Kenya Revenue Authority v County Assemblies Forum & 3 others (Civil Application E093 of 2023) [2024] KECA 923 (KLR)
The bottom line
#The Court of Appeal paused a ruling that spared county assembly members' car reimbursements from tax, so KRA can keep taxing until the appeal ends.
What this practically means
#Executive summary
#Key legal issues
#Whether the appeal is arguable
The appeal is arguable; the respondents conceded this, and the Court found that the decision of the High Court on the taxability of the motor vehicle reimbursement could possibly be upset on appeal.
The Court observed that there is a live dispute about the meaning and tenor of the Income Tax Act provisions: the applicant contends the amounts fall within Sections 3 and 6 and are taxable, while the High Court declared them not taxable. With the respondents themselves conceding arguability, and the appeal process already set in motion, the first twin principle was satisfied without the Court making definitive findings on the statutory interpretation.
Whether the appeal would be rendered nugatory absent a stay
Yes. If the appeal succeeded after refunds had been compelled, the appeal may be rendered nugatory, given the five-year electoral cycle of Members of County Assemblies and the possibility that members may exit office.
The respondents relied on the De La Rue authority, where no stay was granted because the applicant was merely being told to comply with the law. The Court distinguished that case: here there is a genuine dispute over statutory interpretation that remains unresolved pending appeal. Taking judicial notice of the five-year election cycle, the Court found that compelled refunds might be irreversible, satisfying the nugatory principle.
Distinction from the De La Rue principle that a party merely required to comply with the law cannot claim nugatory prejudice
De La Rue was distinguished because it concerned breach of mandatory procurement provisions, whereas this case involves a disputed interpretation of a statutory provision whose correctness will only be clear after the appeal is determined.
In De La Rue, Nyamu J had found breach of the mandatory provisions of the Public Procurement and Disposal Act, so refusing stay simply compelled lawful conduct. Here, by contrast, the High Court declaration rested on an interpretation of Sections 3 and 5/6 of the Income Tax Act that remains contested and arguable; hence refusing a stay would not merely enforce the law but could pre-empt the appellate determination.
Legal principles established
#- A stay under Rule 5(2)(b) requires the applicant to satisfy the twin principles of an arguable appeal and that the appeal would otherwise be rendered nugatory.
- An application for stay may be granted where, unlike a mere direction to comply with the law, there is a genuine dispute about the meaning of a statutory provision whose resolution is pending on appeal, such that reversal of the judgment may be impossible.
- Where Members of County Assemblies hold office only for a five-year electoral cycle, refunds of taxes collected may be irreversible, rendering a successful appeal nugatory if stay is refused.
Court orders
#- 1.An order of stay of execution of the judgment delivered on 12th October 2023 in Kericho Constitutional Petition No. 4 of 2023, together with the orders flowing therefrom
- 2.The stay order to remain in force until the hearing and determination of the applicant's appeal
- 3.Costs of the application to abide by the appeal
- On appeal from
- High Court of Kenya, Kericho
- Constitutional Petition No. 4 of 2023
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules - stay of execution pending appeal
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Revenue Authority v County Assemblies Forum & 3 others (Civil Application E093 of 2023) [2024] KECA 923 (KLR)", Case Analysis (2024). Civil Application (Rule 5(2)(b)) arising from Kericho Constitutional Petition No. 4 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/923/eng@2024-07-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.