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High CourtDismissedJudicial Review Application (Notice of Motion dated 30/6/2020)

Mat International Limited v Kenya Revenue Authority, the Commissioner of Income Tax and the Commissioner of Value Added Tax

High Court of Kenya
28 September 2020
EOE. K. Ogola
3,505 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~14 min to read original · ~4 min brief

The bottom line

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Always use the official tax appeal process first before seeking judicial review in Kenyan courts.

What this practically means

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Executive summary

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Mat International Limited, through leave granted by the High Court at Mombasa, moved the court by Notice of Motion dated 30/6/2020 seeking an order of certiorari to quash a Kenya Revenue Authority income tax assessment dated 14 October 2009 demanding Kshs. 598,183,012.00 for the years of income 2001 and 2002, and an order of prohibition restraining KRA and the Commissioners of Income Tax and Value Added Tax from taking enforcement action over the disputed tax, plus costs. The application was supported by the statement and verifying affidavit of David Killoran and opposed by the replying affidavit of Patrick Chege. KRA's case was that a 2004 audit of the Applicant's records for 2001 and 2002 revealed unexplained and undeclared income and expenses, including omitted bank balances, unsupported bank charges, unrecorded sale proceeds and understated closing stock, leading to additional assessments reconfirmed on 14 October 2009. The Applicant attributed documentation gaps to a fire in its offices and inter-company banking within the Tal Holdings group. E. K. Ogola J framed the issues as unreasonableness, irrationality, abuse of power and frustration of legitimate expectation, but, on the Respondent's plea, first addressed whether an alternative remedy existed. Finding that the Applicant had already lodged an appeal under the ICTA local committee mechanism, which was still pending, and that collection of tax is stayed while such an appeal is pending, the court held that pursuing judicial review in parallel would be an abuse of process. Relying on Republic v NEMA, Kapa Oil Refineries, Mwangemi Munga and Speaker v Njenga Karuma, and noting the internal dispute mechanisms under the Tax Procedures Act and the saving provisions of the Tax Appeals Tribunal Act, the court declined to determine the other grounds and dismissed the motion, with costs to abide the appeal.

Key legal issues

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01

Existence of an adequate alternative remedy

Holding

The motion was dismissed because the Applicant had already lodged an appeal under the ICTA local committee mechanism, which was still pending, and should prosecute that appeal instead of judicial review.

Reasoning

The court found the Applicant had instituted an appeal process under the ICTA before filing judicial review. The appeal was pending and its outcome could return to the High Court for review. Allowing two parallel processes over the same issues would be an abuse of process. The court declined to determine the other grounds and directed the Applicant to the appeal.

p. 4
02

Protection from enforcement during a pending tax appeal

Holding

The Applicant would not suffer any threat of enforcement until the pending appeal is heard and decided.

Reasoning

The court accepted that under the ICTA lodging an appeal to the local committee stops collection of tax until determination. The Applicant's apprehension of enforcement measures was therefore misplaced and unfounded, removing any exceptional circumstance justifying judicial review.

p. 6

Legal principles established

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  • Where a statute provides an internal dispute resolution mechanism, judicial review will only be granted in exceptional circumstances; a litigant must first exhaust the statutory appeal procedure.
  • Where there is a clear procedure for redress of a grievance prescribed by the Constitution or an Act of Parliament, that procedure should be strictly followed.
  • Under the ICTA, when an appeal is lodged with the local committee, collection of tax is stopped until the appeal is determined, so fears of enforcement during the appeal are misplaced.

Court orders

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  1. 1.The Notice of Motion dated 30/6/2020 seeking certiorari and prohibition was dismissed
  2. 2.Costs to abide in the said appeal before the local committee
Jurisdiction invoked
Judicial review jurisdiction of the High Court under the Income Tax Act (Cap. 470) and the fair administrative action framework; leave having been granted by the Court

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Mat International Limited v Kenya Revenue Authority, the Commissioner of Income Tax and the Commissioner of Value Added Tax", Case Analysis (2020). Judicial Review Application (Notice of Motion dated 30/6/2020). Source:

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