[2014] KEHC 4909 (KLR)
The court found that the substantive dispute regarding the principal tax demanded by the respondent had been settled amicably between the parties. Only the issue of interest and penalties remained, which was properly the subject of a statutory waiver application under section 94 of the Income Tax Act. As such, the...
Source-derived case information.
- Citation
- [2014] KEHC 4909 (KLR)
- Parties
- Applicant: Republic; Respondent: Commissioner of Domestic Taxes, Kenya Revenue Authority; Applicant: Consulting Engineering Services (India) Private Limited; Interested Party: Bank of India (Kenya) Limited; Interested Party: Kenya National Highways Authority
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Law Courts)
- Jurisdiction
- Kenya
- Case Number
- Judicial Review 419 of 2012
- Procedural Posture
- Judicial Review Application / Ruling on Settlement and Closure
- Outcome
- Notice of Motion marked as settled; enforcement of agency notice stayed pending waiver application; no order as to costs.
- Judges
- DAS Majanja
- Legal Topics
- Agency Notice, Tax Collection, Waiver of Interest, Income Tax Act Section 94
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Republic
Applicant
Commissioner of Domestic Taxes, Kenya Revenue Authority
Respondent
Consulting Engineering Services (India) Private Limited
Applicant
Bank of India (Kenya) Limited
Interested Party
Kenya National Highways Authority
Interested Party
Procedural Posture
Judicial Review Application / Ruling on Settlement and Closure
Legal Issues
- 1 Whether the agency notice issued by the respondent to recover taxes from the applicant's account was lawful and should be quashed.
- 2 Whether the applicant is entitled to a waiver of interest and penalties under section 94 of the Income Tax Act.
- 3 Whether further proceedings are necessary after settlement of the principal tax amount.
Ratio Decidendi
The court found that the substantive dispute regarding the principal tax demanded by the respondent had been settled amicably between the parties. Only the issue of interest and penalties remained, which was properly the subject of a statutory waiver application under section 94 of the Income Tax Act. As such, the court determined that it was unnecessary to continue with the judicial review proceedings. The court stayed enforcement of the agency notice pending the outcome of the waiver application and marked the matter as settled, with liberty to the applicant and interested party to pursue further remedies if the waiver is rejected. No order as to costs was made given the amicable...
Court Disposition
Notice of Motion marked as settled; enforcement of agency notice stayed pending waiver application; no order as to costs.
Orders
- The Notice of Motion dated 20th March 2012 is marked as settled as the 1st interested party has applied for a waiver of interest and penalties under section 94 of the Income Tax Act.
- The enforcement of the agency notice subject of this matter shall be stayed pending the resolution of the application for waiver.
Full Case Text
Judgment text and source record
38 paragraphs
IN THE HIGH COURT AT NAIROBI
MILIMANI LAW COURTS
JUDICIAL REVIEW DIVISION
JR. MISC. APPL. NO. 419 OF 2012
BETWEEN
REPUBLIC ……………………..…………………… APPLICANT
AND
THE COMMISSIONER OF DOMESTIC TAXES,
KENYA REVENUE AUTHORITY ………...…. RESPONDENT
AND
BANK OF INDIA (KENYA)
LIMITED ……………..……………… 1ST INTERESTED PARTY
KENYA NATIONAL HIGHWAYS
AUTHORITY ………..……………… 2ND INTERESTED PARTY
EX-PARTE
CONSULTING ENGINEERING SERVICES (INDIA)
PRIVATE LIMITED
RULING NO. 1
By the Notice of Motion dated 28th November 2012 the ex-parte applicant moved the court for;
An order of certiorari to bring into this court and quash the decision of the Respondent contained in the letter dated 12th November 2012 and any other letter thereto demanding payment of tax by the Applicant and or any action undertaken thereto.
An order of prohibition prohibiting the respondent through itself, agents and or servants from attaching and or freezing any sums from the Applicant’s account numbers 2252199101 and 2252169501 held with the interested party based on the letter dated 12th November 2012 and or any other letter thereto.
The court did grant leave to operate as a stay of any further proceedings and or execution of the respondent’s letter dated 12th November 2012. The letter was an agency notice issued to the 1st interested party to recover taxes from the ex-parte applicant’s account.
The matter was not heard substantively as the parties opted to negotiate an out of court settlement. The parties now agree that the principal sum of taxes demanded by the respondent has been settled and only the interest due is remaining. The outstanding interest is now the subject of an application for waiver of interest and penalties to the Treasury Secretary under section 94 of the Income Tax Act (Chapter 470 of the Laws of Kenya). Such an application is a statutory right of a party.
In my view, this matter has been exhausted as the substance of the claim has been dealt with. It is therefore not necessary to keep mentioning the matter further. In the event the application for waiver is rejected by the Cabinet Secretary, the ex-parte applicant and 1st interested party shall be at liberty to pursue further remedies available to them.
In order to close the matter, I order as follows;
The Notice of Motion dated 20th March 2012 is marked as settled as the 1st interested party has applied for a waiver of interest and penalties under section 94 of the Income Tax Act.
The enforcement of the agency notice subject of this matter shall be stayed pending the resolution of the application for waiver referred to in (1) above.
DATED and DELIVERED at NAIROBI this 29th May 2014
D.S. MAJANJA
JUDGE
RULING NO. 2
I have marked this matter as settled on the basis that the issues have been resolved amicably between the principal contenders, the respondent, Kenya Revenue Authority and the 2nd interested party, Kenya National Highways Authority. Both parties are government institutions. In the circumstances, I deviate from the normal rule regarding costs and I make no order as to costs.
DATED and DELIVERED at NAIROBI this 29th May 2014
D.S. MAJANJA
JUDGE
Ms Mate instructed Iseme, Kamau and Maema Advocates for the ex-parte applicant.
Mr Wanderi, Advocate instructed by the Kenya Revenue Authority.
Ms Cheruiyot instructed by Kiplagat and Company Advocates for the 2nd interested party.