BY SAM ALFAN.
The Court of Appeal has suspended a decision issued two years ago, quashing sections of the Tax Procedures Act, which gave Kenya Revenue Authority (KRA) power to search and demand documents from taxpayers believed to have evaded tax.
Three judges Martha Koome, Fatuma Sichale and Jamila Mohamed agreed with KRA that the nullified sections should be subjected to a second opinion before the law is amended.
“The order that best commends to us is to stay the entire judgement and orders of the high court delivered on May 16,2018 pending hearing and determination of the appeal”, ruled the bench.
The Judges, however, barred KRA from arresting Dr Robert Ayisi, a former Nairobi County secretary for failing to furnish its officers were documents they had requested.
“We however direct that the applicant should not arrest Dr Robert Anyisi (former county secretary) until hearing and determination of the appeal “, ruled the judges.
In May 2018, Justice George Odunga declared sections 44(1) and (2), 60(10 and (3) and 59(4) of Tax procedures Act, 2015, unconstitutional because it violated of Article 31 (b) of Constitution, which guarantees people’s ‘right not to have their possessions seized’.
The judge also declared unconstitutional sections of the law that sought to waive the rights of individuals or organisations that are bound by contractual duty of confidentiality
The three sections declared unconstitutional are key anchors of the Tax Procedures Act that gave the KRA the power of search and seizure as well as admissibility of evidence. Section 44 (1) and (2) applies to seizure of goods whose owner the commissioner or authorised officer believes has not paid or will not pay value added tax or excise duty.
Other than quashing the said sections, Justice Odunga also directed KRA to pay Dr Ayisi Sh2 million for infringing on his rights.
KRA though it legal officer officer David Ontweka appealed against the decision saying the ruling had crippled its mandate and reaching projected revenue targets might be difficult. The decision, the court heard, threw the country’s revenue collection in a quagmire, such that it cannot successfully implement tax compliance.
The three judge bench said in their own analysis of the matter and as demonstrated, it was a unique case that has public interest bearing on the mandate of the applicant as a tax collection agency on behalf of the people of Kenya.
Lawyer Ontweka argued that Justice Odunga misapprehended the purpose of section 44,59 and 60 of the Tax Procedures Act ,2015 the act which are meant to facilitate the enforcement of tax collection.
The agency argued that it had used the said provisions pursuant to its mandate of ensuring that information in the custody of Dr Anyisi who was the then Nairobi county secretary was released to the KRA which was investigating issues of tax related fraud.
“The said orders have thrown the country’s revenue collection in a quagmire such that KRA cannot successfully implement tax compliance under several heads and cannot combat tax fraud and evasion”, the agency told the court.
Ontweka told the appellate judges that by the high court nullifying the said sections of the law, it effectively stopped the enforcement of tax collection in its entirely including rendering the projected revenue targets for succeeding financial years uncollected.
