[2020] KEHC 10201 (KLR)
The court found that the appellant failed to provide sufficient evidence regarding its financial position, the nature of its business, or to offer any form of security for the stay of execution. The affidavit in support of the application was deemed threadbare and insufficient to justify the exercise of the court's...
Source-derived case information.
- Citation
- [2020] KEHC 10201 (KLR)
- Parties
- Appellant: Subru Motors Limited; Respondent: Commissioner of Domestic Taxes
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Commercial Courts)
- Jurisdiction
- Kenya
- Case Number
- Tax Appeal E074 of 2020
- Procedural Posture
- Tax Appeal / Ruling on Application for Stay of Execution Pending Appeal
- Outcome
- application dismissed with costs to the respondent
- Judges
- DAS Majanja
- Legal Topics
- Stay of Execution, Security for Appeal, Tax Assessment Dispute, Burden of Proof on Applicant
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Subru Motors Limited
Appellant
Commissioner of Domestic Taxes
Respondent
Procedural Posture
Tax Appeal / Ruling on Application for Stay of Execution Pending Appeal
Legal Issues
- 1 Whether the appellant is entitled to an order of stay of execution pending appeal against the Tax Appeal Tribunal's decision.
- 2 What terms, if any, should be imposed for the grant of stay, particularly regarding security.
- 3 Whether the appellant has demonstrated sufficient grounds for the exercise of the court's discretion to grant stay.
Ratio Decidendi
The court found that the appellant failed to provide sufficient evidence regarding its financial position, the nature of its business, or to offer any form of security for the stay of execution. The affidavit in support of the application was deemed threadbare and insufficient to justify the exercise of the court's discretion in favour of granting a stay. The court emphasized that the burden lies on the applicant to demonstrate, with evidence, the risk of substantial loss and to propose reasonable security. In the absence of such evidence and proposals, the court could not fashion an appropriate order for stay. Consequently, the application for stay of execution was dismissed with costs...
Court Disposition
application dismissed with costs to the respondent
Orders
- The Notice of Motion dated 18th September 2020 is dismissed with costs to the respondent.
Full Case Text
Judgment text and source record
22 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
COMMERCIAL AND TAX DIVISION
CORAM: D.S. MAJANJA J.
TAX APPEAL NO. E074 OF 2020
BETWEEN
SUBRU MOTORS LIMITED.............................................APPELLANT
AND
COMMISSIONER OF DOMESTIC TAXES................ RESPONDENT
RULING
1. The Tax Appeal Tribunal (“the Tribunal”) dismissed the Appellant’s appeal by a judgment dated 17th August 2020 thus precipitating this appeal. The Tribunal upheld the Respondent’s assessment. Following the dismissal of the appeal, the Respondent moved to issue an Agency Notice to the Appellant’s banker’s seeking to be paid Kshs. 181,406,247. 00 from the Appellant’s accounts.
2. The Appellant has filed the Notice of Motion dated 18th September 2020 supported by the affidavit of Joseph Gitere Nyamu, the Appellant’s tax agent, sworn on the same date. He deponed that the appeal raises triable issues with high chances of success and that the amounts involved are substantial enough to cripple the appellant’s business and if an order of stay is not granted, the appeal will be rendered nugatory.
3. The application is opposed by the replying affidavit of Felistus Sabiri Nyagwoka, an officer of the Respondent, sworn on 21st September 2020. In respect of the application for stay of the enforcement, the Respondent states that the Appellant has not demonstrated by way of evidence that it will suffer prejudice and or substantial loss if the stay is not granted. The Respondent stated that if the order of stay is granted, there is a risk that it may not be able to recover the outstanding taxes.
4. As this is an application for stay of execution pending an appeal from the decision of the Tribunal, the issue is whether and on what terms I should grant the orders of stay. As I have previously stated, the duty of the court in such circumstances, is to balance the interests of either party. On the one hand, to ensure that a business which is a going concern with the ability to pay taxes in the future does not collapse and on the other hand, it must not unnecessarily impede the Respondent’s statutory duty to collect taxes in accordance with the law (see Africa Oil BV v Commissioner of Domestic TaxesCOMM ITA No. E024 of 2020 [2020] eKLRand Choppies Enterprises Limited v Commissioner of Domestic Taxes [2020] eKLR).
5. Prior to reserving this matter for ruling, I requested the parties to agree on the nature and amount of security to be provided by the Appellant in order to secure the appeal but they failed to agree leaving the decision to the court. The determination of this issue is a matter for the court’s discretion. Such discretion, being judicial discretion, is based on facts presented by the parties. In this case, the Appellant did not disclose the nature of its business as a going concern, it does not state how much money is in its accounts or its assets and liabilities. It did not even offer any security, its nature or even suggest a reasonable amount. In such circumstances, it would be difficult to fashion an appropriate order. In summary, the Appellant’s affidavit is threadbare and insufficient to sustain the application.
6. Having considered all the facts, I am constrained to dismiss the Notice of Motion dated 18th September 2020 with costs to the Respondent.
DATED and DELIVERED at NAIROBI this 23rd day of OCTOBER 2020.
D. S. MAJANJA
JUDGE
Mr Mwara instructed by Komu and Kamenju Advocates for the Appellant.
Mr Ochieng, Advocate instructed by Kenya Revenue Authority for the Commissioner of Domestic Taxes.