The Appellant Company’s suit in Kisii Chief Magistrates Court C.C. No. E938 of 2022 was struck out vide judgment delivered on 25th April, 2024 for want of jurisdiction.
The Appellants claim against Kenya Revenue Authority was for an order to waive the penalty of Kshs. 80,000/=, general damages, costs of the suit and interests.
The Appellant was aggrieved by the determination striking out the claim vide Memorandum of Appeal dated 8th May, 2024 on the following grounds: -
- That the learned trial magistrate erred in law and fact in striking out the suit on the finding that the court lacked jurisdiction;
- That the learned trial magistrate erred in law and fact by addressing the issue of jurisdiction which was not in contention or dispute between the parties;
- That the learned trial magistrate erred in law and fact in going to the extent of framing issues, making analysis and issues of fact and thereafter erroneously divesting herself of jurisdiction in the suit;
- That the learned trial magistrate erred in law and fact by failing to make substance and/ or proper analysis and /or determination on the issues framed by the court;
- That the learned trial magistrate erred in law and fact in basing her judgment/decision on extraneous matters;
- That the learned trial magistrate erred in law and fact in declining to address the other issues in the matter for want of jurisdiction;
- That the learned trial magistrate erred in law and fact in condemning the Appellant for costs of the suit without any legal excuse or justification.
Reasons whereof the Appellant prayed that the appeal be allowed, that the judgment / decision of the lower court be set aside; that the suit be remitted to the lower court for hearing and determination; that the costs of the appeal be awarded to the Appellant.
This Appeal was heard by way of written submissions. The Appellants submissions are dated 16.12.2024. The Appellant submitted that the Respondent admitted the jurisdiction of the court on their statement of defence and therefore jurisdiction was not an issue between the parties.
The Appellant cited the holding in Kericho ELC Case No. 34 of 2014 – Alice Chelangat Ngeny vs. National Bank of Kenya Ltd and argued that the trial court based its decision on extraneous matters whereas it had the duty to decide on issues before it and to foster impartiality between the parties.
The Appellants counsel also faulted the trial court for handling the issue of jurisdiction at the time of writing judgment when it was supposed to be raised at the earliest, opportunity. The holding in Migori HCC No. 23 of 2016 Hillary Tururi Mwita vs. Ismail Nyasimi was cited in that respect. The holding in Kisii HCCA No. 203 of 2004 Kiptagich Tea Estates Ltd vs. Christopher Kibet Koskey was also cited in support of the Appellants position that parties are bound by their pleadings.
The Appellants complained that they were ambushed by the trial magistrates unexpected verdict based on jurisdiction after a full trial. It was further submitted that the trial court having heard the parties ought to have dealt with the substance of the claim rather than strike it out on issue of jurisdiction.
The Respondent’s submissions dated 27.12.2014 is to the effect that the Appellant’s claim lay within the jurisdiction of the Tax Appeals Tribunal and the doctrine of exhaustion ought to have applied in the instant case.
The Respondent relied on the holding in Mulili vs Kenya Judicial Staff Association Elections Board and 13 Others (2023) KEHC 2685 (KLR) where it was held that it is important for the parties to understand that the doctrine of exhaustion does not contend that a court has no jurisdiction over a dispute. However, the doctrine recognizes the jurisdiction of a court the dispute but favours a postponement of a judicial consideration of matters to ensure that a party is, first of all diligent in the protection of his own interest within mechanisms in place for resolution outside the courts. The Respondents also, cited the holding in Njoroge vs. Kenya Power and Lighting Company Constitution Petition No. E533 of 2021 [2023] KEHC 1924 (KLR). In Monayo vs. Kenya School of Law & Another [ 2023] KEHC 1916(KLR) the Respondent argued that unless the Appellant demonstrated any exceptions to the doctrine of an exhaustion the Tribunal will relates its jurisdiction over the matter.
The respondent contended that the Appellant ought to have challenged the Respondents decisions at the Tax Appeals Tribunal in the 1st instance. The Respondents urged the court to dismiss the appeal with costs
ANALYSIS AND DETERMINATION
This is a first appeal and the duties of this court are to re-evaluate the evidence and judgment of the trial court and to make an independent decision on whether or not to allow the appeal. A first appellate court is mandated to scrutinize the whole of the evidence afresh and make conclusion about it bearing in mind that it didn’t have the opportunity of seeing and hearing the witnesses first hand this duty was stated in the case of Peters vs. Sunday Post Limited [1958] EA 424.
Having considered the grounds of appeal and the rival submissions of the parties and having re-evaluated the evidence and judgment of the trial court the issue for determination is:-
- Whether the trial court had jurisdiction to adjudicate upon a dispute between the Appellant and KRA.
- Whether failure to deal with the issue of jurisdiction in the preliminary stages of a suit obligates the trial court to determine substance of claim even where there is no jurisdiction.
Section 51 of the Tax Procedures Act– Objection to tax decision. A tax pay who wishes to dispute a tax decision shall first lodge an objection against that tax decision under this Section before proceeding under any other written law. The Notice of objection to the decision is to be lodged in writing with the commission within 30 days of being notified of the decision.
Under Section 52 of the Tax Procedures Act of the Tax Procedures Ac, A person who is dissatisfied with an appealable decision may appeal the decision to the Tax Appeals Tribunal in accordance with the Provisions of Tax Appeals Tribunal 2013 (No. 40 of 2013).
Under Section 12 of the Tax Appeals Tribunal 2013. A person who disputes the decision of the Commissioner on any matter arising under the provisions of any Tax law may subject to the provisions of the relevant tax law upon giving a notice to the Commissioner Appeal to the Tribunal.
From the provisions of the Tax Procedures Act and Tax Appeals Tribunal it is clear that the forum in which a dispute against Kenya Revenue Authority can be adjudicated is the Tax Appeals Tribunal. The trial magistrate in this case may have proceeded to hear witnesses in the matter upto conclusion but the moment that she realized that she didn’t have jurisdiction she had the duty to down her tools. A suit filed in devoid of jurisdiction is dead on arrival and cannot be remedied. Without jurisdiction the court cannot confer jurisdiction to itself. Jurisdiction of the court is given by the Constitution or law. In the Supreme Court of Kenya in Samuel Kamau Macharia & Another vs. Kenya Commercial Bank & 2 Others 2012 EKLR it was held:-
“ A court jurisdiction flows from either Constitution or legislation or both thus a court of law can only exercise jurisdiction as conferred by eth Constitution or other written law. It cannot arrogant to itself jurisdiction exceeding that which is conferred to it by law. The issue as to whether a court of law has jurisdiction…. goes to the very heart of the matter for without jurisdiction the court cannot entertain any proceedings ……………………”
In the case of Macfoy vs. United Africa Co Ltd [1961]3 ALLE. R. 1169 Lord Demining delivering the opinion of the Privy Council said
“If an Act is void then it is in law a nullity, t is not only bad, but in curably bad. There is no need for an order of the court to set it side. It is automatically null and void without more ado, though it sometimes convenient to have the court declare it so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”
In the circumstances of the above statutory provisions and case law this court finds that the trial magistrate was right in striking out the suit so that the Appellant can adjudicate the same in the right forum namely the Tax Appeals Tribunal. The Appeal herein is therefore unmerited and the same is dismissed with costs to the Respondent.
DELIVERED, DATED and SIGNED at MIGORI this 10th day of January, 2025.