[2022] KEHC 1390 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT SIAYA

JUDICIAL REVIEW CASE NO. 1 OF 2021

IN THE MATTER OF:

AN APPLICATION FOR THE JUDICIAL REVIEW ORDER OF MANDAMUSAND

IN THE MATTER OF:

THE FAIR ADMINISTRATIVE ACTION ACT, 2015AND

IN THE MATTER OF:

MARGARET ATIENO ODIEMBO, NATIONAL COUNCIL FOR PERSONS

WITH DISABILITY AND THE KENYA REVENUE AUTHORITY

BETWEEN

REPUBLIC.............................................................................APPLICANT

VERSUS

NATIONAL COUNCIL FOR PERSONS

WITH DISABILITY.................................................1ST RESPONDENT

KENYA REVENUE AUTHORITY........................2ND RESPONDENT

EX PARTE

MARGARET ATIENO ODIEMBO

JUDGMENT

1. Pursuant to leave granted by this court on the 16. 11. 2021 the exparteapplicant MARGARET ATIENO ODIEMBO filed a Notice of Motion application for Judicial Review Orders dated 22. 11. 2021 in which she seeks the following orders:

a) THAT this Honourable court be pleased to issue Judicial Review Orders in the nature of MANDAMUS directed at the Respondents compelling them directly or through their officers and/or agents to renew the Ex-Parte Applicant’s Tax Exemption Certificate.

b) THAT the costs of this Application be provided for.

2. The application is brought under the provisions or Order 53 Rules 3 and 4 of the Civil Procedure Rules, 2010, and Article 47 of the Constitution. The application is accompanied by the verifying affidavit of Margaret Atieno Odiembo which affidavit was sworn on the 25. 10. 2021 accompanying the application for leave to apply, the statutory statement of facts and annexures thereto.

The Ex-Parte Applicants’ Case

3. It is the ex-parte applicants’ case that she was certified as a person with disability and issued with a Tax Exemption Certificate dated 14. 1.2015 which certificate was renewable every 5 years and that subsequently on the 16. 5.2019, she underwent a second medical assessment that recommended her registration as a person living with disability for issuance with a tax exemption certificate.

4. The ex-parte applicant avers that despite the aforementioned recommendation, the respondents have unreasonably refused to renew her tax exemption certificate and that her appeal against the refusal was dismissed on the 3. 10. 2021.

5. It is her case that the respondents’ refusal to renew her tax exemption status is unreasonable and irrational as her medical condition has not changed since her first medical assessment on the 7. 1.2014 and that the subsequent medical assessment report of 16. 5.2019 did show that her medical condition had not changed.

6. It is her case that the respondents’ refusal to renew her tax exemption certificate has violated her legitimate expectation and led her to incur huge unanticipated financial loss as she had taken up loan facilities which are now repaid from her heavily taxed monthly salary.

7. The applicant filed a supplementary affidavit sworn on the 10. 1.2022 in which she reiterated that she appeared before a vetting committee constituted by the 1st Respondent on 16th May 2019 whereupon a recommendation was made that her registration as a person with disability and tax exemption be maintained and that the decision by the vetting committee constituted by the 1st Respondent recommending the renewal of her tax exemption certificate was sufficient proof that she had met the criteria for the renewal.

8. It is the applicant’s case that in spite of the recommendation by the 1st Respondent, the 2nd Respondent has failed and/or neglected to renew her Tax Exemption Certificate.

9. The 1st respondent neither entered an appearance nor filed any affidavit or grounds of opposition to the exparte applicant’s Notice of motion.

The 2nd Respondent’s Case

10. Through a replying affidavit sworn by one Julius T. Kariuki on the 22. 12. 2021 and filed on the 7. 1.2022, the 2nd respondent contends that the instant application was mischievous and lacked merit as the Applicant had not obtained the requisite exemption recommendation from the 1st Respondent as required by law.

11. The 2nd respondent averred that based on the Legal Notice No. 36 of 2010-The Persons with Disabilities (Income Deductions and Exemptions) Regulations), an application for Income Tax Exemption is made to the National Council for persons with Disability (NCPWD), the 1st Respondent who receives and reviews any such application and establishes a vetting Committee and communicates the verdict of the panel to the Applicant and the 2nd Respondent.

12. The 2nd respondent further states that the Applicant was issued with an Income Tax Exemption Certificate No. 20150114/6684 which expired on 1st January 2020 and further that from information gathered from NCPWD, the 1st respondent herein, the Applicant appeared for the vetting in January 2020 but she was not successful for renewal of the Tax exemption certificate.

13. It is the 2nd respondent’s contention that communication to all unsuccessful applicants is done by the 2nd respondent and that only successful applications are forwarded through iTax by the 2nd respondent for review and approval. It was further averred that the 2nd Respondent’s system does not show any pending Application made by the Applicant to the 1st Respondent as her application was not successful.

14. The 2nd respondent further asserts that the exparte Applicant has also failed to attach any such documentation or certificate from the 1st Respondent showing that her Application was approved, in order for the Applicant to be eligible for a tax exemption renewal.

15. The 2nd respondent avers that should the 1st Respondent recommend the Applicant’s application for an exemption, the 2nd Respondent will issue the Applicant with a tax exemption certificate and that in the absence of the tax exemption renewal, the Applicant’s employer has a duty to deduct PAYE, as guided by Section 3(2)(a)(ii) of the Income Tax Act and thus the orders sought to compel the 2nd Respondent to refund the deductions already made cannot issue because in the absence of a valid tax exemption certificate, the 2nd Respondent has a legal duty to collect the PAYE deducted by the Applicant’s employer.

16. The 2nd respondent further contends that the Applicant has failed to attach any such documentation or certificate from the 1st Respondent showing that her Application for Tax exemption was approved, for her to be eligible for a tax exemption renewal and therefore this Application is devoid of merit and the orders sought cannot issue as the 1st Respondent cannot be compelled to recommend the Applicant for tax exemption if the said Applicant has not met the criteria required and the 2nd Respondent cannot issue an exemption certificate without such recommendation.

17. It was further deposed on behalf of the 2nd respondent that there has been no breach of procedure on the part of the 2nd Respondent to warrant the invoking of the jurisdiction of this Honourable Court.

18. The Judicial Review Application was canvassed by way of written submissions.

The Ex- Parte Applicants’ Submissions

19. It was submitted that having been registered as a person with disability and issued with a Tax Exemption certificate, a legitimate expectation arose that the benefit conferred will be maintained absent any change in the applicant’s disability condition. Reliance was placed on the case of Republic versus Principal Secretary Ministry of Mining Ex-parte Airbus Helicopters Southern Africa (PTY) Ltd [2017] eKLRwhere Odunga J noted that “for the doctrine of legitimate expectation to be successfully invoked, the expectation must in the first place be legitimate “in the sense of an expectation which will be protected by law”.

20. It was submitted that the expectation the applicant sought to protect was legitimate, and sufficiently protected by law and that by disregarding the 1st Respondent’s recommendation, the 2nd Respondent violated the principle of legitimate expectation.

21. The exparteapplicant further submitted that her position was reinforced by section 10 of the Persons with Disabilities (Income Tax Deductions and Exemptions) Order, 2010 which outlines two instances under which a Tax Exemption certificate can be revoked, namely, when the status of the applicant has significantly changed in a manner that affects his or her eligibility status for the tax exemption, and, where the applicant omitted material information at the time of making the application that if such information was submitted it could have affected his or her eligibility for tax exemption.

22. The applicant submitted that when she presented herself before the 1ST Respondent’s vetting committee on 16th May 2019 as a condition precedent for the renewal of her Tax Exemption Certificate, the committee made recommendations that she was already registered as a Person with Disability and that her tax exemption be maintained.

23. The applicant submitted that the 2nd respondent admitted in paragraph 13 of its replying affidavit that once the 1st Respondent makes a recommendation for exemption, the 2nd Respondent must proceed to issue an Applicant with a tax exemption certificate and thus the failure by the 2nd Respondent to act on the recommendation of the 1st Respondent violated the principle of legitimate expectation.

24. It was submitted that the decision not to renew the exemption certificate by the 2nd respondent was unjustified, not transparent and unintelligible for the reason that the 2nd Respondent does not have the power to second guess the decision of the 1st Respondent as upon a recommendation by the 1st Respondent, the 2nd Respondent is obligated to act accordingly.

25. The applicant further submitted that under section 7 (2)(k) of the Fair Administrative Action Act, the ‘unreasonableness’ of an administrative action was a valid ground for commencement of a judicial review proceeding.

26. The applicant further relied on the case of Republic v Public Procurement Administrative Review Board & 2 others Ex-Parte Pelt Security Services Limited [2018] eKLRwhere Mativo J. stated that a court or tribunal has the power to review an administrative action if the exercise of the power or the performance of the function authorized by the empowering provision, in pursuance of which the administrative action was purportedly taken, is so unreasonable that no reasonable person could have so exercised the power or performed the function.

27. The 1st Respondent did not file any submissions in this matter.

The 2nd Respondent’s Submissions

28. It was submitted that the procedure for application and grant of a Tax Exemption Certificate is set out in Legal Notice 36 of 2010, The Persons with Disabilities (Income Tax Deductions and Exemptions) Order, 2010.

29. It was further submitted that the Order establishes that a person with disability must first apply for Income Tax Exemption, in the prescribed form, to the 1st Respondent who receives and reviews any such application and thereafter, the 1st Respondent establishes a committee, whose members shall include a medical doctor, to vet the application for tax exemption.

30. The 2nd respondent submitted that the law provides that after the vetting committee has vetted the application, the 1st Respondent will give its recommendation to the Commissioner in the prescribed form and that only the successful Applications are forwarded by the 1st Respondent through i-Tax for review and approval.

31. It was submitted that the application for exemption renewal by the Applicant herein to the 1st Respondent was unsuccessful and as such the 2nd Respondent’s system did not show any recommendation for tax exemption from the 1st Respondent and that the Applicant herein failed to attach any documentation or certificate from the 1st Respondent showing that the Application was approved and thus the 2nd Respondent was therefore right to deny the tax exemption certificate.

32. The 2nd respondent relied on the case of Kyangaro v Kenya Commercial Bank Ltd & Another (2004) as was quoted in the case of Patrick Waweru Mwangi & Another v Housing Finance Co. of Kenya Ltd [2013] eKLR where it was stated that He that comes to equity must come with clean hands and must also do equity. It was submitted that in the instant case, the Applicant failed to follow the proper procedure in order to be eligible for a tax exemption certificate hence the hands of the 2nd Respondent were tied and it could not grant a renewal of the exemption.

33. It was submitted that whereas Section 7 (2) of the Fair Administrative Action Act, 2015 provides for the scenarios when a court is empowered to review an administrative decision, in the present case, the decision not to act as taken by the 2nd Respondent was procedurally fair and proper hence there is no reason for this Honourable court to review the decision.

34. The 2nd respondent submitted that in the present case it was evident that the decision making process was lawful and proper and that the applicant’s intention is to compel the Court to hear the matter as though it were an appellate court over the decision itself. Reliance was placed on the case of Municipal Council of Mombasa vs Republic & Umoja Consultants Limited [2002] eKLRwhere the Court of Appeal statedinteralia that in judicial review, the court would only be concerned with the process leading to the making of the decision and such court is not entitled to act as a court of appeal over the decider as acting as an appeal court over the decider would involve going into the merits of the decision itself-such as whether there was or there was not sufficient evidence to support the decision.

35. It was further submitted that the Applicant had failed to show, by way of evidence, any reason why the power of this court to review the administrative decision should be invoked. Reliance was placed on the case of National Social Security Fund board of Trustees v Commissioner of Domestic Taxes, Kenya Revenue Authority (2016) eKLR where the court stated interalia that a party needs to adduce evidence to support his said assertion with a view to supporting his case.

36. On the question of whether the applicant merited the order of mandamus sought, it was submitted that the case of Republic v Kenya Association of Music Producers (KAMP) & 3 others Ex- Parte Pubs, Entertainment and Restaurants Association of Kenya (PERAK) [2014] eKLRespoused that the order of mandamus is used to compel a public body to perform a duty imposed by an Act of Parliament for the benefit of an individual whereas in this matter the 2nd Respondent was under a statutory duty to issue the renewal of the exemption only upon the recommendation of the 1st Respondent.

37. The 2nd respondent thus submitted that the prayer for mandamus was wholly devoid of merit as the 2nd Respondent could not be compelled to perform a duty that is beyond the scope of its statutory mandate.

Analysis & Determination

38. I have considered the pleadings herein as well as the submissions of both the ex-parte applicant and the 2nd respondent. The main issue for determination herein is whether the order of mandamus sought by the ex parte Applicant against the Respondents can issue in the circumstances of this case.

39. An order of Mandamus will issue to compel a person or body of persons who have failed to perform the duty to the detriment of a party who has a legal right to expect the duty to be performed. It is a judicial command requiring the performance of a specified duty which has not been performed that is employed to compel the performance thereof. Mandamus cannot be employed to direct the exercise of judgment or discretion in a particular way, nor to direct the retraction or reversal of action already taken in the exercise of either. (See the holding in the case of Republic v Principal Secretary, Ministry of Internal Security & another Ex-Parte Schon Noorani & another [2018] eKLR)

40. The Court of Appeal in the case of Republic v Kenya National Examinations Council ex parte Gathenji & Others, [1997] eKLRexplained the applicable principles for an order of mandamus to issue as follows:

“The order must command no more than the party against whom the application is made is legally bound to perform. Where a general duty is imposed, a mandamus cannot require it to be done at once. Where a statute, which imposes a duty leaves discretion as to the mode of performing the duty in the hands of the party on whom the obligation is laid, a mandamus cannot command the duty in question to be carried out in a specific way.”

What do these principles mean? They mean that an order of mandamus will compel the performance of a public duty which is imposed on a person or body of persons by a statute and where that person or body of persons has failed to perform the duty to the detriment of a party who has a legal right to expect the duty to be performed….”

41. In Republic v Town Clerk, Kisumu Municipality, Ex Parte East African Engineering Consultants [2007] 2 EA 441, it was held that an order of mandamus compels a public officer to act in accordance with the law. The main principles that apply therefore for an order of mandamus to issue are firstly, that the Court will only issue a mandatory order if it concludes that it is the only decision lawfully open to the public body, and there is no other legal remedy that is available to remedy the infringement of a legal right.

42. Secondly, the Court will only compel the satisfaction of a public duty if it has become due, and if or where there is a condition precedent necessary for the duty to accrue, an order of mandamus will not be granted until that condition precedent comes to pass. It follows therefore that where there is a dispute as to whether a public duty has crystallized, the Court will not by an order of mandamus compel the Respondent to exercise that duty until the dispute is settled.

43. Lastly, whereas the Court may compel the performance of the public duty where such duty is shown to exist, it will however not compel its performance or the exercise of its discretion in a particular manner.

44. In the present case, the complaint arises out of what the ex parte applicant alleges is the 2nd respondent’s failure to issue her with a tax exemption certificate even after a recommendation from the 1st respondent committee.

45. On their part, the 2nd respondent asserts that there was no communication, in the requisite form on the iTax portal, from the 1st respondent that recommended the ex parte applicant for tax exemption and further that the applicant had not adduced any evidence of the alleged recommendation from the 1st respondent to warrant this court compel the 2nd respondent to issue her with the Tax Exemption Certificate.

46. Section 35 of the Persons Living with Disability Act No. 14 of 2003 provides that:

(1) All persons with disabilities who are in receipt of an income may apply to the Minister responsible for finance for exemption from income tax and any other levies on such income.

(2) The Minister responsible for finance may, by notice in the Gazette, prescribe the procedure for application for and grant of exemption under this section.

(3) Materials, articles and equipment, including motor vehicles, that are modified or designed for the use of persons with disabilities shall be exempt from import duty, value added tax, demurrage charges, port charges and any other government levy which would in any way increase their cost to the disadvantage of persons with disabilities.

(4) All goods, items, implements or equipment donated to institutions and organizations of or for persons with disabilities shall be exempt from import duties, value added tax, demurrage charges, port charges and any other government levy which would in any way defeat the purposes of or increase the cost of the said donations.

47. Section 42 further provides the conditions and procedures that apply prior to grant of the said exemptions as follows:

(1) The following apply with respect to exemptions and deductions described in subsection (2)—

(a) no person is eligible for an exemption or deduction unless the exemption or deduction has been recommended by the Council and approved by the appropriate government authority;

(b) no person is eligible for an exemption or deduction unless any additional requirements or conditions prescribed in the regulations made by the Minister are satisfied;

(c) an exemption or deduction may be refused on the basis that it has not been provided for in the allocation of public resources.

(2) The exemptions and deductions referred to in subsection (1) are the exemptions and deductions under the following— (a) section 12; (b) section 16; (c) section 35; (d) section 36(1); and (e) section 40.

48. Further, under Section 4 of Legal Notice 36 of 2010 (The Persons with disabilities (Income Deductions and Exemptions Regulations) cited by the 2nd Respondent hereinabove, it is provided as follows:

4. Application for tax exemption.

(1) A person with disability may apply for exemption from income tax to the Commissioner through the Council in Form 1 set out in the Schedule.

(2) The exemption under sub-paragraph (1) shall apply to the first one hundred and fifty thousand shillings of the total income per month.

(3) The Council shall establish a committee, whose members shall include a medical doctor, for the purposes of vetting applications for tax exemption.

(4) The Council shall after vetting an application for tax exemption, give a recommendation in Form 2 set out in the Schedule to the Commissioner.

49. Having set out the relevant law, the question is whether in the circumstances of this case, the exparte applicant is entitled to the relief sought against the respondents or any of them.

50. It is not in dispute that the applicant is a person living with disability or that she underwent the assessment to determine whether she is liable for tax exemption or not. The issue from the point of the applicant is that the medical assessment report recommended that as a registered Person with Disability, the tax exemption that she had been given since 2014 ought to be maintained and that the 2nd respondent failed to act on this recommendation.

51. I have scrutinised the supporting documents relied on by the applicant and do observe that indeed the medical assessment filled on the 16. 5.2019 acknowledged that the applicant was a Person with Disability whose tax exemption status ought to be maintained.

52. From the evidence adduced herein I do further note that despite the aforementioned medical report filled on the 16. 5.2019, the National Council of Persons with Disabilities did not recommend the applicant for tax exemption status leading to her appeal vide her undated letter which appeal was also dismissed vide the letter dated 3. 3.2021 on the grounds that the applicant did not meet the threshold for tax exemption.

53. Accordingly, it is clear that the 1st respondent did not deem the applicant meritous of the grant of tax exemption status and as such did not communicate to the 2nd respondent as contemplated under Section 4 of Legal Notice 36 of 2010 (The Persons with Disabilities (Income Deductions and Exemptions Regulations) as cited above. Consequently, the 2nd respondent did not grant the applicant tax exemption status.

54. There is no evidence that after the 1st respondent refused to issue a recommendation of tax exemption to the applicant, she challenged or has challenged that decision. There is no application for certiorari to quash that decision of the 1st respondent. The question is whether this court can by-pass the decision of the 1st respondent which has not been challenged by way of judicial review orders of certiorari, and proceed to compel or direct the Respondents or even the 2nd respondent to issue the applicant with a tax exemption certificate. The answer is an obvious no. This court cannot substitute its decision with the decision of the decision maker where such decision is not impugned before this court. From the responses by the 2nd respondent, it is clear that they have not refused to act. There is simply no recommendation from the 1st respondent upon which the 2nd respondent can act. On the other hand, the decision of the 1st respondent declining to recommend theexparte applicant for Tax Exemption Certificate can only be challenged through Certiorari and not mandamus, as is the case here.

55. In the circumstances, it would be wrong for this court to proceed to grant an order of mandamus against the 2nd respondent as the 2nd respondent is only mandated by law to grant tax exemption certificate on the basis of a recommendation from the 1st respondent, which recommendation is lacking.

56. Further, this court cannot issue mandamus against the 1st respondent who did not appear where there is a decision made by the 1st respondent, which decision still stands as it has not been quashed. No prayers for certiorari were sought against the 1st respondent and therefore this court cannot grant such serious substantive orders that were never sought by the applicant. Parties are bound by their pleadings. Theexparte applicant never pleaded for certiorari.

57. As earlier stated, an order of mandamus cannot issue where a party has discretion as to the mode of performing the duty. In the instant case, the issuance of tax exemption status to persons living with disabilities by the 2nd respondent is subject to a recommendation from the 1st respondent, the National Council for Persons with Disabilities.

58. Accordingly, I find that the ex-parte applicant has failed to satisfy this court that she merits grant of orders of mandamus against any of the respondents. I find this application to be devoid of any merit. It is hereby declined and dismissed.

59. I order that each party shall bear their own costs of the application for leave and for the substantive application herein dismissed.

60. File closed.

DATED, SIGNED AND DELIVERED AT SIAYA THIS 16TH DAY OF MARCH, 2022

R.E. ABURILI

JUDGE