Universal Corporation Ltd & 2 others v Kenya Revenue Authority & another (Civil Appeal E775 of 2021) [2026] KECA 1528 (KLR)
The bottom line
#The Court of Appeal dismissed three drug manufacturers' challenge, confirming that Kenya's Parliament can backdate tax benefits and VAT refund deadlines still apply.
What this practically means
#Executive summary
#Key legal issues
#Whether section 18 of the VAT Act, 2013 governs the appellants' VAT claims independently of the Finance Act, 2015
The trial Judge correctly appreciated that the provisions had to be read together; the Finance Act 2015 amendments substantively altered the legal scope of VAT claims and a composite reading was required
Section 18 provides the general framework for input tax deduction but does not operate in isolation. The Finance Act, 2015 amendments were substantive, altering documentation requirements and eligibility thresholds, so any determination of entitlement to input VAT after those amendments required reading the VAT Act alongside the Finance Act. The trial court's judgment demonstrates it considered the statutory framework holistically.
Whether section 1(a) of the Finance Act, 2015 was criminally retroactive and unconstitutional
Section 1(a) is not criminally retroactive and cannot be declared unconstitutional; the zero-rating provisions conferred a benefit rather than imposing a burden or penal consequence
Applying the Supreme Court's principles in Samuel Kamau Macharia, the impugned provisions introduce no new tax obligation or fresh duty, operate within the pre-existing tax regime and do not alter the essential incidence of taxation prejudicially. Zero-rating of medicaments is a fiscal advantage not previously available; it cannot impose a burden, disability or penal consequence. The prohibition on retroactivity principally safeguards against ex post facto penal consequences or new liabilities.
Whether the retrospective commencement of 12th June 2015 violated Articles 10, 24, 40 and 116 of the Constitution
No violation established. The retrospective effect is beneficial rather than burdensome, Parliament's intention was clear, and the legislative choice is rational and grounded in the public interest
The deeming language of section 1(a) leaves no doubt as to Parliament's intention to extend a fiscal benefit from 12th June 2015. Zero-rating medicaments promotes the right to health, social justice and equity under Article 10. The appellants demonstrated no arbitrary interference with proprietary rights under Article 40; the provision enhances their position by widening access to relief. With no right infringed, Article 24 limitation does not arise.
Whether Keroche Industries applies to the impugned provisions
Keroche Industries is distinguishable because it dealt with retroactive imposition of tax liabilities, whereas here there is no new tax or increased liability but a benefit-conferring provision
In Keroche Industries the court dealt with retroactive imposition of tax liabilities which adversely affected taxpayers and violated legitimate expectations, holding the change Wednesbury unreasonable and irrational. By contrast, the appellants' case involves no imposition of a new tax or increase in liability, only a provision conferring a benefit by enabling tax relief, rendering the authority inapplicable.
Legal principles established
#- Retrospective legislation is not ipso facto unconstitutional; it is permissible where the legislative intent is clear and no constitutional rights are infringed, and a beneficial retrospective conferment of a fiscal advantage does not offend the Constitution
- The principle against retrospectivity is not offended where a court applies the law in force at the time the cause of action arose or the claim was made
- Section 18 of the VAT Act, 2013 does not operate in isolation but must be read together with subsequent legislative amendments such as those in the Finance Act, 2015
- On a first appeal, the Court of Appeal must re-evaluate the evidence and reach its own conclusions but may only interfere with the trial judge's findings if shown to have proceeded on a wrong principle or misapprehended the evidence
Court orders
#- 1.The appeal is dismissed in its entirety
- 2.The judgment of the High Court is affirmed
- 3.The 1st respondent shall have costs of the appeal
- On appeal from
- High Court of Kenya
- Nairobi Constitutional Petition No. 3 of 2018
- Jurisdiction invoked
- First appeal to the Court of Appeal under Article 164 of the Constitution from a High Court constitutional petition
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Universal Corporation Ltd & 2 others v Kenya Revenue Authority & another (Civil Appeal E775 of 2021) [2026] KECA 1528 (KLR)", Case Analysis (2026). Court of Appeal Appeal arising from Nairobi Constitutional Petition No. 3 of 2018 (Memorandum of Appeal dated 26th April 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1528/eng@2026-07-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.