Cimbria (ea) Limited v Kenya Revenue Authority
The bottom line
#Kenya's Court of Appeal confirmed withholding tax only applies when money is actually paid, and quashed KRA's demand letters and agency notices against Cimbria.
What this practically means
#Executive summary
#Key legal issues
#Meaning of 'upon payment' in Section 35(1) of the Income Tax Act
The words mean 'paid', not 'payable'; however the factual question of whether the monies had been credited to the appellant's accounts could not be resolved by the judicial review court or the Court of Appeal
The Court consulted Ballentine's Law Dictionary and Ramanatha Aiyar's Major Law Lexicon, holding 'upon payment' equivalent to 'paid'. Counsel for both sides agreed. But whether the monies had been credited (the statutory definition of 'paid' in Section 2) was a question of fact requiring evidence, determinable only by the Local Committee under Section 83, not by a judicial review court.
Whether the High Court exceeded its jurisdiction in judicial review by making findings of fact on whether payments had been made
The learned Judge fell into error by descending into disputed facts and finding that the appellant had not disputed the account entries; that finding was in excess of jurisdiction
The Judge correctly stated that judicial review is concerned with process, not merits, and that disputed facts belong to the tribunal under Section 83. Yet she then determined that the monies had been credited based on non-disputed entries - a factual matter requiring evidence. That departure exceeded the restricted, sui generis jurisdiction of judicial review and could not stand.
Non-disclosure of the pending appeal before the Local Committee
Pursuing the statutory appeal and judicial review contemporaneously was an abuse of process; the appellant ought to have withdrawn the appeal or disclosed its pendency
While authorities establish that an alternative remedy does not bar judicial review, maintaining two live proceedings over the same subject matter is abusive. Non-disclosure of the pending appeal imputed lack of candour and disentitled the appellant from judicial review relief on that ground, as the High Court found.
Whether the withholding tax demand for 1998 and 1999 was retroactive
The demand was not retroactive; the respondent relied on the law as it was in 1995, and the 2000 amendment adding 'agency and contractual' fees did not affect the payments demanded
The appellant argued that withholding tax on consultancy, agency or contractual fees took effect on 1st July 2000 and could not be recovered from payments made in 1998 and 1999. The High Court upheld the respondent's submission, and the Court of Appeal agreed, noting its earlier decision in Stanbic Kenya Limited v KRA dealt with a similar issue.
Whether the respondent acted capriciously or unreasonably (Wednesbury unreasonableness) in issuing agency notices
The Court declined to make a determination because the appellant did not raise the point that no notice or time to appeal was given; the issue was left open
The Court reviewed the Wednesbury standard from Associated Provincial Picture Houses Ltd v Wednesbury. Though inclined to say more given that immediate payment was demanded without notice or time to appeal, the appellant had not raised those issues, so the Court said no more on the question.
Constitutional concern with the requirement to deposit the disputed amount before the Local Committee hears an appeal
The deposit requirement obstructs equality before the law and access to justice and requires legislative adjustment to align with the Constitution of Kenya 2010
The appellant explained it could not pursue the Local Committee appeal because it would be required to deposit the disputed amount before being heard. The Court found such a requirement gives the revenue authority an undue advantage and is a hindrance to the guaranteed right of access to justice under the Constitution.
Legal principles established
#- The words 'upon payment' in Section 35(1) of the Income Tax Act mean 'paid', not 'payable'; withholding tax attaches only upon actual payment or crediting, not upon a debt falling due
- Judicial review is confined to the decision-making process, not the merits of the decision; a judicial review court exceeds its jurisdiction by making findings on disputed facts such as whether payment was made
- It is an abuse of the process of the court to pursue two live proceedings over the same subject matter in different courts or dispute resolution organs contemporaneously
- The existence of an alternative remedy does not bar judicial review, but the alternative proceedings should have been withdrawn or disclosed to the court
Court orders
#- 1.The impugned judgment of the High Court dated 4th October 2010 is set aside
- 2.The application dated 3rd December 2002 is allowed in terms of prayers (a), (b), (c) and (d) thereof
- 3.An order of certiorari quashing the letters dated 24th October 2002 and 6th November 2002 written by Mrs. T. W. Kibinge and addressed to the applicant
- 4.An order of certiorari quashing the letter dated 18th November 2002 written by S.O. Aboge and addressed to the applicant
- 5.An order of certiorari quashing the Agency Notice dated 22nd November 2002 addressed to the Manager, Citibank
- 6.An order of certiorari quashing the Agency Notice dated 22nd November 2002 addressed to the Manager, Barclays Bank of Kenya Ltd, Karen Branch
- 7.Prayers (e) and (f) of the application (prohibition) are disallowed
- 8.Each party bears its own costs both in the appeal and in the High Court
- On appeal from
- High Court of Kenya at Nairobi
- Misc. Application No. 1388 of 2002 (Judicial Review Miscellaneous Civil Application No. 1338 of 2002)
- Jurisdiction invoked
- First appeal to the Court of Appeal under Rule 29(1)(a) of the Court of Appeal Rules, from a decision of the High Court in judicial review proceedings under Order LIII of the Civil Procedure Rules and Sections 8 and 9 of the Law Reform Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Cimbria (ea) Limited v Kenya Revenue Authority", Case Analysis (2017). Civil Appeal No. 61 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/319/eng@2017-09-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.