Commissioner of Customs & Border Control v Tile & Carpet Center Ltd (Tax Appeal E055 of 2026) [2026] KEHC 9006 (KLR) (Commercial and Tax) (26 June 2026) (Ruling)

Commissioner of Customs & Border Control v Tile & Carpet Center Ltd (Tax Appeal E055 of 2026) [2026] KEHC 9006 (KLR) (Commercial and Tax) (26 June 2026) (Ruling) Neutral citation: [2026] KEHC 9006 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Tax Appeal E055 of 2026 FG Mugambi, J June 26, 2026 Between Commissioner of Customs & Border Control Appellant and Tile & Carpet Center Limited Respondent Ruling 1.The Appellant (“the Commissioner”), through the Notice of Motion dated 30th March 2026 seeks to stay, set aside, and/or suspend the Tax Appeals Tribunal's judgment delivered on 27th March 2026 pending the hearing and determination of this appeal. 2.The application is supported by the grounds on its face and the supporting affidavit of Thadeus Ogoti sworn on 30th March 2016. It is opposed through the replying affidavit of the Respondent’s Head of Procurement, Mandeep Degon, sworn on 4th May 2026. The parties also supplemented their arguments by filing written submissions which I have equally considered. Analysis and Determination 3.The Respondent has challenged the application on a technical basis, arguing that it relies on the wrong provisions of the law and, in particular, that it fails to invoke Order 42 Rule 6 of the Civil Procedure Rules on stay of execution. However, I find that the mere omission to cite this provision is not fatal to the Commissioner’s application. What matters is that the Respondent has not suffered any prejudice from this omission and is fully aware of the nature of the application it is facing (see Mohamed Aden Abdi V Abdi Nuru Omar, Ali Mohamed Haji T/A & Delta Haulage Services Ltd [2007] KECA 25 (KLR)). 4.The reliefs sought by the Commissioner clearly demonstrate that the application is made pursuant to Order 42 Rule 6 on stay of execution. Since the Respondent has substantively addressed the application, I am satisfied that no prejudice will arise if I proceed to determine the matter on its merits. 5.The singular issue for determination is whether the Commissioner has established a valid basis for this court to grant an order for stay of execution. As submitted by the parties, the Commissioner must demonstrate that it will suffer substantial loss if the order is not granted, that the application has been made without unreasonable delay and that it is willing to provide such security as the court may order for the due performance of the decree. 6.These principles were enunciated in Butt V Rent Restriction Tribunal, [1979] KECA 22 (KLR) where the Court of Appeal stated what ought to be considered in determining whether to grant or refuse stay of execution pending appeal. The court stated as follows:“i.The power of the court to grant or refuse an application for a stay of execution is discretionary; and the discretion should be exercised in such a way as not to prevent an appeal.ii.Secondly, the general principle in granting or refusing a stay is, if there is no other overwhelming hindrance, a stay must be granted so that an appeal may not be rendered nugatory should the appeal court reverse the judge’s discretion.iii.Thirdly, a judge should not refuse a stay if there are good grounds for granting it merely because, in his opinion, a better remedy may become available to the applicant at the end of the proceedings.iv.Finally, the Court in exercising its discretion whether to grant or refuse an application for stay will consider the special circumstances and its unique requirements. The court in exercising its powers under Order XLI Rule 4(2) (b) of the Civil Procedure Rules, can order security upon application by either party or on its own motion. Failure to put security of costs as ordered will cause the order for stay of execution to lapse.” 7.There is no doubt that the application has been brought without unreasonable delay. The parties’ point of divergence is on the loss to be suffered by the Commissioner and the security to be provided. The Commissioner avers that the Tribunal's decision on the tariff classification for the Respondent's product, "Aertech All-in-One heat pump" means that the product in question, as well as similar products imported by other taxpayers in the industry, would be classified under the 0% duty code which would lead to a substantial loss of government revenue. 8.On security, the Commissioner submits that what was before the Tribunal and the orders made thereon were declaratory in nature and do not require furnishing any security. That the decree before the Tribunal was neither a money decree nor was the dispute on liquidated sum ascertainable on monetary value as the Respondent was not demanding payment of any money from the Commissioner so as to make it a judgement debtor under the Civil Procedure Rules. 9.In response, the Respondent depones that the Commissioner has failed to demonstrate it will suffer substantial or irreparable loss, that the dispute is purely monetary, and any taxes found due are fully recoverable if the Commissioner's appeal succeeds and that the claim of loss of revenue is speculative. 10.The Respondent states that the Commissioner's appeal would not be rendered nugatory if a stay is not granted, as the Respondent is a going concern capable of paying any sums if the appeal is eventually successful. The Respondent points out that the Commissioner has failed to offer any security for the due performance of any potential decree, which is a fatal omission for such an application and it maintains that the intended appeal does not raise a prima facie arguable case, as the Tribunal correctly interpreted and applied the law. 11.The Respondent argues that it is in the public interest to prevent taxpayers from being subjected to unlawful or improperly imposed taxes and that the Tribunal's judgment has already corrected what it calls an erroneous classification. The Respondent contends that granting a stay would perpetuate an unlawful tax demand and unjustly deprive it of the fruits of its judgment. 12.Upon careful consideration of the pleadings and submissions, I am persuaded by the Respondent’s position that the Commissioner’s assertion of potential substantial loss of government revenue is speculative. The Commissioner argues that the Tribunal’s decision will operate in rem across the industry, thereby encouraging all importers to adopt the lower tariff code. 13.While this concern raises a theoretical possibility, it remains unsubstantiated. The Commissioner has not furnished any tangible evidence to demonstrate the magnitude of the alleged loss. No financial projections, statistical data, or affidavits from industry experts have been presented to quantify the revenue at risk or to establish a causal link between the Tribunal’s decision and the purported widespread adoption of the lower tariff. In the absence of such material, the claim amounts to a bare assertion of a potential future harm rather than a demonstrable and imminent loss. Accordingly, I find that the Commissioner’s apprehension, though not entirely implausible, lacks evidentiary support and cannot form a sufficient basis for the orders sought. 14.I am further persuaded that the Commissioner retains extensive statutory powers under the tax laws to recover any duties or taxes that may ultimately be payable. It has not been disputed that the Respondent is a going concern, capable of meeting its obligations, and therefore no substantial loss has been demonstrated. In the event that the Commissioner’s appeal succeeds, the sums in question remain fully recoverable, and the risk of irreparable harm is unfounded (see Commissioner of Customs & Border Control & Another V Pernod Richard Kenya Limited, [2019] KECA 756 (KLR)). 15.I am also in agreement that the Tribunal’s judgment was a determination in personam, confined strictly to the parties before it and arising from the unique facts and circumstances presented in that dispute. The decision cannot, therefore, be construed as a blanket pronouncement binding the Commissioner in relation to all other taxpayers. While it is conceivable that other importers may attempt to rely on the Tribunal’s reasoning to advance similar arguments, such reliance does not automatically compel the Commissioner to adopt the same tariff classification across the industry. Each taxpayer’s case must be assessed on its own merits. 16.Having failed to demonstrate the existence of substantial loss, the Commissioner’s application for stay falters at this stage. As rightly observed by the Respondent, the requirements for the grant of a stay of execution under Order 42 Rule 6 are conjunctive in nature. This means that each of the conditions must be satisfied cumulatively. The failure to establish even one of them is fatal to the application. The jurisprudence is clear that substantial loss is the cornerstone upon which the jurisdiction to grant stay rests, and without it, the court cannot exercise its discretion in favour of the applicant (see Equity Bank Limited V Taiga Adams Company Limited, [2006] KEHC 860 (KLR) and Morris Guchura Njage T/A Morris Njage & Company V Liza Catherine Wangari Mwangi, [2021] KEHC 8939 (KLR)). Conclusion and disposition 17.Consequently, the absence of proof of substantial loss renders the application unsustainable, and the quest for stay must therefore fail. The Commissioner’s application dated 30th March 2026 is dismissed with costs being in the cause. DATED, SIGNED AND DELIVERED AT NAIROBI THIS 26TH DAY OF JUNE 2026.F. MUGAMBIJUDGEDelivered in presence of:Nyapara for the applicantMs Kinuthia for Gitonga for respondentCourt Assistants: Lillian & Gloria