https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1277

Commissioner of Domestic Taxes v Hapag-LLoyd Kenya Ltd (Civil Application E623 of 2025) [2026] KECA 1277 (KLR) (3 July 2026) (Ruling) Neutral citation: [2026] KECA 1277 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Application E623 of 2025 SG Kairu, GV Odunga & MB Kairaria, JJA July 3, 2026 Between Commissioner of Domestic Taxes Applicant and Hapag-Lloyd Kenya Limited Respondent (Being an application for stay of execution pending lodging, hearing and determination of an intended appeal from the Judgment of the High Court of Kenya at Nairobi (C. K. Kariuki, J.) dated 26th September 2025 in HC. Income Tax Appeal No. E009 of 2025) Ruling 1.In a judgment delivered on 26th September 2025 in Income Tax Appeal Nos. E009 of 2025, E230 of 2024 and E231 of 2024, the High Court at Nairobi (C. K. Kariuki, J.) overturned the decision of the Tax Appeals Tribunal delivered on 22nd November 2024, and ordered the applicant, Commissioner of Domestic Taxes to refund to the respondent, Hapag-Lloyd Kenya Limited, Input VAT claims in the amounts of Kshs.1,634,610.00 and Kshs.4,561,000.00. 2.Dissatisfied, the applicant intends to challenge that judgment before this Court and in that regard filed a Notice of Appeal dated 2nd October 2025 on the strength of which it has moved the Court with its Notice of Motion dated 27th October 2025 which is the subject of this ruling. 3.In the application, invoking Sections 3A and 3B of the Appellate Jurisdiction Act and Rule 5(2)(b) of the Court of Appeal Rules, the applicant seeks an order of stay of the High Court judgment and all the orders flowing therefrom pending the hearing and determination of the appeal. The application is supported by the affidavit sworn by Leparan Lemiso, an advocate practicing within the Legal & Board Services Department of Kenya Revenue Authority. In opposition, the respondent filed a replying affidavit sworn by Pamba Collins, an employee of the respondent who oversees the business administration of the respondent. 4.We heard the application on 2nd March 2026 when learned counsel Mr. Wairire held brief for Mr. Leparan for the applicant while learned counsel Mr. Ruto appeared for the respondent. Counsel orally highlighted their written submissions dated 24th February 2026 and 27th February 2026 respectively. 5.It was urged for the applicant that it has met the threshold for the grant of the orders sought; that the appeal is arguable; that the High Court erred in ordering refund of VAT input which the applicant had declined on sound legal basis as it contends that the respondent is an agent of a non-resident entity which is not registered for VAT. That there is a pertinent and serious question which this Court will be called upon to determine, namely, whether a non- registered person is entitled to VAT refund. 6.On the nugatory aspect, it was submitted that the applicant is apprehensive that if it pays the refunds as ordered by the High Court, the respondent will not be able to make good the refunds should the appeal succeed as the respondent has not demonstrated its ability to do so. 7.Counsel for the respondent submitted that the application is incompetent because there were three appeals before the High Court which were never consolidated but only heard together for convenience. Therefore, counsel submitted, the applicant should have made three separate applications for stay. 8.On the merits of the application, counsel submitted that the intended appeal does not raise any questions of law and has no chance of success. 9.On the nugatory aspect it was submitted that the amount involved is not colossal; that in any event the respondent is an established company with a long-standing reputation, and that the applicant has not demonstrated that it would not be able to refund. 10.On the competence of the application, counsel for the applicant submitted that one judgment having been issued by the High Court in respect of the three appeals, one application for stay suffices. 11.We have considered the application, the affidavits and the submissions against the established legal principles in applications of this nature. See Stanley Kang’ethe Kinyanjui vs. Tony Ketter & 5 Others [2013] KECA 378. 12.For a start, the respondent has taken issue with the competence of the application on the basis that there were three separate appeals before the High Court namely, Income Tax Appeal Nos. E009 of 2025, E230 of 2024 and E231 of 2024. That those appeals were never consolidated but were merely heard together for convenience. That the applicant should therefore have filed three separate applications and by “improperly collapsing three distinct matters into a single application, the applicant has invoked this Court’s jurisdiction in a procedurally defective manner.” The applicant on the other hand says that there is only one judgment, hence one application. 13.Whereas there may not have been a formal consolidation order made by the High Court, the three matters involved the same parties and raised the same issues. The High Court heard them together and rendered one judgment and disposed of the three matters in that one judgment, evidently in the spirit of efficient use of the available judicial resources. For the same reason, and apart from the fact that there is only one judgment and decree of the High Court, we do not think we should decline to entertain the application on that ground. 14.As to whether the applicant has demonstrated that its intended appeal raises an arguable appeal, in its memorandum of appeal, the applicant complains, among other complaints, that the High Court misapprehended the requirements of Section 17 as read with Section 13(5) of the Valued Added Tax with respect to claiming of input VAT. The respondent on the other hand submitted that the intended appeal does not raise questions of law. 15.On our part, we are persuaded that question whether an agent of a foreign principal who incurs input VAT on behalf of the foreign principle who is not registered for VAT is entitled to VAT refunds under Sections 17 and 13 of the VAT Act, is arguable. One arguable point is sufficient. 16.On the nugatory aspect, the applicant asserted that the respondent would not be able to refund the amount involved should the appeal succeed. For the respondent it was urged that the payout would be reversible. That the amount is not colossal. That the respondent is an agent of a reputable international shipping company with long standing operations in Kenya and worldwide. 17.The applicant having asserted that the respondent would not be able to refund the decretal amount, it was incumbent upon the respondent to demonstrate that it can do so. Beyond the claim that it’s principal is long standing and reputable entity, it did not demonstrate its financial ability. 18.Consequently, we allow the application dated 27th October 2025 in terms of prayer 3 and hereby order that execution of the judgment of the High Court delivered on 26th September 2025 is hereby stayed pending the hearing and determination of the applicant’s appeal. 19.Costs of the application shall abide by the outcome of the appeal. DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY 2026.S. GATEMBU KAIRU, FCIArb, CArb.……………………… JUDGE OF APPEALG. V. ODUNGA……………………… JUDGE OF APPEALMURUNGI B. KAIRARIA……………………… JUDGE OF APPEALI certify that this is a true copy of the original.SignedDEPUTY REGISTRAR.