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The Supreme Court has rejected the Court of Appeal’s judgment on the Finance Bill 2023.
This follows a consolidated appeal concerning the legislative process leading to the enactment of the Finance Bill, 2023 (the Bill) into the Finance Act, 2023 (the Act) after receiving Presidential assent on June 26, 2023.
This is after 11 petitions were lodged before the High Court to challenge the constitutionality of the Act.
“The preliminary objection on this Court's jurisdiction is overruled. We hereby set aside the Court of Appeal's finding declaring the entire Finance Act, 2023, unconstitutional,” the judgment read.
The Supreme Court said it upholds two findings by the Court of Appeal.
They included the question relating to Section 84 (Affordable Housing Levy) introduced by the Finance Act, 2023, before the Court of Appeal was moot and that Sections 76 and 78 of the Act amending Section 7 of the Kenya Roads Act, 1999; Section 87 of the Act amending Section 28 of the Unclaimed Financial Assets Act, 2011 are unconstitutional as they were neither incidental nor directly connected to a money Bill.
In its ruling, the Court of Appeal found that the 21 Sections of the Act, introduced by the National Assembly post the public participation phase, as unconstitutional.
The Court ordered for fresh public participation, having been enacted in violation of the Constitution; the prayer for a refund of taxes collected under the said provisions was declined for not having been sought before the High Court.
They claimed that the enactment of the Act violated various provisions of the Constitution and the Public Finance and Management Act (PFM) Act), on the budget-making process, thus rendering the Act fundamentally flawed and void.
The court further found that Parliament is obligated to provide reasons for adopting or rejecting any proposals received from members of the public during the public participation process.
The Court of Appeal held that the failure to comply rendered the entire Act unconstitutional.
The Supreme Court framed nine issues for determination after considering the pleadings, the impugned judgment, and the parties' respective submissions.
The Supreme Court sought to know whether the Finance Act, 2023 was subject to the concurrence process under Article 110(3) of the Constitution, whether fresh public participation should be undertaken where Parliament amends provisions of a Bill or introduces new provisions in a Bill after initial public participation.
They also sought to find out whether Parliament has an obligation, upon conclusion of the public participation exercise, to provide detailed reasons for accepting or rejecting views, and whether failure to give reasons vitiates the legislative process and invalidates the legislation passed.
The Supreme Court sought to find out whether the Appropriation Act, 2023 contained the estimates of revenue, whether the question of the validity of Section 84 of the Finance Act, 2023 (Affordable Housing Levy) is moot and whether a court has jurisdiction to test the legality of policy positions taken by the Executive and Parliament in the legislative process; and if so, whether the impugned sections of the Finance Act relating to various tax legislations are unconstitutional.
The Supreme Court further dismissed cross appeals for the 15th -19th & 22nd and 38th - 49th respondents'.
The Court said that each party would bear the costs of the consolidated appeal and cross-appeals.
