Kenafric Beverages & Bottling Limited v Commissioner of Domestic Taxes [2025] KETAT 21 (KLR)

Kenafric Beverages & Bottling Limited v Commissioner of Domestic Taxes (Tax Appeal E909 of 2023) [2025] KETAT 21 (KLR) (24 January 2025) (Ruling)

Neutral citation: [2025] KETAT 21 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E909 of 2023

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

January 24, 2025

Between

Kenafric Beverages & Bottling Limited

Applicant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The Applicant filed a Notice of Motion dated 20th November 2024 on 21st November 2024 under certificate of urgency and supported by affidavit sworn by Emma Gwako seeking the following Orders:a.Spent.b.That the Respondent be cited for contempt of the judgment of this Tribunal delivered on 1st August 2024. c.That the Respondent be ordered to immediately and unconditionally remove the tax liabilities on the Applicant's i-Tax Portal.d.Costs of this Application be provided for.

2. The Application was premised on the following grounds:a.That this Tribunal, vide a Judgment dated 1st August 2024, allowed the Applicant's appeal; set aside the Respondent's objection decision dated 10th November 2023; and ordered every party to bear their own costs.b.That pursuant to the said Judgment, the Respondent was mandated to unequivocally and unconditionally remove all the tax liabilities that were reflecting on the Applicant's i-Tax portal.c.That the Respondent notified the Tribunal of its intent to file an appeal against the whole Judgment of the Tribunal vide a notice of Appeal dated 22nd August 2024. d.That the Respondent thereafter instituted its appeal vide a memorandum of appeal dated 13th September 2024. That despite instituting an appeal against the impugned judgment, the Respondent has never made any application, either before this Tribunal or at the High Court, seeking for stay of execution of this Tribunal's decision.e.That in the absence of any valid orders staying the execution of the referenced Judgment, the Respondent has continuously, persistently and capriciously refused to remove the tax liabilities that were successfully challenged by the Respondent before this Tribunal.f.That the attempts by the Applicant's advocates on record, Messrs Rachier & Amollo LLP, to request the removal of the wanton, unlawful and illegal tax liabilities have been contemptuously ignored by the Respondent. This has made it practically impossible for the Applicant to seek its tax refunds from the Respondent.g.That the Respondent has adamantly and stubbornly insisted that it will only remove the said liabilities after the determination of the Appeal in the High Court, despite there being no valid Tribunal's/High Court's orders staying the execution of the impugned judgment.h.That it is for the foregoing reasons that the Respondent ought to be cited for contempt of valid orders of this Tribunal.i.That it is in the best interests of justice and protection of the Applicant's right to enjoy the fruits of the Judgment issued in its favour that this matter be placed before the Tribunal forthwith, certified urgent and directions issued.

3. The Respondent replied by filing a preliminary objection dated 2nd December 2024 on even date, a replying affidavit sworn by its officer, Judith Mulimba dated 2nd December 2024 and filed on even date. The Respondent opposed the Application on the following grounds:Preliminary Objection:i.That the Application was incompetent, legally unsuitable and as such an abuse of the court process as there is no proper Appeal before the Tribunal.ii.That the Applicant had not exhausted all external mechanism available (High Court). As this Tribunal has downed its tools and cannot relook into the matter unless there is an error apparent on the record which they seek review.iii.That the Application is incompetent, legally unsuitable and amounts to forum shopping and as such an abuse of the court process as there was no Jurisdiction before the Tribunal.iv.That the Tribunal lacked jurisdiction to hear the Application as it was functus officio as it delivered its Judgement on 1st August 2024 in TAT No. 909 of 2023. v.That this Application was fatally defective as it offends the mandatory provisions of the laws.vi.That the Application was therefore fatally defective for want of compliance with the law.vii.That under the circumstances, this Application was a misconception and ought to be dismissed with costs to the Respondent.Replying Affidavitviii.That the Respondent carried out a review of the Applicant’s excise returns with a view to verify the accuracy of the returns declared for excise tax purposes for the period March, April and May 2023 and that the Tribunal heard this matter conclusively and delivered its Judgement on 1st August 2024 thus downing its tools and becoming functus officio.ix.That the Applicant had not exhausted all external mechanism available at the High Court as this Tribunal had downed its tools and cannot relook into the matter unless there was an error apparent on the record for which they sought review.x.That the Application is incompetent, legally unsuitable and amounted to forum shopping and as such an abuse of the court process as there was no jurisdiction before the Tribunal. The Respondent maintained that the Tribunal lacks jurisdiction to hear the Application as it was functus officio as it delivered its Judgement on 1st August 2024 in TAT No. 909 of 2023. xi.That the Application is fatally defective as it offends the mandatory provisions of Section 53 of the Tax Procedures Act, CAP 469B of the Laws of Kenya (hereinafter “TPA”) therefore, under the circumstances, the Application was a misconception and ought to be dismissed with costs to the Respondent.xii.That the orders sought in this Application were not in the memorandum of Appeal filed and that the Respondent is not defiant of the Judgement of the Tribunal. It noted that the Applicant wanted to fraudulently seek orders which were not originally prayed for in the finalised Appeal and wants to use this Tribunal to sanitise its pleadings in granting orders that were not even prayed for.xiii.That in order to succeed in civil contempt proceedings, an applicant has to prove the terms of the order; knowledge of these terms by the Respondent and failure by the Respondent to comply with the terms of the order. The Respondent asserted that the Applicant has not proved in its application that the Respondent has flouted the decision issued herein.xiv.The Respondent relied on Hadkison v Hadkison [1952] All ER 567 where the Court held that the plain and unqualified obligation of every person against whom an order was made is to obey it unless the order is discharged and disobedience of the order would result to being in contempt.xv.That the Applicant was putting the Tribunal in an untidy situation in these proceedings as the Tribunal has already pronounced itself and closed the file and there is no error apparent on record.xvi.That if the Applicant seeks further orders or feels that there is disobedience then the right court to move is the High Court. However, the Applicant did the reverse and rushed to this Tribunal seeking orders it had not prayed for.xvii.That there was no specific person and reason the Applicant seeks to cite for contempt because there was no order directed against any officer of the Respondent and that the Applicant did not extract or serve the Order upon the specific officers.xviii.That the Respondent in this case was working not with the intent to violate the rights of the Applicant but had filed an Appeal at the High court to challenge the said decision and that decided cases have ruled that an Appeal filed at a higher court is a stay enough as the issues of the Judgement are contested and a party needs not to apply for stay when they have appealed.xix.That the Respondent was acting well within the Law and acting to safe guard the interests of the Kenyan government and that if the said prayers are granted by the Tribunal the implications can be grave as without pronounced from the High Court on the Appeal filed the Respondent risks to suffer a lot of prejudice.xx.That if the said prayers are granted then the Tribunal will be setting a bad precedent and there will be a risk of all litigant filling frivolous Applications after the Tribunal has rendered its Judgement.xxi.That if the orders are granted the Respondent will not have any recourse to the Applicant and that issuance of the orders at this stage will be detrimental as the Appeal at the High Court will be already spent.xxii.That under the circumstances, the Application was a misconception and ought to be dismissed with costs to the Respondent.xxiii.The Respondent prayed that this Application be dismissed with costs to it as the same was devoid any merit.

4. On 28th November, 2024 parties were directed by the Tribunal to file their respective written submissions on or before the 16th of December, 2024 with consequences for failure to strictly comply with the Tribunal’s directions. The Applicant failed to comply with the Tribunal’s directions and accordingly, its submissions were not considered.

Analysis And Findings 5. The Applicant approached this Tribunal seeking to cite the Respondent for contempt of the judgment of this Tribunal delivered on 1st August 2024. The Applicant also urged the Tribunal to order the Respondent to immediately and unconditionally remove the tax liabilities on the Applicant's iTax Portal.

6. The Respondent, on the other hand, filed a preliminary objection on the basis that Tribunal has no jurisdiction to hear this Application since the Tribunal is “functus officio’ having already rendered its Judgement on the matter on 1st August, 2024. The Respondent was of the view that the Application was fatally defective and ought to be struck out. In its Replying Affidavit the Respondent averred that since the Tribunal had rendered its judgment, the Applicant ought to have approached the High Court for redress and therefore, reaffirming the position that the Tribunal does not have jurisdiction to entertain the Application in issue.

7. In view of the fact that the Respondent raised a preliminary objection on the basis that the Tribunal is “functus officio” the Tribunal finds it necessary to determine whether the Tribunal has jurisdiction to hear the Application wherein the Applicant seeks to cite the Respondent for contempt of the Judgement delivered on 1st August, 2024 and further that the Respondent be Ordered to immediately and unconditionally remove the tax liabilities on the Applicant’s i-Tax portal.

8. The Court in the case of Telkom Kenya Ltd v John Ochanda [2014] eKLR held as follows regarding the principle of “functus officio”:‘‘Functus officio is an enduring principle of law that prevents the re-opening of a matter before a court that rendered the final decision thereon. It is a doctrine that has been recognized in the common law tradition from as long ago as the latter part of the 19th Century. In the Canadian case of Chandler vs Alberta Association of Architects [1989] 2 S.C.R. 848, Sopinka J. traced the origins of the doctrines as follows (at p. 860);“The general rule that a final decision of a court cannot be re-opened derives from the decision of the English Court of Appeal In re St. Nazaire Co., (1879), 12 Ch. D. 88. The basis for it was that the power to rehear was transferred by the Judicature Acts to the appellate division. The rule applied only after the formal judgment had been drawn up, issued and entered, and was subject to two exceptions:1. Where there had been a slip in drawing it up, and,2. Where there was an error in expressing the manifest intention of the court. See Paper Machinery Ltd. v J.O. Rose Engineering Corp., [1934] S.C.R. 186. ”

9. In addition, the Court in the case of Raila Odinga & 2 Others v. Independent Electoral & Boundaries Commission & 3 Others [2013] eKLR cited with approval a passage in an article by Daniel Mala Pretorius entitled “The Origins of the functus officio Doctrine, with Special Reference to its Application in Administrative Law”, in South African Law Journal, Vol. 122 (2005), at p. 832, in the following terms:“The functus officio doctrine is one of the mechanisms by means of which the law gives expression to the principle of finality. According to this doctrine, a person who is vested with adjudicative or decision-making powers may, as a general rule, exercise those powers only once in relation to the same matter…. The [principle] is that once such a decision has been taken, it is (subject to any right of appeal to a superior body or functionary) final and conclusive. Such a decision cannot be reviewed or varied by the decision-maker.”

10. This Tribunal in the case of Subru Motors Limited v Commissioner of Domestic Taxes (Tribunal Appeal 109 of 2016) stated as follows at paragraph 11 with regards to the doctrine of functus officio:‘‘the Tribunal considers itself functus officio upon delivery of its judgment or ruling except where it is moved to exercise its powers to review its decision to correct an error or a mistake.’’

11. The Applicant prayed that the Respondent be cited for contempt. Section 21 of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) provides for an offence known as ‘Contempt of Tribunal’: it provides as follows:‘‘Any person who—a.insults a member or an employee of the Tribunal in relation to exercise of powers and functions under this Act, orb.interrupts the proceedings of the Tribunal; orc.creates a disturbance or takes part in creating a disturbance in or near a place where the Tribunal I sitting; ord.does any other act or thing that would, if the Tribunal were a court of law, constitute a contempt of that court, commits an offence and shall be liable on conviction to a fine not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding six months, or to both. [Emphasis is ours].”

12. Pursuant provisions of section 21 of the TATA, the Tribunal has jurisdiction to determine whether a party to proceedings has acted in contempt of its Orders and it is to that extent the Tribunal is not “functus officio” as the Respondent has outlined in its grounds of opposition and in the replying affidavit. The Tribunal is also of the view that the filing of an appeal at the High Court is not an automatic stay of the proceedings at the Tribunal. It then follows that until the High Court issue Orders to stay its proceedings, the Tribunal has jurisdiction to determine if the Respondent has acted in contempt of its Orders. Furthermore, the Tribunal has jurisdiction to cite the Respondent for contempt if it finds that the Respondent wilfully disobeyed the Orders that it issued vide its Judgement dated 1st August, 2024.

13. Hon. Justice Ibrahim (as he then was) in the case of Econet Wireless Kenya Limited Vs Minister for Information and Communication of Kenya Authority [2005] eKLR had the following to say about the issue of contempt:“It is essential for the maintenance of the rule of law and order that the authority and the dignity of our courts are upheld at all times. The Court will not condone deliberate disobedience of its orders and will not shy away from its responsibility to deal firmly with proved contemnors. It is the plain and unqualified obligation of every person against whom an order is made by court of competent jurisdiction, to obey it unless and until the order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by the order believes it to be irregular or void.’’

14. In the case of T.N Gadavarman Thiru Mulpad v Ashok Khot and Another [2005] 5 SCC, the Supreme Court of India in emphasizing the dangers of disobeying court Orders held as follows:“Disobedience of this Court's order strikes at the very root of the rule of law on which the judicial system rests. The rule of law is the foundation of a democratic society. Judiciary is the guardian of the rule of law. Hence, it is not only the third pillar but also the central pillar of the democratic State. If the judiciary is to perform its duties and functions effectively and remain true to the spirit with which they are sacredly entrusted to it, the dignity and authority of the Courts have to be respected and protected at all costs. Otherwise, the very corner stone of our constitutional scheme will give way and with it will disappear the rule of law and the civilized life in the society. That is why it is imperative and invariable that Court's orders are to be followed and complied with.’’

15. Pursuant to section 21 of the TATA, contempt of the Tribunal is an offence and the same must be handled with care because a Contemnor may end up in jail. In Gatharia K. Mutikika vs Baharini Farm Ltd [1985] KLR 227 the Court held as follows:“A contempt of court is an offence of a criminal character. A man may be sent to prison. It must be proved satisfactorily. It must be higher than proof on a balance of probabilities, almost but not exactly, beyond reasonable doubt. The standard of proof beyond reasonable doubt ought to be left where it belongs, to wit criminal cases. It is not safe to extend it to offences which can be said to be quasi-criminal in nature.’’

16. Considering the gravity of the personal consequences that would ordinarily flow from a finding of contempt, it then follows that the Applicant must adduce evidence to demonstrate that the Order in question was brought to the attention of the alleged contemnor as proof that the contemnor had personal knowledge of the Order in issue. The Court, in the case of Oilfield Movers Ltd v Zahara Oil & Gas Limited [2020] eKLR stated as follows:“It is important however that the court satisfies itself beyond any shadow of a doubt that the person alleged to be in contempt committed the act complained of with full knowledge or motive of the existence of the order of the court forbidding it. The threshold is quite high as it involves possible deprivation of a person’s liberty.”

17. A finding of contempt may deprive someone of constitutional liberties. Consequently, it is necessary that number factors have been satisfied before deciding on contempt. In Samuel M. N. Mweru & Others v National Land Commission & 2 others [2020] eKLR, the court held as follows outlining the conditions that ought to be met for a contempt proceeding to succeed:‘‘It is an established principle of law that in order to succeed in civil contempt proceedings, the Appellant has to prove (i) the terms of the order, (ii) Knowledge of these terms by the Respondent, (iii). Failure by the Respondent to comply with the terms of the order. Upon proof of these requirements the presence of willfulness and bad faith on the part of the Respondent would normally be inferred, but the Respondent could rebut this inference by contrary proof on a balance of probabilities.”

18. The highlighted principles are discussed hereunder in relation to Applicant’s prayer in relation to contempt. With regards to the first principle, the Tribunal observed that the Applicant demonstrated that the Tribunal made an Order. In regard to the second principle, there is no doubt that the Respondent was made aware of the decision of the Tribunal since the Respondent regurgitated the same in its Replying Affidavit. Further, upon a review of the Respondent’s grounds of opposition, the Tribunal notes that the Respondent knew the terms of the Orders that the Tribunal issued.

19. There is no dispute that on 1st August, 2024, the Tribunal issued Orders allowing the appeal, setting aside the Respondent’s objection decision dated 10th November 2023 and directed each party to bear own costs.

20. The setting aside of the Respondent’s objection decision meant that the impugned assessment was quashed and that therefore, the Respondent could not demand from the Applicant the assessed taxes. However, the Applicant did not adduce evidence to prove that the Respondent wilfully and in bad faith failed to comply with the Orders of the Tribunal delivered vide its Judgement on 1st August, 2024. Consequently, the Tribunal finds and holds that the Respondent was not in contempt of the Order of the Tribunal to set aside its Objection Decision dated 10th November 2023 and sees no reason to cite the Respondent for Contempt.

21. The Applicant also sought Orders for the Respondent to immediately and unconditionally, remove the tax liabilities on its i-Tax portal. The Tribunal notes that it has jurisdiction to review its Orders and/or Decrees pursuant to section 29A of the TATA. Section 29A of the TATA provides as follows:‘‘29A. Review of decree or orders(1)A person who is aggrieved by a decree or an order from which no appeal has been preferred from the Tribunal to the High Court, may apply for review of the decree or the order within seven days from the date the decree or order was made by the Tribunal.(2)Applications for review of decree or orders under subsection (1) may be made —(a)Upon the discovery of new and important matter or evidence which, after the exercise of due diligence, was not within the knowledge of the applicant or could not be produced by the applicant at the time when the decree was passed or the order was made;(b)On account of some mistake or error apparent on the face of the record; or(c)For any other sufficient reason.(3)Upon receipt of an application for review under subsection (1), the Tribunal may, set aside, vary or affirm the decree or the order, stating reasons for review as it deems fit within fourteen days after receipt of an application.’’

22. The Applicant did not make an application for review pursuant to section 29A of TATA, and even if it was an application for review, the same was not filed within 7 days as stipulated under the aforementioned section. Therefore, the Tribunal finds that it does not have jurisdiction to issue the additional Orders to compel the Respondent to immediately and unconditionally, remove the tax liabilities on its i-Tax portal. Granting this additional Order would amount to a review of the Tribunal’s Orders which review the Applicant though entitled to, failed to apply for.

23. The Applicant disregarded the clear provisions of section 29A of the TATA and further, during the appeal stage, the Applicant did not pray for or seek the order that the Respondent be compelled to immediately and unconditionally, remove the tax liabilities on its i-Tax portal. Therefore, the Applicant is asking the Tribunal to make an order that it did not pray for in its Appeal. It follows that the Tribunal does not have jurisdiction to make such an order.

24. The Tribunal having delivered its Judgment in favour of the Applicant in TAT Appeal No. E909 of 2023 finds and holds that it is “functus officio” in relation to the third prayer in the instant Application and therefore downs its tools as it is required to do following the holding in the case Owners of The Motor Vessel “Lillian S” vs. Caltex Oil (Kenya) Limited (Civil Appeal No. 50 of 1989.

Disposition 25. The upshot of the foregoing is that the Tribunal finds that this Application fails and accordingly proceeds to make the following Orders:a.The Application be and is hereby dismissed.b.No orders as to costs.

26. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 24TH DAY OF JANUARY, 2025. CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBEROLOLCHIKE S. SPENCER - MEMBER