https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1528

Universal Corporation Limited & 2 others v Kenya Revenue Authority & another (Civil Appeal E775 of 2021) [2026] KECA 1528 (KLR) (31 July 2026) (Judgment) Neutral citation: [2026] KECA 1528 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal E775 of 2021 W Karanja, HI Ong'udi & LM Njuguna, JJA July 31, 2026 Between Universal Corporation Limited 1st Appellant Elys Chemical Industries Limited 2nd Appellant Dawa Limited 3rd Appellant and Kenya Revenue Authority 1st Respondent The Attorney General 2nd Respondent (An appeal against the Judgment of the High Court at Nairobi of (W. Korir, J) delivered on 13th May 2021 in Nairobi Constitutional Petition No. 3 of 2018) Judgment 1.Universal Corporation Limited, Elys Chemicals Industries Limited and Dawa Limited the appellants herein, were aggrieved by the judgment rendered by Korir J. (as he then was), in Nairobi Constitutional Petition No. 3 of 2018 on 13th May 2021. They had instituted a petition against the respondents in the High Court which was dismissed. 2.In the primary suit, it was the appellants’ case that as manufacturers of medicaments, they purchased raw materials and paid input Value Added Tax (VAT) upon importation. They stated that under the Value Added Tax Act, 2013, the said raw materials were originally exempt from VAT. However, Section 18 of the said Act allowed a person who had incurred input VAT on exempt supplies to claim relief if those supplies later became taxable through future legislation, provided the claim was lodged within three (3) months of the said supplies becoming taxable (zero-rated). They further stated that on 13th September 2015, Section 6 of the Finance Act, 2015 was published, which zero-rated these previously exempted raw materials. Following this, the appellants lodged claims for input VAT refunds in November and December 2015. 3.The 1st respondent rejected the appellants' refund claims on the grounds that they were filed outside the mandatory three-months window. The 1st respondent’s decision was anchored on Section 1(a) of the Finance Act, 2015, which stipulated that Section 6 of the said Act (the zero- rating provision) was deemed to have come into operation on 12th June 2015, despite the Act being published on 15th September 2015. 4.The appellants challenged this position, contending that their three-month period should have started from the actual publication date that is 15th September, 2015 rather than the retrospective commencement date of 12th June 2015. They argued that Section 1(a) was unconstitutional because it violated Article 116(2) of the Constitution, which they interpreted as prohibiting an Act of Parliament from coming into force before its publication. 5.On its part, the 1st respondent maintained that the Finance Act, 2015 followed the proper legislative process, receiving presidential assent on 11th September, 2015. It stated that since the law explicitly set the commencement date for Section 6 as 12th June, 2015, the appellants were required by law to lodge their claims within three (3) months of that specific date. It stated further that since the claims were filed in late 2015, they were legally out of time. Furthermore, the 1st respondent asserted that Article 116(2) of the Constitution does not prohibit Parliament from enacting laws with retroactive application. 6.It was the 1st respondent’s case that Parliament has the mandate to determine the commencement date of an enactment, whether in the future or the past. It argued that the law did not deprive the appellants of property rights under Article 40(2). Rather, that zero-rating provided a new power for taxpayers to claim relief that did not exist when the items were merely exempt. 7.The 2nd respondent in opposing the petition, stated that the petition offended the doctrine of presumption of constitutionality of statutes. Further, that estoppel cannot be used to circumvent express constitutional or statutory procedures. Furthermore, that imposition of taxes is a legislative function that does not inherently constitute an arbitrary violation of rights. 8.Upon considering the matter before him, the learned trial Judge, Korir J. (as he then was), found in favour of the respondents against the appellants. In dismissing the appellants’ petition the learned trial Judge held as follows;“ 73.Even if the petitioners had succeeded in convincing this court that the impugned law is unconstitutional, the prayer would not have been granted in the manner in which they are framed……… 75.Although it is not the duty of this court to assess taxes and order refunds as suggested by the petitioners through their prayer in the petition a casual perusal of the petitioners’ evidence being the annexures marked AP-1 and VTR will show that the petitioners have not indicated the unsold stock from which their input VAT may be claimed. They merely indicated figures which may have included sold stock and this may be unfair and unjust enrichment on their part since the inclusion of the sold stock in the figures would mean that the petitioners would benefit by getting input tax relief from the 1st respondent for tax already passed to consumers. Had the petitioners succeeded in this matter, the appropriate orders would have been to remit the petitioners’ claim for tax relief to the 1st respondent for consideration. 76.In light of what has been stated in the judgment, the answer to the petitioners’ case is that the same has failed. The petition is dismissed…….” 9.This aggrieved the appellants provoking the instant appeal. The grounds as set out in the Memorandum of Appeal dated 26th April 2019, are that the learned Judge erred in law and fact:i.By failing to appreciate the distinction between a retrospective legislation and a legislation that is not retrospective but which is being construed retrospectively.ii.By failing to appreciate that the relevant provision which governed the petitioners' right to claim VAT refunds was section 18 of VAT Act 2013 and not the Finance Act 2015.iii.By failing to appreciate that section 18 of VAT Act 2013 is not retrospective and cannot even be construed retrospectively.iv.By failing to appreciate that parliament, like all other state organs, is bound by the provision of the constitution and cannot constitutionally and/or legally direct a person to do that which is practically impossible (it cannot constitutionally direct a person on 15th September 2015 to do something on 12th June 2015.v.By failing to appreciate the difference between a retrospective legislation and a legislation that purports to direct a person on 15th September 2015 to do something on 12th June 2015.vi.By failing to appreciate that the decisions taken by parliament are also subject to review by the High Court and where such decisions fail to pass the constitutional muster the High Court has a duty to declare them unconstitutional and therefore null and void.vii.By holding erroneously:a.That section 1(a) of the Finance Act 2015 abided by the provisions of Article 10 and 24 of the Constitution.b.That section 1(a) of the Finance Act 2015 did not introduce any new tax.c.That the Petitioners did not sustain any loss.d.That the petitioners' right to property were not violated.viii.By failing to appreciate that even though parliament may in appropriate circumstances enact a retrospective legislation, it cannot constitutionally enact a legislation that purports to direct a person on 15th September 2015 to do something on 12th June 2015.ix.By holding erroneously that the High Court must defer to the intention of parliament even when the purported intention is grossly irrational, unreasonable and wholly impracticable.x.By holding erroneously that the interpretation that was being given to Section 6 of Finance Act 2015 as read together with Section 18 of the VAT Act 2013 and Section 95 of the Tax Procedures Act by the 1st Respondent did not lead to retroactive imposition of criminal liability.xi.By failing to appreciate that the interpretation that was being given to Section 6 of Finance Act 2015 as read together with Section 18 of the VAT Act 2013 by the 1st Respondent unconstitutionally divested the Petitioners of their vested right.xii.By failing to appreciate that the interpretation that was being given to section 6 of Finance Act 2015 as read together with Section 18 of VAT Act 2013 by the 1st Respondent was constitutionally forbidden. 10.When the appeal came up for hearing on 10th March 2026, learned counsel, Mr. Arwa appeared for the appellant while learned counsel Ms. Kithinji represented the 1st respondent. There was no appearance for the 2nd respondent despite being served. Both counsel agreed to rely on their respective written submissions. In addition, they made oral highlights at the plenary. 11.The appellants’ submissions are dated 5th March 2026 and were filed through the firm of Rachier & Amollo LLP. Learned counsel for the appellants submitted that the Finance Act set a retrospective commencement date of 12th June, 2015, for section 6(c) of that Act. He argued that the retrospective application violates several constitutional provisions, primarily Article 116(2) of the Constitution, which states that an Act comes into force 14 days after publication unless it stipulates a date at which it will come into force. He contended that the use of "will" implied a future event and it is factually and legally impossible for a law to commence before it has been passed by Parliament, assented to by the President, and published in the Gazette as required by Article 116(1). 12.Learned counsel further argued that such a retrospective deadline constituted a brutal absurdity that requires taxpayers to do the impossible that is, filing a claim in June for a law not passed until September. That this violated the right to human dignity provided for under Article 24 and the Rule of Law under Article 10. He also cited Article 40, asserting that forcing businesses to absorb VAT burdens that should be passed to consumers was an arbitrary deprivation of property. 13.Learned counsel cited the Supreme Court's ruling in Samwel Kamau Macharia & Another v. Kenya Commercial Bank Ltd & 2 Others [2021] eKLR, where it was established that legislation is presumed prospective unless express words or clear legislative intent dictate otherwise. He emphasized that retroactivity was strictly forbidden if it divests individuals of vested rights, impairs contracts, or involves criminal legislation. He argued that the Tax Procedures Act (TPA) specifically Sections 8, 81, 83, 93, 94 and 95, imposes criminal penalties for failing to register or file returns. 14.Mr. Arwa further argued that section 19(1) of the VAT Act imposed an obligation to pay VAT as from the date of enactment of the Act. That the amount of VAT payable could only be determined, under section 17 of the said Act, (for those who manufactured medicines using medicaments purchased before 15th September 2015) by calculating the amount of relief to which they were entitled pursuant to section 18(1) (b) of the Act and thereafter deducting the same from the VAT payable. Further, that failure to pay VAT, determined as aforesaid, later than twentieth of every month, constituted a crime under section 19(1), as read together with section 95 of TPA. Thus, Section 6(c) of the Finance Act should be treated as criminal legislation and cannot be applied retrospectively. 15.Regarding the interpretation of tax law, counsel cited the decision in Commissioner of Income Tax v Pan African Paper Mills (EA) Ltd [2018] eKLR and Keroche Industries Ltd v. KRA [2007] eKLR. He argued that any ambiguity in a taxing statute must be resolved in favor of the taxpayer. He further cited the US Supreme Court cases of Nichols v. Coolidge 274 US.531 [1926] and Untermyer v. Anderson 276 US.440 [1928]. He also cited the Canadian case CWT Farms Inc. v. Commissioner 755 F.2d 790 (11th Cir.03 /19/1985) in support to illustrate that retroactive taxes which disturb completed transactions and vested interests are widely considered unconstitutional. Counsel contended that their right to load input VAT onto product prices was a vested interest that was unfairly taken away by the retrospective law. 16.Mr. Arwa submitted that section 18(2) of VAT Act had already imposed a duty on the 1st respondent to verify that the relief sought related solely to input VAT burden associated with previous purchases of medicaments that had not already been transferred to the ultimate consumers. He further submitted that section 43(4) of VAT Act as well as section 94 of TPA, empower the 1st respondent to request for such documents and information, from registered tax payers, as it may require to satisfy itself that the reliefs claimed do not relate to input VAT burdens that have already been transferred to the ultimate consumers. He added that the 1st respondent never denied that it had been given the opportunity to verify whether the said claims were justified. That it admitted in its affidavit that the only ground for rejecting the said claims was the allegation that they were filed late. 17.In conclusion, he asserted that the said section 18(2) of the VAT Act specifies that such reliefs should be deducted from the next return and that the 1st respondent's delay in processing the claims past the 2016 income year made that impossible. Therefore, the amounts became recoverable as refunds for tax paid in error under Section 30 of the VAT Act. Counsel further asserted that the High Court's finding was grounded on a factual issue which had not been raised in the 1st respondent’s replying affidavit. He added that the learned Judge appeared to have failed to appreciate that the 1st respondent had already verified the appellants’ claims and found they solely related to input VAT burdens that had not been transferred to consumers. Therefore, the learned Judge erroneously thought that the said claims had been lodged out of time. 18.The 1st respondent’s submissions are dated 9th March 2026 and were filed by learned counsel Judith N. Kithinji. She submitted that prior to the zero rating of the medicaments under the Finance Act 2015, the same were exempt under the first schedule of the VAT Act. Therefore, the amendment removed medicaments listed therein from being exempt to being zero-rated. 19.Counsel further submitted that under Section 2 of the VAT Act, 2013, exempt supplies are those specified in the First Schedule and are not subject to tax. However, as per Section 17(6) of the said Act, input tax incurred in their production cannot be claimed and is instead factored into the final price to the consumer. On the contrary, zero-rated supplies are listed in the Second Schedule and are taxed at a rate of 0%, which allows suppliers to deduct input VAT under Section 17, effectively making the goods cheaper for the consumer. 20.Ms. Kithinji argued that the amendments in Sections 3 and 6 of the Finance Act, 2015 did not introduce a new tax but conferred a benefit by reclassifying medicaments as zero-rated. She added that tax remains due at the time of supply under Section 19 of the VAT Act and Section 95 of the TPA. Regarding retroactivity and vested rights, she cited Samuel Kamau Macharia & another (supra) and asserted that retroactive law is only unconstitutional if it acts as a bill of attainder, impairs contract obligations, divests vested rights, or is expressly forbidden by the Constitution. Further, that under Article 116(1) and (2) of the Constitution, an Act of Parliament typically comes into force upon publication unless it stipulates a different date. She added that Section 1 of the Finance Act, 2015 expressly provided various commencement dates, including 12th June, 2015, and 15th September 2015. 21.She further argued that the appellants improperly introduced new issues on appeal, such as the application of Sections 8, 43, 44, 81, 93, 94, and 95 of the TPA, which were not pleaded in the High Court. She cited the case of Dakianga Distributors (K) Ltd v Kenya Seed Company Limited eKLR and Malawi Railways Limited v Nyasulu MWSC 3 and argued that parties are bound by their pleadings and cannot introduce new cases at the appellate stage. Furthermore, that the appellants failed to provide evidence that they met VAT registration thresholds or complied with record-keeping requirements under Sections 43(5), 81, and 93 of the TPA. She urged the court to note that the impugned amendment made the appellants’ supplies zero-rated and therefore no tax was payable for the same. 22.Counsel also cited the decision in Law Society of Kenya v Attorney General & Another [2019] eKLR and submitted that the role of this court is to give effect to the intention of the National Assembly, which was express and clear on the date of commencement of the zero rating. She argued that taxpayers were to enjoy this benefit from the date of publication of the Finance Act, on 15th September 2015 and not to back date the claiming of VAT under Section 18 of the VAT Act. She further argued that for the input VAT incurred prior to the date of publication, the cost was to be passed to the final customers of medicaments. Therefore, there was no loss incurred by the appellants or taxpayers dealing with such supplies as the input VAT was passed to customers. 23.She cited Section 9 (1) and (3) of the Interpretation & General Provisions Act and asserted that the said Act does not bar retroactiv e commencement of an Act of Parliament or a provision of an Act. The court’s attention was drawn to the decisions in County Government of Nyeri & Anor. vs Cecilia Wangechi Ndung’u [2015] eKLR, Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd [1987]1 SCC 424, Commissioner of Income Tax v Pan Africa Paper Mills E.A Ltd [2018] eKLR and Amalgamated Society of Engineers vs. Adelaide Steamship [1920] 28 CLR 129 at 161-2. 24.Ms. Kithinji argued that Section 18 of the VAT Act, allows for relief on input tax when exempt supplies become taxable, provided the claim is lodged within three (3) months. She maintained that because the Finance Act did not amend Section 18, the appellants' claims were time-barred as they were made outside the statutory three-month window from the date the supplies became taxable. Thus, allowing these claims without verification of unsold stock would lead to unjust enrichment, as the input VAT had likely already been passed to consumers while the goods were exempt. She further argued that under Section 18(2), the Commissioner must be satisfied that a claim is justified before authorizing a deduction. 25.In conclusion, learned counsel for the 1st respondent submitted that the High Court found no deprivation of property under Article 40 of the Constitution, as the right to claim input VAT for these supplies did not exist prior to the amendment. She placed reliance on the case of Pharmaceutical Manufacturing (K) Co. Ltd & 3 others v Commissioner General of Kenya Revenue Authority & 2 others [2017] eKLR, where this court held that the lawful imposition of tax under Article 209 of the Constitution cannot be considered a deprivation of property. 26.This being the first appeal, our mandate is as stated in the case of Neepu Auto Spares Limited v Narendra Chaganlal Solanki & 3 others [2014] KECA 383 (KLR) as follows:“Being a first appeal, we must re-evaluate the evidence and come to our own conclusions, but always bearing in mind that we did not hear the witnesses nor observe their demeanour. We may only interfere with the findings of the trial judge if the judge failed to take into account particular circumstances or based his impression on demeanour of witnesses which was inconsistent with the evidence – see the judgment of this court in Maimuna s/o Patrick Mutoo v Wilson Njau Nyaki Civil Appeal No. 131 of 1994. In Peters v Sunday Post Limited [1958] EA 424 it was held that while an appellate court has jurisdiction to review the evidence to determine whether the conclusions of the trial judge should stand this jurisdiction is exercised with caution; if there is no evidence to support a particular conclusion, or if it is shown that the trial judge has failed to appreciate the weight or bearing of the circumstances admitted or proved, or has plainly gone wrong, the appellate court will not hesitate to so decide.” 27.Upon carefully considering the grounds of appeal, the record of appeal, the rival submissions and the authorities relied upon, we are of the view that the following issues arise for determination:i.Whether the learned trial Judge erred in law and in fact in:a.failing to appreciate that the applicable provision governing the appellants’ entitlement to claim VAT was section 18 of the VAT Act, 2013 and not the Finance Act, 2015; andb.failing to appreciate that section 18 of the VAT Act, 2013 is not retrospective and cannot be construed retrospectivelyii.Whether the trial court erred in law and fact in holding that section 1(a) of the Finance Act, 2015 was not criminally retroactive and could therefore not be declared unconstitutional.iii.Whether the trial court erred in law and in fact in holding that section 1(a) of the Finance Act, 2015 does not violate Articles 10 and 24 of the Constitution, 2010 and that the appellants’ right to property had not been infringed as a result of the implementation of section.iv.Whether the appellants are entitled to any reliefs (if any). 28.Issue one herein above is twofold and it arises from the second and third grounds of appeal. In our view, the same are closely related in substance and both address the statutory framework applicable to the appellants’ claim for input VAT. We shall determine them jointly. 29.As regards the first limb, it is evident that section 18 of the VAT Act, 2013 provides the general framework for the deduction of input tax, setting out the conditions under which a registered taxpayer may claim input VAT. However, that provision does not operate in isolation. It is our view that the same must be read together with subsequent legislative amendments and related statutory instruments that clarify, limit, or otherwise affect the enjoyment of that right. 30.The Finance Act, 2015 introduced amendments relating to input VAT claims. The said amendments were not merely procedural but they substantively altered the legal scope governing VAT claims, including the documentation requirements and eligibility thresholds. Consequently, it is our view that any determination of a taxpayer’s entitlement to input VAT, after the coming into force of those amendments, necessarily required a composite reading of the VAT Act, 2013 in line with the amendments in the Finance Act 2015. 31.A plain reading of the trial court’s judgment does not support the appellants’ assertion that section 18 was ignored or disregarded. The court’s findings were as follows;“ 45…….the petitioners are seeking for a declaration that they are entitled to VAT returns pursuant to section 18 of the VAT Act, 2013………………………………. 47.The Finance Act, 2015 stipulated different commencement dates for different sections of the Act. The commencement date of section 6 which zero-rated raw materials for medicaments which were previously tax- exempt was set by section 1(a) as 12th June, 2015. From this enactment, it may be inferred that parliament clearly intended that taxpayers were to commence enjoying the benefits from the date of commencement of the law being 12th June 2015 ” 32.It is our view that the Judge correctly appreciated that the provision had to be interpreted in light of the amendments introduced by the Finance Act, 2015. The judgment demonstrates that the trial court considered the statutory framework holistically and applied the law as it stood at the material time when the appellants claim for input VAT from the 1st respondent arose. 33.On the second limb concerning retrospectivity, the appellants’ argument is, with respect, misplaced. The learned trial Judge did not apply section 18 of the VAT Act, 2013 retrospectively. Rather, the court applied the law as it stood at the time that is, the commencement date set by Parliament under section 1(a) of the Finance Act for section 6(c) which zero-rated raw materials for medicaments which were previously tax-exempt which was 12th June, 2015. It is our considered view that the principle against retrospectivity, which generally precludes legislation from operating on past events unless expressly stated, is not offended where a court applies the law in force at the time the cause of action arose or the claim was made. 34.Finally, even on a further consideration of the record of appeal, the appellants’ claim failed in that the evidence adduced during trial being annexures marked as AP-1 and VTR did not indicate the unsold stock from which their input VAT may be claimed and the same was not made good even on appeal. In our view, the trial court’s finding has not been shown to be perverse or based on any misdirection. 35.Moving to the second issue, whether the trial court erred in law and in fact in holding that Section 1(a) of the Finance Act, 2015 was not criminally retroactive and could, therefore, not be declared unconstitutional. It is the appellants’ case that the Finance Act set a retrospective commencement date of 12th June, 2015, for section 6(c) of that Act. They argued that the retrospective application of the said section violates several constitutional provisions, primarily Article 116(2), which states that an Act comes into force 14 days after publication unless it stipulates a date at which it will come into force. They maintained that the exempt supplies that they made became taxable on 15th September 2025 when the Finance Act was passed. Thus, under section 18(1) of the VAT Act they were entitled to lodge their claim for input tax within three months from that date. 36.They cited the Supreme Court decision in Samuel Kamau Macharia & Another (supra) where it was held that retrospective legislation is not ipso facto unconstitutional and whether or not it will be declared unconstitutional depends on its form and contents. They argued that a legislative provision cannot be construed retrospectively unless the words used by the legislature leave no doubt at all that they intended to apply that provision retrospectively. That the said condition could not be met where the words used by the legislature are ambiguous. They further argued that section 1(a) and 6 (c) of the Finance Act 2015 when read together with section 18 (1) of the VAT Act were therefore ambiguous, to the point that the legislative intent could not be discerned easily. 37.It is the 1st respondent’s case that sections 3 and 6 of the Finance Act, 2015 did not introduce a new tax in the amendments. That section 3 allowed the commissioner to pay excess tax if the excess arose from making zero-rated supplies. Further, section 6 made medicaments zero rated as they were previously exempt. In addition, that zero rating of medicaments made it possible for the appellants to claim input VAT which was not claimable previously as their supplies were exempt. 38.Counsel for the 1st respondent equally, cited the Supreme Court’s decision in Samuel Kamau Macharia & Another (supra). She thus argued that the said elements which make a retroactive law unconstitutional were not violated in the enactment of the Finance Act. 39.The learned trial Judge while citing the same decision, in the Samuel Kamau Macharia’s case held that when the principles established therein are applied to sections 3 and 6 of the Finance Act, 2015, it was clear that the said provisions do not introduce a new tax obligation or new duty. Further, that no new disability was imposed upon the appellants and in fact the said sections introduced zero rating of medicaments which was a benefit that previously did not exist. He therefore held that section 1(a) of the Finance Act 2015 is not criminally retroactive and could not be said to be unconstitutional. 40.We have read and evaluated Sections 1(a), 3 and 6 of the Finance Act, 2015 as quoted in the impugned judgment and the Supreme Court’s decision in Samuel Kamau Macharia & Another (supra) which has also been heavily relied on by the parties herein and we therefore need not reproduce it. Equally applying the principles on retroactivity of laws as set out by the Supreme Court to Sections 3 and 6 of the Finance Act, 2015, we are satisfied that the impugned provisions do not introduce any new tax obligation or impose any fresh duty upon the appellants. Rather, the statutory amendments operate within the pre-existing tax regime and do not alter the essential incidence of taxation in a manner prejudicial to the appellants. 41.As the learned Judge rightly observed, the effect of the amendments was beneficial in nature. The introduction of zero-rating for medicaments constituted a fiscal advantage that had not previously been available. Such a measure cannot, by any reasonable construction, be said to impose a burden, disability, or penal consequence. It follows that the provisions were beneficial rather than punitive. In that regard, we find no basis to characterize Section 1(a) of the Finance Act, 2015 as criminally retroactive. 42.Additionally, we opine that the prohibition against retroactive application of the law is principally concerned with safeguarding individuals from ex post facto penal consequences or the imposition of new liabilities. Further, the Finance Act, 2015 is primarily an amending statute.Its provisions must be interpreted strictly within the scope of the amendments expressly stated. Section 6(c) does not contain language indicating an intention to amend or displace Section 19 of the VAT Act or Section 95 of the TPA. 43.Accordingly, we concur with the learned trial Judge’s conclusion that the impugned provisions do not offend constitutional principles on retroactivity. The challenge by the appellants to their constitutionality is, therefore, without merit, and we uphold the finding that Section 1(a) of the Finance Act, 2015 is not criminally retroactive and can, therefore, not be declared to be unconstitutional. 44.On the third issue, learned counsel for the appellants argued that interpreting section 6(c) of the Finance Act retrospectively clearly violates Articles 10, 24, 40 and 116 of the Constitution and that one of the national values entrenched in Article 10(2) (a) which binds both Parliament and the superior court is the rule of law. He quoted Noel B Reynolds in “The doctrine of Rule of Law in the Twentieth Century” Bringam Young University (1985) at pg. 1 and asserted that the doctrine of rule of law embodies the constitutional requirement that all public law decision making must be anchored on law. 45.Additionally, counsel referred to Lon Fuller in (“The Morality of Laws” 5th Indian Reprint Universal Law Publishing Co. Ltd 2009 at pg. 49) where he opined that conception of law must be prospective, not self- contradictory, must not require an individual to do what was practically impossible and must be promulgated and published before it can acquire a force of law. Learned counsel for the appellants contended that interpreting or applying sections 1(a) and 6 (c) of the Finance Act, 2015 in conjunction with section 18 of the VAT Act, retrospectively would obviously violate the said aforementioned principles of the rule of law. 46.It is the 1st respondent’s case that there was no breach of the national values and principles of governance under Article 10 of the Constitution. Further, that the amendments in the Finance Act 2015 did not also breach Article 24 of the Constitution as no tax was introduced retroactively. Thus, the trial court rightly found that the said amendments conferred a benefit to the appellants by making medicaments which are essential commodities zero-rated. 47.In the impugned judgment delivered in Nairobi Constitutional Petition No. 3 of 2018, the trial Judge held in part as follows;“ 63.In my view, Section 1(a) of Finance Act, 2015 abides by the principles and values of good governance as stipulated under Article 10 of the Constitution since the amendment confers a benefit to residents of Kenya by making the medicaments which are essential human commodities zero-rated. The expected benefit of zero-rating of medicaments is that the commodities would become cheaper and more affordable to consumers thereby improving and bettering their lives. 64.It is clear from the impugned enactment that, by indicating that the Section 6 of the Finance Act, 2015 would be deemed to have come into operation on 12th June, 2015, Parliament specifically wanted taxpayers in the category of the petitioners to claim for relief under the provision as from. 12th June, 2015 when the Act was enacted and not under Section 18(1) of the VAT Act, 2013 which gave three months to a registered person from the date the exempt supplies became taxable to claim relief from any tax shown to have been incurred on supplies within the period of twenty-four months immediately before the exempt supplies became taxable. 65.Therefore, the case of Keroche Industries Ltd v Kenya Revenue Authority & 5 others [2007] eKLR doesn't apply since the 1st respondent has demonstrated that there was no infringement on the right to property and also that there was no new tax that was introduced retroactively. It cannot therefore be said that Article 24 of the Constitution was violated because no breach of any of the constitutional rights has so far been established by the petitioners” 48.Article 10 entrenches national values including good governance, equity, social justice, and human dignity. The impugned provision zero-rates medicaments. It is not disputed that medicaments are essential goods directly linked to the realization of the right to health under Article 43 of the Constitution. It is our considered view that by removing the tax burden on such goods, Parliament sought to enhance affordability and accessibility. We agree with the learned trial Judge that this measure promotes social justice and equity, enhances access to healthcare and improves the welfare of the population. Thus, the legislative choice is rational, purposive, and firmly grounded in the public interest. 49.Regarding the retrospective application of the Finance Act, the said Act expressly provides that the amendment would be deemed to have come into operation on 12th June 2015. In our humble view, this language leaves no doubt as to Parliament’s intention. It is a well-established principle (see Samuel Kamau Macharia (supra)) that retrospective legislation is permissible where the legislative intent is clear; and no constitutional rights are infringed. In the present case, the retrospective effect is beneficial rather than burdensome. It allows taxpayers to claim relief from an earlier date than that provided under Section 18(1) of the VAT Act, 2013. Thus, it is our finding that Parliament deliberately intended to extend a fiscal benefit to taxpayers and such retrospective conferment of benefit does not offend the Constitution. 50.The appellants also relied heavily on the case of Keroche Industries Ltd v Kenya Revenue Authority & 5 others (supra) to challenge the impugned provisions. However, that authority is distinguishable. In that case the court dealt with the retroactive imposition of tax liabilities, which adversely affected the taxpayer and violated legitimate expectations. It held as follows;“ 31.Taking the above into consideration, the court finds it improper, that the Respondent have used their power the way they have done in the circumstances of the case, in that the motive for the change is improper, discriminatory and done in bad faith and in addition the Applicants have quite rightly demonstrated that, there is in the circumstances detrimental reliance in the past practice and promise. Moreover, effecting the change of tariff retroactively is in the view of the Court Wednesbury unreasonable and irrational. No reasonable taxman or any reasonable public body would abruptly change tariffs retrospectively to an industry that has been in existence for over 10 years. In other words the conduct of the Respondents does not reflect consistency of treatment and equality. Even in taxation law, these ideals and values must be protected by the courts. Failure to adhere to these values leads to unfairness and legitimate expectation is about fairness at the end of the day. Whether or not there is unfairness in law has to be ascertained on a case to case basis and there cannot be a rule of thumb. In this regard this court adopts as good law the visionary observation by Sir Thomas Bingham MR in R v Inland Revenue Commissioner, Ex-parte Uniliver p/c [1996] STC p 681 at page 690 in these words:“The categories of unfairness are not closed, and precedent should act as a guide and not as a cage”….” 51.In contrast, the appellants’ case involves no imposition of a new tax, no increase in tax liability but a provision that confers a benefit by enabling tax relief. In our view, the decision in Keroche Industries Limited (supra) therefore, inapplicable in this instance. Consequently, we concur with the trial court that the authority does not aid the appellants’ case. 52.Moving to Article 40 of the Constitution, we are of the view that its violation requires proof of arbitrary or unjust interference with proprietary rights. The appellants did not demonstrate any deprivation of property. Further, the impugned provision does not deprive the appellants of property, impose additional obligations or interfere with vested rights. On the contrary, it enhances the taxpayers’ position by widening access to relief. We therefore find no violation of Article 40. 53.Having found that no constitutional right has been infringed, it follows that the question of limitation under Article 24 does not arise. Even if it did, the measure would be justified as reasonable and proportionate in light of its clear public interest objective. 54.It is also important to note that appellate intervention on findings of law mixed with fact is only warranted where the trial court is shown to have proceeded on a wrong principle or misapprehended the evidence. In this instance, no such error has been demonstrated. We are satisfied that the learned trial Judge properly directed himself on both the facts and the law. The impugned provision advances the national values and principles of governance under Article 10, reflects a clear and lawful legislative intention, confers a benefit rather than a burden and does not infringe any constitutional right. 55.In view of the above findings, it follows that the appellants are not entitled to any reliefs. 56.Consequently, we find no merit in the appeal and the same is hereby dismissed in its entirety. The judgment of the High Court is affirmed. 57.The 1st respondent shall have costs of the appeal. 58.Orders accordingly. DATED AND DELIVERED AT NAIROBI THIS 31ST DAY OF JULY, 2026W. KARANJA………………JUDGE OF APPEALH. I. ONG’UDI………………JUDGE OF APPEALL. NJUGUNA………………JUDGE OF APPEALI certify that this is the true copy of the originalsignedDEPUTY REGISTRAR