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Court of AppealDismissedCivil Application E383 of 2021· [2022] KECA 1002 (KLR)

Kenya Revenue Authority v Mount Kenya Breweries Limited

Court of Appeal
23 September 2022
DMD. K. MusingaSKS. ole KantaiHOH. A. Omondi
1,237 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to pause a High Court order against KRA because the tax authority proved its appeal was arguable but failed to show it would be pointless without a stay.

What this practically means

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Executive summary

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The Kenya Revenue Authority applied to the Court of Appeal under rule 5(2)(b) of the Court of Appeal Rules for stay of execution of a ruling by Korir, J. dated 29 October 2021 in High Court Petition No. E172 of 2021. The High Court had issued conservatory orders restraining KRA from locking or sealing the respondent's premises, directed reinstatement of the respondent's excise licence, and ordered release of a seized motor vehicle. The dispute arose from a KRA raid in April 2021 in which the respondent was found producing alcoholic drinks allegedly contrary to the Excise Duty Act, with goods bearing counterfeit excise duty stamps; KRA seized the vehicle and bottles, suspended production under section 23(4) of the Excise Duty Act, and issued a tax demand of Kshs. 934,816,934.00. KRA argued its intended appeal was arguable - contending the High Court contradicted section 23(4) of the Excise Duty Act and Legal Notice No. 53 of 2017 - and that allowing the respondent to resume production would render the appeal nugatory and cause revenue loss. Applying the settled Stanley Kangethe Kinyanjui v Tony Ketter test, the Court (Musinga, ole Kantai and Omondi, JJA) found the grounds arguable but held the nugatory limb failed, since the High Court orders did not bar KRA from pursuing outstanding and future tax liabilities. Satisfying only one limb, the application was dismissed with costs. No appearance was made for KRA at the hearing, which proceeded on written submissions.

Key legal issues

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01

Arguability of the intended appeal

Holding

The intended grounds of appeal concerning section 23(4) of the Excise Duty Act and Legal Notice No. 53 of 2017 were arguable and should be determined on merit.

Reasoning

The court reviewed the draft grounds of appeal, which alleged the High Court contradicted express statutory provisions and disregarded an admitted possession of counterfeit excise stamps. It found the issues were not idle and that arguable grounds existed warranting determination by a full appeal.

02

Nugatory value of the appeal

Holding

The appeal would not be rendered nugatory if stay was refused, because the High Court orders did not stop the applicant from pursuing outstanding and future tax liabilities.

Reasoning

The court noted the impugned ruling expressly preserved the applicant's right to pursue outstanding and future tax liabilities, and accepted the respondent's argument that the applicant could continue discharging its revenue-collection mandate while the respondent resumed production. The nugatory limb therefore failed.

p. 3

Legal principles established

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  • An applicant under rule 5(2)(b) must satisfy both the arguability and nugatory limbs; satisfying only one is insufficient.
  • Even one arguable ground of appeal suffices on the arguability limb of rule 5(2)(b).

Court orders

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  1. 1.The Notice of Motion dated May 11, 2021 is dismissed with costs

Authorities

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Legislation

  • Excise Duty Actsection 23(4)
  • Tax Procedures Actsection 90
  • Legal Notice No. 53 of 2017Paragraphs 30, 32 and 33
  • Court of Appeal Rulesrule 5(2)(b)

Cases cited (1)

  • Stanley Kangethe Kinyanjui v Tony Ketter & 5 Others
    [2013] eKLR

    The established test that an applicant for stay pending appeal must show an arguable appeal and that the appeal would be rendered nugatory.

On appeal from
High Court at Nairobi
Petition No. E172 of 2021
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules (application for stay of execution pending appeal)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kenya Revenue Authority v Mount Kenya Breweries Limited", Case Analysis (2022). Civil Application E383 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/1002/eng@2022-09-23

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.