[2020] KEHC 689 (KLR)
The court determined that the interests of both parties must be balanced when considering an application for stay of execution pending appeal in tax matters. The Appellant demonstrated that it is a going concern and expressed willingness to comply with any conditions imposed by the court. The court found that...
Source-derived case information.
- Citation
- [2020] KEHC 689 (KLR)
- Parties
- Appellant: Foresight Infrastructure Inc; Respondent: Commissioner of Domestic Taxes
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Tax Appeal E124 of 2020
- Procedural Posture
- Tax Appeal / Ruling on Application for Stay Pending Appeal
- Outcome
- Notice of Motion for stay pending appeal allowed with conditions.
- Judges
- DAS Majanja
- Legal Topics
- Stay of Execution, Security for Costs, Tax Appeals, Judicial Discretion
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Foresight Infrastructure Inc
Appellant
Commissioner of Domestic Taxes
Respondent
Procedural Posture
Tax Appeal / Ruling on Application for Stay Pending Appeal
Legal Issues
- 1 Whether the court should grant a stay of execution of the Tax Appeal Tribunal's judgment pending appeal.
- 2 What terms, if any, should be imposed as conditions for the grant of stay.
Ratio Decidendi
The court determined that the interests of both parties must be balanced when considering an application for stay of execution pending appeal in tax matters. The Appellant demonstrated that it is a going concern and expressed willingness to comply with any conditions imposed by the court. The court found that requiring the Appellant to provide a bank guarantee for Kshs. 4,000,000 as security would adequately protect the Respondent's interests while allowing the Appellant to continue its business operations. The court exercised its discretion to grant a stay of execution on these terms, noting that failure to provide the guarantee within the stipulated period would result in the discharge...
Court Disposition
Notice of Motion for stay pending appeal allowed with conditions.
Orders
- An order of stay is issued staying execution of the judgment of the Tax Appeal Tribunal dated 18th September 2020 pending hearing and determination of this appeal or until further orders of the court.
- The Appellant shall provide a Bank Guarantee in favour of the Respondent from a reputable bank for Kshs. 4,000,000 within twenty-one (21) days; in default, the stay shall stand discharged.
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. E124 OF 2020
BETWEEN
FORESIGHT INFRASTRUCTURE INC...........APPELLANT
AND
COMMISSIONER OF DOMESTIC TAXES ...RESPONDENT
RULING
1. The Tax Appeal Tribunal (“the Tribunal”) dismissed the Appellant’s appeal by a judgment dated 18th September 2020 thus precipitating this appeal. The Tribunal upheld the Respondent’s objection decision requiring the Appellant to pay Kshs. 21,176,283. 00.
2. The Appellant has filed the Notice of Motion dated 14th December 2020 supported by the affidavit of its director, Vishal Agarwal, sworn on the same date. The Respondent did not file any response to the Application. At the plenary hearing of the application, counsel for the parties made brief oral submissions and agreed that the only issue for determination is the terms upon which the court should order stay pending appeal.
3. The duty of the court in such circumstances, is to balance the interests of both parties. 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 in fact, continues to pay taxes as and when they fall due. On the other hand, the court must not unnecessarily impede the Respondent’s statutory duty to collect taxes in accordance with the law bearing in mind that it has succeeded before the Tribunal (see Africa Oil BV v Commissioner of Domestic TaxesCOMM ITA No. E024 of 2020 [2020] eKLRand Choppies Enterprises Limited v Commissioner of Domestic Taxes [2020] eKLR).
4. The grant of an order of stay is an exercise of judicial discretion based on facts presented by the parties. The Appellant states that it will comply with any orders that the court may order as conditions for the grant of stay pending appeal. I have considered that the Appellant is a going concern. It owns commercial rental properties. Considering the circumstances of the economy, which I am entitled to take judicial notice vis-a- vis the amount of tax claimed, I find than an order for security in the sum of Kshs. 4 million would be appropriate in the circumstances.
5. I allow the Notice of Motion dated 14th December on the following terms:
a. An order of stay be and is hereby issued staying execution of the judgment of the Tax Appeal Tribunal dated 18th September 2020 in Tax Appeal Tribunal Appeal No. 257of 2018 pending hearing and determination of this appeal or until further orders of this court.
b. In consideration of the stay in (a) above, the Appellant shall provide a Bank Guarantee in favour of the Respondent pending the hearing and determination of the appeal from a reputable bank for Kshs. 4,000,000. 00 within twenty-one (21) days from the date hereof. In default, stay shall stand discharged.
c. The costs of this application shall be in the appeal.
DATEDandDELIVEREDatNAIROBIthis22nd day DECEMBER of 2020.
D. S. MAJANJA
JUDGE
Mr Muhindi instructed by Anjarwalla and Khanna LLP Advocates for the Appellant.
Ms Kithinji, Advocate instructed by Kenya Revenue Authority for the Commissioner of Domestic Taxes.