A. THE EX PARTE APPLICANT’S APPLICATION.
1. The ex parte Applicant herein Petrocity Energy (K) Limited commenced the present proceedings vide the notice of motion dated 12th July, 2025, pursuant to leave granted by this Court on 24th June, 2025. The motion seeks the following orders;
a. THAT an Order of judicial review by way of certiorari do issue to remove into this Court for purposes of quashing the decision of the Respondent communicated to the ex parte Applicant by its letters dated the 6th of June 2025 seeking payment of Ksh.31,340,573/- as additional duties and levies on account of alleged product depot gains on petroleum products for the period December, 2024 to April, 2025.
b. THAT an Order of judicial review by way of prohibition do issue directed at the Respondent prohibiting it from levying and/or demanding payments of additional duties and levies on account of alleged product depot gains on petroleum products imported by the ex parte Applicant and held in its terminal located in Konza. In this regard, the ex parte Applicant is not required to seek the approval of officers of the Respondent to off-load any of the petroleum product held in its terminal located in Konza. Where deemed necessary the Respondent shall issue all necessary documents to facilitate the offloading of petroleum product held at the ex parte Applicant’s terminal even as it works on overcoming any administrative, documentary or systems challenges.
c. THAT an Order of judicial review by way of mandamus do issue directed at the Respondent compelling it to allow the ex parte Applicant to offset Ksh.678,442,787/- it has paid as additional duties and levies on account of product depot gains against future duties, levies and taxes it shall be required to pay the Respondent on account of any other tax law. To facilitate the said offset the Respondent do credit Ksh.678,442,787/- into an advance gross payment account in favour of the ex parte Applicant from which account the ex parte Applicant shall readily offset its future taxes failing which interest to accrue on the said Ksh.678,442,787/- at the rate of 1% per month from the date of the order of this Honourable Court until the Respondent credits the advance gross payment account and facilitates commencement of the offset.
d. THAT the Honourable Court be pleased to issue any other orders or directions as it may deem fit and just to grant.
e. THAT the costs of this application be provided for.
2. The grounds upon which the application is premised are set out on its face and are as follows:
a. THAT the Respondent had by its letters dated the 6th of June, 2025 formally sought from the ex parte Applicant the payment of Ksh.31,340,573/- as additional duties and levies on account of product depot gains on petroleum products for the period December, 2024 to April, 2025.
b. THAT this Honorable Court through a judgement delivered by Lady Justice J.W.W. Mongare on the 15th of April, 2024 declared demands and or assessments by the Respondent for additional duties and levies on account of product depot gains unlawful as such demands are not established under any particular provision of tax laws.
c. THAT the Respondent in defiance of the aforesaid court judgement, continues to assess and demand from the ex parte Applicant additional duties and levies citing volume fluctuations occurring post importation on duty paid petroleum products held at its terminal in Konza. Given that all duties and levies have already been paid on the said products the conduct of the Respondent amounts to re-opening duty assessment based on post-tax-point phenomena undermines legal certainty and finality
d. THAT the actions of the Respondent are in breach of the principles of legal certainty, contradict customs valuation norms and introduce undue administrative complexity undermining sectoral stability.
e. THAT the levy of the additional duties and levies on account of product depot gains by the Respondent arbitrarily deprives the ex parte Applicant from its property in utter contempt of the judgement of this Honourable Court and in contravention of the ex parte Applicant’s rights set out in Articles 40 of the Constitution.
f. THAT the ex parte Applicant herein seeks reliefs in the nature of prerogative writs, which ought to be decided upon by this Honourable Court.
g. THAT judicial review is the only appropriate and effective remedy.
B. THE EX PARTE APPLICANT’S AFFIDAVIT.
3. The motion is supported by the affidavit of Aman Jafferali Kurji sworn on 12th July, 2025.
4. In his affidavit, the said deponent deposes that the ex parte Applicant is an energy solutions provider engaged in the importation, storage, handling and distribution of petroleum products through its private inland terminal in Konza and that upon importation of such products, it pays all requisite customs duties and statutory levies, including excise duty, road maintenance levy, import declaration fee, petroleum development levy and petroleum regulatory levy, based on the volume of the product at the legally prescribed tax point.
5. He avers that, under the East African Community Customs Management Act (EACCMA) and the applicable tariff regime, the tax point for petroleum products arises at the time of importation and entry for home use, with quantities measured at a temperature of 20 degrees Celsius, and that upon payment of all duties and levies at this stage, the Applicant’s tax obligation is fully discharged and cannot lawfully be revisited.
6. The deponent states that once duties are paid, the petroleum products are released from customs control and transferred through the Kenya Pipeline Company system to the Applicant’s private terminal in Konza, where the volumes are recorded in the Respondent’s Customs Oil Information System (COSIS) for purposes of tracking duty-paid products and regulating their movement and withdrawal.
7. He further deposes that the Respondent’s officers reconcile the volumes of petroleum products pumped into and out of the terminal against COSIS records and treat any excess volume remaining after the recorded “duty-paid” quantities have been drawn as “product depot gains,” which the Respondent classifies as volumes on which duty has not been paid, thereby requiring the Applicant to process zero manifests and pay additional duties and levies before such product can be withdrawn.
8. It is the deponent’s further deposition that the said product depot gains do not arise from new importations or commercial transactions but are attributable to natural and operational factors such as temperature-induced volumetric expansion, tank stratification, measurement variances and vapor recovery, and that there is no statutory provision under EACCMA, the Excise Duty Act or any other applicable law permitting the imposition of additional duties on such post-importation volume variations.
9. He further avers that this Court, in a judgment delivered on 15th April, 2024 by Mongare J, declared demands for additional duties and levies on account of such product depot gains unlawful, but that notwithstanding the said decision, the Respondent has persisted in issuing similar demands against the ex parte Applicant.
10. The deponent states that by letters dated 6th June, 2025, the Respondent demanded payment of Ksh.31,340,573/- as additional duties and levies for the period between December, 2024 and April, 2025, which demands the Applicant challenged, and in respect of which it obtained a court order on 24th June, 2025 staying enforcement; however, the Respondent is said to have disregarded the said order and continued to insist on payment as a condition for release of the petroleum products.
11. The deponent deposes that, owing to the Respondent’s refusal to release the products and in order to ensure business continuity, the Applicant paid the demanded sum of Ksh.31,340,573/- under protest, and that over time it has been compelled to make similar payments amounting to Ksh. 678,442,787/-, which it considers unlawful and prejudicial to its operations.
12. The deponent contends that the Respondent’s actions are arbitrary, unlawful and in violation of the Applicant’s constitutional rights, including the right to property under Article 40 of the Constitution, the right to fair administrative action under Article 47 and the right to a fair hearing under Article 50, and that such conduct undermines the rule of law and the administration of justice.
13. In the premises, he deposes that the Applicant seeks the intervention of this Court under its supervisory jurisdiction pursuant to Article 165 of the Constitution to restrain the Respondent from levying additional duties on account of product depot gains and to grant appropriate prerogative reliefs, contending that unless such orders are issued, the Respondent will persist in the impugned conduct to the ex parte Applicant’s detriment.
C. THE RESPONDENT’S PRELIMINARY OBJECTION.
14. In resisting the application, the Respondent filed a notice of preliminary objection dated 25th October, 2025, citing the following grounds.
a. That this Honourable court lacks territorial jurisdiction to hear and determine this suit since the Cause of Action arose in Konza within Machakos County which is within the jurisdiction of Machakos High Court, as opposed to Kisumu High Court where the suit has been filed, in total disregard of Section 15 (a) of the Civil Procedure Act.
b. THAT this Honorable Court ought to transfer the matter to Machakos High Court which has both the jurisdiction to hear the matter and well within the convenience of the litigants seeking to make reference to the site.
c. THAT the Notice of Motion Application filed herein contravenes the express provisions of Sections 229 and 230 of the EACCMA.
d. THAT the Application is filed contrary to the provisions of Section 9(2) of the Fair Administrative Action Act.
e. THAT the Application been filed contrary to the provisions of Sections 12 and 13 of the Tax Appeals Tribunal Act.
f. THAT the Application is a breach of the doctrine of exhaustion and the doctrine of constitutional avoidance.
g. THAT the Application is therefore an abuse of the court process and should be struck out with Cost to the Respondent.
D. THE RESPONDENT’S REPLYING AFFIDAVIT.
15. The Respondent also filed a replying affidavit sworn on 4th November, 2025 by Bernard Kibiti, an officer of the Respondent’s by duly appointed under Section 13 of the Kenya Revenue Authority Act and serving in the Petroleum Monitoring Unit, which is mandated to detect and deter violations of customs laws within the petroleum sector at points of entry and discharge from customs-controlled facilities.
16. The said deponent avers in his affidavit that the Respondent is statutorily mandated under Section 5(2) of the Kenya Revenue Authority Act to administer and enforce tax laws for purposes of assessing, collecting and accounting for government revenue, and that challenges in revenue collection have necessitated strict enforcement of tax obligations under various statutes including EACCMA, the Excise Duty Act, the Value Added Tax Act, the Income Tax Act and the Tax Procedures Act.
17. The deponent states that the ex parte Applicant’s application seeks to quash a customs demand relating to alleged product gains at the Applicant’s Konza terminal, which the ex parte Applicant claims were already duty-paid, though, according to the Respondent, no documentary evidence has been furnished to substantiate that assertion.
18. He further deposes that the Applicant improperly invites this Court, sitting in judicial review, to interrogate the merits of the tax demand rather than the legality of the decision-making process, and contends that the impugned demand was lawfully issued pursuant to Section 135 of EACCMA, which empowers the Commissioner to recover duty on uncustomed goods.
19. The deponent outlines the factual background, stating that the Applicant operates a petroleum storage and loading facility in Konza, Machakos County, handling both duty-paid fuel for local consumption and transit petroleum products on which duty has not been paid, and that the Respondent verifies volumes at the point of exit from the terminal to ensure recovery of the exact quantities declared.
20. He avers that any excess volume identified upon reconciliation between declared and dispatched quantities is classified as “hospitality gain,” which is treated as uncustomed product, and that such gains may only be lawfully removed from the customs-controlled facility upon payment of the requisite duties.
21. The deponent further explains that petroleum procurement in Kenya has evolved from the Open Tender System to a Government-to-Government framework involving foreign state entities, and asserts that the ex parte Applicant is not an importer of record under either regime but merely a licensed oil marketing company and storage facility operator.
22. He deposes that the petroleum products stored at the ex parte Applicant’s facility do not include imports declared in the ex parte Applicant’s name but comprise duty-paid local products and transit goods, and that a reconciliation exercise conducted by the Respondent for the period December, 2024 to April, 2025 revealed product gains arising from discrepancies between declared local and transit volumes.
23. According to the deponent, the said gains are attributable to under-declaration or improper commingling of transit fuel with duty-paid stock, thereby rendering them uncustomed goods subject to duty under the law, and he adds that the ex parte Applicant itself sought permission to regularize the position by paying the assessed taxes, which request was granted.
24. He avers that the ex parte Applicant subsequently requested and was granted an extension of time to settle the assessed taxes and ultimately made payment voluntarily without indicating that the same was under protest, thereby rendering the present proceedings overtaken by events.
25. The deponent contends that the Respondent’s actions were procedurally proper and that the ex parte Applicant’s grievance ought to have been pursued through the statutory dispute resolution mechanism provided under Section 229 of EACCMA rather than by way of judicial review, in line with the doctrine of exhaustion as embodied in Section 9(2) of the Fair Administrative Action Act.
26. He further deposes that the ex parte Applicant’s reliance on the decision in Commissioner of Investigations & Enforcement v Libya Oil Kenya Ltd is misplaced, as the present case is distinguishable on the basis that the gains herein comprise not only operational gains but also “hospitality gains” derived from commingled duty-paid and transit products which have not reached the tax point.
27. The deponent asserts that, unlike in the cited case, the impugned demand is not a second taxation of already taxed goods but a lawful recovery of duty on uncustomed goods, firmly grounded in the provisions of EACCMA.
28. He also distinguishes the ex parte Applicant’s role as a storage facility operator from that of an importer, contending that the ex parte Applicant’s handling of commingled goods attracts separate obligations under customs control and warehousing provisions, which were not in issue in the Libya Oil case.
29. The deponent further avers that the prior judgement relied upon by the Applicant was issued in personam and is binding only upon the parties to that suit, and cannot be applied to the present dispute, which must be determined on its own facts and merits.
30. He concludes that the Applicant has failed to demonstrate any procedural impropriety, illegality or irrationality on the part of the Respondent, has not met the threshold for the grant of judicial review orders, and that the application constitutes an abuse of the court process intended to evade lawful tax obligations, and accordingly prays that the same be dismissed with costs.
E. THE EX PARTE APPLICANT’S INITIAL SUBMISSIONS.
31. The ex parte Applicant submits that it sought leave to commence judicial review proceedings against the Respondent, which leave was duly granted by this Court on 24th June, 2025 and that the Court ordered that the leave granted operates as a stay, effectively restraining the Respondent from enforcing its demand for Ksh.31,340,573/- being additional duties and levies on alleged product depot gains for the period December, 2024 to April, 2025.
32. The ex parte Applicant avers that the said order entitled it to take possession of its petroleum products without payment of the impugned levies pending determination of the suit, and that the order was duly served upon the Respondent.
33. The ex parte Applicant contends that notwithstanding service of the said court order, the Respondent acted in defiance thereof by insisting on payment of the demanded sum as a condition for release of the petroleum products, thereby compelling the ex parte Applicant to pay the amount under protest in order to avoid business disruption. It is further submitted that despite directions issued by the Court on 30th July, 2025 requiring the Respondent to file a response, the Respondent failed to file any replying affidavit or submissions in time.
34. On the merits, the ex parte Applicant submits that the Respondent’s demand for additional duties and levies on account of alleged product depot gains is unlawful, arbitrary and devoid of any statutory foundation under EACCMA, the Excise Duty Act or any other tax legislation. It argues that once duties are assessed and paid at the point of importation, the tax obligation is discharged and cannot be reopened on account of post-importation occurrences.
35. The ex parte Applicant further submits that the Respondent’s actions are contrary to a decision of this Court delivered on 15th April 2024 by Mongare J in Commissioner of Investigations & Enforcement v Libya Oil Kenya Ltd (HCCOMMITA E104 of 2021), wherein the Court held that demands for additional duties on account of product depot gains are unlawful for want of a clear statutory basis. The ex parte Applicant submits that the Court in that case emphasized that taxation must be grounded in clear and express legislative provisions and that no tax can be imposed by implication.
36. It is the ex parte Applicant’s submission that the Respondent’s continued imposition of the impugned levies, in disregard of the aforesaid judgement and the subsisting stay order issued on 24th June, 2025, amounts to contempt of court, administrative excess and abuse of power, thereby undermining the rule of law and the authority of the Court.
37. The ex parte Applicant submits that the impugned decision is tainted by illegality, irrationality and procedural impropriety, which are the well-established grounds for the grant of judicial review remedies.
38. On illegality, the ex parte Applicant argues that the Respondent acted ultra vires by purporting to levy duties not sanctioned by statute.
39. On irrationality, the ex parte Applicant contends that the decision offends the principle of finality of the tax point by seeking to re-open duty assessments based on natural phenomena such as temperature-induced expansion and measurement variances.
40. On procedural impropriety, the ex parte Applicant asserts that the Respondent acted in blatant disregard of court orders.
41. The ex parte Applicant further submits that the Respondent’s actions violate its constitutional rights under Article 40 of the Constitution by arbitrarily depriving it of its funds, under Article 47 by subjecting it to unlawful and unreasonable administrative action and under Article 50 by failing to adhere to due process.
42. It is therefore submitted that judicial review is the appropriate remedy to check the Respondent’s unlawful exercise of power and to safeguard the Applicant’s rights, and that this Court ought to intervene under its supervisory jurisdiction to quash the impugned decision, prohibit further unlawful demands and grant appropriate reliefs.
43. In conclusion, the ex parte Applicant urges the Court to allow its motion dated 12th July, 2025, contending that its case stands uncontroverted and that it has satisfied the threshold for the grant of the orders of certiorari, prohibition and mandamus sought.
F. THE EX PARTE APPLICANT’S SUPPLEMENTARY SUBMISSIONS.
44. In its supplementary submissions, the ex parte Applicant submits that it is a licensed oil marketing company operating a private petroleum terminal through which imported petroleum products are stored and handled, and that all such products are subjected to customs duties and statutory levies at the point of importation prior to being pumped into its terminal through the Kenya Pipeline Company system.
45. It contends that under EACCMA and related tax statutes, the legally recognised “tax point” occurs at importation when the goods are entered for home use at a standard temperature of 20 degrees Celsius, and that upon payment of all requisite duties, including excise duty, road maintenance levy, import declaration fee, petroleum development levy and petroleum regulatory levy, the taxpayer fully discharges its tax obligations in respect of the imported petroleum products.
46. It is the ex parte Applicant’s case that the present dispute arises from the Respondent’s unlawful reopening of tax assessments on petroleum products based on what it terms “operational gains” occurring after the tax point.
47. The ex parte Applicant asserts that this conduct undermines the principles of legal certainty and finality in taxation, and is contrary to the judgement delivered in Commissioner of Investigations and Enforcement v Libya Oil Kenya Limited, in which the High Court held that demands for additional duties and levies on account of operational or product depot gains lack statutory foundation and are therefore unlawful. It submits that the impugned demand, as reflected in the Respondent’s correspondence, expressly refers to “operational gains” and not to any short levy under Section 135 of EACCMA
48. The ex parte Applicant explains that such operational gains arise from natural and technical characteristics of petroleum products, including thermal expansion, stratification, measurement variances and vapour recovery and are therefore post-importation phenomena affecting already duty-paid product. It maintains that in the Libya Oil case, the Court affirmed that once duty is paid at importation, such payment covers the product together with any subsequent volumetric changes and that there exists no statutory provision authorising further taxation of such gains.
49. The ex parte Applicant further contends that the Respondent’s attempt to recharacterise the impugned sums as arising from “hospitality gains” or short levy under Section 135 of EACCMA is an afterthought, inconsistent with its own correspondence which expressly referred to operational gains. It argues that if indeed the demand related to short-levied duty on uncustomed goods, the Respondent would have clearly stated so and invoked the applicable statutory provisions, including penalties under Section 135(2), which it did not. This inconsistency, it submits, demonstrates that the impugned demand is not grounded in any lawful taxing provision.
50. On jurisdiction, the ex parte Applicant submits that these proceedings, being judicial review proceedings brought under Order 53 of the Civil Procedure Rules and Article 165(3)(d)(ii) of the Constitution, fall within the supervisory jurisdiction of the High Court, and are not governed by the territorial limitations under Section 12 of the Civil Procedure Act. It maintains that any High Court in Kenya is competent to hear such matters, particularly where constitutional violations, namely infringement of the right to property under Article 40 and the right to fair administrative action under Article 47, are alleged.
51. Regarding the doctrine of exhaustion, the ex parte Applicant argues that Sections 229 and 230 of EACCMA are inapplicable in the present case, as those provisions relate only to disputes concerning lawful tax assessments. It submits that the impugned demand is ultra vires and does not constitute a lawful tax capable of being challenged through the statutory dispute resolution framework.
52. In this regard, it relies on Keroche Industries Limited v Kenya Revenue Authority & 5 others [2007] 2 KLR 240, where the Court held that judicial review is available where a taxing authority acts ultra vires, irrationally or in abuse of power, and that the exhaustion doctrine does not apply where the issues transcend the competence of statutory tribunals and involve illegality, procedural impropriety and abuse of power.
53. The ex parte Applicant further relies on Republic v Kenya Revenue Authority Ex parte Jaffer Mujtab Mohammed [2015] eKLR and Fleur Investments Limited v Commissioner of Domestic Taxes & Kenya Revenue Authority [2018] eKLR, wherein the courts held that a taxing authority must act fairly and on a rational basis, and is not entitled to arbitrarily impose tax assessments without legal justification. In Fleur Investments, the Court of Appeal emphasized that a taxing authority is not entitled to pluck a figure from the air and impose it upon a taxpayer without some rational basis, and that such conduct would be arbitrary, capricious and in bad faith, thereby justifying judicial intervention.
54. The ex parte Applicant also places reliance on Republic v Inland Revenue Commissioners ex parte National Federation of Self-Employed and Small Businesses Ltd [1981] UKHL 2, where it was held that judicial review is available where a public authority fails in its statutory duty or acts outside its powers, and that taxpayers are entitled to fair treatment by revenue authorities.
55. It further cites the case of Commissioner of Income Tax v Pan African Paper Mills (EA) Limited [2018] eKLR, in which the Court of Appeal reiterated the principle of strict construction of tax statutes, holding that taxation must be based strictly on clear statutory words, with no room for implication or intendment.
56. It is the ex parte Applicant’s position that the Respondent’s conduct amounts to an unlawful attempt to impose tax without a statutory charging provision, contrary to the principle that taxation can only be imposed by clear legislative authority. It submits that the Respondent’s reliance on provisions such as Section 47 and 135 of EACCMA is misplaced, as those provisions do not authorise taxation of post-importation operational gains.
57. The ex parte Applicant further submits that the issues in the present matter are materially identical to those determined in the Libya Oil case and that the Respondent’s attempt to distinguish that decision on the basis of “hospitality gains” is unfounded, unsupported by evidence and not grounded in any recognized statutory framework. It argues that the Respondent has failed to demonstrate the existence of any untaxed transit product or misdeclaration and that any such allegation would require proof and would be addressed under ordinary customs provisions, not through the concept of operational gains.
58. On the legal effect of the Libya Oil judgement, the ex parte Applicant submits that the decision constitutes binding precedent on the legal question of whether operational gains are taxable, and that it is not merely a judgement in personam but one that establishes the legal position applicable to all similarly situated taxpayers. It maintains that the Respondent’s continued issuance of similar demands, without appealing or setting aside that judgement, amounts to defiance of the law as declared by the Court.
59. The ex parte Applicant concludes that the Respondent’s actions are ultra vires, irrational, procedurally improper and in violation of constitutional rights, and that judicial review remedies are warranted. It therefore prays for orders of certiorari to quash the impugned demand, prohibition to restrain further unlawful demands, and mandamus to compel restitution by way of offsetting sums unlawfully collected against future tax liabilities, on the basis that the Respondent has unjustly enriched itself in violation of Article 40 of the Constitution.
G. THE RESPONDENT’S SUBMISSIONS.
60. On its part, the Respondent submits that the ex parte Applicant operates a petroleum storage and loading facility at Konza within Machakos County, being a customs-controlled area handling both duty-paid fuel for local consumption and transit petroleum products on which duty has not been paid. It is contended that the Applicant is not an importer of record under either the former Open Tender System or the current Government-to-Government framework and does not lodge customs declarations in its own name.
61. The Respondent avers that a stock reconciliation exercise conducted for the period December, 2024 to April, 2025 revealed product gains arising from discrepancies between declared duty-paid volumes and transit products, quantified as PMS 192,951 litres and AGO 396,202 litres. These gains are said to have arisen from under-declaration or improper commingling of transit fuel with duty-paid stock, thereby rendering them uncustomed goods liable to duty.
62. It is further contended that the Applicant voluntarily sought to regularize the position by requesting to pay the assessed taxes, which demand was issued pursuant to Section 135 of EACCMA.
63. The Respondent raises a preliminary objection challenging the jurisdiction of this Court on the basis that the Applicant failed to comply with the statutory dispute resolution framework under Sections 229 and 230 of EACCMA and Section 9(2) of the Fair Administrative Action Act. It is submitted that the Applicant ought first to have lodged an application for re
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1. The ex parte Applicant herein Petrocity Energy (K) Limited commenced the present proceedings vide the notice of motion dated 12th July, 2025, pursuant to leave granted by this Court on 24th June, 2025. The motion seeks the following orders;
a. THAT an Order of judicial review by way of certiorari do issue to remove into this Court for purposes of quashing the decision of the Respondent communicated to the ex parte Applicant by its letters dated the 6th of June 2025 seeking payment of Ksh.31,340,573/- as additional duties and levies on account of alleged product depot gains on petroleum products for the period December, 2024 to April, 2025.
b. THAT an Order of judicial review by way of prohibition do issue directed at the Respondent prohibiting it from levying and/or demanding payments of additional duties and levies on account of alleged product depot gains on petroleum products imported by the ex parte Applicant and held in its terminal located in Konza. In this regard, the ex parte Applicant is not required to seek the approval of officers of the Respondent to off-load any of the petroleum product held in its terminal located in Konza. Where deemed necessary the Respondent shall issue all necessary documents to facilitate the offloading of petroleum product held at the ex parte Applicant’s terminal even as it works on overcoming any administrative, documentary or systems challenges.
c. THAT an Order of judicial review by way of mandamus do issue directed at the Respondent compelling it to allow the ex parte Applicant to offset Ksh.678,442,787/- it has paid as additional duties and levies on account of product depot gains against future duties, levies and taxes it shall be required to pay the Respondent on account of any other tax law. To facilitate the said offset the Respondent do credit Ksh.678,442,787/- into an advance gross payment account in favour of the ex parte Applicant from which account the ex parte Applicant shall readily offset its future taxes failing which interest to accrue on the said Ksh.678,442,787/- at the rate of 1% per month from the date of the order of this Honourable Court until the Respondent credits the advance gross payment account and facilitates commencement of the offset.
d. THAT the Honourable Court be pleased to issue any other orders or directions as it may deem fit and just to grant.
e. THAT the costs of this application be provided for.
2. The grounds upon which the application is premised are set out on its face and are as follows:
a. THAT the Respondent had by its letters dated the 6th of June, 2025 formally sought from the ex parte Applicant the payment of Ksh.31,340,573/- as additional duties and levies on account of product depot gains on petroleum products for the period December, 2024 to April, 2025.
b. THAT this Honorable Court through a judgement delivered by Lady Justice J.W.W. Mongare on the 15th of April, 2024 declared demands and or assessments by the Respondent for additional duties and levies on account of product depot gains unlawful as such demands are not established under any particular provision of tax laws.
c. THAT the Respondent in defiance of the aforesaid court judgement, continues to assess and demand from the ex parte Applicant additional duties and levies citing volume fluctuations occurring post importation on duty paid petroleum products held at its terminal in Konza. Given that all duties and levies have already been paid on the said products the conduct of the Respondent amounts to re-opening duty assessment based on post-tax-point phenomena undermines legal certainty and finality
d. THAT the actions of the Respondent are in breach of the principles of legal certainty, contradict customs valuation norms and introduce undue administrative complexity undermining sectoral stability.
e. THAT the levy of the additional duties and levies on account of product depot gains by the Respondent arbitrarily deprives the ex parte Applicant from its property in utter contempt of the judgement of this Honourable Court and in contravention of the ex parte Applicant’s rights set out in Articles 40 of the Constitution.
f. THAT the ex parte Applicant herein seeks reliefs in the nature of prerogative writs, which ought to be decided upon by this Honourable Court.
g. THAT judicial review is the only appropriate and effective remedy.
B. THE EX PARTE APPLICANT’S AFFIDAVIT.
3. The motion is supported by the affidavit of Aman Jafferali Kurji sworn on 12th July, 2025.
4. In his affidavit, the said deponent deposes that the ex parte Applicant is an energy solutions provider engaged in the importation, storage, handling and distribution of petroleum products through its private inland terminal in Konza and that upon importation of such products, it pays all requisite customs duties and statutory levies, including excise duty, road maintenance levy, import declaration fee, petroleum development levy and petroleum regulatory levy, based on the volume of the product at the legally prescribed tax point.
5. He avers that, under the East African Community Customs Management Act (EACCMA) and the applicable tariff regime, the tax point for petroleum products arises at the time of importation and entry for home use, with quantities measured at a temperature of 20 degrees Celsius, and that upon payment of all duties and levies at this stage, the Applicant’s tax obligation is fully discharged and cannot lawfully be revisited.
6. The deponent states that once duties are paid, the petroleum products are released from customs control and transferred through the Kenya Pipeline Company system to the Applicant’s private terminal in Konza, where the volumes are recorded in the Respondent’s Customs Oil Information System (COSIS) for purposes of tracking duty-paid products and regulating their movement and withdrawal.
7. He further deposes that the Respondent’s officers reconcile the volumes of petroleum products pumped into and out of the terminal against COSIS records and treat any excess volume remaining after the recorded “duty-paid” quantities have been drawn as “product depot gains,” which the Respondent classifies as volumes on which duty has not been paid, thereby requiring the Applicant to process zero manifests and pay additional duties and levies before such product can be withdrawn.
8. It is the deponent’s further deposition that the said product depot gains do not arise from new importations or commercial transactions but are attributable to natural and operational factors such as temperature-induced volumetric expansion, tank stratification, measurement variances and vapor recovery, and that there is no statutory provision under EACCMA, the Excise Duty Act or any other applicable law permitting the imposition of additional duties on such post-importation volume variations.
9. He further avers that this Court, in a judgment delivered on 15th April, 2024 by Mongare J, declared demands for additional duties and levies on account of such product depot gains unlawful, but that notwithstanding the said decision, the Respondent has persisted in issuing similar demands against the ex parte Applicant.
10. The deponent states that by letters dated 6th June, 2025, the Respondent demanded payment of Ksh.31,340,573/- as additional duties and levies for the period between December, 2024 and April, 2025, which demands the Applicant challenged, and in respect of which it obtained a court order on 24th June, 2025 staying enforcement; however, the Respondent is said to have disregarded the said order and continued to insist on payment as a condition for release of the petroleum products.
11. The deponent deposes that, owing to the Respondent’s refusal to release the products and in order to ensure business continuity, the Applicant paid the demanded sum of Ksh.31,340,573/- under protest, and that over time it has been compelled to make similar payments amounting to Ksh. 678,442,787/-, which it considers unlawful and prejudicial to its operations.
12. The deponent contends that the Respondent’s actions are arbitrary, unlawful and in violation of the Applicant’s constitutional rights, including the right to property under Article 40 of the Constitution, the right to fair administrative action under Article 47 and the right to a fair hearing under Article 50, and that such conduct undermines the rule of law and the administration of justice.
13. In the premises, he deposes that the Applicant seeks the intervention of this Court under its supervisory jurisdiction pursuant to Article 165 of the Constitution to restrain the Respondent from levying additional duties on account of product depot gains and to grant appropriate prerogative reliefs, contending that unless such orders are issued, the Respondent will persist in the impugned conduct to the ex parte Applicant’s detriment.
C. THE RESPONDENT’S PRELIMINARY OBJECTION.
14. In resisting the application, the Respondent filed a notice of preliminary objection dated 25th October, 2025, citing the following grounds.
a. That this Honourable court lacks territorial jurisdiction to hear and determine this suit since the Cause of Action arose in Konza within Machakos County which is within the jurisdiction of Machakos High Court, as opposed to Kisumu High Court where the suit has been filed, in total disregard of Section 15 (a) of the Civil Procedure Act.
b. THAT this Honorable Court ought to transfer the matter to Machakos High Court which has both the jurisdiction to hear the matter and well within the convenience of the litigants seeking to make reference to the site.
c. THAT the Notice of Motion Application filed herein contravenes the express provisions of Sections 229 and 230 of the EACCMA.
d. THAT the Application is filed contrary to the provisions of Section 9(2) of the Fair Administrative Action Act.
e. THAT the Application been filed contrary to the provisions of Sections 12 and 13 of the Tax Appeals Tribunal Act.
f. THAT the Application is a breach of the doctrine of exhaustion and the doctrine of constitutional avoidance.
g. THAT the Application is therefore an abuse of the court process and should be struck out with Cost to the Respondent.
D. THE RESPONDENT’S REPLYING AFFIDAVIT.
15. The Respondent also filed a replying affidavit sworn on 4th November, 2025 by Bernard Kibiti, an officer of the Respondent’s by duly appointed under Section 13 of the Kenya Revenue Authority Act and serving in the Petroleum Monitoring Unit, which is mandated to detect and deter violations of customs laws within the petroleum sector at points of entry and discharge from customs-controlled facilities.
16. The said deponent avers in his affidavit that the Respondent is statutorily mandated under Section 5(2) of the Kenya Revenue Authority Act to administer and enforce tax laws for purposes of assessing, collecting and accounting for government revenue, and that challenges in revenue collection have necessitated strict enforcement of tax obligations under various statutes including EACCMA, the Excise Duty Act, the Value Added Tax Act, the Income Tax Act and the Tax Procedures Act.
17. The deponent states that the ex parte Applicant’s application seeks to quash a customs demand relating to alleged product gains at the Applicant’s Konza terminal, which the ex parte Applicant claims were already duty-paid, though, according to the Respondent, no documentary evidence has been furnished to substantiate that assertion.
18. He further deposes that the Applicant improperly invites this Court, sitting in judicial review, to interrogate the merits of the tax demand rather than the legality of the decision-making process, and contends that the impugned demand was lawfully issued pursuant to Section 135 of EACCMA, which empowers the Commissioner to recover duty on uncustomed goods.
19. The deponent outlines the factual background, stating that the Applicant operates a petroleum storage and loading facility in Konza, Machakos County, handling both duty-paid fuel for local consumption and transit petroleum products on which duty has not been paid, and that the Respondent verifies volumes at the point of exit from the terminal to ensure recovery of the exact quantities declared.
20. He avers that any excess volume identified upon reconciliation between declared and dispatched quantities is classified as “hospitality gain,” which is treated as uncustomed product, and that such gains may only be lawfully removed from the customs-controlled facility upon payment of the requisite duties.
21. The deponent further explains that petroleum procurement in Kenya has evolved from the Open Tender System to a Government-to-Government framework involving foreign state entities, and asserts that the ex parte Applicant is not an importer of record under either regime but merely a licensed oil marketing company and storage facility operator.
22. He deposes that the petroleum products stored at the ex parte Applicant’s facility do not include imports declared in the ex parte Applicant’s name but comprise duty-paid local products and transit goods, and that a reconciliation exercise conducted by the Respondent for the period December, 2024 to April, 2025 revealed product gains arising from discrepancies between declared local and transit volumes.
23. According to the deponent, the said gains are attributable to under-declaration or improper commingling of transit fuel with duty-paid stock, thereby rendering them uncustomed goods subject to duty under the law, and he adds that the ex parte Applicant itself sought permission to regularize the position by paying the assessed taxes, which request was granted.
24. He avers that the ex parte Applicant subsequently requested and was granted an extension of time to settle the assessed taxes and ultimately made payment voluntarily without indicating that the same was under protest, thereby rendering the present proceedings overtaken by events.
25. The deponent contends that the Respondent’s actions were procedurally proper and that the ex parte Applicant’s grievance ought to have been pursued through the statutory dispute resolution mechanism provided under Section 229 of EACCMA rather than by way of judicial review, in line with the doctrine of exhaustion as embodied in Section 9(2) of the Fair Administrative Action Act.
26. He further deposes that the ex parte Applicant’s reliance on the decision in Commissioner of Investigations & Enforcement v Libya Oil Kenya Ltd is misplaced, as the present case is distinguishable on the basis that the gains herein comprise not only operational gains but also “hospitality gains” derived from commingled duty-paid and transit products which have not reached the tax point.
27. The deponent asserts that, unlike in the cited case, the impugned demand is not a second taxation of already taxed goods but a lawful recovery of duty on uncustomed goods, firmly grounded in the provisions of EACCMA.
28. He also distinguishes the ex parte Applicant’s role as a storage facility operator from that of an importer, contending that the ex parte Applicant’s handling of commingled goods attracts separate obligations under customs control and warehousing provisions, which were not in issue in the Libya Oil case.
29. The deponent further avers that the prior judgement relied upon by the Applicant was issued in personam and is binding only upon the parties to that suit, and cannot be applied to the present dispute, which must be determined on its own facts and merits.
30. He concludes that the Applicant has failed to demonstrate any procedural impropriety, illegality or irrationality on the part of the Respondent, has not met the threshold for the grant of judicial review orders, and that the application constitutes an abuse of the court process intended to evade lawful tax obligations, and accordingly prays that the same be dismissed with costs.
E. THE EX PARTE APPLICANT’S INITIAL SUBMISSIONS.
31. The ex parte Applicant submits that it sought leave to commence judicial review proceedings against the Respondent, which leave was duly granted by this Court on 24th June, 2025 and that the Court ordered that the leave granted operates as a stay, effectively restraining the Respondent from enforcing its demand for Ksh.31,340,573/- being additional duties and levies on alleged product depot gains for the period December, 2024 to April, 2025.
32. The ex parte Applicant avers that the said order entitled it to take possession of its petroleum products without payment of the impugned levies pending determination of the suit, and that the order was duly served upon the Respondent.
33. The ex parte Applicant contends that notwithstanding service of the said court order, the Respondent acted in defiance thereof by insisting on payment of the demanded sum as a condition for release of the petroleum products, thereby compelling the ex parte Applicant to pay the amount under protest in order to avoid business disruption. It is further submitted that despite directions issued by the Court on 30th July, 2025 requiring the Respondent to file a response, the Respondent failed to file any replying affidavit or submissions in time.
34. On the merits, the ex parte Applicant submits that the Respondent’s demand for additional duties and levies on account of alleged product depot gains is unlawful, arbitrary and devoid of any statutory foundation under EACCMA, the Excise Duty Act or any other tax legislation. It argues that once duties are assessed and paid at the point of importation, the tax obligation is discharged and cannot be reopened on account of post-importation occurrences.
35. The ex parte Applicant further submits that the Respondent’s actions are contrary to a decision of this Court delivered on 15th April 2024 by Mongare J in Commissioner of Investigations & Enforcement v Libya Oil Kenya Ltd (HCCOMMITA E104 of 2021), wherein the Court held that demands for additional duties on account of product depot gains are unlawful for want of a clear statutory basis. The ex parte Applicant submits that the Court in that case emphasized that taxation must be grounded in clear and express legislative provisions and that no tax can be imposed by implication.
36. It is the ex parte Applicant’s submission that the Respondent’s continued imposition of the impugned levies, in disregard of the aforesaid judgement and the subsisting stay order issued on 24th June, 2025, amounts to contempt of court, administrative excess and abuse of power, thereby undermining the rule of law and the authority of the Court.
37. The ex parte Applicant submits that the impugned decision is tainted by illegality, irrationality and procedural impropriety, which are the well-established grounds for the grant of judicial review remedies.
38. On illegality, the ex parte Applicant argues that the Respondent acted ultra vires by purporting to levy duties not sanctioned by statute.
39. On irrationality, the ex parte Applicant contends that the decision offends the principle of finality of the tax point by seeking to re-open duty assessments based on natural phenomena such as temperature-induced expansion and measurement variances.
40. On procedural impropriety, the ex parte Applicant asserts that the Respondent acted in blatant disregard of court orders.
41. The ex parte Applicant further submits that the Respondent’s actions violate its constitutional rights under Article 40 of the Constitution by arbitrarily depriving it of its funds, under Article 47 by subjecting it to unlawful and unreasonable administrative action and under Article 50 by failing to adhere to due process.
42. It is therefore submitted that judicial review is the appropriate remedy to check the Respondent’s unlawful exercise of power and to safeguard the Applicant’s rights, and that this Court ought to intervene under its supervisory jurisdiction to quash the impugned decision, prohibit further unlawful demands and grant appropriate reliefs.
43. In conclusion, the ex parte Applicant urges the Court to allow its motion dated 12th July, 2025, contending that its case stands uncontroverted and that it has satisfied the threshold for the grant of the orders of certiorari, prohibition and mandamus sought.
F. THE EX PARTE APPLICANT’S SUPPLEMENTARY SUBMISSIONS.
44. In its supplementary submissions, the ex parte Applicant submits that it is a licensed oil marketing company operating a private petroleum terminal through which imported petroleum products are stored and handled, and that all such products are subjected to customs duties and statutory levies at the point of importation prior to being pumped into its terminal through the Kenya Pipeline Company system.
45. It contends that under EACCMA and related tax statutes, the legally recognised “tax point” occurs at importation when the goods are entered for home use at a standard temperature of 20 degrees Celsius, and that upon payment of all requisite duties, including excise duty, road maintenance levy, import declaration fee, petroleum development levy and petroleum regulatory levy, the taxpayer fully discharges its tax obligations in respect of the imported petroleum products.
46. It is the ex parte Applicant’s case that the present dispute arises from the Respondent’s unlawful reopening of tax assessments on petroleum products based on what it terms “operational gains” occurring after the tax point.
47. The ex parte Applicant asserts that this conduct undermines the principles of legal certainty and finality in taxation, and is contrary to the judgement delivered in Commissioner of Investigations and Enforcement v Libya Oil Kenya Limited, in which the High Court held that demands for additional duties and levies on account of operational or product depot gains lack statutory foundation and are therefore unlawful. It submits that the impugned demand, as reflected in the Respondent’s correspondence, expressly refers to “operational gains” and not to any short levy under Section 135 of EACCMA
48. The ex parte Applicant explains that such operational gains arise from natural and technical characteristics of petroleum products, including thermal expansion, stratification, measurement variances and vapour recovery and are therefore post-importation phenomena affecting already duty-paid product. It maintains that in the Libya Oil case, the Court affirmed that once duty is paid at importation, such payment covers the product together with any subsequent volumetric changes and that there exists no statutory provision authorising further taxation of such gains.
49. The ex parte Applicant further contends that the Respondent’s attempt to recharacterise the impugned sums as arising from “hospitality gains” or short levy under Section 135 of EACCMA is an afterthought, inconsistent with its own correspondence which expressly referred to operational gains. It argues that if indeed the demand related to short-levied duty on uncustomed goods, the Respondent would have clearly stated so and invoked the applicable statutory provisions, including penalties under Section 135(2), which it did not. This inconsistency, it submits, demonstrates that the impugned demand is not grounded in any lawful taxing provision.
50. On jurisdiction, the ex parte Applicant submits that these proceedings, being judicial review proceedings brought under Order 53 of the Civil Procedure Rules and Article 165(3)(d)(ii) of the Constitution, fall within the supervisory jurisdiction of the High Court, and are not governed by the territorial limitations under Section 12 of the Civil Procedure Act. It maintains that any High Court in Kenya is competent to hear such matters, particularly where constitutional violations, namely infringement of the right to property under Article 40 and the right to fair administrative action under Article 47, are alleged.
51. Regarding the doctrine of exhaustion, the ex parte Applicant argues that Sections 229 and 230 of EACCMA are inapplicable in the present case, as those provisions relate only to disputes concerning lawful tax assessments. It submits that the impugned demand is ultra vires and does not constitute a lawful tax capable of being challenged through the statutory dispute resolution framework.
52. In this regard, it relies on Keroche Industries Limited v Kenya Revenue Authority & 5 others [2007] 2 KLR 240, where the Court held that judicial review is available where a taxing authority acts ultra vires, irrationally or in abuse of power, and that the exhaustion doctrine does not apply where the issues transcend the competence of statutory tribunals and involve illegality, procedural impropriety and abuse of power.
53. The ex parte Applicant further relies on Republic v Kenya Revenue Authority Ex parte Jaffer Mujtab Mohammed [2015] eKLR and Fleur Investments Limited v Commissioner of Domestic Taxes & Kenya Revenue Authority [2018] eKLR, wherein the courts held that a taxing authority must act fairly and on a rational basis, and is not entitled to arbitrarily impose tax assessments without legal justification. In Fleur Investments, the Court of Appeal emphasized that a taxing authority is not entitled to pluck a figure from the air and impose it upon a taxpayer without some rational basis, and that such conduct would be arbitrary, capricious and in bad faith, thereby justifying judicial intervention.
54. The ex parte Applicant also places reliance on Republic v Inland Revenue Commissioners ex parte National Federation of Self-Employed and Small Businesses Ltd [1981] UKHL 2, where it was held that judicial review is available where a public authority fails in its statutory duty or acts outside its powers, and that taxpayers are entitled to fair treatment by revenue authorities.
55. It further cites the case of Commissioner of Income Tax v Pan African Paper Mills (EA) Limited [2018] eKLR, in which the Court of Appeal reiterated the principle of strict construction of tax statutes, holding that taxation must be based strictly on clear statutory words, with no room for implication or intendment.
56. It is the ex parte Applicant’s position that the Respondent’s conduct amounts to an unlawful attempt to impose tax without a statutory charging provision, contrary to the principle that taxation can only be imposed by clear legislative authority. It submits that the Respondent’s reliance on provisions such as Section 47 and 135 of EACCMA is misplaced, as those provisions do not authorise taxation of post-importation operational gains.
57. The ex parte Applicant further submits that the issues in the present matter are materially identical to those determined in the Libya Oil case and that the Respondent’s attempt to distinguish that decision on the basis of “hospitality gains” is unfounded, unsupported by evidence and not grounded in any recognized statutory framework. It argues that the Respondent has failed to demonstrate the existence of any untaxed transit product or misdeclaration and that any such allegation would require proof and would be addressed under ordinary customs provisions, not through the concept of operational gains.
58. On the legal effect of the Libya Oil judgement, the ex parte Applicant submits that the decision constitutes binding precedent on the legal question of whether operational gains are taxable, and that it is not merely a judgement in personam but one that establishes the legal position applicable to all similarly situated taxpayers. It maintains that the Respondent’s continued issuance of similar demands, without appealing or setting aside that judgement, amounts to defiance of the law as declared by the Court.
59. The ex parte Applicant concludes that the Respondent’s actions are ultra vires, irrational, procedurally improper and in violation of constitutional rights, and that judicial review remedies are warranted. It therefore prays for orders of certiorari to quash the impugned demand, prohibition to restrain further unlawful demands, and mandamus to compel restitution by way of offsetting sums unlawfully collected against future tax liabilities, on the basis that the Respondent has unjustly enriched itself in violation of Article 40 of the Constitution.
G. THE RESPONDENT’S SUBMISSIONS.
60. On its part, the Respondent submits that the ex parte Applicant operates a petroleum storage and loading facility at Konza within Machakos County, being a customs-controlled area handling both duty-paid fuel for local consumption and transit petroleum products on which duty has not been paid. It is contended that the Applicant is not an importer of record under either the former Open Tender System or the current Government-to-Government framework and does not lodge customs declarations in its own name.
61. The Respondent avers that a stock reconciliation exercise conducted for the period December, 2024 to April, 2025 revealed product gains arising from discrepancies between declared duty-paid volumes and transit products, quantified as PMS 192,951 litres and AGO 396,202 litres. These gains are said to have arisen from under-declaration or improper commingling of transit fuel with duty-paid stock, thereby rendering them uncustomed goods liable to duty.
62. It is further contended that the Applicant voluntarily sought to regularize the position by requesting to pay the assessed taxes, which demand was issued pursuant to Section 135 of EACCMA.
63. The Respondent raises a preliminary objection challenging the jurisdiction of this Court on the basis that the Applicant failed to comply with the statutory dispute resolution framework under Sections 229 and 230 of EACCMA and Section 9(2) of the Fair Administrative Action Act. It is submitted that the Applicant ought first to have lodged an application for re
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