[2023] KEHC 23165 (KLR)
The court found that the appellant, a business entity, would likely suffer substantial loss if the entire sum of Kshs 108,213,774/- was paid out from its accounts due to the agency notices. The application for stay was filed timeously, and the appellant had offered security. The court determined that it was in the...
Source-derived case information.
- Citation
- [2023] KEHC 23165 (KLR)
- Parties
- Appellant: Rana Auto Selection Limited; Respondent: Commissioner of Domestic Taxes
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Income Tax Appeal E150 of 2021
- Procedural Posture
- Income Tax Appeal / Ruling on Application for Stay of Execution Pending Appeal
- Outcome
- Stay of execution granted on condition; agency notices to be lifted upon payment of security.
- Judges
- A Mabeya
- Legal Topics
- Stay of Execution, Security for Costs, Tax Collection Enforcement, Agency Notices
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Rana Auto Selection Limited
Appellant
Commissioner of Domestic Taxes
Respondent
Procedural Posture
Income Tax Appeal / Ruling on Application for Stay of Execution Pending Appeal
Legal Issues
- 1 Whether the appellant is entitled to a stay of execution of the ruling delivered on 30/6/2023 pending appeal.
- 2 What conditions, if any, should be imposed for the grant of stay of execution.
- 3 Whether the agency notices issued by the respondent should be lifted.
Ratio Decidendi
The court found that the appellant, a business entity, would likely suffer substantial loss if the entire sum of Kshs 108,213,774/- was paid out from its accounts due to the agency notices. The application for stay was filed timeously, and the appellant had offered security. The court determined that it was in the interest of justice to grant a stay of execution pending appeal, but on the condition that the appellant pays a cash amount of Kshs 20,000,000/- as security. This amount was deemed sufficient to protect the respondent's interests while preventing irreparable harm to the appellant. The agency notices would be lifted upon payment of this security.
Court Disposition
Stay of execution granted on condition; agency notices to be lifted upon payment of security.
Orders
- There shall be a stay of execution of the ruling delivered on 30/6/2023 pending appeal.
- The agency notices issued by the respondent are to be lifted upon payment of Kshs 20,000,000/- as security by the appellant.
Full Case Text
Judgment text and source record
30 paragraphs
Rana Auto Selection Limited v Commissioner of Domestic Taxes (Income Tax Appeal E150 of 2021) [2023] KEHC 23165 (KLR) (Commercial and Tax) (6 October 2023) (Ruling)
Neutral citation: [2023] KEHC 23165 (KLR)
Republic of Kenya
In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)
Commercial and Tax
Income Tax Appeal E150 of 2021
A Mabeya, J
October 6, 2023
Between
Rana Auto Selection Limited
Appellant
and
The Commissioner of Domestic Taxes
Respondent
Ruling
1. Vide an application dated 10/8/2023, the appellant sought a stay of execution of the ruling delivered by this Court on 30/6/2023 pending the determination of an intended appeal.
2. The grounds for the application included that the appellant’s appeal raises triable issues with high chances of success and that the subject matter of the appeal is substantial and should the execution proceed, the appellant would suffer irreparable loss. Further, that no prejudice would be suffered by the respondent if the application is allowed as both parties are still negotiating at ADR.
3. The respondent opposed the application vide a replying affidavit sworn by Victor Mino on 24/8/2023 an employee of the respondent in the Corporate Tax Account Management Division.
4. He averred that the ruling of 30/6/2023 struck out the appellant’s appeal in this Court against the Tax Appeal Tribunal’s judgment and that the respondent ought to be allowed to enjoy the fruits of its judgment by being allowed the collection of the taxes which have now crystallized for collection.
5. That if the stay is granted, there is a likelihood that the appellant would remove the monies out of its account thereby making the enforcement of taxes impossible.
6. Without prejudice to the aforementioned averments, the respondent prayed, in the alternative, that if the Court would deem it fit to grant the stay orders it should be on condition that the appellant deposits 50% of the demanded taxes.
7. Before a ruling on the said application was delivered, the respondent issued agency notices dated 12/9/2023 to the applicant’s bankers for the sum of Kshs 108,213,774/=.
8. Aggrieved by this, the appellant lodged a second application dated 13/9/2023 whereby it essentially prayed for conservatory orders to lift the aforementioned agency notices. The appellant asserted that the agency notices were premature and caused the applicant pecuniary embarrassment as it was unable to continue with its business of importation of motor vehicles.
9. When the parties appeared before me on 21/9/2023, Counsel for the appellant proposed that the appellant was willing to put in place a bank guarantee for Kshs 5,000,000/- as security for the taxes while the respondent’s advocates prayed for a 50% deposit of the taxes demanded.
10. The appellant seeks a stay of execution pending determination of its appeal. The principles applicable are well known. The application was filed timeously. The applicant has averred that it would suffer substantial loss if the stay is not granted. It has offered security of a bank guarantee of Kshs 5,000,000/-.
11. The appellant is a business entity whose bank accounts have been affected by the agency notices issued by the respondent who demands a sum of Kshs Kshs 108,213,774/=. If such a huge amount is paid out from its account, it is likely that the applicant would suffer substantial loss.
12. I find that it would be in the interest of justice for a stay of execution pending appeal to be granted on the condition that a portion of the taxes demanded are paid by the appellant. The appellant proposes a bank guarantee of Kshs 5,000,000/- while the respondent seeks 50% of the taxes demanded that is half of Kshs 108,213,774/= which translates to Kshs 54,106,887/=.
13. I think a cash amount of Kshs 20,000,000/- would be a sufficient security.
14. Accordingly, there shall be a stay of execution and the agency notices shall be lifted upon payment of Kshs 20,000,000/- as security.It is so ordered.
DATED AND DELIVERED AT NAIROBI THIS 6TH DAY OF OCTOBER, 2023. A. MABEYA, FCI ArbJUDGE