[2020] KEHC 2322 (KLR)
The court found that the Appellant had not made sufficient disclosure regarding the state of his accounts and obligations to employees, landlord, and suppliers, which limited the court's ability to exercise discretion on the terms of security. Given the devastating fire and the uncertainty about the Appellant's...
Source-derived case information.
- Citation
- [2020] KEHC 2322 (KLR)
- Parties
- Appellant: Ernest Mburu Muinamu T/A Kikuyu Pipes and Fittings Centre; Respondent: Commissioner of Domestic Taxes
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Tax Appeal E029 of 2020
- Procedural Posture
- Tax Appeal / Application for Stay of Execution Pending Appeal
- Outcome
- Status quo regarding the accounts and attachment to be maintained pending hearing and determination of the appeal or until further orders.
- Judges
- DAS Majanja
- Legal Topics
- Stay of Execution, Security for Costs, Tax Assessment Enforcement, Distress for Tax, Interim Relief
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Ernest Mburu Muinamu T/A Kikuyu Pipes and Fittings Centre
Appellant
Commissioner of Domestic Taxes
Respondent
Procedural Posture
Tax Appeal / Application for Stay of Execution Pending Appeal
Legal Issues
- 1 Whether the court should grant a stay of execution of the enforcement of tax collection pending appeal.
- 2 What terms of security, if any, should be imposed pending the hearing and determination of the appeal.
Ratio Decidendi
The court found that the Appellant had not made sufficient disclosure regarding the state of his accounts and obligations to employees, landlord, and suppliers, which limited the court's ability to exercise discretion on the terms of security. Given the devastating fire and the uncertainty about the Appellant's ability to continue business and settle tax liabilities, the court determined that the appropriate course was to maintain the status quo regarding the accounts and attachment. This would preserve the position of both parties pending the hearing and determination of the appeal or until further orders, balancing the need to protect the Appellant's business from collapse and the...
Court Disposition
Status quo regarding the accounts and attachment to be maintained pending hearing and determination of the appeal or until further orders.
Orders
- The status quo regarding the accounts and attachment is to be maintained pending the hearing and determination of the appeal or until further orders.
Full Case Text
Judgment text and source record
24 paragraphs
IN THE HIGH COURT OF KENYA
AT NAIROBI
MILIMANI LAW COURTS
COMMERCIAL AND TAX DIVISION
CORAM: D.S. MAJANJA J.
TAX APPEAL NO. E029 OF 2020
BETWEEN
ERNEST MBURU MUINAMU
T/A KIKUYU PIPES AND FITTINGS CENTRE...APPELLANT
AND
COMMISSIONER OF DOMESTIC TAXES.......RESPONDENT
RULING
1. The Tax Appeal Tribunal (“the Tribunal”) dismissed the Appellant’s appeal by a judgment dated 27th March 2020 thus precipitating this appeal. The Tribunal upheld the Respondent’s assessment of Kshs. 8,028,842. 00. Following the dismissal of the appeal, the Respondent moved to enforce collection of taxes by issuing a Notice of Distress and proceeded to proclaim the Appellant’s assets. The Respondent also sent an Agency Notice to the Kenya Commercial Bank seeking to be paid Kshs. 8,028,842. 00 from the Appellant’s accounts.
2. On 9th September 2020, the Appellant has filed the Chamber Summons seeking to stay the orders of attachment. It was supported by the Appellant’s affidavit sworn on the same date. He deponed that the attachment of his accounts has occasioned hardship as he has been unable to meet his obligations to about 150 employees, the landlord and suppliers. He stated that continued attachment of his property exposes him to double jeopardy as his accounts have also been attached. The Appellant further deponed that on 6th September 2020, his business premises suffered a devastating fire which razed the warehouse where the stock is kept and which loss amounts to about Kshs. 150,000,000. 00. The Appellant therefore seeks interim relief to enable him engage with the Respondent and protect his business otherwise he will suffer irreparable loss.
3. The application is opposed by the affidavit of Victor Mimo, an officer of the Respondent, sworn on 21st September 2020. In respect of the application for stay of the enforcement, the Respondent states that the Appellant has not demonstrated by way of evidence that it will suffer prejudice and or substantial loss if the stay is not granted. The appellant stated that if the order of stay is granted there is a risk that the Respondent may not be able to recover the outstanding taxes.
4. As this is an application in the nature of stay of execution pending an appeal from the decision of the Tribunal, the issue is whether and on what terms I should grant the orders of stay. As I have previously stated, the duty of the court in such circumstances, is to balance the interests of either party. On the one hand, to ensure that a business which is a going concern with the ability to pay taxes in the future does not collapse and on the other, to ensure that the statutory duty imposed on the Respondent to collect in accordance with the law is observed. (see Africa Oil BV v Commissioner of Domestic TaxesCOMM ITA No. E024 of 2020 [2020] eKLR).
5. I had prior to reserving this ruling suggested to the parties to attempt an out of court resolution of the matter and if not, to agree on some form of security pending the hearing of the application. Unfortunately, this was not done hence I am now called upon to determine the application at hand. The only new issue that emerged during the period after the application was filed, is that the Appellant suffered a devastating loss to its business through a fire. It is not clear to what extent that it may remain in business and whether it would be able to settle its tax liabilities in the future.
6. As I had indicated, the only issue I intended to deal with is the nature and terms of security to be ordered pending the hearing and determination of the appeal. In this regard, the Appellant has not made sufficient disclosure on how much is held in its accounts and how much is due to the employees, landlord and suppliers in order for the court to exercise its discretion.
7. Having considered all the facts, I direct that the status quo regarding the accounts and attachment be maintained pending the hearing and determination of the appeal or until further orders.
DATEDandDELIVEREDatNAIROBIthis23rd day of OCTOBER 2020.
D. S. MAJANJA
JUDGE
Mr Njoroge instructed by J. M. Njoroge and Company Advocates for the Appellant.
Mr Ochieng, Advocate instructed by Kenya Revenue Authority for the Commissioner of Domestic Taxes.