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JudgmentKenya Revenue Authority VS KENYA BREWERIES LIMITED23 min read

Kenya Revenue Authority VS KENYA BREWERIES LIMITED

High Court at Milimani High Court · · Wilfrida A. Okwany

{Being an appeal from the Judgment of the Honourable Tribunal delivered on the 14th day of July, 2023 in TAT NO. 431 OF 2022}

The Parties

  1. The Appellant is the Commissioner of Domestic Taxes, a principal officer appointed under Section 13 of Kenya Revenue Authority Act, 1995 and under Section 5 of the Act, The Kenya Revenue Authority is an agency of the Government of Kenya to collect and receive all the revenues.
  2. The Respondent is a company incorporated and licensed in Kenya to carry out the business of manufacturing and selling both non-alcoholic and alcoholic drinks, having breweries in Nairobi and Kisumu Counties.

Introduction

  1. On 20th June 2019, the Government of Kenya (“Government”), through the National Treasury and Planning and the Ministry of Industry, Trade and Cooperatives signed a Special Operating Framework Agreement (SOFA). The SOFA was to support the delivery of economic benefits anticipated from the establishment of the Respondent’s Kisumu plant worth Kshs. 15 Billion in line with a Letter of Commitment (LOC) signed by the government of Kenya and the Respondent on 27th June 2017.
  2. In the said LOC, the Government undertook to provide the Respondent with the following incentives for the construction of a brewery in Kisumu County (the “Kisumu Plant”): -
    1. to provide to the Respondent, upon commencement of operations, excise duty remission of 90% for a period of five (5) years on locally manufactured keg beer made from sorghum, millet and cassava grown in Kenya and produced at Kisumu Plant;
    2. that the Respondent would enjoy tax incentives including capital allowances, VAT exemptions and entitlement to carry forward tax losses with respect to the Kisumu Plant; and
    3. to facilitate support from the County Government of Kisumu in obtaining the requisite permits, licenses, approvals, and way leaves for the Brewery.
  3. It was projected that once operational, the expected impact of the Kisumu Plant would include: -
  4. increased demand for white sorghum and millet from approximately 20,000 to 40,000 metric tonnes;
  5.     creation of approximately 106,475 additional jobs by year three of the project comprising 45,000 in agriculture, 935 in manufacturing, 200 in logistics and 60,340 in the retail value chains;
  6. an estimated additional Kshs.3 Billion annually in gross additional farmer earnings over the next five years; and
  7. an estimated additional Kshs.3 billion annually in additional excise duty revenues collected by the Government from 2020.
  8. The Respondent investment was to assist the Government in its efforts to reduce the consumption of illicit alcohol from 50% to 10% over a five-year period.
  9. Through a letter dated 23rd July 2019, the Respondent informed the Appellant/Commissioner of the SOFA it had signed with the Government and that it had commenced the implementation of the SOFA from 19th June 2019.
  10. In its letter dated 7th November 2019, the Appellant indicated that in order to ensure that the Government honors its commitment contained in the LOC, it had made a recommendation to the Cabinet Secretary for National Treasury and Planning (“the CS Treasury”) to issue a Legal Notice under Section 7(2) and (3) of the Excise Duty Act (“the EDA”) to ensure that the 90% remission agreed upon under the SOFA was clearly provided for in the law.
  11. On 18th December 2019, the CS Treasury issued the Excise Duty (Remission of Excise Duty) (Amendment) Regulations 2019 through Legal Notice No. 196 of 2019 (“the Legal Notice”) which provided for the legal framework and the conditions to be met for the CS to grant a 90% remission, on application by eligible manufacturers. The conditions set out in the Legal Notice for eligibility for the 90% remission were as follows:

the manufacturer should have invested at least five billion shillings in the manufacture of the beer;

the Government and the manufacturer would enter into an agreement where the manufacturer would meet specific commitments related to the manufacture of the beer; and

the remission of excise duty granted would subsist for a period not exceeding 5 years from the date of the commencement of the manufacture of the beer.

  1. Through a letter dated 23rd December 2019, the Respondent confirmed that it had met all the requirements set out in the said regulations and applied to the CS Treasury for the grant of 90% remission of excise duty in respect of its Senator Lager, Senator Dark Extra and any other eligible beer brands (“Beer”) made at its Kisumu Plant.
  2. The Principal Secretary to the National Treasury responded to the application through his letter dated 7th February 2020 wherein he informed the Appellant that the CS Treasury had considered and approved the Respondent’s application for 90% remission of excise duty in respect of beer made by the Respondent in its Kisumu Plant from sorghum, millet or cassava grown in Kenya for a period of 5 years with effect from 1st July 2019.
  3. Upon receipt of the letter from the CS Treasury, the Respondent immediately implemented the 90% remission rate by collecting only 10% excise duty from the consumers of the target products.
  4. Despite communication of the said remission rate of 90% with effect from 1st July 2019, the Appellant did not configure its iTax system to include or accommodate the 90% remission rate. This meant that for the period between July 2019, when the Kisumu Plant commenced operation and January 2020, the only applicable remission rate on the iTax platform was the rate of 80% provided in the Excise Duty (Remission of Excise Duty) Regulations, 2017.
  5. It was only until February 2020 that the Appellant configured the iTax platform to allow the Respondent to enjoy the agreed 90% remission which it was entitled to with effect from 1st July 2019. This meant that for the period between 1st July 2019 and 31st January 2020, the iTax platform had not been configured so as to permit the application of the said 90% remission rate.
  6. The Respondent was therefore forced to pay excise duty on the difference between the 90% remission rate that it was entitled to and the 80% remission rate that was configured on iTax, from its own resources. The overpaid tax arising from the Respondent applying the 80% remission instead of the 90% remission for the period 1st July 2019 to 31st January 2020 amounted to Kshs 458,761,544.
  7. On 17th March 2020, the Respondent applied for a refund of the overpaid excise duty amounting to Kshs 458,761,544 for the period 1st July 2019 and 31st January 2020 pursuant to Section 47 of the Tax Procedures Act (“the TPA”)
  8. In its response dated 7th April 2020, the Appellant informed the Respondent that the overpayment sought did not reflect on iTax and advised the Respondent to amend its returns pursuant to the provisions of Section 31 of the TPA to reflect the correct tax position and allow for the application of the overpaid amounts through iTax. The Appellant further advised the Respondent to liaise with its sector manager within the Large Taxpayers Office - Domestic Excise and Other Manufacturers department.
  9. The Respondent’s efforts to amend the iTax returns for the period July 2019 to January 2020, as advised by the Appellant, were however unsuccessful since the Appellant had still not configured the iTax platform to reflect or accommodate the 90% remission rate. The Respondent notified the Appellant of this challenge through it letter dated 17th April 2020 which it followed up with the Appellant to facilitate the recalibration of the iTax platform for the period July 2019 to January 2020 to reflect the 90% remission rate to allow the Respondent to amend its returns. The Appellant’s promises to make the necessary changes, were however not actualized as its officials continued to procrastinate and/or avoid effecting the recalibration of the iTax platform.
  10. The Respondent was therefore surprised when on 12th January 2022, (about 2 years later), the Appellant reneged on its earlier position and purported to reject the Respondent’s application for refund of overpaid excise duty for the period 1st July 2019 to 31st January 2020.
  11. The Respondent objected to the tax decision through its letter of objection dated 10th February 2022 and on 15th March 2022, the Appellant issued its objection decision rejecting the Respondent’s objection and confirming the tax decision to reject the refund claim of Kshs 458,761,544.
  12. Aggrieved by the Appellant’s tax decision, the Respondent filed Appeal No. 431 of 2022 before the Tax Appeals Tribunal and in judgment delivered on 14th July 2023, the Tribunal allowed the Respondent’s Appeal, set aside the Appellant’s objection decision dated 15th March 2022 and directed the Appellant to process the Respondent’s refund claim of Kshs. 458,761,544.00 within ninety days the delivery of the Judgement.

The Appeal

  1. Aggrieved by the Tribunal’s decision, the Appellant herein filed the instant appeal and listed the following grounds of appeal in its Amended Memorandum of Appeal: -
  2. THAT the Tribunal erred in fact and in law in finding that the Respondents Appellants actions created a legitimate expectation that the 90% remission rate would apply with effect from 1st July 2019.
  3. THAT the Tribunal erred in fact and law in finding that the Respondent Appellant was entitled to the 90% excise duty remission from 1st July 2019, which automatically entitled to the refund for the period between July 2019 and December 2019.
  4. THAT the Tribunal erred in fact and law in finding that the Respondents Appellant’s rejection of the Appellant’s Respondent’s application for refund breached the Appellant’s Respondent’s legitimate expectations.
  5. THAT the Tribunal erred in fact and in law in finding that in addition to the Legal Notice the Appellants Respondent’s application for a refund was in line with the Government’s commitment under the Letter of commitment dated 27th June 2017 and the Special Operating Framework Agreement dated 26th June 2019.
  6. The Appellant seeks the following orders in the instant appeal: -
  7. THAT the Judgment of the Tribunal dated 14th July, 2023 and the consequential orders be set aside.
  8. THAT the Objection Decision 15th March 2022 be upheld.
  9. THAT the costs of this Appeal be awarded to the Appellant by this Honorable Court.
  10. The Respondent opposed the Appeal through its Statement of Facts dated 8th December 2023 wherein it reiterated the facts and genesis of the case as outlined in the introductory part of this judgment.
  11. The Appeal was canvassed by way of written submissions which I have considered.

Analysis and Determination

  1. I have carefully considered the record of appeal and the parties’ respective submissions together with the authorities that they cited. The parties did not isolate the issues for determination but argued each of the grounds of appeal listed in the Memorandum of Appeal extensively. I however find that the main issue for determination is whether the Tribunal arrived at the correct verdict when it found that the Appellant’s actions created a legitimate expectation that the 90% remission rate was to apply with effect from 1st July 2019 thereby automatically entitling the Respondent to a refund for period between July 2019 to December 2019.

Legitimate Expectation

  1. The Appellant submitted that the Tribunal misapprehended the legal principles and the laid out tests in determining the creation of a legitimate expectation thereby arriving at the wrong determination that the Appellant’s actions created a legitimate expectation that a 90% remission rate would apply from 1st July 2019. For this argument, the Appellant cited several cases including the case of Communications Authority of Kenya & 5 Others vs. Royal Media Services Ltd & 5 Others SC Pet. No. 14 of 2014 where it was held as follows on the conditions that must exist for a legitimate expectation to be created: -
  2. There must be an express, clear, unambiguous promise given by a public authority.
  3. The expectation must itself be reasonable.
  4. The Representation must be one which was competent and lawful for the decision maker to make;
  5. And there cannot be a legitimate expectation against clear provisions of the law and the Constitution.
  6. The Appellant submitted that while the Respondent’s appeal before the Tribunal met the criteria set in a), b) and c) in the Royal Media case (supra), the same did not meet the fourth condition that required the 90% remission rate to comply with paragraph “I” of the SOFA for the Gazette Notice to be issued pursuant to Section 7(2) of the Excise Duty Act.
  7. The Appellant noted that it was informed of the SOFA on 23rd July 2019 after the date on which the remission was supposed to come into force and that the same was directed to the wrong person as the Appellant does not issue Gazette Notices under Section 7(2) of the Excise Duty Act.
  8. The Appellant’s case was that since the National Treasury approved the Respondent’s remission application on 24th January, 2020 and notified it of the same vide a letter dated 7th February 2020, the Respondent’s legitimate expectation could not have existed prior to the Cabinet Secretary’s approval. Reference was made to the decision in Pevans East Africa Limited vs. Betting Control and Licensing Board & 2 Others; Safaricom Limited & Another (Interested Parties) [2019] eKLR where the court stated that: -

“Legal certainty is not, however the only principle at play in legitimate expectation doctrine. The counter value of legality is especially important in the context of the substantive protection of legitimate expectations. The fear in protecting legitimate expectations substantively is that administrators may be forced to act ultra vires. That would be the case where and administrator has created an expectation of some conduct, which is beyond his authority or has become beyond his authority due to a change of law or policy. If the administrator were consequently held to that representation, he would be force to act contra legem. It is clear that such representations will not be upheld by the court. The value of legality in law has led to the requirement that the expectation must be one of lawful administrative action before it can be either reasonable or legitimate. Legality therefore seems to take precedence over legal certainty in law. As stated above, there can be no reasonable expectation where the representation is of unlawful conduct and hence the question of legitimacy does not arise.”

  1. The Appellant further argued that it would be acting contra statute if it proceeded to effect the remission at 90% without the Legal Notice as provided under Section 7(2) of the Excise Duty Act.
  2. In a rejoinder, the Respondent submitted that the Excise Duty Act, 2015 gives the CS Treasury various powers with respect to administration of excise duty in Kenya including the power to grant partial of full remission of excise duty. In this regard, the Respondent referred to the provisions of Section 7(2) and (3) of the Excise Duty Act which stipulate as follows:

“7 (2) The Cabinet Secretary may by notice in the Gazette, grant remission of excise duty, wholly or partially, in respect of beer or wine made from sorghum, millet or cassava or any other agricultural products, (excluding barley), grown in Kenya.

(3) The Gazette notice issued under subsection (2), shall specify the products and conditions to be met for the remissions to be granted. ”

  1. The Respondent submitted that CS Treasury duly exercised this power when he published the Excise Duty (Remission of Excise Duty) (Amendment) Regulations 2019 vide Legal Notice 196 of 2019 on 18th December 2019. The Respondent drew this court’s attention to the provision on the effective date the said Regulations which was stated to be as follows: -

“1. These Regulations may be cited as the Excise Duty (Remission of Excise Duty) (Amendment) Regulations 2019, and shall be deemed to have come into effect from 1st July 2019.”[Emphasis added.

  1. The Respondent referred to the provisions of Section 28 of the Interpretation and General Provisions Act which allows for the retrospective application subsidiary legislation. The section provides as follows:

“28. Subsidiary legislation may be made to operate retrospectively to any date, not being a date earlier than the commencement of the written law under which the subsidiary legislation is made, but no person shall be made or become liable to any penalty whatsoever in respect of an act committed or of the failure to do anything before the day on which that subsidiary legislation is published in the Gazette.”

  1. It was therefore the Respondent’s submission that the CS Treasury acted within his powers when he prescribed the effective date of the Excise Duty (Remission of Excise Duty) (Amendment) Regulations 2019 as 1st July 2019. For this argument, the Respondent cited the case of Kenya Bankers Association vs. Attorney General & Another; National Assembly (Interested Party) [2020] eKLR where the High Court considered the retrospective application of tax laws and stated as follows:

“56. The drafters of the document have made their intentions known concerning the date of operation of each of the sections of the Act, and the same went through the legislative process and were passed accordingly...

58. I am therefore fortified in my conclusion that the passing of the retrospective legislation, even tax legislation, is not unconstitutional as it is not prohibited under the Constitution...”

  1. Reference was also made to the case of Commissioner of Income Tax vs. Pan African Paper Mills (E.A) Limited [2018] eKLR where the Court of Appeal stated as follows regarding retrospective application of the law:

“18. From the above authorities it is clear that there are exceptions to the general rule that a statutory provision is not retrospective. The important consideration being the intention of the legislature in enacting the statute.”

  1. The Respondent also cited the decision in the case of Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others [2012] eKLR where the Supreme Court added its voice to the subject of retrospective application of statutes and stated as follows:

“(61) As for non-criminal legislation, the general rule is that all statutes other than those which are merely declaratory or which relate only to matters of procedure or evidence are prima facie prospective, and retrospective is not to be given to them unless, by express words or necessary implication, it appears that this was the intention of the legislature...”

  1. It was the Respondent’s case that there was no legal impediment preventing the CS Treasury from directing that the effective date of the regulations was to be retrospective from 1st July 2019, thereby creating a legal framework for application of the 90% remission rate.
  2. The Respondent asserted that the retrospective application of the 90% remission rate was confirmed by the CS Treasury’s letter of approval dated 7th February 2020 approving the Respondent’s application for the 90% remission of excise duty with effect from 1st July 2019.
  3. It was submitted that since the effective date of the 90% excise duty remission was indicated in the Gazette Notice and the letter from the CS Treasury as 1st July 2019, the assertion that the Respondent cannot claim the benefit under the remission prior to the date of the publication of the Gazette Notice was not merited.
  4. The Respondent submitted that its entitlement to the 90% remission rate from 1st July 2019 was also based on the terms of the LOC and the SOFA which clearly indicated that the 90% excise duty remission rate was a fundamental term for the investment by the Respondent and was a binding primary obligation for the Government. 
  5. The Tribunal considered the guidelines for establishing the existence of legitimate expectation as was held in several similar cases and rendered itself as follows on the doctrine of legitimate expectation: -
  6. The Tribunal is guided by the case of Kenya Revenue Authority vs. Universal Corporation Ltd [2020] eKLR, where the court outlined the guidelines in establishing a legitimate expectation as follows: -

\"Legitimate expectation arises where there is demonstration that;

    • A decision maker led a party affected by the decision to believe that he would receive or retain a benefit or advantage including a benefit that he/she/ it would be accorded a hearing before the decision was taken,
    • A promise was made to a party by a public body that it would act or not act in a certain manner, and which promise was made within the confines of the law,
    • The public body whether itself to the legitimate expectation,
    • The representation was clear and unambiguous,
    • The claim fell within the class of persons who were entitled to rely upon the representations made by the public body,
    • The representation was reasonable and that the claimant relied upon it to its detriment,
    • There was no overriding interest arising from the decision maker\'s actions and representation,
    • The representation was fair in the circumstances of the particular case and that the same arose from actual or ostensible authority of the affected public authority to make the same,
    • The promise related to either a past or a future benefit,
    • Its main purpose is to challenge the decision maker to demonstrate regularity, predictability, and certainty in their dealings with persons likely to be affected by their action in the discharge of their public mandate.”
  1. The same principles were summarized in the Supreme Court case of Communications Authority of Kenya & 5 others vs. Royal Media Services Ltd & 5 others, SC Pet. No. 14 of 2014, where the court held as follows;

“there must be an express, clear, unambiguous promise given by a public Authority:

the expectation itself must be reasonable;

the representation must be one which was competent and lawful for the decision maker to make;

and there cannot be a legitimate expectation against clear provisions of the law or the Constitution.”

  1. The Tribunal is equally guided by the decision in Petition No. 20 of 2020 (E021 of 2020) Kenya Revenue Authority v Export Trading Company Limited where the Supreme Court upheld the findings of the Court of Appeal and the High Court that the Kenya Revenue Authority acted unfairly in demanding additional taxes from a taxpayer and that the demand for payment of additional customs duties was irrational and contravened the taxpayer\'s right to fair administrative action.
  2. The foregoing decision clarified the place of legitimate expectation in tax issues. The Supreme Court held that Kenya Revenue Authority is bound by the promises it makes to taxpayers, whether these are made expressly or by way of conduct in the discharge of its functions. The Supreme Court held as

“A person could have a legitimate expectation of being treated in a certain way by an administrative authority even though he had no legal right in private law to receive such treatment. The expectation could arise either from a representation or promise made by authority, including an implied representation, or from consistent past practice. A legitimate expectation arose where a person responsible for taking a decision had induced in someone a reasonable expectation that he would receive or retain a benefit of advantage.”

95    In the instant case, the Appellant had the commitment from the Government of the Republic of Kenya through the following documents: -

  1. A Letter of Commitment from the Government of Kenya dated 27th June 2017.
  2. A Special Operating Framework Agreement (SOFA), dated 26th June.
  3. Legal Notice No. 196 of 1 8th December 2019.
  4. The representation and decision to offer the incentives to the Appellant was made by the decision-makers on behalf of the Government of Kenya. The decision-makers had the competence and legal backing for making the representation. The Respondent vide the letter dated 7th November, 2019 requested the Cabinet Secretary for National Treasury and Planning to sanitize the Government\'s commitment to grant the Appellant a remission of 90% on excise duty through a Legal Notice that was subsequently published on 18th December, 2019.
  5. After analyzing the pleadings, the LOC, SOFA, Legal Notice No 196 of 18th December 2019 and the case laws cited above, the Tribunal finds that the Respondent\'s actions created a legitimate expectation that the 90% remission rate would apply with effect from 1st July 2019.
  6. The Tribunal therefore finds that the Respondent\'s rejection of the Appellant\'s application for refund breached the Appellant\'s legitimate expectation.
  7. Whether the Appellant is entitled to the refund claim amounting to Kshs. 458, 761,544.00 following the grant of the 9004 remission on Excise Duty by the Government of Kenya.
  8. The Tribunal finds that the hereunder material facts are not in dispute as between the parties.
  9. That on 27th June 2017, the Government of Kenya issued the Appellant with a Letter of Commitment (LOC), with respect to the construction of a new brewery in Kisumu. The LOC outline the commitments of both parties.
  10. That the LOC was signed by the Cabinet Secretary, the National Treasury and witnessed by the Cabinet Secretary Ministry of Trade, Industry and Cooperative on behalf of the Government of the Republic of Kenya and the Managing Director on behalf of the Appellant.
  11. Clause 4 of the LOC stated as follows: -

“As a fundamental term for the investment by KBL and as binding primary obligation, the Government of Kenya Commits:

4.1 to provide, upon commencement of operations, excise duty remission of 90% for a period of five (5) years on locally manufactured

keg beer made from sorghum, millet and cassava grown in Kenya and produced at Kisumu Brewery.”

  1. On 26th June 2019, the Ministry of Industry Trade and Cooperatives forwarded to the Appellant the Special Operating Framework Agreement (SOFA), signed between the Ministry and witnessed by the Cabinet Secretary for the National Treasury.
  2. Clause 3 of the SOFA stated that:-   

“The Government of Kenya has agreed to offer Excise duty remission of 90% on locally manufactured keg Beer made from sorghum, millet or cassava grown in Kenya, processed in the Kisumu brewery for a period of five year.”

  1. Vide Legal Notice No. 196 of2019 published on 18th December 2019, the Cabinet Secretary National Treasury and Planning amended the Excise Duty (Remission of Excise Duty) Regulations, allowing the Cabinet Secretary to grant remission at a 90% rate upon application by a manufacturer of beer. The amendment was effective as from 1st July 2019.
  2. The Appellant applied to the CS Treasury and Planning for the remission of excise duty at the 90% rate with respect to keg beer made at the Appellant\'s new Kisumu plant for a period of five years with effect from 1st July 2019.
  3. The National Treasury approved the Appellant\'s remission application on 24th January, 2020 and notified it of the same vide a letter dated 7th February, 2020 and notified it of the same vide a letter dated 7th February, 2020.  The effective date of the approval was 1st July 2019.
  4. On 17th March, 2020, the Appellant applied for a refund of excise duty pursuant to Section 47 of the Tax Procedures Act, amounting to Kshs. 458,761,544.00, being the 10% difference between the duty paid with the 80% remission and the duty payable with 90% remission for the period 1st July 2019 to 31st December, 2019.
  5. On 17th April 2020, the Appellant wrote to the Respondent informing it of its unsuccessful attempt to amend the returns and requested for a workaround to reflect the 90% remission.
  6. On 12th January 2022, the Respondent issued a refund decision that the Kshs. 458,761,544.00 was not refundable.
  7. The Tribunal noted that the decision Was made close to two years after the Appellant applied for the refund.
  8. On 15th March 2022, the Respondent issued its objection decision rejecting the Appellant\'s objection and confirming the tax decision rejecting the Appellant\'s refund claim of Kshs. 458,761,544.00.
  9. Based on the above undisputed facts, the Tribunal noted that the LOC, SOFA and the Legal Notice set out the commitment of the Government of the Republic of Kenya that the Appellant was entitled to enjoy the 90% remission from the date of commencement of operations at the Kisumu plant.
  10. The Tribunal noted that from January 2020, the Respondent seems to have configured its iTax platform to allow the remission rate of 90% and the Respondent did not raise any issues after December 2019. From the documents presented, it seems that the intention was to do this from 1st July 2019 but it was never actualized then.
  11. The Tribunal also noted that the Kisumu plant commenced operations on 1st July 2019. There was no limitation in the Legal Notice that the remission would only apply to goods manufactured from 1st July 2019 for which excise duty had not been paid.
  12. From the pleadings and documents filed by the parties, the Tribunal finds that the Appellant was entitled to the 90% excise duty remission from 1st July 2019, and is therefore entitled to the refund for the period between July 2019 and December 2019.
  13. The Tribunal also finds that in addition to the Legal Notice the Appellant\'s application for a refund was in line with the Government\'s commitment under the Letter of Commitment dated 27th June 2017 and the Special Operating Framework Agreement dated 26th June 2019.
  14. My finding is that the Tribunal gave a proper and in depth analysis of the facts of the case and the law before arriving at the conclusion that the actions, promises, commitments and undertakings made by the Government, on whose behalf the Appellant herein collects taxes, created a legitimate expectation on the Respondent that it would be offered an incentive in the form of 90% remission on the excise duty on its goods. I note that it was not disputed that the Respondent promptly acted on the Government’s LOC and SOFA by establishing a brewery in Kisumu in compliance with the terms agreed upon in the SOFA. It is my view that the Appellant, and by extension the Government, cannot be seen to renege on their promise to grant the Respondent the 90% remission long after the Respondent has fulfilled its part of the bargain.
  15. The Appellant conceded that the Respondent’s claim for 90% remission fulfilled all the conditions for the existence of legitimate expectation except the condition that the same must not go against clear provisions of the law and the Constitution. In advancing this argument, the Appellant contended that the 90% remission rate could only be actualized through the issuance of a Gazette Notice pursuant to Section 7(2) of the Excise Duty Act.
  16. I find that in the face of the undisputed fact that the CS Treasury duly published the Excise Duty (Remission of Excise Duty) (Amendment) Regulations 2019 vide Legal Notice 196 of 2019 on 18th December 2019 which notice provided that the Regulations shall be deemed to have come into effect from 1st July 2019, the Appellant’s argument that the Respondent’s claim did not have a legal backing is misplaced.

Refund for the Period Between July 2019 to December 2019

  1. Turning to the issue of the Respondent’s claim for entitlement to the 90% remission from July to December 2019, I note that this is not a claim that the Respondent picked out of the blue but one which was specifically provided in the LOC and SOFA. As I have already stated in this judgment, it was not disputed that the Respondent fulfilled its part of the agreement by setting up a brewery plant in Kisumu and was therefore entitled to the agreed remission. The Respondent narrated its frustration is pursuing its claim through the Appellant’s iTax platform and stated that the Appellant’s officers were unwilling and/or reluctant to assist it get the refund.
  2. It is my finding that the Respondent established that it was entitled to the 90% remission on excise duty and I find no justification in disturbing the Tribunal’s findings on this issue.
  3. In conclusion, I find that the instant appeal is not merited and I therefore dismiss it with costs to the Respondent.
  4. Orders accordingly.

Judgment dated, signed and delivered virtually via Microsoft Teams this 3rd October 2024.

In the Presence of: -

Chabala for the Appellant

N/A for the Respondent

C/A – Anita

    Kenya Revenue Authority VS KENYA BREWERIES LIMITED Kenya Revenue Authority VS KENYA BREWERIES LIMITED