- Appeal was triggered by a High court decision delivered in March 2018
- Court of Appeal Judges were satisfied principle on public participation was met
Image: KENYA JUDICIARY
It's a win for Kenya Revenue Authority after the Court of Appeal paved the way for the planned levying on excise duty on bottled water, juices, soda, and cosmetics.
The genesis of the appeal was triggered by a High Court decision delivered in March 2018, that nullified the regulations on excise duty, which required manufacturers and importers to affix the said items with the new generation excise stamps.
Justice John Mativo who handled the matter at the High Court, said there was no evidence that the regulations on the excise duty were subjected to public participation.
The reasoning being that only two consultative meetings were carried out and that these meetings were only carried out in Nairobi, whereas the implementation of the Excise Goods Management System (EGMS) would affect the entire country.
However, the Court of Appeal judges Daniel Musinga, Hellen Omondi and Ngenye Macharia agreed with the taxman that there was adequate public participation before the tax was rolled out.
One of the key stakeholders in the meetings was the Kenya Association of Manufacturers (KMA). The judges said there was representation of membership of KMA in the meetings, and this in itself was sufficient as the representation of the membership of the stakeholder had the members view on the implementation of EGMS.
“A consultative meeting in every county was therefore not necessary so that the EGMS could pass the public participation test,” said the appellate judges.
They were persuaded that the public participation that was carried out passed the test of effectiveness and that requirement was met.
The case had been filed by Busia Senator Okiya Omtatah following the awarding of a 5-year multi-billion shilling tender to a Swiss-based international company. The company was to ensure the traceability of products, secure excise duty and ultimately increase revenue to KRA.
The justification given for implementation of this system, was that it was intended to seal the loopholes that had been suffered under the manual system; and curb illicit trade in counterfeit goods which were contributing to loss of revenue.
But Omtatah in his case argued there was no public participation before the introduction of the EGMS. He also said the company was corruptly procured, and that the EGMS duplicates the work of other government agencies like the Kenya Bureau of Standards and the Anti-counterfeit agency.
Omtatah also claimed KRA abused the law on direct procurement. That the said procurement was invalid because the direct tender locked out other firms.
But KRA argued that the tender process was competitively floated and the Swiss company was awarded, having met the set conditions.
The appellate judge in their findings said the tender was not awarded irregularly.
“Omtatah avers that the contract was awarded irregularly; and he who alleges must prove it. The burden ought not to have been on KRA.”