[2022] KEHC 14093 (KLR)

Rana Auto Selection v Commissioner of Domestic Taxes (Miscellaneous Application E259 of 2021) [2022] KEHC 14093 (KLR) (Commercial and Tax) (14 October 2022) (Ruling)

Neutral citation: [2022] KEHC 14093 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Miscellaneous Application E259 of 2021

EC Mwita, J

October 14, 2022

Between

Rana Auto Selection

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. Rana Auto Selection (Rana), took out motion on notice dated May 11, 2021, under rule 17, 18 and 19 (1) of the High Court of Kenya (Organization and Administration) Rules, Order 42 rule 6 and Order 45 rule 1 of the Civil Procedure Rules, section 53 of the Tax Procedure Act and sections 3A and 80 of the Civil Procedure Act and sought a review of the conditional stay of execution pending appeal issued on May 11, 2020.

2. The order required Rana to pay 50% of the decretal sum by theTATwithin 14 days from May 11, 2021 and substitute it with an unconditional stay. In the alternative, Rana wants a condition al stay where it will deposit Kenya Shillings Sixty Million (Kshs 60,000,000) in six equal monthly installments.

3. The motion is premised on the grounds on its face, the supporting and further affidavits sworn by Khan Sultan Ali, a director and shareholder of Rana, on May 11, 2021 and July 25, 2022 respectively.

4. The background leading to this application is that Rana together with Ras Holdings Limited, Sainil Investments Limited and Riasat Ali Mian filed four separate appeals before the Tax Appeals Tribunal (TAT). The appeals were consolidated and in a judgment delivered on April 12, 2021, the TATdismissed those appeals and upheld the Commissioner’s objection decision confirmation demand for additional customs duty, VAT and corporation tax.

5. Dissatisfied, the four entities filed separate appeals against that judgment. Files simultaneous with the appeals, were applications seeking stay of execution of the judgment by TAT pending the hearing and determination of those appeals.

6. On May 11, 2021, the Court granted stay of execution pending appeal on condition that the appellants pay to the Commissioner 50% of the decretal sum and file and serve the record of appeal within 14 days. It is these orders that Rana wants reviewed or varied.

7. Rana asserts that challenges brought by the Ccvid-19 pandemic and the measures introduced to contain the spread of the virus hampered its business. As a consequence, it is not able to pay 50% of the decretal sum to the Commissioner as ordered by the Court. Rana Further asserts the time within which to comply with the conditions for stay was short to raise the funds.

8. Rana believes that there is proper basis for this Court to vary the conditional stay. Rana maintains that if the orders are not varied, it will suffer irreparable injury as enforcement will lead to automatic collapse of the business which will also affect employees and other businesses that depend on it as a going concern.

9. In Rana’s view, the Commissioner will not suffer any prejudice given that it will remain a going concern and continue paying taxes. This is more so since the Commissioner has place prohibition orders pursuant to section 45 of the Tax Procedure Act which is good enough protection.

10. Rana further argues that it has already paid Kshs 76,000,000 to KRA and an additional Kshs 108,213,774 following a review of corporation tax due from Kshs 852,750,429 to Kshs 108,213,774, following negotiations between the parties. Rana contends, therefore, that the amount already paid is sufficient security for granting unconditional stay of execution.

Response 11. The Commissioner has opposed the application through grounds of opposition dated June 9, 2021, arguing that Rana has not met the conditions for review under Order 45 rule 1 of the Civil Procedure Rules. According to Rana, the application is bad in law, frivolous and an abuse of the court process in that it regurgitates the grounds that were advanced in the application for stay dated April 13, 2021.

12. The Commissioner’s concerned is that in the event the intended appeal is unsuccessful, Rana may not be able to raise the taxes in dispute since it claims that it is unable to raise 50% of the decretal sum.

Determination 13. The application seeks review and variation of the conditional stay granted on May 11, 2020. The court ordered Rana and the other appellants to pay 50% of the disputed that to the Commissioner within 14 days of that order and file and serve the record of appeal within that timeline.

14. Those orders were not complied with and Rana has now applied for review of those orders and be either grant an unconditional stay or be allowed stay on condition that it deposits Kshs 60,000,000 in six equal instalments. In essence, Rana wants stay subject to payment of Kshs 10,000,000 per months for next six months following review.

15. Rana has, in principle, invoked the jurisdiction of this court under section 80 of the Civil Procedure Act and Order 45 rule 1 of the Civil Procedure Rules. Section 80 provides that a person aggrieved by a decree or order where an appeal is allowed but no appeal has been preferred, or by a decree or order where no appeal is allowed, may apply for a review of that judgment or order and the court which passed the decree or made the order, may make such order as it thinks fit.

16. Order 45 grants the court discretion to allow an application for review where it is shown that there is a mistake or error apparent on the face of the record; discovery of new and important matter, or for any other sufficient reason. Although this jurisdiction is discretionary, it must, however, be exercised judicially.

17. The law on review is settled that a review may only be granted where the court considers it is necessary to correct an apparent error or omission on the part of the court or for other sufficient reason. The error or omission must be self-evident and should not require an elaborate argument to be established. It is not a sufficient reason for review if the applicant thinks that another Judge would have taken a different view of the matter. (National Bank of Kenya Ltd v Ndungu Njau [1977] eKLR).

18. InPankras T Swai v Kenya Breweries Ltd [2014] eKLR, the Court of Appeal pointed out that a party cannot seek review on grounds of law as those are grounds of appeal and not review. The court went on to state:The power to review decisions on appeal is vested in appellate courts. Order 44 rule 1 (now Order 45 rule 1 in the 2010 Civil Procedure Rules) gave the trial Court discretionary power to allow review on the three limps therein stated or “for any sufficient reason.

19. The court also pointed out that the words, “any sufficient reason” must be understood in the context of section 80 of the Civil Procedure Act which confers an unfettered right to apply for review, and the current jurisprudential thinking that the words need not be analogous with the other grounds specified in Order 45.

20. In Benjoh Amalgamated Ltd & another v Kenya Commercial Bank Ltd[2014] eKLR, the Court of Appeal again stated:(26)"The basic philosophy inherent in the concept of review, is acceptance of human fallibility and acknowledgement of frailties of human nature and sometimes possibility of perversion that may lead to miscarriage of justice. In some jurisdictions, courts have felt the need to cull out such power in order to overcome abuse of process of court or miscarriage of justice.(27)In the High Court, both the Civil Procedure Act in section 80 and the Civil Procedure Rules in Order 45 rule 1 confer on the court power to review. Rule 1 of Order 45 shows the circumstances in which such review would be considered range from discovery of new and important matter or mistake or error apparent on the face of the record or any other sufficient reason but section 80 gives the High Court greater amplitude for review."

21. What is clear from the above decisions, is that an applicant must bring the application for review within the grounds in Order 45 rule 1, or for any other sufficient reason.

22. Rana’s case, as I perceive it, is not that there is an error apparent on the face of the record but rather, that the conditional stay was difficult to comply with. Rana wants this court to give softer conditions or has suggested conditions of its own liking. That is why Rana wants either unconditional stay or to pay Kshs 60,000,000 within six months.

23. I have considered the application and reasons on which it is grounded. The fact that the court gave what appeared to Rana to be unfavorable conditional stay is not, in my considered view, an error requiring review under section 80 of the Act as read with Order 45 of the Rules. For purposes of review, the error or mistake must be real and not an illusory, and must have led to an injustice to call for review.

24. The grounds that Rana has put forward in seeking review such as inability to meet the conditions for stay are not, in my respectful view, grounds for review but for appeal. In National Bank of Kenya Ltd v Ndungu Njau) (supra) the Court stated that that it is not a ground for review if the argument is that the court proceeded on an incorrect exposition of the law and reached an erroneous conclusion of law, or misconstrued a statute or other provision of law. (See alsoNyamogo & Nyamogo v Kogo[2001] EA 170.

25. I have perused the ruling dated May 11, 2021 where the court elaborately considered the test for granting stay pending appeal. The court then stated at paragraph 46 of the ruling:"Considering the circumstances of this case, it is my finding that the applicant has not met any of the above tests. However, since the applicant stated that they are willing to offer such reasonable security as the court may impose, and the respondent has also urged the court if it grants stay to impose security, I find the following orders will serve the interest of justice…"

26. Following that observation, the court imposed a conditional stay Rana now wants reviewed and set aside.

27. The court having exercised its discretion and considered interest of justice before imposing the conditional stay, it is not in the province of this court to vary those conditions and give conditions favorable and as suggested by Rana.

28. Having given due consideration to the application, response and submissions, the conclusion I come to, is that Rana has not persuaded this court that there is good reason to exercise its jurisdiction for review. Consequently, the application dated May 26, 2021, is declined and dismissed with costs.

29. This ruing and the orders herein shall apply to HCCOMM Misc App No E269 of 2021, HCCOMM MISC App No E270 of 2021, and HCCOMM Misc App No E271 of 2021. For avoidance of doubt, applications for review in those files (if any) are dismissed.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 14TH DAY OF OCTOBER 2022E C MWITAJUDGE