Introduction and Background
1. For determination is the Appellant’s Motion dated 9th April 2025. The Motion seeks, in the main, a stay of execution of the Orders of the Honourable Tax Appeals Tribunal issued on 20th March 2025 in TAT Appeal No. E133 of 2025, which directed the Appellant to release the Respondent’s consignments currently held in the Appellant’s warehouses. The stay is sought pending the hearing and determination of the intended appeal and pending the hearing and determination of the appeal before the Tribunal.
2. In the alternative, the Appellant prays that the Respondent be ordered to deposit security as a condition for the release of the said goods. The Appellant further seeks a stay of proceedings before the Tribunal pending the hearing and determination of the appeal before this Court.
3. The application is opposed by way of a Replying Affidavit sworn by Zamba Henry Zvenyika on 24th September 2025. The Respondent’s case is that the goods which the Appellant seeks to preserve were already released pursuant to the Tribunal’s ruling of 20th March 2025. It therefore contends that the prayer for stay of release is moot. The Respondent further argues that the Appellant’s apprehension of loss of tax revenue is speculative and incapable of sustaining the drastic orders sought. It prays that the stay of proceedings before the Tribunal be lifted to allow the appeal to proceed expeditiously.
Analysis and Determination
4. The issues arising for determination are:
i. Whether this Court ought to stay the Tribunal’s orders for release of the Respondent’s consignments.
ii. Whether the Respondent should be ordered to provide security pending appeal.
iii. Whether proceedings before the Tribunal should be stayed pending the appeal before this Court.
The Stay of the Release Orders
5. The dispute before this Court traces back to a Management Letter demanding taxes of Kshs. 145,952,132/= following a Post Compliance Audit for the period January 2018 to December 2022. The Respondent contends to have sought review of the tax demand by letter dated 11th July 2023, which on the face of it, was received by the Appellant on 3rd October 2023.
6. The Appellant argues that the review was filed outside the statutory timelines under Section 229 of the East African Community Customs Management Act (EACCMA), which requires applications for review to be lodged within 30 days of the decision. Conversely, the Respondent faults the Appellant for failing to respond to the review application within the statutory timelines. The Tribunal, upon considering the Respondent’s application, allowed the prayer for release of consignments held by the Commissioner pending the hearing and determination of the appeal. That order is the subject of the present appeal.
7. From the Appellant’s own Further Affidavit, it is admitted that the consignments have already been released, some to the Respondent and others to third parties. This admission confirms the Respondent’s position that the consignments are no longer in the custody of the Appellant.
8. It follows therefore that the prayer for stay of the release orders is overtaken by events and is moot. Courts do not issue orders in vain. If the subject matter is not within the Appellant’s control, the Court cannot grant relief that is incapable of enforcement. The ground therefore fails.
Security Pending Appeal
9. The Appellant argues that unless security is provided, it risks being unable to recover substantial taxes amounting to Kshs. 145,952,132/= should the appeal succeed. The relevant statutory provision according to the Appellant is Section 122(3) of the EACCMA, which provides:
“Provided that before granting such permission the proper officer may require the importer to provide sufficient guarantee in the form of a surety, a deposit or some other appropriate security as the proper officer may determine, to secure the ultimate payment of customs duties for which the goods may be liable.”
10. This section empowers the Appellant to release goods subject to the importer furnishing adequate security to safeguard the revenue. The rationale is clear that while trade facilitation requires that goods are not unduly detained, the public interest in protecting tax revenue must equally be preserved. Security acts as a balancing mechanism, to ensure that if the importer is ultimately found liable, the government can recover the duties without difficulty.
11. In the present case, the Post Clearance Audit and subsequent tax demand of Kshs. 145,952,132/= has not been denied by the Respondent. Whether or not the tax is ultimately payable will be determined after the full hearing of the appeal before this Court and possibly after the Tribunal proceedings. I hold the view that the existence of a prima facie demand is sufficient to trigger the protective jurisdiction of this Court under Section 122 of EACCMA
12. The Tribunal’s order for unconditional release of the consignments failed to safeguard the Commissioner’s statutory duty to secure revenue. Considering the confirmation that the consignments are no longer in the Appellant’s custody and control, this Court is entitled to intervene so as to ensure that the appeal is not rendered nugatory. Without security, the Commissioner risks irrecoverable loss should the Respondent dispose of the goods or otherwise frustrate enforcement.
13. The balance of convenience therefore tilts in favour of ordering security. The Respondent will not suffer prejudice, as it retains possession of its goods and is at liberty to continue its business, while the Commissioner’s right to recover taxes, if ultimately due, will be preserved.
Stay of Proceedings Before the Tribunal
14. Ordinarily, stay of proceedings is a grave remedy, granted sparingly and only where continuation of proceedings would render an appeal nugatory or result in manifest injustice (See: Global Tours & Travels Limited; Nairobi HC Winding Up Cause No. 43 of 2000 and Kenya Wildlife Service v James Mutembei [2019] KEHC 10478 (KLR)). Courts are equally slow to interfere with the statutory mandate of specialized tribunals.
15. In the present matter, I have carefully scrutinized the Memorandum of Appeal. A central issue emerging therefrom is whether the Tribunal acted correctly in extending time to admit the Respondent’s appeal beyond the statutory period stipulated under Section 229 of the EACCMA. This question is not incidental as it strikes at the very foundation of the Tribunal’s jurisdiction. Should this Court ultimately determine that the Tribunal lacked lawful basis to enlarge time, the inevitable consequence would be that the proceedings before the Tribunal stand vitiated and rendered a nullity ab initio.
16. It follows that allowing the Tribunal to proceed with the substantive hearing while this Court has yet to pronounce itself on the jurisdictional question may lead to wasted judicial time, duplicative proceedings, and prejudice to the parties.
17. In addition, the Appellant has demonstrated that the appeal before this Court raises a prima facie case with arguable grounds. The jurisdictional issue is dispositive and depending on how this Court answers it, the Tribunal may either proceed or be barred from hearing the matter altogether. In such circumstances, it is prudent to preserve the status quo until this Court has rendered its determination.
18. Accordingly, I am satisfied that this is one of those exceptional cases where a stay of proceedings before the Tribunal is warranted. The prejudice to the Respondent is minimal, as the matter will still be determined expeditiously once this Court pronounces itself. On the other hand, the prejudice to the Appellant and to the administration of justice would be grave if proceedings were allowed to continue only to be later declared a nullity.
Disposition
19. Accordingly, I find as follows:
i. The prayer for stay of the release orders issued by the Tribunal is moot, the consignments having already been released.
ii. The prayer for security is merited. Pursuant to Section 122 of EACCMA, the Respondent shall, within 45 days, provide a Bank Guarantee of 50% of the tax demand of Kshs. 145,952,132/=, pending the hearing and determination of this appeal.
iii. The prayer for stay of proceedings before the Tribunal is allowed.
iv. Each party shall bear their own costs of this application.
1. For determination is the Appellant’s Motion dated 9th April 2025. The Motion seeks, in the main, a stay of execution of the Orders of the Honourable Tax Appeals Tribunal issued on 20th March 2025 in TAT Appeal No. E133 of 2025, which directed the Appellant to release the Respondent’s consignments currently held in the Appellant’s warehouses. The stay is sought pending the hearing and determination of the intended appeal and pending the hearing and determination of the appeal before the Tribunal.
2. In the alternative, the Appellant prays that the Respondent be ordered to deposit security as a condition for the release of the said goods. The Appellant further seeks a stay of proceedings before the Tribunal pending the hearing and determination of the appeal before this Court.
3. The application is opposed by way of a Replying Affidavit sworn by Zamba Henry Zvenyika on 24th September 2025. The Respondent’s case is that the goods which the Appellant seeks to preserve were already released pursuant to the Tribunal’s ruling of 20th March 2025. It therefore contends that the prayer for stay of release is moot. The Respondent further argues that the Appellant’s apprehension of loss of tax revenue is speculative and incapable of sustaining the drastic orders sought. It prays that the stay of proceedings before the Tribunal be lifted to allow the appeal to proceed expeditiously.
Analysis and Determination
4. The issues arising for determination are:
i. Whether this Court ought to stay the Tribunal’s orders for release of the Respondent’s consignments.
ii. Whether the Respondent should be ordered to provide security pending appeal.
iii. Whether proceedings before the Tribunal should be stayed pending the appeal before this Court.
The Stay of the Release Orders
5. The dispute before this Court traces back to a Management Letter demanding taxes of Kshs. 145,952,132/= following a Post Compliance Audit for the period January 2018 to December 2022. The Respondent contends to have sought review of the tax demand by letter dated 11th July 2023, which on the face of it, was received by the Appellant on 3rd October 2023.
6. The Appellant argues that the review was filed outside the statutory timelines under Section 229 of the East African Community Customs Management Act (EACCMA), which requires applications for review to be lodged within 30 days of the decision. Conversely, the Respondent faults the Appellant for failing to respond to the review application within the statutory timelines. The Tribunal, upon considering the Respondent’s application, allowed the prayer for release of consignments held by the Commissioner pending the hearing and determination of the appeal. That order is the subject of the present appeal.
7. From the Appellant’s own Further Affidavit, it is admitted that the consignments have already been released, some to the Respondent and others to third parties. This admission confirms the Respondent’s position that the consignments are no longer in the custody of the Appellant.
8. It follows therefore that the prayer for stay of the release orders is overtaken by events and is moot. Courts do not issue orders in vain. If the subject matter is not within the Appellant’s control, the Court cannot grant relief that is incapable of enforcement. The ground therefore fails.
Security Pending Appeal
9. The Appellant argues that unless security is provided, it risks being unable to recover substantial taxes amounting to Kshs. 145,952,132/= should the appeal succeed. The relevant statutory provision according to the Appellant is Section 122(3) of the EACCMA, which provides:
“Provided that before granting such permission the proper officer may require the importer to provide sufficient guarantee in the form of a surety, a deposit or some other appropriate security as the proper officer may determine, to secure the ultimate payment of customs duties for which the goods may be liable.”
10. This section empowers the Appellant to release goods subject to the importer furnishing adequate security to safeguard the revenue. The rationale is clear that while trade facilitation requires that goods are not unduly detained, the public interest in protecting tax revenue must equally be preserved. Security acts as a balancing mechanism, to ensure that if the importer is ultimately found liable, the government can recover the duties without difficulty.
11. In the present case, the Post Clearance Audit and subsequent tax demand of Kshs. 145,952,132/= has not been denied by the Respondent. Whether or not the tax is ultimately payable will be determined after the full hearing of the appeal before this Court and possibly after the Tribunal proceedings. I hold the view that the existence of a prima facie demand is sufficient to trigger the protective jurisdiction of this Court under Section 122 of EACCMA
12. The Tribunal’s order for unconditional release of the consignments failed to safeguard the Commissioner’s statutory duty to secure revenue. Considering the confirmation that the consignments are no longer in the Appellant’s custody and control, this Court is entitled to intervene so as to ensure that the appeal is not rendered nugatory. Without security, the Commissioner risks irrecoverable loss should the Respondent dispose of the goods or otherwise frustrate enforcement.
13. The balance of convenience therefore tilts in favour of ordering security. The Respondent will not suffer prejudice, as it retains possession of its goods and is at liberty to continue its business, while the Commissioner’s right to recover taxes, if ultimately due, will be preserved.
Stay of Proceedings Before the Tribunal
14. Ordinarily, stay of proceedings is a grave remedy, granted sparingly and only where continuation of proceedings would render an appeal nugatory or result in manifest injustice (See: Global Tours & Travels Limited; Nairobi HC Winding Up Cause No. 43 of 2000 and Kenya Wildlife Service v James Mutembei [2019] KEHC 10478 (KLR)). Courts are equally slow to interfere with the statutory mandate of specialized tribunals.
15. In the present matter, I have carefully scrutinized the Memorandum of Appeal. A central issue emerging therefrom is whether the Tribunal acted correctly in extending time to admit the Respondent’s appeal beyond the statutory period stipulated under Section 229 of the EACCMA. This question is not incidental as it strikes at the very foundation of the Tribunal’s jurisdiction. Should this Court ultimately determine that the Tribunal lacked lawful basis to enlarge time, the inevitable consequence would be that the proceedings before the Tribunal stand vitiated and rendered a nullity ab initio.
16. It follows that allowing the Tribunal to proceed with the substantive hearing while this Court has yet to pronounce itself on the jurisdictional question may lead to wasted judicial time, duplicative proceedings, and prejudice to the parties.
17. In addition, the Appellant has demonstrated that the appeal before this Court raises a prima facie case with arguable grounds. The jurisdictional issue is dispositive and depending on how this Court answers it, the Tribunal may either proceed or be barred from hearing the matter altogether. In such circumstances, it is prudent to preserve the status quo until this Court has rendered its determination.
18. Accordingly, I am satisfied that this is one of those exceptional cases where a stay of proceedings before the Tribunal is warranted. The prejudice to the Respondent is minimal, as the matter will still be determined expeditiously once this Court pronounces itself. On the other hand, the prejudice to the Appellant and to the administration of justice would be grave if proceedings were allowed to continue only to be later declared a nullity.
Disposition
19. Accordingly, I find as follows:
i. The prayer for stay of the release orders issued by the Tribunal is moot, the consignments having already been released.
ii. The prayer for security is merited. Pursuant to Section 122 of EACCMA, the Respondent shall, within 45 days, provide a Bank Guarantee of 50% of the tax demand of Kshs. 145,952,132/=, pending the hearing and determination of this appeal.
iii. The prayer for stay of proceedings before the Tribunal is allowed.
iv. Each party shall bear their own costs of this application.