African Banking Corporation Limited v Commissioner of Domestic Taxes
The bottom line
#Kenya's Court of Appeal paused collection of an Kshs.86 million tax demand against African Banking Corporation, but only if the bank pays Kshs.25 million within 30 days.
What this practically means
#Executive summary
#Key legal issues
#Arguability of the intended appeal
The intended appeal is arguable and not frivolous.
The applicant raised complaints that the High Court erred in holding exported services excisable absent express provision under the Customs and Excise Act, and in retroactively applying the Finance Act 2013. The court applied the settled test that an arguable appeal need not necessarily succeed, and found the grounds sufficient to meet the threshold.
Nugatory-ness and conditions for stay
Payment of the entire demand pending appeal may affect the applicant's operations; a conditional stay with partial payment balances the parties' interests.
The applicant argued the Kshs.86,076,985 demand was colossal and would affect cash flows, offering a bank guarantee as security. The respondent offered to refund and sought 60% security, citing Caltex Oil. The court, following Equity Bank v Commissioner of Domestic Taxes, ordered a stay conditional on payment of Kshs.25,000,000.00 within 30 days, failing which the stay lapses.
Legal principles established
#- An applicant for stay pending appeal must demonstrate that the intended appeal is arguable and that it will be rendered nugatory unless the interim orders are granted.
- An arguable appeal need not necessarily succeed; it suffices that it is not frivolous.
- The Court may grant a stay of a tax demand on condition of partial payment to the revenue authority, balancing the parties' interests.
Court orders
#- 1.Stay of execution of the respondent's demand granted conditional upon the applicant paying the respondent Kshs.25,000,000.00 within 30 days from delivery of the ruling
- 2.In default of payment, the stay shall automatically lapse and the respondent may proceed with execution
- 3.Costs of the application to be costs in the appeal
- On appeal from
- High Court of Kenya at Nairobi
- High Court Income Tax Appeal No. E014 of 2021
- Jurisdiction invoked
- Inherent appellate jurisdiction to grant stay of execution pending appeal (rule-based motion under the Court of Appeal procedure)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "African Banking Corporation Limited v Commissioner of Domestic Taxes", Case Analysis (2023). Civil Appeal (Application) E453 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1669/eng@2023-12-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.