[2017] KEHC 7075 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

(JUDICIAL REVIEW DIVISION)

MISC. CIVIL APPLICATION NO. 243 OF 2016

IN THE MATTER OF AN APPLICATION BY NEW FRARIMS WHOLESALERS LIMITED FOR LEAVE TO APPLY FOR JUDICIAL REVIEW BY WAY OF ORDERS OF CERTIORARI AND PROHIBITION

AND

IN THE MATTER OF THE DECISION BY THE COMMISSIONER FOR DOMESTIC TAXES IN HIS LETTER DATED 18TH MAY 2016

AND

IN THE MATTER OF SECTIONS 8 & 9 OF THE LAW REFORM ACT

CHAPTER 26, LAWS OF KENYA

AND

IN THE MATTER OF THE CONSTITUTION OF KENYA, THE INCOME TAX ACT, CAP 470 LAWS OF KENYA AND THE VAT ACT, 2013

BETWEEN

REPUBLIC…………….……………….…………..................APPLICANT

VERSUS

THE KENYA REVENUE AUTHORITY…………......…1ST RESPONDENT

THE COMMISSIONER OF DOMESTIC TAXES........2ND RESPONDENT

THE HON. ATTORNEY GENERAL..............................3RD RESPONDENT

LEAKEY’S AUCTIONEERS…..……….…...………INTERESTED PARTY

EX PARTE: NEW FRARIMS WHOLESALERS LIMITED

RULING

Introduction

1. By a Notice of Motion dated 6th day of June, 2016, the ex parteapplicant herein, New Frarims Wholesalers Limited(hereinafter referred to as “the Wholesalers”), seeks the following orders:

1. That an order of Certiorari do issue to remove to this Honourable Court and quash the decision of the 1st and 2nd Respondents to impose arbitrary tax arrears upon the Applicant.

2. That an order of Certiorari do issue to remove to this Honourable Court and quash the decision of the 1st and 2nd Respondents directing the Interested Party to distrain the Applicant’s movable goods and chattels.

3. That an order of Prohibition do issue against the 1st and 2nd Respondents restraining the Respondents whether by themselves, their servants or their duly authorized agents from in any manner whatsoever acting or continuing to act upon the Notice of Distress dated 18th May 2016.

4. That an order of Prohibition do issue against the 1st and 2nd Respondents restraining the Respondents whether by themselves, their servants or their duly authorized agents from making any claims against the Applicant or issuing any directives of whatever nature to the Interested Party directing the Interested Party to recover any tax arrears by attaching the Applicant’s movable goods and chattels or interfering in any manner whatsoever with the business operations of the Applicant.

5. That this Honourable Court be pleased to issue such further and other reliefs that it may deem just and expedient to grant in the circumstances.

6. That the costs of and incidental to the Application be provided for.

Ex ParteApplicant’s Case

2. According to the applicant, it was incorporated and duly registered in the year 2011 and subsequent thereto, it duly registered with the 1st Respondent for the purposes of payment of Income Tax and VAT pursuant to the law and was accordingly issued with a PIN Number P051416778S.

3. The applicant averred that since the said registration, it has faithfully honoured its tax obligations to the 1st Respondent. However vide a letter dated May 2016, the 2nd Respondent informed Frarim’s Supermarket Limited (hereinafter referred to as “the Supermarket”) that the said entity owed it tax arrears in the sum of Kshs 8,109,849/=. Vide another letter dated 18th May, 2016 addressed to the same entity, the 2nd Respondent issued a Notice of Distress in respect of the alleged arrears.

4. The applicant averred that to its surprise, pursuant to the said Notice of Distress, the interested party, under the instructions of the 1st and/or 2nd Respondents proclaimed the applicant’s moveable assets on 18th May, 2016. Despite the applicant clarifying to the Respondent that the Wholesales and the Supermarket are two totally unrelated entities, hence the said proclamation s invalid, unlawful and illegal, the 2nd Respondent failed, refused and/or neglected to either respond hereto or lift the said action.

5. It was the applicant’s case that it has no knowledge, relation, connection, nexus nor has it ever had any dealings of whatever nature with the said Supermarket and is a stranger to the said tax arrears. It was therefore its case, that the said action is illegal and ought to be lifted.

6. The applicant further contended that in any event the said arrears of Kshs 8,109,849/= is manifestly excessive in view of the fact that the applicant was only incorporated in 2011.

7. The applicant however contended that it has never been issued with any Notice in its own name of any tax arrears and has never n afforded an opportunity to make any representations in accordance with the law before the said action was taken hence the said action contravened the rules of natural justice.

8. It was submitted on behalf of the applicant that the jurisdiction of this Court is not to determine whether or not the Applicant owed the Respondents any taxes but rather to determine whether the decision of the Respondents’ decision to distrain the Applicant’s movable goods and chattels with a view to recovering tax arrears owed by a third party was lawful. To the applicant it was irrational, unreasonable and an abuse of discretion by the Respondent to serve a demand notice and subsequently proclaim the Applicant’s movable assets and chattels with a view to recover tax arrears allegedly owed by a third party purportedly on the ground that the two entities are related. By so doing, the Respondent is trying to achieve its objective through craft and unprocedurally trying to lift the veil of incorporation as opposed to applying well laid down legal procedures.

9. While appreciating that the Respondents are entitled to employ measures stipulated in law and exercise powers donated by statute to recovery, the applicant submitted that exercise of such powers should be done rationally and reasonably and that where discretion is to be exercised, the same should be done reasonably. In the premises, it submitted that the Respondent arbitrarily exercised its powers, abused its discretion and acted irrationally in arriving at its decision to proclaim the Applicant’s assets This position was based on the fact that the incorporation, ownership and management of the Supermarket is fundamentally different from the Applicant’s incorporation, ownership and management as is evidenced through the tax profiles of the respective companies produced herein. Similarly, the directors of the said companies are different albeit carrying on similar business. The applicant contended that once incorporated, a company becomes a separate and distinct legal entity from its members, agents or shareholders as was enunciated in the hallowed case of Salomon –vs- Salomon [1897] AC 78 and the veil of incorporation can only be pierced in special circumstances which are clearly spelt out by statute and judicial authorities over time.

10. In this case it was submitted that the Respondents have not proved in any way or demonstrated how the directors, shareholders or agents of the said Supermarket incorporated the Applicant for the sole purpose of fraudulently avoiding the tax liabilities now being demanded from the Applicant neither have they demonstrated how the Applicant’s directors incorporated it to evade tax. The only relationship alleged is that of family and that the directors were related by blood. However, the tax profiles of the two entities produced by the Respondents clearly show that the directors of the said entities are different persons. Further, the allegation that the said Supermarkets fraudulently transferred its business to the Applicant has not been substantiated either for the Respondents to invoke the provisions of the Transfer of Business Act and the Tax Procedures Act. To the best of the Applicant’s knowledge, the said Supermarkets is still in existence and as such any recovery should be made against it. The fraudulent schemes or theories alleged designed for tax evasion are only presumptuous.

11. With respect to lifting of the corporate veil, the applicant relied on Republic vs. Commissioner of Investigation & Enforcement & another Ex-Parte Eldoret Grains Limited [2014] eKLRwhere the Court held as follows:

“The Applicant also attacked the decisions of the respondents by stating that the accounts in issue belonged to an employee and the tax should therefore have been assessed on the employee. The Applicant argued that the 2nd Respondent in reaching its decision overlooked the fact that Applicant being a company is a different entity from its employees and its owners. In response to this latter argument the respondents submitted that the corporate veil can be lifted in certain circumstances and those circumstances existed in the case of the Applicant. In my view, the decision as to whether or not the corporate veil of the Applicant could be lifted and was indeed lifted by the 1st Respondent is a matter that goes to the merits of the decision. The facts that led to the decision of the 1st Respondent were placed before the 2nd Respondent and it is only the 2nd Respondent which could determine whether this was a proper matter for the lifting of the corporate veil. This is a no-go-area for a judicial review court....”

12. In this case it was submitted that the Applicant has never been served with any Notice of Assessment contrary to section 78 of the Income Tax Act, Cap 470 Laws of Kenya which provides that:

The Commissioner shall cause a notice of an assessment, provisional assessment or instalment assessment to be served on the person assessed, and the notice shall state the amount of income assessed and the amount of tax payable and shall inform the person assessed of his rights under section 84; but no notice need be served in the case of a person deemed to have been assessed under section 74(2) or 74A(2).

13. Reliance was further placed on section 41(1) and (2) of the Tax Procedures Act, 2015 which provide in mandatory terms that:

(1) The Commissioner or an authorised officer may issue an order (referred to as a “distress order”), in writing, for the recovery of an unpaid tax by distress and sale of the movable property of a taxpayer.

(2) A distress order shall specify––

(a)the taxpayer against whose property the order is issued;

(b)the amount of the unpaid tax liability;

(c)the property against which the distress proceedings are to be executed; and

(d)the location of the property against which the distress proceedings are to be executed.

14. In this case it was submitted that since incorporation the Respondents have treated the Applicant and the said Supermarkets as separate and distinct legal entities hence it is arbitrary, unreasonable and unconscionable for the Respondents to now turn around and purport treat the two entities as one. In this respect the applicant relied on Republic vs. Commissioner General, Kenya Revenue Authority & 2 Others[2012] eKLR where while faced with a scenario like the one in question, the Court expressed itself as follows:

“I will first consider the position under the Value Added Tax Act. The Notice of Assessment in this case was addressed to an entity called Sirikwa Hotel Limited. The detailed explanation of the reasons for the assessment and the calculations related thereto, were for that entity. On the respondents’ own admission, that entity had a separate PIN Number distinct from the PIN Number of the applicant. It is significant that PIN numbers are issued by the respondents who alone keep records of the tax payers. The respondents themselves treated the applicant and the said entity as separate and distinct legal entities complete with separate tax files. The respondents also exhibited annexture A77 to the replying affidavit of Fredrick O. Osamba aforesaid. The annexture is a letter from M/s. Ndettei and Associates addressed to the Assistant Commissioner, Investigations and Enforcement Department of the respondents. At paragraph 6 of that letter, the said firm stated that the applicant purchased the assets of the entity called Sirikwa Hotel Limited which was under receivership and it was then issued with its own PIN number. In the premises, M/s Ndettei and Associates, alerted the respondents that the assessment in respect of Sirikwa Hotel Limited did not apply to the applicant. The plain language of M/s. Ndettei’s letter meant that the applicant had a separate legal existence distinct from Sirikwa Hotel Limited and was accordingly a different body for purposes of taxation. That, in my view, is elementary. Yet the respondents do not appear to have appreciated the import of the legal status of the applicant and Sirikwa Hotel Limited. They treated the applicant as a synonym of Sirikwa Hotel Limited during the assessment. With all due respect to the respondents, the difference between the applicant and Sirikwa Hotel Limited is not one of form as they contended; they are separate and distinct bodies for purposes of taxation-indeed even in the eyes of the law. Section 81 (1) of the Income Tax Act and paragraph 19(d), of the 6th Schedule of the value Added Tax Act do not therefore apply…That being my view of the matter, the inescapable conclusion is that assessment number 2120100000090 dated 9th June, 2010 with respect to Value Added Tax of Sirikwa Hotel Limited, was not a valid assessment of the applicant’s Value Added Tax liability. The respondents accordingly did not serve the applicant with a valid notice of taxation with respect to Value Added Tax. The respondents were therefore guilty of an impropriety of procedure in first demanding of the applicant value added tax without notice and demanding tax not due from the applicant. The demand had no basis and was therefore arbitrary. To demand, of the applicant, tax due from a different entity was also grossly negligent and blatantly in breach of the Law.As Nyamu J, as he then was, held in Keroche Industries Limited -Vs- Kenya Revenue Authority and Four others, [Misc. Civil Appeal No. 743 of 2006] UR, judicial review remedy is available where there is, inter alia, proof of Wednesbury unreasonableness, illegality and impropriety of procedure. Judicial review is not limited to the decision making process alone. Indeed the court of Appeal did not limit its application in Pili Management Consultants -Vs- Commissioner of Income Tax - KRA [Nairobi CA NO. 154 of 2007] UR as the respondents contended. Judicial review is also available where there is an error of law, arbitrariness, illegality and abuse of power. Its purview continues to expand.”

15. In sum, the applicants prayed humbly prayed that this Honourable Court finds that the Respondent acted arbitrarily, unreasonably, unconscionably and blatantly flouted the laid down procedure by purporting to demand tax owed by a third party from an entity that does not owe tax arrears to it. In its view, the decision to proclaim the Applicant’s assets amounts to a clear violation of the laid down law as it puts the Respondents in a position where they literally do as they wish placing the Applicant at a huge disadvantage and in the process the right of equal protection before the law is thrown to the four winds. The applicant therefore prayed that its Notice of Motion Application dated 6th June 2016 has merit and ought to be allowed as prayed.

Respondents’ Case

16. In response to the application, the Respondents averred that they have for many years been experiencing problems in effectively assessing, collecting and accounting for all tax revenues due to various acts, omissions and/or vices perpetrated by some traders which result in incorrect and/or lower tax declarations, with resultant loss of substantial government revenue. It was averred that in order to ensure that everybody pays his fair share of taxes, the Tax Procedures Act has robust provisions that provides that when a taxpayer has a tax liability in relation to a business carried on by the taxpayer and the taxpayer has transferred all or some of the assets of the business to a related person, the transferee shall be liable for tax liability of the transferor.

17. It was the Respondents’ case that the Applicant is a limited liability company with same registered physical location and same postal address at Malaba as Frarim’s Supermarket Limited, who are the distressed tax payers herein and that on the 15th June 2010 the Respondents issued the Supermarket with tax assessment for the year 2009 of Kshs. 7,753,778. 00 following a compliance check at the premises and preliminary examination of the taxpayers books and records for the specified period which revealed that VAT was never paid in full. It was disclosed thaton 12th July, 2010 the said Supermarket objected to the said tax assessment which the Respondents after considering the objection in line with the Value Added Tax Act (repealed) dismissed on 20th July, 2010 on the grounds that the said tax payer had fraudulently with a view to evade tax declared more taxable purchases in VAT3 than what was in the actual invoices with a view to inflate input tax. Further the Respondents found that the Taxpayer had fraudulently declared more zero rated purchases than what was in the actual invoices and also that the tax payer had not issued all the documents with regards to its sales, purchases and VAT 3 booklets.

18. To the Respondents, having unearthed the taxpayer’s scheme to evade tax by fraudulent accounting and failure to avail all the documents and records of accounting the taxpayer through its directors; Francis Rimui Muchina and Nancy Wanjiru Muchina advised their sons; James Rimui, Martin Mwaniki Rimui and Samuel Rimui to register the Applicant company to take over the business hence the registration of the Applicant in 2011 as another ploy to evade the tax liability. It was averred that whereas the Applicant further applied for a PIN/VAT number and the Respondents issued them with one, the business entity remained the same and continued to be operated with the same staff and the only thing that changed was the name from Frarim’s Supermarket Limited to New Frarim’s Wholesalers Limited with the sons now taking over as the directors from their parents in the new entity. However, the Applicant did not issue the notice to the Respondents on taking over the business of the taxpayer as provided under the Value Added Tax Act, CAP 476 so that the Respondents could raise the issue of the tax liability. Further the Applicant despite having one of its directors as an advocate of the High Court of Kenya in transferring of the business failed to issue notice to the creditors and any entity that the Supermarket could be having outstanding liabilities to present themselves as provided under the Transfer of Business Act.

19. The Respondents averred that the failure to issue the notices under the Value Added Tax Act, the Income Tax Act and the Transfer of Business Act was a ploy to ensure the Respondent did not take notice of the scheme and evade the tax liability. It was therefore the Respondents’ case that on 3rd December, 2014 they proceeded to issue a demand notice to the Taxpayer, the Supermarket, for the tax in arrears which then amounted to Kshs. 8,109,849. 00 but there was no response from the tax payer. The Respondents on 18th March, 2015 further to section 25 of the Value Added Tax Act issued agency notices to Kenya Commercial Bank, Equity Bank and Co-operative Bank all Kamuriai branches against the accounts of the tax payer, the Supermarket. In support of their case the Respondents relied on section 41 of the Tax Procedures Act, 2015 which provides that:

The Commissioner or an authorized officer may issue an order (referred to as a “distress order”), in writing, for the recovery of an unpaid tax by distress and sale of the movable property of a taxpayer.

20. However as the said Agency Notices yielded no tax, the Respondents resorted to distraint measures to recover the tax in accordance with section 41 of the Tax Procedures Act (TPA) ,2015and on 18th May, 2016 issued a Notice of Distress under section 102 of the Income Tax Act and section 24 of the Value Added Tax Act to the Supermarket and the same was served upon the Applicant who had taken over the assets and liabilities of the said Taxpayer.

21. The Respondents averred that on 18th March, 2016 their officers visited the premises of the tax payer to serve the Notice of Distress only to find that the business was still ongoing and nothing much had changed only that this time round it was going on in the new name of the Applicants herein and their preliminary investigations established that the business had changed its name following the demand notices in 2010 and the new company had been incorporated in 2011 to take over. The Respondents further disclosed that on visiting the Taxpayer business premises on 18th March, 2016 it observed the following:

a) the taxpayer had changed the business name from Frarim’s Supermarket Limited to New Frarim Wholesaler’s Limited which was incorporated in 2011 by the sons of the directors of the Tax payer; Frarim’s Supermarket Limited;

b) the Nature of Business of the new business entity remained the same as that of the said Taxpayer, Frarim’s Supermarket Limited which was supermarket, even after changing the business name and the clientele remained the same; and

c) the physical location of the business of the said Frarim’s Supermarket Limited also remained the same: Frarim’s Supermarket Building, Malaba Border Town, Malaba-Uganda Roadand the Postal Address too remains Box 103-50408 Malaba.

22. To the Respondents the aforesaid observations show an explicit plan to circumvent the law and evade payment of taxes by way of re-registration of the same business and transfer of assets to related parties. They further aver that the Applicant having failed to issue the notices under the Transfer of Business Act meant that it took with it the liabilities of the transferor as provided the Act. Accordingly, the Respondents were well within their legal mandate to issue the distress notice and further the proclamation to the Applicant has it had taken over the business of the tax payer and failed to issue a notice to the Respondent as provided under the Value Added Tax Act and the Transfer of Business Act.

23. The Respondents asserted that the Wholesalers and the Supermarket are related persons within the meaning of the Value Added Tax Act and the Income Tax Act hence the respondents can collect the tax due from the Supermarket. This was explained by the fact that the two entities share the same name “Frarim” which is derived from the name Francis Rimui Muchina, who is the director of the Supermarket and the father to the directors of the Applicant. In addition, the Respondent averred the directors of the Applicant share the name of their father Mr. Rimui hence clearly they cannot allege they do not know the entity which they took from.

24. The Court was therefore urged to lift the veil of incorporation for the two entities and find that they are indeed related. To the Respondents the courts have always lifted veil of incorporation where it shown that the company was incorporate to avoid legal obligation or commit an offence by evading tax liabilities which are already due and payable as it is the case herein. In support of their case the Respondents relied on section 23 of the said Income Tax Act (Cap 470) which provides:

where any transaction was avoidance or reduction of liability to tax for a year of income or the that the main benefit which might have been expected to accrue from the transaction in the three years immediately following the completion thereof was the avoidance or reduction of liability to tax, he may, if he determines it to be just and reasonable, direct that such adjustments shall be made as respects liability to tax as he considers appropriate to counteract the avoidance or reduction of liability to tax which could otherwise be affected by the transaction.

25. It was further deposed that in order to ensure that everybody pays his fair share of taxes, the Tax Procedures Act has robust provisions that provides that where an arrangement has been entered into by any director, general manager, company secretary, or other senior officer or controlling member of the company with the intention or effect of rendering a company unable to satisfy a current or future tax liability under a tax law, every person who was a director or controlling member of the company when the arrangement was entered into shall be jointly and severally liable for the tax liability of the company. The Respondents disclosed that further investigations into the affairs of the Wholesalers and the Supermarket established that the Applicant company was indeed incorporated by the directors of the Supermarket together with current directors who are their sons after they were issued with the initial assessment in 2010. For the purpose of taxation the person registered as associated with the Applicant herein is one Nancy Wanjiru Muchina who together with Francis Rimui Muchina are the only directors of the Supermarket. The applicant contended that the Applicants where at all material time related persons to the Supermarket as provided under section 2 of the Tax Procedures Act as read with section 13(8) of the Value Added Tax Act, 2013. Further the Applicant were the controlling members of the Taxpayer as they beneficially hold directly or indirectly, either alone or together with a related person the rights to capital attaching to the members of the taxpayer as provided under section 18 of the Tax Procedures Act which company it took over the assets.

26. In the Respondents’ view, it would be unreasonable and unrealistic for the Respondents to be required that every time a taxpayer changes its name or identification the Respondent should also change the name on its assessments and demands as changes were done without the Respondent being any given notice as provided under the statute. It was averred that that the current directors only took over the control and management of the Applicant company operations after the demise of the said Francis Rimui and Nancy Wanjiru Muchina who were their parents who were the proprietors of the Supermarket. It was the Respondents’ case that the Applicant and its directors are related persons to the taxpayer company and as such liable for the liabilities of the taxpayer company.

27. The Respondents insisted that the Applicants being directors and others controlling member (only members of the company) of the Taxpayer are jointly and severally liable for the tax liability of the Taxpayer as provided under section 18(6) of Tax Procedure Act as its now evident the intention or effect of the incorporation was to make the Taxpayer unable to satisfy a current or future tax liability under a tax law. The Respondents also relied on section 46 of the said Tax Procedure Act, 2015 for the position that when a taxpayer has a tax liability in relation to a business carried on by the taxpayer and the taxpayer has transferred all or some of the assets of the business to a related person, the transferee shall be liable for the tax liability of the transferor.

28. It was submitted on behalf of the Respondents that for the court to determine whether the Proclamation Notice which is being disputed herein was properly issued this court would have to go to the merits of the case and determine the following things:

a. Whether there was a transfer of the assets of the Taxpayer: Frarim Supermarkets Limited;

b. Whether there was transfer of the liabilities of the said taxpayer to the Applicant;

c. Whether the facts from the observation and investigation findings of the Respondent were properly applied in arriving at the decision to proclaim against the Respondent; and

d. Whether the Proclamation Notice was properly issued.

29. The Respondent submitted that for this court to answer these four critical questions it will have to go to the merits of the case and consider the detailed facts and laws that advised the Respondent to reach the decision, which is now being disputed. This court will be further required to look at the circumstances of the case to evaluate whether the facts that have been considered by the 1st and 2nd Respondents to find that there was a transfer. The court will further have to apply its mind to determine whether the Respondent applied its best judgment given the facts. It was submitted that the Respondent had gone to great length to demonstrate the facts and the law which advised the Respondent’s decision and the procedure which was followed to arrive at that decision and that the Applicant company was incorporated by the directors of the Tax Payer: Frarim’s Supermarket whose assets were taken over by the Applicant and no notice was issued contrary to section 3(1) of the Transfer of Businesses Act which states that:

Whenever any business or any portion of any business is transferred, with or without the goodwill or any portion thereof, the transferee shall, notwithstanding any agreement to the contrary, become liable for all the liabilities incurred in the business by the transferor, unless due notice in accordance with this Act has been given and has become complete.

30. The Respondent further relied section 46 of the Tax Procedures Act which provides that:

When a taxpayer (referred to as the “transferor”) has a tax liability in relation to a business carried on by the taxpayer and the taxpayer has transferred all or some of the assets of the business to a related person (referred to as the “transferee”), the transferee shall be liable for the tax liability (referred to as the “transferred liability”) of the transferor.

31. It was the Respondents’ submission that the Applicant did not give a reason for the crucial observations made by the Respondent including when they visited the premises. The Respondents further relied on section 2(2) of the Tax Procedures Act which provides that:

For the purposes of this Act, the following are related persons–

(a) persons who are treated as related persons under section 13(8) of the Value Added Tax Act; or

(b) an individual and a relative of the individual.

32. On the same issue the Respondents relied on section 13(8) of the Value Added Tax Act (similar provision in section 2(3) of VAT Act (Cap 476) which provides that:

For the purposes of this Act, a person is related to another person if—

(a) either person participates, directly or indirectly, in the management, control or the capital of the business of the other;

(b)a third person participates, directly or indirectly, in the management, control or capital of the business of both; or

(c) an individual who participates in the management, control or capital of the business of one, is associated by marriage, consanguinity or affinity to an individual who participates in the management, control or capital of the business of the other.

33. Reliance was further placed on VAT Act, (Cap 476) section 2, which states that:

Where a person who is related to another person owns, operates or controls one or more business entities, the value of his taxable supplies for the purposes of registration under this Act shall be the aggregate value of taxable supplies of all business entities owned, operated or controlled by the person.

34. Based on the foregoing provisions, the Respondents submitted that for the court to be able to establish whether the facts relied on and legal consideration are correct the court has to go to the merits and interrogate the facts and cited Republic vs. Kenya Revenue Authority exparte Interactive Gaming & Lotteries Limited [2016] eKLRin which it was held that the law is now trite that the determination of whether taxes are due and if so how much, is not a matter for the judicial review Court. As such this court is not the best forum to determine whether the taxes of the Taxpayer where due from the Applicant or not. It was therefore submitted that in order for the court to fully appreciate the issues herein the court would need to allow the Respondent to call viva voce evidence and to interrogate the merits of the decision as is put in details in the Replying Affidavit and Further Replying Affidavit sworn and filed herein. Further the court would need to review and call for evidence to demonstrate that whether there was a transfer from Frarim’s Supermarket Limited to the Applicant. For this, the Respondents relied on Republic vs. Commissioner for Investigations & Enforcement Ex-parte Wananchi Group Kenya Limited [2014] eKLR where it was stated that:

“Similarly, for me to make a determination that VAT was not payable, I would have to make a finding that the STBs or decoders were subject of the Minister’s remission. I have no evidence before me which can enable me arrive at such a finding. To do that would amount to this Court sitting on appeal on the decision made by the Respondent.”

35. In the Respondents’ view, a dispute of such a nature that need the re-evaluation of the merits and interrogation of facts and law applied should be filed in such a manner that the dispute is fully addressed. However, a court sitting as a judicial review would have to extend its mandate to fully address dispute of such a nature and as such the civil division of this court would have been a better forum for the Applicant to file this case. To this effect they relied on Pili Management Consultants Ltd vs. Commissioner of Income Tax Kenya Revenue Authority(Civil Appeal No. 154 of 2007.

36. In the Respondent’s view, even the Applicant, in identifying issues for this court to make a ruling, have highlighted two questions being whether the Applicant and Frarim’s Supermarket Limited are separate legal entities; and whether the Applicant has never been served with any Notice of Assessment. In their view, these two questions are questions of merit and issues of private rights which can only be answered by going into the facts and interrogating them and not mere procedure and relied on Republic vs. Commissioner for Investigations & Enforcement Ex-parte Wananchi Group Kenya Limited [2014] eKLR.

37. In their view, disputes of the nature as herein is not one of those envisaged for a judicial review courts and as such the Application herein is in the wrong forum and the court should dismiss the same and the Applicant be directed to file the suit in the right forum and in the right format- plaint with witness statements. To them, the Applicant having themselves chosen this forum to address this dispute and cannot now submit that the scope of judicial review is limited and the court ought to not go into the merit as is the merits that advised the decision they are questioning and relied on Republic vs. Kenya Revenue Authority Ex parteYaya Towers Limited [2008] eKLR. To them, when the Applicant chose this forum it ought to have ensure that it is the right forum to address its dispute in totality and the Respondent cannot be allowed by any court of justice to suffer because the Applicant chose a forum which cannot fully handle the dispute in question as the matter requires going into the merits and interrogating the facts therein. From the foregoing the Respondents submitted that this court if not for any other reason ought to dismiss the Application and the Applicant to condemned to choose the right forum for the dispute.

38. It was contended that the Proclamation notice arose from the Respondent carrying out an assessment in line with section 73 of the Income Tax Act and paragraph 9 of the 7th Schedule to the Value Added Tax Act Cap 476. To them, the proclamation Notice was issued under section 41(1) of the Tax Procedures Act which provides that:

The Commissioner or an authorised officer may issue an order (referred to as a “distress order”), in writing, for the recovery of an unpaid tax by distress and sale of the movable property of a taxpayer.

39. However, section 51 (1) & (2) of the Tax Procedures Act provides for the remedy available where a taxpayer wishes to dispute a tax decision.

40. The Act, it was submitted, thus provides for statutory procedure to be followed on receipt of an Assessment notice and a dispute resolution mechanism for tax assessments by the Commissioner. In this case, the Applicant lodged an objection through its letter dated 23rd May, 2016 which was served upon the Respondent on 24th May, 2016 and without waiting for the Respondent to make a decision proceeded to institute this suit on 27th May, 2016 hardly 48 hours from the time of service. To the Respondents, the Applicant has not demonstrated with precision to this court that Judicial Review is a more effective and convenient remedy than the statutory laid down dispute resolution mechanism. In their view, judicial review is not the appropriate and efficacious way of resolving the dispute herein and the Applicant has not demonstrated what exceptional circumstances existed in its case which would remove it from the procedural mechanisms set out in the statute. In this respect the Respondents relied on Republic vs. Kenya Revenue Authority ex parte Interactive Gaming & Lotteries Limited [2016] eKLRand Speaker of the National Assembly –vs- Njenga Karume’s Nrb. C.A.C.A. No. 92 of 1992 .

41. The same principle has been underlined by Lenaola J. in Bernard Murage vs. Fineserve Africa Limited & 3 others [2015] eKLR while upholding the position of the Court of Appeal of Trinidad and Tobago in Damian Belfonte vs. The Attorney General of Trinidad and Tobago C.A 84 of 2004.

42. In this case, it was submitted that the Applicant is challenging proclamation further to an assessment of taxes which is not cast in stone but there is statutory provision to prefer and objection and an appeal thereafter. While embarking on these processes, the taxes are usually stood over pending determination of the same. The Commissioner and the Tax Appeal Tribunal, are most suitable in the context of this case to determine the real issues in dispute herein. In support of our case, they relied on Republic vs. Commissioner for Income Tax & another Ex-Parte Stockman Rozen (K) Limited [2015] eKLR where in dismissing the Judicial Review application this Court had this to say:

“Therefore confronted with a question as to which remedy a litigant ought to seek, a Court should examine whether the alternative remedy provides an efficacious and satisfactory answer to the litigant’s grievance. In other words the Court ought to consider whether the alternative remedy is less convenient, beneficial and effectual.”

43. The Respondent submitted that the Applicant properly lodged the objection on 24th May, 2016 with the Commissioner but abandoned it two days later only to file the suit herein on 27th May, 2016 without giving any reason why they did not pursue the statutory remedy provided by the law. In the circumstances, it is their submission that this is a proper case that warrants exercise of the courts discretion by directing the Applicant to exhaust the statutory available remedies in resolving the dispute, before approaching this court for judicial review remedies.

44. In the Respondents’ view, Judicial Review is a discretionary remedy and the court has a wide discretion to issue orders in Judicial Review. However this discretion is limited and does not allow the court of review to examine the evidence with a view of forming its own view about the substantial merits of the case. It was submitted that the Application before the court is one that is not within the scope of Judicial Review. The Applicant is calling upon this court to delve into the merits of the statutory decision made by the Respondent yet there is another forum in which the decision the Respondent is seeking to be quashed on its merits, can be examined. The Applicant has not demonstrated to this court in its supporting affidavits and supplementary affidavit that the process/manner in which the decisions to issue the Proclamation Notice was outside its statutory mandate save for making averments. To the Respondents, this judicial review process is not an objection process and the Applicant ought not be allowed to use this to ventilate its objection.

45. It was the Respondents’’ case that in the circumstances of this case, there is no requirement that the Proclamation be in the name of the person to be proclaimed since it only refer to the service to be made on the person to whom the assessment relates but this sections does not exist in a vacuum where the facts make other provisions to be applicable those provisions would be considered in enforcement as in this case the facts required the Respondent to invoke section 23 of the Income Tax Act and section 46 of the Tax Procedures Act.

46. Since the Respondent is, pursuant to section 51(11) of the Tax Procedures Act given sixty days to determine an objection, in this case, by instituting these proceedings 48 hours after serving the letter of objection, the applicant denied the Respondent an opportunity to exercise its statutory mandate and make a decision thereon. To them, the assessment and the Proclamation and further to the objection issued and 48 hours only being allowed to respond the actions of the Respondent cannot be termed as unreasonable, outrageous to meet the test for grant of the judicial review orders sought in light of the above provisions. It was therefore submitted that the ex parte applicant failed to demonstrate that the Respondent’s decision was tainted with irrationality or unreasonableness to warrant grant of the orders sought herein and the same should be dismissed.

47. According to the Respondents, the question whether the proclamation was enforced on the right entity goes to root of the decision made by the Respondent to proclaim on the Applicant. To establish the whether the proclamation was properly enforced the court will be tasked to answer questions which will require going into merits and further evaluating the weight of the facts placed before the Respondent that advised its decision.

48. With respect to lifting of corporate veil, the Respondents relied on Ephantus M. Kagomo and six others versus the Industrial and Commercial Development Corporation where this Court cited the case of Mugenyi and Company Advocates vs. The Attorney General (1999) 2 EA 199 which lists 10 instances in which the veil of corporate personality may be lifted or as they put it looking behind the company as a legal personaand these are:

“In certain matters relating to taxation…In abuse of law in certain circumstances,… where the device of incorporation is used for some illegal or improper purpose…. and where the private company is founded on personal relationship between the members.”

49. It was submitted that the Tax Procedures Act has however already placed the liability on the transferee as such the question of lifting the veil would just be used by the Respondents to explain to the court of merit which other factors advised its decision. However this court does not allow the Respondents to go deep into merits so the Respondent rest the matter at that point.

50. It was the Respondents’ case that the Court should find that the Proclamation Notice was rightly saved under section 46 of the Tax Procedures Act and questioning the decision would mean going into the merits of the case which is a reserve of another forum which forum the Applicant was to place the dispute herein as such the application be dismissed.

51. It was reiterated that the Appellant having objected through its letter dated 23rd May, 2016 to the decision of the commissioner, the Applicant ought to have waited for the commissioners decision before proceeding to instituted any suit and as such the suit was premature as envisaged under section 51 of the Tax Procedures Act.

52. The Respondent further submitted that the Applicant should have waited until the statutory timeline as provided under section 51(11).

53. It was therefore submitted that the Applicant has failed to demonstrate why this court should not ignore the statutory body established under law to resolve the dispute of such nature and proceed to entertain the suit. Secondly, it has not shown why the court sitting in a judicial review should entertain a dispute that goes to the merits of the decision made by a public authority. Thirdly, the Applicant has not shown how the dispute herein falls within the scope of judicial review. The Respondent has however shown that the proclamation notice was issued as provided as provided under section 46 of the Tax Procedures Act and therefore valid. Finally the Applicant has not shown why it did not allow the Respondent to respond to its objection before instituting the suit prematurely.

54. In the Respondents’ view, the balance of convenience lie more on the said orders not being granted as this will be setting a very dangerous precedence to tax evaders.

Determinations

55. Since an issue was raised as to the viability of the appellate procedure, it is important to deal with the said issue before delving into the merits of the matter. Sections 84, 85 and 86 of the Income Tax Act provide as follows:

84. (1) A person who disputes an assessment made upon him under this Act may, by notice in writing to the Commissioner, object to the assessment.

(2) A notice given under subsection (1) shall not be a valid notice of Objection unless it states precisely the grounds of objection to the assessment and is received by the Commissioner within thirty days after the date of service of the notice of assessment; but if the Commissioner is satisfied that owing to the absence from Kenya, sickness or other reasonable cause, the person objecting to the assessment was prevented from giving the notice within that period and there has been no unreasonable delay on his part, the Commissioner may, upon application by the person objecting, and after deposit by him with the Commissioner of so much of the tax as is due under the assessment under section 92, or such part thereof as the Commissioner may require, and the payment of any interest due under section 94, admit the notice after the expiry of that period and the admitted notice shall be a valid notice of objection:

Provided that the objection made within the thirty days shall not be valid unless it is accompanied by a return of income together with all the supporting documents, where applicable.

(3) A person aggrieved by the refusal of the Commissioner to admit a notice of objection under subsection (2) may, on depositing with the Commissioner if he so requires, the whole or such part as the Commissioner may require of the amount of tax assessed under the assessment to which objection is made and on paying any interest due under section 94, appeal against the refusal to a local committee, whose decision shall be final.

(4) All the provisions of this Act relating to appeals against assessments shall, so far as they are applicable and subject to the finality of the decision of the local committee, have effect with respect to an appeal under subsection (3), and the local committee hearing the appeal may confirm the decision of the Commissioner or may direct that the notice concerned shall be a valid notice of objection.

85. (1) Where a notice of objection has been received, the Commissioner may -

(a) amend the assessment in accordance with the objection; or

(b) amend the assessment in the light of the objection according to the best of his judgement; or

(c) refuse to amend the assessment

(2) Where the Commissioner either—

(a) agrees to amend the assessment in accordance with the objection; or

(b) proposes to amend the assessment in the light of the objection and the person objecting agrees with the Commissioner as to the proposed amendment, the assessment shall be amended accordingly and the Commissioner shall cause a notice setting out the amendment and the amount of the tax payable to be served on that person.

(3) Where the Commissioner—

(a) proposes to amend the assessment in the light of the objection and the person objecting does not agree with the Commissioner as to the proposed amendment, the assessment shall be amended as proposed by the Commissioner and he shall cause a notice setting out the amendment and the amount of the tax payable to be served on that person; or

(b) refuses to amend the assessment, he shall cause a notice confirming the assessment to be served on that person.

86. (1) A person who has been served with a notice under section 85(3) may—

(a) if his assessment is based upon or consequent upon a direction issued under section 23 or 24, appeal from the decision of the Commissioner to the Tribunal; or

(b) in any other case, appeal from that decision to the local committee appointed for the area in which he resides or, if he is a non-resident person, to a local committee appointed for the Nairobi Area, upon giving notice of appeal in writing to the Commissioner within thirty days after the date of service.

(2) A party to an appeal under subsection (1) of this section or under section 89(1) who is dissatisfied with the decision thereon may appeal to the Court against that decision upon giving notice of appeal to the other party or parties to the original appeal within fifteen days after the date in which a notice of that decision has been served upon him; but an appeal to the Court under this subsection may be made only on a question of law or of mixed law and fact.

(3) Where a person other than the Commissioner has failed to give notice of appeal within a period specified in subsection (1) he may, after depositing with the Commissioner so much of the tax as is payable under section 92(6), or such part thereof as the Commissioner may require, and paying any interest due under section 94, apply to the local committee or the Tribunal, as the case may be, for an extension of the time in which to give the notice of appeal, and the local committee or the Tribunal may grant an extension on being satisfied that, owing to absence from Kenya, sickness or other reasonable cause, he was prevented from giving notice of appeal within the relevant period and that there has been no unreasonable delay on his part.

(4) Where a person other than the Commissioner has failed to give notice of appeal within the period specified in subsection (2) he may apply to the Court for an extension of the time in which to give notice of appeal and the Court may grant an extension on being satisfied—

(a) that he has paid the tax payable or required under section 92(6) (together with any interest charged under section 94); and

(b) that he has paid the tax due under section 93(1)(c); and

(c) that owing to absence from Kenya, sickness or other reasonable cause, he was prevented from giving notice of appeal within the relevant period; and

(d) that there has been no unreasonable delay on his part.

56. It was contended that the Proclamation notice arose from the Respondent carrying out an assessment in line with section 73 of the Income Tax Act and paragraph 9 of the 7th Schedule to the Value Added Tax Act Cap 476. Section 51(1) & (2) of the Tax Procedures Act provide that:

(1) A taxpayer who wishes to dispute a tax decision shall first lodge an objection against that tax decision under this section before proceeding under any other written law.

(2) A taxpayer who disputes a tax decision may lodge a notice of objection to the decision, in writing, with the Commissioner within thirty days of being notified of the decision.

57. In this case, it was not controverted that the Applicant lodged an objection through its letter dated 23rd May, 2016 which was served upon the Respondent on 24th May, 2016 and these proceedings were instituted on 27th May, 2016. No reason has been advanced as to why the applicant who had properly invoked the statutory remedy could not wait for the alternative process to take its lawful course. The Applicant has not for example demonstrated that Judicial Review is a more effective and convenient remedy than the statutory laid down dispute resolution mechanism.

58. In Rich Productions Ltd. vs. Kenya Pipeline Company & Another, Petition No. 173 of 2014,the High Court explained why it must be slow to undermine prescribed alternative dispute resolution mechanisms thus:

“The reason why the Constitution and the law establish different institutions and mechanism for dispute resolution in different sectors is to ensure that such disputes as may arise are resolved by those with the technical competence and the jurisdiction to deal with them. While the Court retains the inherent and wide jurisdiction under Article 165 to supervise bodies such as the 2nd respondent, such supervision is limited in various respects, which I need, not go into here. Suffice to say that it (the court) cannot exercise such jurisdiction in circumstances where parties before it seek to avoid mechanisms and processes provided by law, and convert the issues in dispute into constitutional issues when it is not.”

59. This position was appreciated in Republic vs. Kenya Revenue Authority exparte Interactive Gaming & Lotteries Limited [2016] eKLRwhere this court held that:

“…the issue whether or not tax is due and payable ought to be left to the statutory bodies and Tribunals as opposed to a judicial review Court since such issues go to the merit of the decision rather than the process. In my view specialized bodies established under statutes ought to be given the leeway to conduct their proceedings freely without unnecessary interference by the Court. Where such bodies are acting within their jurisdiction, the Court only ought to step in to ensure that the proceedings are being conducted fairly…..”

60. This has been the position since the Court of Appeal decision in Speaker of the National Assembly –vs- Njenga Karume’s Nrb. C.A.C.A. No. 92 of 1992 where it was held that:

“There is considerable merit in the submission that where there is a clear procedure for redress of any particular grievance prescribed by the Constitution or an Act of Parliament, that procedure should be strictly followed. Accordingly the special procedure provided by any law must be strictly adhered to since there are good reasons for such special procedure.”

61. As was held by this Court in Republic vs. Ministry of Interior and Coordination of National Government and Another ex parte ZTE Judicial Review Case No. 441 of 2013:

“…one must not lose sight of the fact that the decision whether or not to grant judicial review orders is an exercise of judicial discretion and as was held by Ochieng, J in John Fitzgerald Kennedy Omanga vs. The Postmaster General Postal Corporation of Kenya & 2 Others Nairobi HCMA No. 997 of 2003,for the Court to require the alternative procedure to be exhausted prior to resorting to judicial review is in accord with judicial review being very properly regarded as a remedy of last resort though the applicant will not be required to resort to some other procedure if that other procedure is less convenient or otherwise less appropriate. Therefore, unless due to the inherent nature of the remedy provided under the statute to resort thereto would be less convenient or otherwise less appropriate, parties ought to follow the procedure provided for under the statute.”

62. There is now a chain of authorities from the High Court as well as the Court of Appeal that where a statute has provided a remedy to a party, this Court must exercise restraint and first give an opportunity to the relevant bodies or State organs to deal with the dispute as provided in the relevant statute. See Kipkalya Kones vs. Republic & Another ex-parte Kimani Wanyoike& 4 Others (2008) 3 KLR (EP) 291,andFrancis Gitau Parsimei & 2 Others vs. National Alliance Party & 4 Others Petition No.356 and 359 of 2012.

63. This position has now acquired statutory underpinning vide section 9(2), (3) and (4) of the Fair Administrative Action Act, 2015 which provides:

(2) The High Court or a subordinate court under subsection (1) shall not review an administrative action or decision under this Act unless the mechanisms including internal mechanisms for appeal or review and all remedies available under any other written law are first exhausted.

(3) The High Court or a subordinate Court shall, if it is not satisfied that the remedies referred to in subsection (2) have been exhausted, direct that applicant shall first exhaust such remedy before instituting proceedings under sub-section (1).

(4) Notwithstanding subsection (3), the High Court or a subordinate Court may, in exceptional circumstances and on application by the applicant, exempt such person from the obligation to exhaust any remedy if the court considers such exemption to be in the interest of justice.

64. In Republic vs. National Environment Management Authority Civil Appeal No. 84 of 2010 the Court of Appeal expressed itself as follows:

“...where there was an alternative remedy and especially where Parliament had provided a statutory appeal process it is only in exceptional circumstances that an order for judicial review would be granted, and that in determining whether an exception should be made and judicial review granted, it was necessary for the court to look carefully at the suitability of the statutory appeal in the context of the particular case and ask itself what, in the context of the real issue is to be determined and whether the statutory appeal procedure was suitable to determine it...The learned judge, in our respectful view, considered these strictures and come to the conclusion that the Appellant had failed to demonstrate to her what exceptional circumstances existed in its case which would remove it from the appeal process set out in the statute. With respect we agree with the judge.”

65. Having considered the issues raised before me in these proceedings, I am not satisfied that this is a matter in which an exemption ought to be considered since the applicant has not even attempted to offer an explanation as to why it bypassed the statutory remedy which it had aptly invoked and instituted these proceedings. Section 51(11) of the Tax Procedures Act gives the Respondent sixty days to determine an objection and provides that:

Where the Commissioner has not made an objection decision within sixty days from the date that the taxpayer lodged a notice of the objection, the objection shall be allowed.

66. Accordingly, a taxpayer, once he has lodged is objection, ought to wait for the said sixty days before taking the next legal step. To move the Court while the Commissioner is still seized of the objection, in my view amounts to an abuse of the process of the Court as it amounts to playing lottery with the judicial process. That the Court may invoke its inherent powers to bring to an end proceedings which amount to abuse of its process was appreciated byKimaru, J in Stephen Somek Takwenyi & Another vs. David Mbuthia Githare & 2 Others Nairobi (Milimani) HCCC No. 363 of 2009 where he expressed himself as follows:

“This is a power inherent in the court, but one which should only be used in cases which bring conviction to the mind of the court that it has been deceived. The court has an inherent jurisdiction to preserve the integrity of the judicial process. When the matter is expressed in negative tenor it is said that there is inherent power to prevent abuse of the process of the court. In the civilised legal process it is the machinery used in the courts of law to vindicate a man’s rights or to enforce his duties. It can be used properly but can also be used improperly, and so abused. An instance of this is when it is diverted from its proper purpose, and is used with some ulterior motive for some collateral one or to gain some collateral advantage, which the law does not recognise as a legitimate use of the process. But the circumstances in which abuse of the process can arise are varied and incapable of exhaustive listing. Sometimes it can be shown by the very steps taken and sometimes on the extrinsic evidence only. But if and when it is shown to have happened, it would be wrong to allow the misuse of that process to continue. Rules of court may and usually do provide for its frustration in some instances. Others attract res judicata rule. But apart from and independent of these there is the inherent jurisdiction of every court of justice to prevent an abuse of its process and its duty to intervene and stop the proceedings, or put an end to it”.

67. The same Judgein Rev. Madara Evans Okanga Dondo vs. Housing Finance Company of Kenya Nakuru HCCC No. 262 of 2005 similarly held that:

“The court will always invoke its inherent jurisdiction to prevent the abuse of the due process of the court. The jurisdiction of the court, which is comprised within the term “inherent”, is that which enables it to fulfil itself, properly and effectively, as a court of law. The overriding feature of the inherent jurisdiction of the court is that it is part of procedural law, both civil and criminal, and not part of the substantive law; it is exercisable by summary process, without plenary trial, it may be invoked not only in relation to the parties in pending proceedings, but in relation to anyone, whether a party or not, and in relation to matters not raised in litigation between the parties; it must be distinguished from the exercise of judicial discretion; it may be exercised even in circumstances governed by rules of the court. The inherent jurisdiction of the court enables the court to exercise control over process by regulating its proceedings, by preventing the abuse of the process and by compelling the observance of the process. In sum, it may be said that the inherent jurisdiction of the court is virile and viable doctrine and has been defined as being the reserve or fund of powers, a residual source of powers, which the court may draw upon as necessary whenever it is just or equitable to do so, in particular to ensure the observance of the due process of law, to prevent improper vexation or oppression, to do justice between the parties and to secure a fair trial between them.”

68. I am also mindful of the decision of this Court in Constitutional Petition Number 359 of 2013 - Diana Kethi Kilonzo vs. IEBC and 2 Others in which it was held that:

“We note that the Constitution allocated certain powers and functions to various bodies and tribunals. It is important that these bodies and tribunals should be given leeway to discharge the mandate bestowed upon them by the Constitution so long as they comply with the Constitution and national legislation. These bodies and institutions should be allowed to grow. The people of Kenya, in passing the Constitution, found it fit that the powers of decision-making be shared by different bodies. The decision of Kenyans must be respected, guarded and enforced. The courts should not cross over to areas which Kenyans specifically reserved for other authorities.”

69. In the premises the order that commends itself to me is that the applicant ought to pursue the statutory process provided for under the Tax Procedures Actwhich it had in fact initiated but for reasons known only to it, abandoned midstream without seeing it through to its logical conclusion. This Court is under a constitutional obligation pursuant to Article 159(2)(c) of the Constitution to promote alternative dispute resolution mechanisms and it cannot undertake such mandate if it otherwise readily accedes to request to take over matters which ought to be resolved by other statutory bodies.

70. In tax matters the law is as restated in Pili Management Consultants Ltd vs. Commissioner of Income Tax, Kenya Revenue Authority Civil Appeal No. 154 of 2007that:

“As the trial Judge rightly pointed out, the jurisdiction of a court in judicial review is concerned primarily with the decision making process not with the merits of the decision. For the Judge to be able to conclude that no tax was due from Pili for the year 2004, the Judge would have to determine first whether the money in Pili’s account at the Bank was or was not liable to tax. No material was placed before the Judge on that point... it was not the role of the superior court nor of this Court to determine the correctness or otherwise of the tax which Pili was liable or whether Pili was liable to pay any tax at all for the year 2004. ”

71. In the premises I will not deal with the merits of the application in order to avoid prejudicing or embarrassing the said alternative dispute resolution mechanisms more so as such mechanisms had in fact been invoked and are pending.

72. In the premises the order which commends itself to me and which I hereby issue is that the Motion dated 6th day of June, 2016 is incompetent, the same fails and is struck out with costs to the Respondents.

73. It is so ordered.

Dated at Nairobi this 24th day of March, 2017

G V ODUNGA

JUDGE

Delivered in the presence of:

Mr Mbugua for the applicant

Mr Gaya Ochieng for the Respondent

CA Mwangi