Ali v Kenya Revenue Authority & another [2024] KEHC 11023 (KLR)

Ali v Kenya Revenue Authority & another (Petition E003 of 2024) [2024] KEHC 11023 (KLR) (23 September 2024) (Judgment)

Neutral citation: [2024] KEHC 11023 (KLR)

Republic of Kenya

In the High Court at Mombasa

Petition E003 of 2024

JK Ng'arng'ar, J

September 23, 2024

IN THE MATTER OF: ARTICLES 3, 10, 22, 23, 27, 35, 47, 50, AND 210 OF THE CONSTITUTION OF KENYA, 2010 AND IN THE MATTER OF: KENYA REVENUE AUTHORITY ACT (CAP 469 LAWS OF KENYA) EAST AFRICAN COMMUNITY CUSTOMS MANAGEMENT ACT, 2004 AND IN THE MATTER OF: ALLEGED FAILURE TO ACCORD MEMBERS OF THE PUBLIC, IMPORTERS AND EXPORTERS THEIR CONSTITUTIONAL RIGHTS TO FULLY PARTICIPATE IN THE ABRUPT PROCESS OF CHANGING CLEARANCE OF GOODS

Between

Mohammed Samow Ali

Petitioner

and

Kenya Revenue Authority

1st Respondent

Commissioner for Customs & Border Control

2nd Respondent

Judgment

1. The Petitioner is a Kenyan citizen and a resident of Mombasa within the Republic of Kenya. The 1st Respondent is an agency of the government of Kenya for the collection and receipt of all revenue and is required to administer and enforce all provisions of the written laws for purposes of assessing, collecting and accounting for all revenues in accordance with the written laws of the land. The 2nd Respondent is responsible for the general administration of the provisions of the East African Community Customs Management Act, attendant regulations and all laws with respect to customs revenue and border control.

2. The Petitioner vide Petition dated 2nd August 2024 averred that the Respondents in executing their mandate introduced a new system called Centralization of Head Verification Officers for purposes of Cargo Clearance Process without public participation as a result of which the public and shareholders have been adversely affected. That there are massive delays in clearing goods, a high rise of storage/demurrage charges, introduction of new verification forms, centralization of the clearance process, an increase in the number of days to clear consignments, the new process is cumbersome, increased tariffs and barriers, increased business frustrations among stakeholders and the public, and that it lacks transparency, accountability and efficiency.

3. The Petitioner averred that in the course of July 2024, the Respondents and their employees and/or agents purported to introduce stakeholders’ participation by inviting them to consultative meetings purporting to be public participation meetings. That the public, major stakeholders and interested parties were not invited because no public notice was published by the Respondents in any daily newspaper of wide circulation within the country, and that no single public forum was held.

4. The Petitioner claims that as a result of the Respondent’s actions aforesaid, it resulted to the following breaches: -a.Failure to give the Petitioner, public, stakeholders and interested parties adequate notice to prepare and attend the meeting and forums violated Articles 10, 35 and 47 of the Constitution of Kenya.b.There was violation of fair administrative action by the Respondents as per Article 47 of the Constitution of Kenya as read together with the Fair Administrative Action Act, 2016. c.There was breach to fair hearing by failure to accord the public a fair and public hearing before the implementation of the new Centralization of Head Verification Officers contrary to Article 50 of the Constitution of Kenya, 2010. d.The 1st Respondent’s failure to act in an accountable and transparent manner in upholding the rule of law, transparency, accountability, and good governance violated Article 10 of the Constitution of Kenya, 2010 as read together with Section 5 of the Kenya Revenue Authority and Section 122 of the East African Community Customs Management Act, 2004. e.The 1st Respondent’s failure to furnish the public, stakeholders and interested parties with a draft copy of the intended new Centralization of Head Verification Officers in good time and prior to the implementation of the same violated Article 35 of the Constitution of Kenya, 2010 as read with the Access to Information Act.f.The actions of the 1st Respondent fell far below the requirements set out in Articles 10 and 47 of the Constitution of Kenya, 2010 and that the same violated Articles 35 and 50 of the Constitution of Kenya 2010 in that the Petitioner was expected to deliberate on and validate the contents of the new Centralization of Head Verification Officers whose contents are not known to the Petitioner, public, stakeholders and any interested party.

5. Arising from the above alleged violations, the Petitioner prays for the following orders: -a.A declaration that the 1st Respondent has violated Articles 10, 27, 33, 35, 47, 50, 201, and 210 of the Constitution of Kenya, 2010. b.A declaration that the new Centralization of Head Verification Officers is unconstitutional having been implemented without notice to the stakeholders and the public.c.A declaration that the 1st Respondent may only implement the new Centralization of Head Verification Officers after they have fully complied with the law particularly with regard to giving the public in general and the stakeholders in particular the right to participate in the decision-making process.d.A conservatory order to stop the Respondents from further operationalization of the new Centralization of Head Verification Officers which is fundamentally flawed and unconstitutional.e.Costs of this Petition.f.The Honourable Court do issue such orders and give such directions as it may deem fit to meet the ends of justice.

6. The 1st and 2nd Respondents opposed the Petition through a Replying Affidavit sworn on 7th August 2024 by Keneth Mbobua, an officer appointed under and in accordance with Section 13 of the Kenya Revenue Authority Act. The deponent avers that what it undertook was merely an administrative and human resource reorganization involving realignment and deployment of its staff who are the Heads Verification Officers pursuant to Section 5(2) of the East African Community Customs Management Act, 2004 and it did not undertake any legal, policy or system change that would necessitate public participation. That it is after the 2nd Respondent’s introduction of the administrative change vide the Centralized Head Verification Officers, that Kenya International Freight and Warehousing Association (KIFWA) reached out to the 2nd Respondent with a view of understanding the administrative changes. That it is consequent to the aforesaid request that the 1st Respondent wrote an email to the representatives of KIFWA, which email has been annexed to the Petition. That such routine engagements between the Respondents and KIFWA leadership or any other person cannot be construed to amount to public participation. That the Petition lacks merit and ought to be dismissed with costs.

7. The Petitioner filed a Supplementary Supporting Affidavit sworn on 15th August 2024 that prior to the introduction of the new system, it only took 1-3 hours to clear goods as shown on pages 1-20 of the Exhibit marked ‘MSA-1’. That pages 21-33 are entries lodged after implementation of the new system showing that it takes between 3-16 days or more to clear goods. That further, evidence on pages 34 to 54 of the exhibit shows revenue collected between April and July 2024 which clearly is a decline in revenue collection. That these documents were collected from the affected stakeholders to demonstrate the delays and loss of revenue. The Petitioner reiterated contents of his Supporting Affidavit and prayed that the orders sought in the Petition be granted as prayed.

8. The 1st and 2nd Respondents filed a Further Replying Affidavit sworn on 23rd August 2024 by Kenneth Mbobua that there was no new system, process or procedure introduced by the Respondent. That the process of clearance of goods remains as per the provisions of the East African Community Customs Management Act supported by the existing Integrated Customs Management Systems (ICMS) and the payment gateway which remain unchanged but the Respondents merely redeployed its internal human capital from their decentralized stations or regions to centralized stations or regions which is within its mandate pursuant to Section 5(2) of the East African Community Customs Management Act, 2004.

9. The 1st and 2nd Respondents further averred that the evidence purportedly adduced by the Petitioner is deficient in truth as the Petitioner has not established the existence of the old and new system and their differentiation if any but merely presented handwritten notes of the purported distinction which adds no evidential value and are inadmissible, that the data and examples cited by the Petitioner are selectively chosen and do not accurately represent the overall impact of the Centralization of Head Verification Officers, that the exhibits adduced presents the Petitioner’s understanding of the clearing process as time taken to clear a particular consignment will depend on a number of variables, and that the revenue performance is not merely an outcome of clearing process but has other interdependent factors such as the volume of imports made, nature of imports etc during a given period. That contrary to the Petitioner’s averments, available data demonstrates that there have been efficiency gains as a result of the Centralization of Head Verification Officers which has positively impacted customs operations. That the Petitioner plays no role in revenue collection and accounting which is the sole mandate of the Respondents and as such would not be in a position to know revenue loss or gain.

10. The Petition was canvassed by way of written submissions. The Petitioner in their submissions dated 15th August 2024 relied on the decision in Nairobi Civil Appeal No. E003 of 2023, The National Assembly & Another & Okiya Omtata Okoiti & 56 Others, Nairobi Constitutional Petition No. E406 of 2021, Judith Karigu Kiragu & 2 Others & Attorney General & 3 Others, and Nairobi Petition No. 552 of 2017, Okiya Omtata Okoiti v The Commissioner General, Kenya Revenue Authority & 2 Others on the essence of public participation as reiterated in the Petition and consequences of lack of public participation.

11. The 1st and 2nd Respondents in their submissions dated 23rd August 2024 relied on the decision in Mombasa High Court Constitutional Petition No. 159 of 2018 consolidated with Petition No. 201 of 2019, William Odhiambo Ramogi & 3 Others v The Attorney General & Others where the court dealt with the manner in which a state corporation ought to exercise statutory power. That recently the court in Nairobi High Court Constitutional Petition No. E283 of 2020, Law Society of Kenya v The Attorney General & Others (unreported) as cited at paragraph 78 of Richard Owuor & 2 Others (suing on behalf of Busia Sugarcane Importers Association) v Cabinet Secretary, Ministry of Agriculture, Livestock, Fisheries & Cooperatives & 7 Others (2021) eKLR stated with approval that operational and administrative decisions need not be subjected to public participation. That the upshot of the foregoing is that Centralization of Head Verification Officers, being purely an operational day to day decision need not be subjected to public participation. That consequently the Petition is devoid of merit and the same should be dismissed with costs to the Respondents.

12. I have considered the Petition and the Supporting Affidavit thereto, the Replying Affidavit by the 1st and 2nd Respondents, the Supplementary Supporting Affidavit by the Petitioner, a Further Replying Affidavit by the 1st and 2nd Respondents and submissions by the parties. Breaking down the entire dispute, there are only two issues for determination in view of the fact that the parties are agreed on the rest of the issues. These issues are: -a.Whether implementation of Centralization of Head Verification Officers for cargo clearance required adherence to the principle of public participation; andb.Whether public participation was conducted.

13. The Petitioner contended that the changes to the cargo clearance process by introduction of a new Centralization of Head Verification Officers is causing massive delays, demurrage and storage charges, has increased time frame for release of goods, it is cumbersome, increased clearance costs, tariffs and barriers, and it lacks transparency, accountability and efficiency. The Petitioner maintained that the new system has far reaching affects numerous port users such as the CFS, importers, clearing agents, shipping lines, and consolidators among others. That therefore, failure to conduct public participation is in violation of the constitution and should be declared null and void.

14. Public participation is a mandatory pre-condition in administrative action by public bodies and/or in actions that affect the public. It is the process by which an organization and the public interact with the aim of coming up with better and acceptable decisions. It enriches organizations with views of those affected the most by the policies or decisions. Public participation is a Constitutional imperative and any execution of statutory provisions ought to comply in relevant cases.

15. Article 10 of the Constitution provides: -1. The national values and principles of governance in this Article bind all State organs, State officers, public officers and all persons whenever any of them:a.applies or interprets this Constitution;b.enacts, applies or interprets any law; orc.makes or implements public policy decisions.2. The national values and principles of governance include: -(a)patriotism, national unity, sharing and devolution of power, the(b)rule of law, democracy and participation of the people;(c)human dignity, equity, social justice, inclusiveness, equality, human rights, non-discrimination and protection of the marginalised;(d)good governance, integrity, transparency and accountability; and(e)sustainable development.

16. Article 47 of the Constitution provides: -1. Every person has the right to administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair.2. If a right or fundamental freedom of a person has been or is likely to be adversely affected by administrative action, the person has the right to be given written reasons for the action.3. Parliament shall enact legislation to give effect to the rights in clause (1) and that legislation shall.a.provide for the review of administrative action by a court or, if appropriate, an independent and impartial tribunal; andb.promote efficient administration.

17. The body involved in decision making is required to facilitate public participation and, in this case, the Respondents have been entrusted with the task. The burden of proof therefore lays with them to demonstrate that indeed there was public participation.

18. The Respondents admit that indeed no public participation was conducted and that no select stakeholder was invited for public participation. The Respondents insist that implementation of centralization of the Head Verification Officers was administrative human resource realignments and staff deployment necessary to achieve the mandate of the Respondent as espoused under Section 5(2) of the East African Community Customs Management Act. That Kenya International Freight and Warehousing Association (KIFWA) reached out to the 2nd Respondent with a view of understanding the administrative changes and that the same was merely a routine stakeholder engagement/consultative meeting which cannot be construed to amount to public participation.

19. This court does not dispute the Respondents’ position that the aim of rolling out Centralization of Head Verification Officers is to facilitate faster clearance of goods and reduce importation costs by eliminating the need for physical presence once correct documentation is submitted online. However, Centralization of Head Verification Officers is a new system with far reaching implications on numerous port users which requires public participation. The Respondents cannot therefore say that their decision was within their mandate under Section 5 (2) of the East African Community Customs Management Act and that the Petitioner’s need for public participation is inviting the court to get entangled in administrative decisions and to micromanage their human resource administrative measures.

20. Article 2 (4) of the Constitution provides that any law that is inconsistent with the Constitution is void to the extent of the inconsistency, and any act or omission in contravention of the Constitution is invalid. This court has jurisdiction under Article 165 (3) (d) (1) of the Constitution to hear any question on interpretation of the Constitution in a manner that promotes its values and purposes which includes public participation. This court therefore has the power to issue remedies to ensure that the Constitution is not violated or threatened.

21. From the analysis above, it is clear that in the obtaining scenario, public participation was a necessary constitutional imperative which needed to be complied with. It is trite fact and admitted by the Respondents that public participation was not done in respect to the changes effected by the Respondents.

22. Consequently, flowing from the facts, evidence and the law, this court in allowing the Petition herein issues the following remedies: -a.A declaration be and is hereby issued that the 1st Respondent violated Articles 10, 27, 33, 35, 47, 50, 201, and 210 of the Constitution of Kenya, 2010. b.A declaration be and is hereby issued that the 1st Respondent shall implement the Centralization of Head Verification Officers after conducting public participation and in compliance with the law.c.In the absence of (b) above, a conservatory order do issue to stop the Respondents from further operationalization of the new Centralization of Head Verification Officers which is fundamentally flawed and in violation of the law.d.This being a public interest litigation, each party do bear its own costs.

DATED AND DELIVERED VIRTUALLY AT MOMBASA THIS 23RD DAY OF SEPTEMBER, 2024. ………………………..J.K. NG’ARNG’AR, HSCJUDGEIn the presence of: -Omwenga Advocate for the PetitionerNo appearance Advocate for the RespondentsCourt Assistant – Mr. Samuel Shitemi