[2015] KEHC 1033 (KLR)
The court found that the Kenya Revenue Authority, as a statutory body, is mandated to collect taxes but must do so fairly and reasonably. The evidence indicated that the applicant had received the relevant tax assessment notices, as shown by stamps and signatures. However, considering the history between the parties...
Source-derived case information.
- Citation
- [2015] KEHC 1033 (KLR)
- Parties
- Applicant: Miliman Resort Hotel Limited; Respondent: Kenya Revenue Authority
- Court
- High Court
- Court Station
- High Court at Kisumu
- Jurisdiction
- Kenya
- Case Number
- Petition 14 of 2015
- Procedural Posture
- Constitutional Petition / Ruling on Interlocutory Application for Conservatory Orders
- Outcome
- Application for conservatory orders allowed with conditions.
- Legal Topics
- Conservatory Orders, Tax Assessment Disputes, Right to Fair Administrative Action, Statutory Duties of Revenue Authority
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Miliman Resort Hotel Limited
Applicant
Kenya Revenue Authority
Respondent
Procedural Posture
Constitutional Petition / Ruling on Interlocutory Application for Conservatory Orders
Legal Issues
- 1 Whether the applicant is entitled to a conservatory order restraining the respondent from taking action based on the tax assessment notice.
- 2 Whether the respondent followed due process in issuing the tax assessment notice to the applicant.
- 3 Whether the applicant's fundamental rights were infringed by the respondent's actions.
Ratio Decidendi
The court found that the Kenya Revenue Authority, as a statutory body, is mandated to collect taxes but must do so fairly and reasonably. The evidence indicated that the applicant had received the relevant tax assessment notices, as shown by stamps and signatures. However, considering the history between the parties and the need to balance the respondent's statutory duty with the applicant's rights, the court determined that a conservatory order was warranted to restrain the respondent from taking action against the applicant or its proprietors, provided the applicant furnished a bank guarantee of Kshs.50,000,000 within 21 days. This approach ensures the respondent's interests are secured...
Court Disposition
Application for conservatory orders allowed with conditions.
Orders
- A conservatory order restraining the respondent from taking any action against the applicant or its proprietors is issued, conditional upon the applicant providing a bank guarantee of Kshs.50,000,000 within 21 days.
- Costs shall abide the outcome of the petition.
Full Case Text
Judgment text and source record
28 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT KISUMU
PETITION NO.14 OF 2015
MILIMAN RESORT HOTEL LIMITED...........................................PETITIONER
VERSUS
THE KENYA REVENUE AUTHORITY...........................................REPONDENT
R U L I N G
1. The application dated 31. 2.12 by the applicant prays for the following reliefs:
a. Pending the hearing and determination of the petition a conservatory order do issue restraining the respondent by themselves agents assigns or any other government department from taking any agitated action against the directors and the principals of the petition company in furtherance of their assessment notice that is the subject of the petition.
2. The application is supported by the affidavits of WALTER EDWIN OMINDEthe applicant director sworn on the said date. The issues raised there are clear and straightforward. It appears that there has been a history of demands for taxes from the respondent between the years 2007-2014 and the parties have heard various correspondences. Apparently due to bad economic times the applicant lost his hotel business when the same was sold by M/S Diamond Trust Bank Limited to Le-Savanne Hotel & Lodges Limited in the year 2014.
4. On 17. 6.15 the respondent issued a notice to the petition/applicant containing an assessment for the period between 2001-2014 estimated at about Kshs.78 million. This prompted the filing of the petition and the motion herein. The applicants states that the said estimated assessment was wrong as there was no adequate notice by the petitioner and that in any case there have been previous audit by the respondent and certificates of compliance granted.
5. In short the applicant felt that its fundamental right had been infringed hence the need to seek protection from the court.
6. One JAMES WAINAINA the supervisor in the respondent's investigations and Enforcement Department Western Region filed a replying affidavit in opposition to the application. The substance thereof is that the applicant has failed to comply with the notice to supply the respondent with various documents required and this therefore forced the respondent to issue the tax estimates notice. That if the applicant intended to object to the tax estimate it ought then to have filed an objection pursuant to Section 84 of the Income Tax Act.
7. The respondent concluded by praying that should this court grant the applicant its request then it ought to demand security pending the determination of the petition.
8. Having carefully perused the application and the attached responses and the submissions by the counsels representing them, it is apparently clear that the parties have had a long history of engagement. The respondent's atatutory duty is to collect taxes on behalf of the government and that duty is anchored within the constitution. That duty is underpinned by the relevant statutory guidelines and ought to be fair to the tax payers.
9. The question herein is whether the notice issued by the respondent was actually received by the applicant. Nothing essentially was shown that the notice was illegal.
10. Although its claimed by the applicant that it never received the notice dated 22. 8.14 there is a stamp and a signature of the said date. The same goes for the one dated 17. 6.15.
11. Be it as it may, the proper recourse taking into consideration the history before the parties herein is to allow the respondent undertake its statutory duty of collecting taxes on behalf of the government. This however should be done fairly and in a reasonable manner. The applicant must be protected from any unwarranted procedures by the respondent, Yet at the same time it ought to be obligated to pay the relevant taxes if any.
12. Consequently I shall allow the application dated 31. 7.15 as follows:
a. Pending he hearing and determination of the petition herein, a conservatory order restraining the respondent from taking any action against the petitioner/applicant herein or its proprietors is issued on condition that the petitioner do provide a bank guarantee of Kshs.50,000,000/- within the next 21 days from the date herein.
b. Costs shall abide the outcome of the petition.
Dated, signed and delivered this 2nd day of Dember 2015.
H. K. CHEMITEI
J U D G E
In the presence of:
........................................for petitioner
......................................for respondent