[2021] KEHC 43 (KLR)
The court found that while the appellant had demonstrated it was a going concern and had previously made tax payments, the interests of both parties had to be balanced. The appellant's partial success before the Tribunal and its prior payments were considered, but the court determined that some form of security was...
Source-derived case information.
- Citation
- [2021] KEHC 43 (KLR)
- Parties
- Appellant: Home Bridge Limited; Respondent: Commissioner for Domestic Taxes
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Tax Appeal E156 of 2021
- Procedural Posture
- Tax Appeal / Ruling on Stay Pending Appeal
- Outcome
- Stay of execution granted on condition of provision of bank guarantee.
- Judges
- DAS Majanja
- Legal Topics
- Stay of Execution, Security for Costs, Tax Appeals, Agency Notice
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
More case intelligence is available
Unlock the full research layer for this judgment.
Parties
Home Bridge Limited
Appellant
Commissioner for Domestic Taxes
Respondent
Procedural Posture
Tax Appeal / Ruling on Stay Pending Appeal
Legal Issues
- 1 Whether the appellant is entitled to an order of stay of execution pending appeal against the Tax Appeals Tribunal's judgment.
- 2 What form and quantum of security, if any, should be imposed as a condition for stay of execution.
Ratio Decidendi
The court found that while the appellant had demonstrated it was a going concern and had previously made tax payments, the interests of both parties had to be balanced. The appellant's partial success before the Tribunal and its prior payments were considered, but the court determined that some form of security was still necessary to protect the respondent's interests. Accordingly, the court granted a stay of execution of the Tribunal's judgment and any enforcement action, conditional upon the appellant providing a bank guarantee of KES 5,000,000 within thirty days. Failure to comply would result in the discharge of the stay. The court thus exercised its discretion to ensure the appeal...
Court Disposition
Stay of execution granted on condition of provision of bank guarantee.
Orders
- An order of stay is issued staying execution of the Tribunal's judgment and any enforcement action pending appeal or further court orders.
- The appellant shall provide a bank guarantee for KES 5,000,000 from a reputable bank in favour of the respondent within thirty days.
Full Case Text
Judgment text and source record
21 paragraphs
Home Bridge Limited v Commissioner for Domestic Taxes (Tax Appeal E156 of 2021) [2021] KEHC 43 (KLR) (Commercial and Tax) (24 September 2021) (Ruling)
Neutral citation number: [2021] KEHC 43 (KLR)
Republic of Kenya
In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)
Tax Appeal No. E156 of 2021
DAS Majanja, J
September 24, 2021
Between
Home Bridge Limited
Appellant
and
Commissioner for Domestic Taxes
Respondent
(Being an appeal against the judgment of the Tax Appeals Tribunal at Nairobi dated 23rd July 2021 in Tax Appeal No. 43 of 2021)
Ruling
1. The Appellant has lodged an appeal with the court challenging and having been dissatisfied with the decision of the Tax Appeals Tribunal (“the Tribunal”) dated 23rd July 2021 where the Appellant was allowed in part. In the judgment the Tribunal disallowed loan interest costs, marketing and advertising costs and start-up costs. Consequently, the Respondent (“the Commissioner”) issued an Agency Notice dated 11th August 2021 for KES. 51,602,837. 00 which the Appellant seeks to stay in the Notice of Motion dated 20th August 2021.
2. I have considered the depositions of the Appellant’s director, Peter Murage Karoki, sworn on 20th August 2021 and 2nd September 2021 alongside the grounds of opposition dated 30th August 2021. I have also heard the arguments by both counsel.
3. The parties do not dispute the jurisdiction of this court to order a stay pending appeal under Order 42 Rule 6 (2) of the Civil Procedure Rules. What is in contention is the nature of the security to be ordered as a condition for the stay. The Appellant is of the view that the stay should be unconditional stay since it has paid KES. 31,631,153. 00 between October 2016 and 20th December 2019. The Commissioner on the other hand, states that this amount relates to other taxes and not to this case. It demands that the Appellant deposit at least 50% of the taxes.
4. The court has a duty to weigh both sides; the Appellant’s entitlement to exercise its statutory right of appeal and the Commissioner’s entitlement to the fruits of its judgment in this case to collect the taxes to be paid by the Appellant bearing in mind that if harsh terms are imposed the appeal will be rendered nugatory. Each case ultimately depends on its own facts.
5. The fact that the Appellant has made payments previously demonstrates that the Appellant is a going concern and may well continue to pay taxes. I also note that part of its appeal before the Tribunal was successful. I therefore order as follows:(a)An order of stay be and is hereby issued staying execution of the Judgment of the Tax Appeal Tribunal dated 23rd July 2021 in Tribunal Appeal No. 43 of 2019 and any further enforcement action thereon including the Agency Notices pending the hearing and determination of this appeal or until further orders of the court.(b)In consideration of the stay in (a) above, the Appellant shall provide a Bank Guarantee for KES. 5,000,000. 00 from a reputable bank in favour of the Respondent within thirty (30) days from the date hereof.(c)In default of compliance with the terms aforesaid, the order of stay shall stand discharged.(d)The costs of this application shall be in the appeal.(e)The court shall adjourn to issue directions for the hearing and determination of the appeal.
SIGNED AT NAIROBID. S. MAJANJAJUDGEDATEDandDELIVEREDatNAIROBIthis24thday of SEPTEMBER 2021. A. MABEYAJUDGEMr Nyachio instructed by Muchemi and Company Advocates for the Appellant.Ms Onyango, Advocate, instructed by Kenya Revenue Authority for the Respondent.