[2018] KEHC 5842 (KLR)
The court found that the plaintiff had admitted the tax arrears and had not disputed the amount due. The only reason advanced for non-payment was financial hardship, which the court held does not constitute a prima facie case for the grant of an injunction. The court further found that the defendant had lawfully...
Source-derived case information.
- Citation
- [2018] KEHC 5842 (KLR)
- Parties
- Plaintiff: LTI Kisii Safari Inns Limited t/a Kaskazi Beach Hotel; Defendant: Kenya Revenue Authority
- Court
- High Court
- Court Station
- High Court at Mombasa
- Jurisdiction
- Kenya
- Case Number
- Civil Suit 100 of 2016
- Procedural Posture
- Civil Suit / Ruling on Interlocutory Injunction Application
- Outcome
- application dismissed with costs
- Judges
- CA Otieno
- Legal Topics
- Tax Arrears Enforcement, Temporary Injunctions, Distress for Tax, Self Assessment Taxation
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
LTI Kisii Safari Inns Limited t/a Kaskazi Beach Hotel
Plaintiff
Kenya Revenue Authority
Defendant
Procedural Posture
Civil Suit / Ruling on Interlocutory Injunction Application
Legal Issues
- 1 Whether the plaintiff has established a prima facie case to warrant the grant of a temporary injunction restraining the defendant from attaching its movable assets in execution of a tax proclamation.
- 2 Whether the defendant lawfully exercised its statutory powers under the Tax Procedures Act to issue distress for unpaid taxes.
Ratio Decidendi
The court found that the plaintiff had admitted the tax arrears and had not disputed the amount due. The only reason advanced for non-payment was financial hardship, which the court held does not constitute a prima facie case for the grant of an injunction. The court further found that the defendant had lawfully exercised its statutory powers under the Tax Procedures Act to issue distress for unpaid taxes. The plaintiff had been given ample time to settle the arrears, including an opportunity to sell property, but had not taken meaningful steps to do so. Consequently, the court held that there was no basis to grant the injunction sought and dismissed the application with costs.
Court Disposition
application dismissed with costs
Orders
- The application dated 6/10/2016 is dismissed with costs to the defendant.
Full Case Text
Judgment text and source record
19 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT MOMBASA
CIVIL SUIT NO. 100 OF 2016
LTI KISII SAFARI INNS LIMITED
t/a KASKAZI BEACH HOTEL.....................PLAINTIFF
VERSUS
KENYA REVENUE AUTHORITY..........DEFENDANT
R U L I N G
1. By a Notice of Motion dated 6/10/2016 and field in court the sameday, the plaintiff/Applicant sought from the court one substantive order of an injunction pending suit to restrain the defendant from attaching and or carting away the plaintiffs movable Assets in execution of the proclamation served by the Defendant.
2. That application was supported by the supporting Affidavit of DR.CHRISTA MARRIANE OTARA and supplementary Affidavit (titledFURTHER AFFIDAVIT) sworn on 27/3/2017 with leave of the court.
3. The gists and grounds in the Application and Affidavits for seekingthe orders are primarily that the taxes being demanded by the Respondent in the sum of Kshs.59,260,680/= is computed and based on salary earned by staff but have not been paid and that theplaintiff is keen to pay the arrears of taxes from other sources owing to cash crunch in the tourism sector but the defendant has refused to agree on termshence the plaintiff would be exposed to suffer loss and damages if orders are not granted. To the Affidavit in support the plaintiff exhibited the proclamation, Notice of distress, and a Board resolution resolving to sell a property known as KWALE/DIANI BEACH BLOCK 1655to pay the tax arrears. Essentially that Affidavit in support does not dispute the tax arrears but acknowledges same and seeks time to pay.
4. The Further Affidavits on its part equally admit the arrears andexhibits attempts by the plaintiff to pay by showing some three payment receipts all totaling Kshs.2,500,000/= and an agreement to sell a disclosed parcel of land at Kshs.57,344,000/=.
5. The Application was opposed by the Replying Affidavit of one ASHASALIM whose thrust is that the demanded tax arrears are based on self-assessment for the period of January 2013 to March 2016 and that even if the salaries have not been paid the law mandates taxes upon such salaries are payable by the plaintiff/Applicant once earned even if not paid. That Affidavit exhibited the calculation of the tax arrears and a letter dated 28/5/2016 referring to a meeting between the parties and a commitment by the plaintiff to pay the arrears of tax by the 30/9/2016. With such being the history and common facts of the dispute, the Defendant contended that it had validly and lawfully exercised it powers under section 41, Tax Procedures Act, to issue a distress over the plaintiffs movable assets and that there had not been preferred any valid reason to interfere with the lawful process.
6. Having looked at the totality of the material availed and this beingan application for a temporary injunction, I am in nodoubt that there is no prima facie case disclosed. There cannot be a prima facie a case when it is in black and write in the hands of the plaintiff itself that the tax is due and the only reason it has not paid is the hard economic times for which it has been given more than one year to sell a disclosed property and settle but no meaningful steps have been taken to settle the taxes.
7. Without a prima facie case these cannot be a basis to grant thesought injunction for which reason I do find no merit in the application dated 6/10/2018 and I therefore order it dismissed with costs.
Dated and delivered at Mombasa this 11th day of June 2018.
P.J.O. OTIENO
JUDGE