported items falling within the description of tariff codes 3923. 30. 00 and 3923. 90. 90 were excisable with effect from the effective date of 1st July, 2022 under this particular amendment.

171. The role of the Tribunal is limited to the textual interpretation of the law. The textual interpretation of what was contained in the Excise Duty Act which was effective from the 1st of July 2022 was that only imported items that fell within the tax remit of tariff codes 3923. 30. 00 and 3923. 90. 90 were excisable.

172. The provisions of the law surrounding the charge of Excise duty on commodities are clear and that items listed in the First Schedule of the Excise Duty Act are chargeable based on their descriptions and the rates specified therein.

173. The Tribunal is thus enjoined to interpret the law as it is without looking at its intendment or any other justification which may have formed its enactment. Tax statutes must be interpreted literally and without equity as was explained in the classicus case of Cape Brandy Syndicate vs. Inland Revenue Commissioner [1921] 1 KB 64, where it was held that:“In a taxing Act one has to look merely at what is clearly stated. There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.”

174. In view of the foregoing, and guided by the Cape Brandy Syndicate case cited above, the Tribunal finds and holds that that the law in place at the time of the assessment that is the subject matter of this Appeal provided that imported articles of plastic that fell under tariff codes 3923. 30. 00 and 3923. 90. 90 were excisable at 10%.

175. Locally manufactured articles of plastic were left out of this descriptions under the Finance Act 2022. The Respondent therefore erred in its attempt to bring locally manufactured articles of plastic within tariff codes 3923. 30. 00 and 3923. 90. 90 to charge as this was not the applicable law on Excise duty chargeability for locally manufactured articles of plastic under the two codes.

b. Whether the Respondent’s assessment was justified 176. The Tribunal having established that effective 1st July 2022, only imported articles of plastic of tariff codes 3923. 30. 00 and 3923. 90. 90 were excisable at 10%, concludes that the Respondent was not justified in levying Excise duty on the Appellant’s locally manufactured items of plastic in the months in dispute.

Final Decision 177. The upshot of the foregoing analysis is that the Appeal is merited and consequently, the Tribunal makes the following Orders: -a.The Appeal be and is hereby upheld.b.The Respondent’s Objection decision dated 2nd June, 2023 be and is hereby set aside.c.Each Party to bear its own costs.

172. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF MAY, 2024. ERIC NYONGESA WAFULA -.....................................CHAIRMANCYNTHIA B. MAYAKA -.....................................MEMBER**DR. RODNEY O. OLUOCH -.....................................MEMBERABRAHAM K. KIPROTICH -.....................................MEMBERTIMOTHY B. VIKIRU -.....................................MEMBERI certify that this is a true copy of the originalSignedDEPUTY REGISTRAR