The Applicants case:
1. The Applicant is a society registered under the Society's Act to carry out charitable purposes aimed at promoting the Hindu religion and allied activities from February 1953. Subsequently, the Applicant made an Application for an Income Tax Exemption Certificate which was declined by the Respondent on 15th December 2023.
2. Dissatisfied by the decision of the Respondent, the Applicant being filed an Appeal with the Tax Appeals Tribunal in Tax Appeal No. E077 of 2024; where judgment was entered on 1st August 2024 to the effect that the Applicant was entitled to Income Tax Exemption under Paragraph 10 of the First Schedule to the Income Tax Act, Cap 470.
3. The Respondent then issued the Applicant with an Income Tax Exemption Certificate for the period between 1st October 2024 and 30th September 2029 on 17th March 2025 after frequent follow-ups by the Applicant.
4. It is the Applicants case that subsequently, the Respondent unlawfully levied and collected Income Tax from the Applicant after 1st October 2024 in the excess of KES. 10,413,412.70 in clear disregard of the Applicant's Tax-Exempt status and the holding of the Tax Appeals Tribunal.
5. Despite various attempts and requests made by the Applicant to Respondent on repayment of the unlawfully collected “taxes”, the Respondent willfully neglected or ignored to act on the Applicant's request thus necessitating the present Application.
6. Aggrieved by the foregoing, the Applicant has through the Application dated 5th June 2025 moved this court seeking the following orders;
a) …Spent.
b) Leave be granted to the Applicant to file an Application for Judicial Review by way of an order of mandamus directed to the Commissioner of Domestic Taxes to compel him/her to process and refund the irregularly and unlawfully of over KES. 10,413,412.70 collected from the Applicant.
c) Costs of the Application be provided for.
d) Such further or other relief as the Honourable Court may deem just and expedient to grant.
The Applicant's Submissions;
7. It submits that it is a requirement under Order 53 Rule 1 of the Civil Procedure Rules, that an Applicant must seek leave to institute Judicial Review proceedings.
8. It submits that leave is meant to eliminate at an early stage any applications for judicial review, which are either frivolous, vexatious or hopeless.
9. An Applicant should only be allowed to proceed to the substantive hearing phase if the court is satisfied that there is a case fit for further consideration as discussed in Republic v County Council of Kwale & another; Kondo & 57 others (Exparte) [19981 KEHC 2 (KLR) where the Court held;
“Leave may only be granted therefore if on the material available the court is of the view, without going into the matter in depth, that there is an arguable case for granting the relief claimed by the Applicant the test being whether there is a case fit for further investigation at a full interpartes hearing of the substantive application for judicial review. It is an exercise of the courts discretion but as always is has to be exercised judicially. Has the Applicant satisfied these principles?” (Emphasis supplied)
10. The Applicant submits that the instant application raises such issues as described in Republic v County Council of Kwale (supra). It submits that the issues and illegal acts of the Respondent in this case are so clear that even without delving into the arguments of either parties, a cursory perusal of the evidence before it is sufficiently meritorious to justify an order for leave.
11. It submits that the undisputed that, the Applicant was declared tax-exempt by the Tax Appeals Tribunal on 1st August 2024 under Paragraph 10 of the First Schedule to the Income Tax Act, and was subsequently issued with a valid Tax Exemption Certificate on 17th March 2025 covering the period 1st October 2024 to 30th September 2029.
12. It submits that it is further not in dispute that despite the exemption and Tribunal's judgment, the Respondent unlawfully levied and collected Income Tax from the Applicant after 1st October 2024 in excess of KES. 10,413,412.70.
13. It submits that the Applicant, through its advocates, has persistently written to the Respondent demanding restitution of the illegally collected sums, but the Respondent has failed, refused, and/or neglected to act on the said demands.
14. It submits that the return of the monies illegally collected is a restitution and not a 'refund' for which Section 47 of the Tax Procedures Act is applicable.
15. The taxes envisaged at Section 47 refer to taxes collected at source lawfully. Section 47 of the Tax Procedures Act does not provide for a “refund” of taxes illegally collected from a Taxpayer.
16. It is the Respondent's assertion that the Applicant should have applied for a “refund” of the illegally collected sums under Section 47 of the Tax Procedures Act which provides for offset or refund of overpaid tax.
17. The Applicant submits that Section 47 deals with refund of otherwise legally overpaid taxes. In contrast, in the instant suit, the Commissioner's levying of income tax was without justification and offended the principle espoused under Article 210(1) which provides that no taxes may be imposed, waived or varied except by legislation.
18. Further, it is instructive to note that under Section 47 of the Act, the Respondent ought to have processed the Applicants request within 90 days as prescribed under Section 47 (3) of the Act.
19. The Applicant submits that the Respondent's action/inaction is a blatant disregard of its Constitutional Rights. With that violation, the Applicant is at liberty to institute judicial review proceedings against the Respondent to remedy the wrong presently being perpetrated by the Respondent.
20. It baffles the Applicant that despite the clear and binding judgment of the Tax Appeals Tribunal, and the subsequent issuance of a tax exemption certificate, the Respondent has continued to retain monies illegally collected, and has willfully neglected to address the Applicant's numerous demand letters.
21. It submits that such conduct not only undermines the authority of quasi-judicial bodies but also portrays the Respondent as acting with impunity in disregard of the rule of law.
22. The Applicant submits that in the instant case, the Respondent levied and collected income tax from the Applicant despite a binding decision of the Tax Appeals Tribunal confirming the Applicant's exempt status and despite issuing a Certificate of Exemption.
23. The Respondent acts are plainly ultra vires and call for this Court's intervention.Article 210(1) of the Constitution expressly provides that no tax may be imposed, waived, or varied except as provided by legislation.
24. It submits that to collect tax without legal justification is therefore unconstitutional and amounts to a violation of the Applicant's Constitutional rights.It submits that Section 47 is concerned with refund of tax lawfully assessed and collected in excess.
25. The Respondent's decision to continue levying and collect taxes from the Applicant despite being issued with Income Tax Exemption Certificate was unconstitutional and unlawful from the outset.
26. The Applicant position is that what it seeks is not a refund under statute, but restitution of money illegally collected.
27. It further submits that it is trite law that exhaustion of statutory remedies does not apply where a claim is founded on illegality, unconstitutionality, or fundamental rights violations.
28. Reliance is placed in the case of Fleur Investments Limited v Commissioner of Domestic Taxes & another [20181 KECA 341 (KLR) where it was held;
“Whereas courts of Law are enjoined to defer to Specialised Tribunals and other Alternative Dispute Resolution Statutory bodies created by Parliament to resolve certain specific disputes, the court cannot, being a bastion of Justice, sit back and watch such institutions ride roughs110d on the rights of citizens who seek refuge under the Constitution and other legislations or protection. The court is perfectly. in order to intervene where there is clear abuse of discretion by such bodies, where arbitrariness, malice, capriciousness and disrespect of the Rules of natural justice are manifest. Persons charged with statutory powers and duties ought to exercise the same reasonably and fair” (Emphasis supplied)
29. The Applicant submits that as a taxpayer it had a legitimate expectation that upon the Tax Appeal Tribunal's Judgment and subsequent issuance of an Income Tax Exemption Certificate, the Respondent would cease levying tax.
30. The Applicant's expectation was both reasonable and legally enforceable.
31. In Keroche Industries Limited V Kenya Revenue Authority & 5 Others [2007] KEHC 3680 (KLR) where it was held that;
“Legitimate expectation is based not only on ensuring that legitimate expectations but the parties are not thwarted, but on a higher public interest beneficial to all including the Respondents which is the value or the need of holding authorities to promises and practices they have made and acted on and by so doing upholding responsible public administration. This in turn enables people affected to plan their lives with a sense of certainty, trust, reasonableness and reasonable expectation. An abrupt change as was intended in this case, targeted at a particular company or industry is certainly abuse power. Stated simply legitimate expectation arises for example where a member of the public as a result of a promise or Other conduct expects that he will be treated in one way and the public bod wishes to treat him or her in a different way... " (Emphasis supplied)
32. The Respondent has not denied that it continued collecting taxes from the Applicant. Despite issuing the Applicant with an Income Tax Exemption Certificate and knowledge of the Applicant's exempt status, the Respondent willfully elected to violate the Applicant's constitutional rights.
33. The Applicant submits that Respondent's refusal to act on repeated demand letters from the Applicant is further evidence of administrative inertia and bad faith. It submits that the application this raises issues of public accountability in tax administration.
34. If public bodies are permitted to retain taxes illegally levied, it would erode public confidence in the fairness of the tax system and undermine the rule of law.
The Respondent’s Case;
35. The Respondent opposes the Application and pleads that the Application is barred by the doctrine of exhaustion.
36. According to the Respondent, the Applicant ought to have invoked Section 47 of the Act which deals with the refunds. It confirms that there were proceeding that at the tribunal.
37. The Respondent is concerned that the Applicant has failed to abide by the advice that it gave the Applicant in relation to what forms the subject of the Application that is be for the court.
The Respondent’s Submissions;
38. The Respondent submits that the Applicant filed an Appeal at the Tax Appeals Tribunal in TAT Appeal No. E077 of 2024 between Shree Cutchi Leva Patel Samaj Vs Commission of Domestic Taxes contesting the Respondent's decision declining their application for exemption from tax, pursuant to Paragraph 10 of the First Schedule to the Income Tax Act.
39. It submits that the Tribunal rendered its decision on 1st August 2024, allowing the Applicant's appeal and directed the Respondent to issue the Applicant with an exemption certificate within 60 days of the delivery of the judgment.
40. The Respondent dissatisfied with the Tribunal's decision appealed at the High Court in High Court Income Tax E.244 of 2024 but the same was not successful and the Court disallowed the Respondent's application for stay in a ruling dated 6th February 2025 and ultimately the matter was withdrawn by the Respondent.
41. In compliance with the Tribunal's decision, the Respondent approved the Applicant's exemption on 13th February 2025 with an effective date of 1st October 2024.
42. The Applicant alleges that before the issuance of the exemption certificate, they paid 1Kshs 10,413,412.70 as income tax. Upon the grant of the exemption certificate, the Applicant sought a refund of the amount paid on the basis of the Tribunal's order.
43. It submits that on 11th March 2025 the Applicant wrote to the Respondent seeking a refund of Kshs 10,413,412.70 allegedly collected by the Respondent before the issuance of the exemption certificate.
44. On 14th March 2025 the Respondent wrote to the Applicant informing them to apply for the tax refund if any under Section 47 of the Tax Procedures Act for the purposes of ascertaining whether the amounts are due as claimed or not.
45. It is the said communication and decision that has necessitated the Applicant's filing of the instant application seeking leave be granted to the Applicant to file an application for Judicial Review by way of an order of mandamus directed to the Commissioner of Domestic Taxes to compel him/her to process and refund the irregularly and unlawfully of over KES.10,413,412.70 collected from the Applicant.
46. The Respondent submits that the Honourable Court is bereft of jurisdiction to determine the application as the Applicant's application seeking leave offends the doctrine of exhaustion of statutory administrative remedies as provided under Section 47 of the Tax Procedures Act and Section 9 of the Fair Administrative Actions Act.
47. It places reliance on the Supreme Court case of Ngugi v Commissioner of Lands: Owindo & 63 others (Interested Parties) [20231 ICESC 20 (ICLR) where the Court held that;
6. Jurisdiction goes to the root o an cause or dispute be ore a court of law. A court must exercise restraint to avoid overstepping its constitutional role in order to maintain its legitimacy. If a court has no jurisdiction, a judgment rendered therein does not adjudicate the dispute. It does not bind the arties nor can it be made the foundation of any right. It is a nullity without life or authority. In short, it is coram non judice and amounts to a nullity because, as Nyarangi, JA famously said in the locus classicus, Owners of the Motor Vessel "Lillian S" v Caltex Oil, (Kenya) Ltd [19891 ICLR 1,
“jurisdiction is everything. Without it, a court has no power to make one more step.”
37. It is, therefore a basic rule of procedure that jurisdiction must exist when the proceedings are initiated. Because the question of jurisdiction is so fundamental, a limitation on the authority of the court, it can be raised at any stage of the proceedings by any party or even by the court suo motu. As a matter of practice, this court has a duty of jurisdictional in ui to satis itsel that it is ro erlt seized o an matter before it.
48. The application flows from request for refund of amounts (taxes) allegedly paid in excess by the Applicant's to the Respondent. It is baffling for the Applicant to indicate that there is a process for refund of lawfully and unlawfully collected taxes.
49. The Respondent submits that if indeed the Applicant has overpaid taxes then the Applicant needs to adhere to Section 47 of the TPA which is the known law for refund of any taxes overpaid to the Respondent.
50. The Respondent submits that there exist statutory provisions on how taxes paid in excess ought to be refunded to a taxpayer and to this end the Respondent.
51. Section 47 of the Tax Procedures Act which provides that;
Offset or refund of overpaid tax
(1) Where a taxpayer has overpaid a tax under any tax law. the taxpayer may apply to the Commissioner in the prescribed form—
(a) to offset the overpaid tax against the taxpayer's outstanding tax debts and future tax liabilities including instalment taxes and input value added tax; or
(b) for a refund of the overpaid tax—
(i) in the case of income tax, within five years from the date on which the tax was overpaid; or
(ii) in the case of any other tax, within twelve months from the date on which the tax was overpaid.
(2) The Commissioner shall ascertain and determine an application under subsection (1) within ninety days and where the Commissioner ascertains that there was an overpayment of tax—
(a) in the case of an application under subsection (l)(a), apply the overpaid tax to such outstanding tax debts or future tax liability; and (b) in the case of an application under subsection (l)(b), refund the overpaid tax within a period of six months from the date of ascertainment and, if the Commissioner fails to refund, the overpaid tax shall be applied to offset the taxpayer's outstanding tax debt or future tax liabilities.
(3) Where the Commissioner fails to ascertain and determine an application under subsection (1) within ninety days, the same shall be deemed ascertained and approved.
(4) The Commissioner may, for purposes of ascertaining the validity of an application under subsection
(1), subject the application to an audit.
44) Where an application under subsection (1) has been subjected to an audit under subsection (4), the Commissioner shall ascertain and determine the application within one hundred- and twenty-days failure to which, the application shall be deemed to have been ascertained and approved.
(5) Where the application is for a refund of tax under subsection (l)(b), the Commissioner shall apply he overpayment in the following order— (a) in payment of any other tax owing by the taxpayer under the specific tax law;
(b) in payment of a tax owing by the taxpayer under any other tax law; and
(c) any remainder shall be refunded to the taxpayer.
(6) Where the Commissioner fails to refund the overpaid tax within the period specified in subsection (2)(b), the amount due shall attract interest of one per cent for each month or part thereof during which the amount remains unpaid.
(7) Where the Commissioner notifies a taxpayer that an application under subsection (l)(a) has been ascertained and applies the overpaid tax liability to offset an outstanding tax in accordance with subsection (2)(a), interest or penalties shall not accrue on the amount applied to offsetting the outstanding tax liability from the date of the notification.
(8) Where the Commissioner has applied the overpaid tax to offset an outstanding tax liability under subsection (2)(a), any outstanding tax after such application shall accrue interest and penalties in accordance with this Act.
(9) Notwithstanding any other provision of this section, where a person overpays an instalment tax due under section 12 of the Income Tax Act (Cap. 470), the Commissioner shall apply the overpaid tax to offset the taxpayer's future instalment tax liability.
(10) Where, after the application of the overpaid tax under subsection (9), the Commissioner later determines that there was no overpayment of instalment tax, the amount of the tax that was used to offset the taxpayer's future instalment tax liabilities under subsection (9) shall be treated as a tax due to the Commissioner in the subsequent tax period.
(11) The amount due under subsection (10) shall be due from the date that the Commissioner applied that amount to offset an instalment tax liability.
(12) The Commissioner shall notify the taxpayer in writing of the amount due under subsection (10) and specify in the notification
(a) the interest on the amount due; and
(b) any penalties due in respect of the amount due.
(13) A person aggrieved by a decision of the Commissioner under this section may appeal to the Tribunal within thirty days after being notified of the decision.
52. From the reading of Section 47 of the Tax Procedures Act, the Respondent submits that the Applicant has not complied with the provisions of Section 47(1) of the Act, since the Applicant has not made any application to the Respondent in the prescribed form for a refund save for the letter dated 11th March 2025 which is not the prescribed form required under the Act.
53. The Respondent further submits that even if the said letter dated 11th March 2025 is an application for refund of taxes then again, this Court cannot assume jurisdiction as Section 47 (13) of the TPA confers jurisdiction upon the Tax Appeals Tribunal.
54. The Respondent further submits that the Tribunal did not make any order as to refund of taxes but only made orders to the grant of an exemption certificate.
55. The Respondent thus submits that these two processes are two distinct processes governed by two different Acts of Parliament, exemptions being governed by the Income Tax Act whereas refunds are governed by the Tax Procedures Act.
56. The Respondent thus submits that despite informing the Applicant of their rights to make an application for refund under Section 47 of the Tax Procedures Act, the Applicant now rushes to this Honourable Court in breach of statutory processes without indicating why they have chosen to bypass statutory provided mechanisms.
57. It places reliance on the case of Geoffrey Muthiga Kabiru & 2 Others - vs- Samuel Munga Henry & 1756 others [20151 eKLR, where the Court of Appeal stated that:
It is imperative that where a dispute resolution mechanism exists outside Courts. The same be exhausted before the jurisdiction of the Courts is invoked. Courts ought to be fora of last resort and not the first port of call the moment a storm brews...The exhaustion doctrine is a sound one and serves the purpose of ensuring that there is a postponement of judicial consideration of matters to ensure that a party is first of all diligent in the protection of his own interest within the mechanisms in place for resolution outside the Courts. The Exparte Applicants argue that this accords with Article 150 of the Constitution which commands Courts to encourage alternative means of dispute resolution.
58. It submits that the Applicant ought to have first made an application pursuant to Section 47(1) of the Tax Procedures Act and if dissatisfied by the Respondent then they should move the Tribunal pursuant to Section 47(13) of the Tax Procedures Act.
59. The Respondent thus submits that moving this Honourable Court at this particular time when the Applicant has not exhausted the statutory provided administrative mechanisms then the present application for writ of mandamus is premature.
60. Section 9 of the Act which provides;
9(1) Subject to subsection (2), a person who is aggrieved by an administrative action may, without unreasonable delay, apply for judicial review of any administrative action to the High Court or to a subordinate court upon which original jurisdiction is conferred pursuant to Article 22(3) of the Constitution.
9(2) The High Court or a subordinate court under subsection (1) shall not review an administrative action or decision under this Act unless the mechanisms including internal mechanisms for appeal or review and all remedies available under any other written law are first exhausted.
9(3) The High Court or a subordinate Court shall, if it is not satisfied that the remedies referred to in subsection (2) have been exhausted, direct that Applicant shall first exhaust such remedy before instituting proceedings under subsection (1).
9(4) Notwithstanding subsection the High Court or a subordinate Court may, in exceptional circumstances and on application by the Applicant, exempt such person from the obligation to exhaust any remedy the court considers such exemption to be in the interest of justice.
9(5) A person aggrieved by an order made in the exercise of the judicial review jurisdiction of the High Court may appeal to the Court of Appeal.
61. The Respondent further submits that where a party is aggrieved of an administrative action, Section 9(2) is instructive to the extent that mechanisms available under any other written law are first exhausted before moving this Court.
62. The Respondent submits that the Applicant has not exhausted all remedies available to them as provided for under Section 47(1) and 47(13) of the Tax Procedures Act and Section 9(4) of the Fair Administrative Actions Act.
63. The Respondent seeks to place reliance on the case of Speaker of National Assembly v Karume [1992] ICLR 21 where the Court of Appeal held as follows;
“Where there is a clear procedure for redress of any particular grievance prescribed by the Constitution or an Act QC Parliament, that procedure should be strictly followed. Accordingly, the special procedure provided by any law must be strictly adhered to since there are good reasons for such special procedures”
64. In the case of Night Rose Cosmetics (19Z2) Ltd v Nairobi County Government & 2 others [20181 eKLR where Justice Mativo as he then was held that;
“Our jurisprudential policy is to encourage parties to exhaust and honour alternative forums of dispute resolution where they are provided for by statute. It is also settled that the exhaustion doctrine is only applicable where the alternative forum is accessible, affordable, timely and effective. A remedy is considered available if the Petitioner can pursue it without impediment, it is deemed effective if it offers a prospect of success and is found sufficient if it is capable of redressing the complaint fin its totality] ...a remedy is considered available only if the Applicant can make use of it in the circumstances of his case.”
65. It is the Respondent's submission that the Applicant has only written to the Respondent's requesting for a refund and the Respondent reverted back informing the Applicant to comply with the provisions of Section 47 and prove the existence of the said overpaid taxes.
66. The Respondent relies in the decision in Republic v County_ Council of Kwale & another; Kondo & 57 others (Exparte) [1998] KEHC 2 (ICLR) where Justice Waki as he then was held that;
“The purpose of the application for leave to apply for judicial review is firstly to eliminate at an early stage any applications for judicial review which are either. Frivolous, vexatious or hopeless and secondly to ensure that the Applicant is only allowed to proceed to substantive hearing if the court is satisfied that there is a case fit for further consideration.”
67. The Respondent submits that the Applicant has not shown that they have made any application for refund as provided for under the Section 47 of the Tax Procedures Act neither has the Applicant shown the inability by the Respondent to issue a decision.
68. In the case of Republic vs. Kenya National Examinations Council Exparte Gathengi & 8 Others Civil Appeal No 234 of 1006 the Court of Appeal cited, with approval, Halsbury's Law of England, 4th Edn. Vol. 7 p. 111 para 89 thus:
"The order of mandamus is of most extensive remedial nature and is in form, a command issuing from the High Court of Justice, directed to any person, corporation or inferior tribunal, requiring him or them to do some particular thing therein specified which appertains to his or their office and is in the nature of a public duty. Its purpose is to remedy the defects of justice and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy for enforcing that right and it may issue in cases where although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual. These principles mean that an order of mandamus compels the performance of a public duty which is imposed on a person or body of persons but a statute and where that person or body of persons has failed to perform the duty to the detriment of a party who has a legal right to expect the duty. to be performed."
69. The Respondent's submits that it cannot be compelled to perform a public duty to a person who has not adequately presented their case to it and in this particular case the Applicant has not complied with Sections 47 of the Tax Procedures Act.
70. The Respondent further submits that the Applicant's application lacks the essence of an arguable appeal as the Applicant has not presented any evidence that the Respondent has been in breach of its duty under Section 47 of the Tax Procedures Act.
Analysis and determination:
1) Whether the Application has merit.
2) Who shall bear the costs.
Whether the Application has merit.
71. In determining this issue this court is guided by the case of HCJR Case No. E087 of 2021, AAR Insurance vs Public Procurement Administrative Review Board, Secretary IEBC and Zamara Risk and Insurance Brokers Limited Interested Parties (unreported) where the court held that Judicial Review remedies are discretionary and that the court has the discretion to examine the intended Application for prerogative orders. He further stated the court must weigh the need for public authorities to perform their functions with the rights and interests of individuals. If the court finds that the rights and interests of individuals may have been violated, it will grant leave to proceed with a Substantive Motion for Judicial Review.
72. In determining Applications for leave to initiate judicial review proceedings, the court must remain cautious, not to develop into the merits of the case.
73. What the courts does at this stage is to determine whether the Applicant has made out of prima facie case that calls for a further interrogation or deep analysis and consideration before the court can come to a final determination of the issues.
74. All that the Applicant is expected to demonstrate at the leave stage is that the Application does not amount to a post leave litigation exercise that will lead to an abuse of the court. As such an Applicant has to demonstrate that its case is not a frivolous.
75. It is the courts business at this point in the proceedings to ensure that it is not opening up the Justice System frivolous litigation.
76. In the case of Geoffrey Muthinja Kabiru & 2 Others v Samuel Munga Henry & 1756 others[2015] eKLR the Court of Appeal stated that: -
“It is imperative that where a dispute resolution mechanism exists outsi
[...truncated]
1. The Applicant is a society registered under the Society's Act to carry out charitable purposes aimed at promoting the Hindu religion and allied activities from February 1953. Subsequently, the Applicant made an Application for an Income Tax Exemption Certificate which was declined by the Respondent on 15th December 2023.
2. Dissatisfied by the decision of the Respondent, the Applicant being filed an Appeal with the Tax Appeals Tribunal in Tax Appeal No. E077 of 2024; where judgment was entered on 1st August 2024 to the effect that the Applicant was entitled to Income Tax Exemption under Paragraph 10 of the First Schedule to the Income Tax Act, Cap 470.
3. The Respondent then issued the Applicant with an Income Tax Exemption Certificate for the period between 1st October 2024 and 30th September 2029 on 17th March 2025 after frequent follow-ups by the Applicant.
4. It is the Applicants case that subsequently, the Respondent unlawfully levied and collected Income Tax from the Applicant after 1st October 2024 in the excess of KES. 10,413,412.70 in clear disregard of the Applicant's Tax-Exempt status and the holding of the Tax Appeals Tribunal.
5. Despite various attempts and requests made by the Applicant to Respondent on repayment of the unlawfully collected “taxes”, the Respondent willfully neglected or ignored to act on the Applicant's request thus necessitating the present Application.
6. Aggrieved by the foregoing, the Applicant has through the Application dated 5th June 2025 moved this court seeking the following orders;
a) …Spent.
b) Leave be granted to the Applicant to file an Application for Judicial Review by way of an order of mandamus directed to the Commissioner of Domestic Taxes to compel him/her to process and refund the irregularly and unlawfully of over KES. 10,413,412.70 collected from the Applicant.
c) Costs of the Application be provided for.
d) Such further or other relief as the Honourable Court may deem just and expedient to grant.
The Applicant's Submissions;
7. It submits that it is a requirement under Order 53 Rule 1 of the Civil Procedure Rules, that an Applicant must seek leave to institute Judicial Review proceedings.
8. It submits that leave is meant to eliminate at an early stage any applications for judicial review, which are either frivolous, vexatious or hopeless.
9. An Applicant should only be allowed to proceed to the substantive hearing phase if the court is satisfied that there is a case fit for further consideration as discussed in Republic v County Council of Kwale & another; Kondo & 57 others (Exparte) [19981 KEHC 2 (KLR) where the Court held;
“Leave may only be granted therefore if on the material available the court is of the view, without going into the matter in depth, that there is an arguable case for granting the relief claimed by the Applicant the test being whether there is a case fit for further investigation at a full interpartes hearing of the substantive application for judicial review. It is an exercise of the courts discretion but as always is has to be exercised judicially. Has the Applicant satisfied these principles?” (Emphasis supplied)
10. The Applicant submits that the instant application raises such issues as described in Republic v County Council of Kwale (supra). It submits that the issues and illegal acts of the Respondent in this case are so clear that even without delving into the arguments of either parties, a cursory perusal of the evidence before it is sufficiently meritorious to justify an order for leave.
11. It submits that the undisputed that, the Applicant was declared tax-exempt by the Tax Appeals Tribunal on 1st August 2024 under Paragraph 10 of the First Schedule to the Income Tax Act, and was subsequently issued with a valid Tax Exemption Certificate on 17th March 2025 covering the period 1st October 2024 to 30th September 2029.
12. It submits that it is further not in dispute that despite the exemption and Tribunal's judgment, the Respondent unlawfully levied and collected Income Tax from the Applicant after 1st October 2024 in excess of KES. 10,413,412.70.
13. It submits that the Applicant, through its advocates, has persistently written to the Respondent demanding restitution of the illegally collected sums, but the Respondent has failed, refused, and/or neglected to act on the said demands.
14. It submits that the return of the monies illegally collected is a restitution and not a 'refund' for which Section 47 of the Tax Procedures Act is applicable.
15. The taxes envisaged at Section 47 refer to taxes collected at source lawfully. Section 47 of the Tax Procedures Act does not provide for a “refund” of taxes illegally collected from a Taxpayer.
16. It is the Respondent's assertion that the Applicant should have applied for a “refund” of the illegally collected sums under Section 47 of the Tax Procedures Act which provides for offset or refund of overpaid tax.
17. The Applicant submits that Section 47 deals with refund of otherwise legally overpaid taxes. In contrast, in the instant suit, the Commissioner's levying of income tax was without justification and offended the principle espoused under Article 210(1) which provides that no taxes may be imposed, waived or varied except by legislation.
18. Further, it is instructive to note that under Section 47 of the Act, the Respondent ought to have processed the Applicants request within 90 days as prescribed under Section 47 (3) of the Act.
19. The Applicant submits that the Respondent's action/inaction is a blatant disregard of its Constitutional Rights. With that violation, the Applicant is at liberty to institute judicial review proceedings against the Respondent to remedy the wrong presently being perpetrated by the Respondent.
20. It baffles the Applicant that despite the clear and binding judgment of the Tax Appeals Tribunal, and the subsequent issuance of a tax exemption certificate, the Respondent has continued to retain monies illegally collected, and has willfully neglected to address the Applicant's numerous demand letters.
21. It submits that such conduct not only undermines the authority of quasi-judicial bodies but also portrays the Respondent as acting with impunity in disregard of the rule of law.
22. The Applicant submits that in the instant case, the Respondent levied and collected income tax from the Applicant despite a binding decision of the Tax Appeals Tribunal confirming the Applicant's exempt status and despite issuing a Certificate of Exemption.
23. The Respondent acts are plainly ultra vires and call for this Court's intervention.Article 210(1) of the Constitution expressly provides that no tax may be imposed, waived, or varied except as provided by legislation.
24. It submits that to collect tax without legal justification is therefore unconstitutional and amounts to a violation of the Applicant's Constitutional rights.It submits that Section 47 is concerned with refund of tax lawfully assessed and collected in excess.
25. The Respondent's decision to continue levying and collect taxes from the Applicant despite being issued with Income Tax Exemption Certificate was unconstitutional and unlawful from the outset.
26. The Applicant position is that what it seeks is not a refund under statute, but restitution of money illegally collected.
27. It further submits that it is trite law that exhaustion of statutory remedies does not apply where a claim is founded on illegality, unconstitutionality, or fundamental rights violations.
28. Reliance is placed in the case of Fleur Investments Limited v Commissioner of Domestic Taxes & another [20181 KECA 341 (KLR) where it was held;
“Whereas courts of Law are enjoined to defer to Specialised Tribunals and other Alternative Dispute Resolution Statutory bodies created by Parliament to resolve certain specific disputes, the court cannot, being a bastion of Justice, sit back and watch such institutions ride roughs110d on the rights of citizens who seek refuge under the Constitution and other legislations or protection. The court is perfectly. in order to intervene where there is clear abuse of discretion by such bodies, where arbitrariness, malice, capriciousness and disrespect of the Rules of natural justice are manifest. Persons charged with statutory powers and duties ought to exercise the same reasonably and fair” (Emphasis supplied)
29. The Applicant submits that as a taxpayer it had a legitimate expectation that upon the Tax Appeal Tribunal's Judgment and subsequent issuance of an Income Tax Exemption Certificate, the Respondent would cease levying tax.
30. The Applicant's expectation was both reasonable and legally enforceable.
31. In Keroche Industries Limited V Kenya Revenue Authority & 5 Others [2007] KEHC 3680 (KLR) where it was held that;
“Legitimate expectation is based not only on ensuring that legitimate expectations but the parties are not thwarted, but on a higher public interest beneficial to all including the Respondents which is the value or the need of holding authorities to promises and practices they have made and acted on and by so doing upholding responsible public administration. This in turn enables people affected to plan their lives with a sense of certainty, trust, reasonableness and reasonable expectation. An abrupt change as was intended in this case, targeted at a particular company or industry is certainly abuse power. Stated simply legitimate expectation arises for example where a member of the public as a result of a promise or Other conduct expects that he will be treated in one way and the public bod wishes to treat him or her in a different way... " (Emphasis supplied)
32. The Respondent has not denied that it continued collecting taxes from the Applicant. Despite issuing the Applicant with an Income Tax Exemption Certificate and knowledge of the Applicant's exempt status, the Respondent willfully elected to violate the Applicant's constitutional rights.
33. The Applicant submits that Respondent's refusal to act on repeated demand letters from the Applicant is further evidence of administrative inertia and bad faith. It submits that the application this raises issues of public accountability in tax administration.
34. If public bodies are permitted to retain taxes illegally levied, it would erode public confidence in the fairness of the tax system and undermine the rule of law.
The Respondent’s Case;
35. The Respondent opposes the Application and pleads that the Application is barred by the doctrine of exhaustion.
36. According to the Respondent, the Applicant ought to have invoked Section 47 of the Act which deals with the refunds. It confirms that there were proceeding that at the tribunal.
37. The Respondent is concerned that the Applicant has failed to abide by the advice that it gave the Applicant in relation to what forms the subject of the Application that is be for the court.
The Respondent’s Submissions;
38. The Respondent submits that the Applicant filed an Appeal at the Tax Appeals Tribunal in TAT Appeal No. E077 of 2024 between Shree Cutchi Leva Patel Samaj Vs Commission of Domestic Taxes contesting the Respondent's decision declining their application for exemption from tax, pursuant to Paragraph 10 of the First Schedule to the Income Tax Act.
39. It submits that the Tribunal rendered its decision on 1st August 2024, allowing the Applicant's appeal and directed the Respondent to issue the Applicant with an exemption certificate within 60 days of the delivery of the judgment.
40. The Respondent dissatisfied with the Tribunal's decision appealed at the High Court in High Court Income Tax E.244 of 2024 but the same was not successful and the Court disallowed the Respondent's application for stay in a ruling dated 6th February 2025 and ultimately the matter was withdrawn by the Respondent.
41. In compliance with the Tribunal's decision, the Respondent approved the Applicant's exemption on 13th February 2025 with an effective date of 1st October 2024.
42. The Applicant alleges that before the issuance of the exemption certificate, they paid 1Kshs 10,413,412.70 as income tax. Upon the grant of the exemption certificate, the Applicant sought a refund of the amount paid on the basis of the Tribunal's order.
43. It submits that on 11th March 2025 the Applicant wrote to the Respondent seeking a refund of Kshs 10,413,412.70 allegedly collected by the Respondent before the issuance of the exemption certificate.
44. On 14th March 2025 the Respondent wrote to the Applicant informing them to apply for the tax refund if any under Section 47 of the Tax Procedures Act for the purposes of ascertaining whether the amounts are due as claimed or not.
45. It is the said communication and decision that has necessitated the Applicant's filing of the instant application seeking leave be granted to the Applicant to file an application for Judicial Review by way of an order of mandamus directed to the Commissioner of Domestic Taxes to compel him/her to process and refund the irregularly and unlawfully of over KES.10,413,412.70 collected from the Applicant.
46. The Respondent submits that the Honourable Court is bereft of jurisdiction to determine the application as the Applicant's application seeking leave offends the doctrine of exhaustion of statutory administrative remedies as provided under Section 47 of the Tax Procedures Act and Section 9 of the Fair Administrative Actions Act.
47. It places reliance on the Supreme Court case of Ngugi v Commissioner of Lands: Owindo & 63 others (Interested Parties) [20231 ICESC 20 (ICLR) where the Court held that;
6. Jurisdiction goes to the root o an cause or dispute be ore a court of law. A court must exercise restraint to avoid overstepping its constitutional role in order to maintain its legitimacy. If a court has no jurisdiction, a judgment rendered therein does not adjudicate the dispute. It does not bind the arties nor can it be made the foundation of any right. It is a nullity without life or authority. In short, it is coram non judice and amounts to a nullity because, as Nyarangi, JA famously said in the locus classicus, Owners of the Motor Vessel "Lillian S" v Caltex Oil, (Kenya) Ltd [19891 ICLR 1,
“jurisdiction is everything. Without it, a court has no power to make one more step.”
37. It is, therefore a basic rule of procedure that jurisdiction must exist when the proceedings are initiated. Because the question of jurisdiction is so fundamental, a limitation on the authority of the court, it can be raised at any stage of the proceedings by any party or even by the court suo motu. As a matter of practice, this court has a duty of jurisdictional in ui to satis itsel that it is ro erlt seized o an matter before it.
48. The application flows from request for refund of amounts (taxes) allegedly paid in excess by the Applicant's to the Respondent. It is baffling for the Applicant to indicate that there is a process for refund of lawfully and unlawfully collected taxes.
49. The Respondent submits that if indeed the Applicant has overpaid taxes then the Applicant needs to adhere to Section 47 of the TPA which is the known law for refund of any taxes overpaid to the Respondent.
50. The Respondent submits that there exist statutory provisions on how taxes paid in excess ought to be refunded to a taxpayer and to this end the Respondent.
51. Section 47 of the Tax Procedures Act which provides that;
Offset or refund of overpaid tax
(1) Where a taxpayer has overpaid a tax under any tax law. the taxpayer may apply to the Commissioner in the prescribed form—
(a) to offset the overpaid tax against the taxpayer's outstanding tax debts and future tax liabilities including instalment taxes and input value added tax; or
(b) for a refund of the overpaid tax—
(i) in the case of income tax, within five years from the date on which the tax was overpaid; or
(ii) in the case of any other tax, within twelve months from the date on which the tax was overpaid.
(2) The Commissioner shall ascertain and determine an application under subsection (1) within ninety days and where the Commissioner ascertains that there was an overpayment of tax—
(a) in the case of an application under subsection (l)(a), apply the overpaid tax to such outstanding tax debts or future tax liability; and (b) in the case of an application under subsection (l)(b), refund the overpaid tax within a period of six months from the date of ascertainment and, if the Commissioner fails to refund, the overpaid tax shall be applied to offset the taxpayer's outstanding tax debt or future tax liabilities.
(3) Where the Commissioner fails to ascertain and determine an application under subsection (1) within ninety days, the same shall be deemed ascertained and approved.
(4) The Commissioner may, for purposes of ascertaining the validity of an application under subsection
(1), subject the application to an audit.
44) Where an application under subsection (1) has been subjected to an audit under subsection (4), the Commissioner shall ascertain and determine the application within one hundred- and twenty-days failure to which, the application shall be deemed to have been ascertained and approved.
(5) Where the application is for a refund of tax under subsection (l)(b), the Commissioner shall apply he overpayment in the following order— (a) in payment of any other tax owing by the taxpayer under the specific tax law;
(b) in payment of a tax owing by the taxpayer under any other tax law; and
(c) any remainder shall be refunded to the taxpayer.
(6) Where the Commissioner fails to refund the overpaid tax within the period specified in subsection (2)(b), the amount due shall attract interest of one per cent for each month or part thereof during which the amount remains unpaid.
(7) Where the Commissioner notifies a taxpayer that an application under subsection (l)(a) has been ascertained and applies the overpaid tax liability to offset an outstanding tax in accordance with subsection (2)(a), interest or penalties shall not accrue on the amount applied to offsetting the outstanding tax liability from the date of the notification.
(8) Where the Commissioner has applied the overpaid tax to offset an outstanding tax liability under subsection (2)(a), any outstanding tax after such application shall accrue interest and penalties in accordance with this Act.
(9) Notwithstanding any other provision of this section, where a person overpays an instalment tax due under section 12 of the Income Tax Act (Cap. 470), the Commissioner shall apply the overpaid tax to offset the taxpayer's future instalment tax liability.
(10) Where, after the application of the overpaid tax under subsection (9), the Commissioner later determines that there was no overpayment of instalment tax, the amount of the tax that was used to offset the taxpayer's future instalment tax liabilities under subsection (9) shall be treated as a tax due to the Commissioner in the subsequent tax period.
(11) The amount due under subsection (10) shall be due from the date that the Commissioner applied that amount to offset an instalment tax liability.
(12) The Commissioner shall notify the taxpayer in writing of the amount due under subsection (10) and specify in the notification
(a) the interest on the amount due; and
(b) any penalties due in respect of the amount due.
(13) A person aggrieved by a decision of the Commissioner under this section may appeal to the Tribunal within thirty days after being notified of the decision.
52. From the reading of Section 47 of the Tax Procedures Act, the Respondent submits that the Applicant has not complied with the provisions of Section 47(1) of the Act, since the Applicant has not made any application to the Respondent in the prescribed form for a refund save for the letter dated 11th March 2025 which is not the prescribed form required under the Act.
53. The Respondent further submits that even if the said letter dated 11th March 2025 is an application for refund of taxes then again, this Court cannot assume jurisdiction as Section 47 (13) of the TPA confers jurisdiction upon the Tax Appeals Tribunal.
54. The Respondent further submits that the Tribunal did not make any order as to refund of taxes but only made orders to the grant of an exemption certificate.
55. The Respondent thus submits that these two processes are two distinct processes governed by two different Acts of Parliament, exemptions being governed by the Income Tax Act whereas refunds are governed by the Tax Procedures Act.
56. The Respondent thus submits that despite informing the Applicant of their rights to make an application for refund under Section 47 of the Tax Procedures Act, the Applicant now rushes to this Honourable Court in breach of statutory processes without indicating why they have chosen to bypass statutory provided mechanisms.
57. It places reliance on the case of Geoffrey Muthiga Kabiru & 2 Others - vs- Samuel Munga Henry & 1756 others [20151 eKLR, where the Court of Appeal stated that:
It is imperative that where a dispute resolution mechanism exists outside Courts. The same be exhausted before the jurisdiction of the Courts is invoked. Courts ought to be fora of last resort and not the first port of call the moment a storm brews...The exhaustion doctrine is a sound one and serves the purpose of ensuring that there is a postponement of judicial consideration of matters to ensure that a party is first of all diligent in the protection of his own interest within the mechanisms in place for resolution outside the Courts. The Exparte Applicants argue that this accords with Article 150 of the Constitution which commands Courts to encourage alternative means of dispute resolution.
58. It submits that the Applicant ought to have first made an application pursuant to Section 47(1) of the Tax Procedures Act and if dissatisfied by the Respondent then they should move the Tribunal pursuant to Section 47(13) of the Tax Procedures Act.
59. The Respondent thus submits that moving this Honourable Court at this particular time when the Applicant has not exhausted the statutory provided administrative mechanisms then the present application for writ of mandamus is premature.
60. Section 9 of the Act which provides;
9(1) Subject to subsection (2), a person who is aggrieved by an administrative action may, without unreasonable delay, apply for judicial review of any administrative action to the High Court or to a subordinate court upon which original jurisdiction is conferred pursuant to Article 22(3) of the Constitution.
9(2) The High Court or a subordinate court under subsection (1) shall not review an administrative action or decision under this Act unless the mechanisms including internal mechanisms for appeal or review and all remedies available under any other written law are first exhausted.
9(3) The High Court or a subordinate Court shall, if it is not satisfied that the remedies referred to in subsection (2) have been exhausted, direct that Applicant shall first exhaust such remedy before instituting proceedings under subsection (1).
9(4) Notwithstanding subsection the High Court or a subordinate Court may, in exceptional circumstances and on application by the Applicant, exempt such person from the obligation to exhaust any remedy the court considers such exemption to be in the interest of justice.
9(5) A person aggrieved by an order made in the exercise of the judicial review jurisdiction of the High Court may appeal to the Court of Appeal.
61. The Respondent further submits that where a party is aggrieved of an administrative action, Section 9(2) is instructive to the extent that mechanisms available under any other written law are first exhausted before moving this Court.
62. The Respondent submits that the Applicant has not exhausted all remedies available to them as provided for under Section 47(1) and 47(13) of the Tax Procedures Act and Section 9(4) of the Fair Administrative Actions Act.
63. The Respondent seeks to place reliance on the case of Speaker of National Assembly v Karume [1992] ICLR 21 where the Court of Appeal held as follows;
“Where there is a clear procedure for redress of any particular grievance prescribed by the Constitution or an Act QC Parliament, that procedure should be strictly followed. Accordingly, the special procedure provided by any law must be strictly adhered to since there are good reasons for such special procedures”
64. In the case of Night Rose Cosmetics (19Z2) Ltd v Nairobi County Government & 2 others [20181 eKLR where Justice Mativo as he then was held that;
“Our jurisprudential policy is to encourage parties to exhaust and honour alternative forums of dispute resolution where they are provided for by statute. It is also settled that the exhaustion doctrine is only applicable where the alternative forum is accessible, affordable, timely and effective. A remedy is considered available if the Petitioner can pursue it without impediment, it is deemed effective if it offers a prospect of success and is found sufficient if it is capable of redressing the complaint fin its totality] ...a remedy is considered available only if the Applicant can make use of it in the circumstances of his case.”
65. It is the Respondent's submission that the Applicant has only written to the Respondent's requesting for a refund and the Respondent reverted back informing the Applicant to comply with the provisions of Section 47 and prove the existence of the said overpaid taxes.
66. The Respondent relies in the decision in Republic v County_ Council of Kwale & another; Kondo & 57 others (Exparte) [1998] KEHC 2 (ICLR) where Justice Waki as he then was held that;
“The purpose of the application for leave to apply for judicial review is firstly to eliminate at an early stage any applications for judicial review which are either. Frivolous, vexatious or hopeless and secondly to ensure that the Applicant is only allowed to proceed to substantive hearing if the court is satisfied that there is a case fit for further consideration.”
67. The Respondent submits that the Applicant has not shown that they have made any application for refund as provided for under the Section 47 of the Tax Procedures Act neither has the Applicant shown the inability by the Respondent to issue a decision.
68. In the case of Republic vs. Kenya National Examinations Council Exparte Gathengi & 8 Others Civil Appeal No 234 of 1006 the Court of Appeal cited, with approval, Halsbury's Law of England, 4th Edn. Vol. 7 p. 111 para 89 thus:
"The order of mandamus is of most extensive remedial nature and is in form, a command issuing from the High Court of Justice, directed to any person, corporation or inferior tribunal, requiring him or them to do some particular thing therein specified which appertains to his or their office and is in the nature of a public duty. Its purpose is to remedy the defects of justice and accordingly it will issue, to the end that justice may be done, in all cases where there is a specific legal right and no specific legal remedy for enforcing that right and it may issue in cases where although there is an alternative legal remedy, yet that mode of redress is less convenient, beneficial and effectual. These principles mean that an order of mandamus compels the performance of a public duty which is imposed on a person or body of persons but a statute and where that person or body of persons has failed to perform the duty to the detriment of a party who has a legal right to expect the duty. to be performed."
69. The Respondent's submits that it cannot be compelled to perform a public duty to a person who has not adequately presented their case to it and in this particular case the Applicant has not complied with Sections 47 of the Tax Procedures Act.
70. The Respondent further submits that the Applicant's application lacks the essence of an arguable appeal as the Applicant has not presented any evidence that the Respondent has been in breach of its duty under Section 47 of the Tax Procedures Act.
Analysis and determination:
1) Whether the Application has merit.
2) Who shall bear the costs.
Whether the Application has merit.
71. In determining this issue this court is guided by the case of HCJR Case No. E087 of 2021, AAR Insurance vs Public Procurement Administrative Review Board, Secretary IEBC and Zamara Risk and Insurance Brokers Limited Interested Parties (unreported) where the court held that Judicial Review remedies are discretionary and that the court has the discretion to examine the intended Application for prerogative orders. He further stated the court must weigh the need for public authorities to perform their functions with the rights and interests of individuals. If the court finds that the rights and interests of individuals may have been violated, it will grant leave to proceed with a Substantive Motion for Judicial Review.
72. In determining Applications for leave to initiate judicial review proceedings, the court must remain cautious, not to develop into the merits of the case.
73. What the courts does at this stage is to determine whether the Applicant has made out of prima facie case that calls for a further interrogation or deep analysis and consideration before the court can come to a final determination of the issues.
74. All that the Applicant is expected to demonstrate at the leave stage is that the Application does not amount to a post leave litigation exercise that will lead to an abuse of the court. As such an Applicant has to demonstrate that its case is not a frivolous.
75. It is the courts business at this point in the proceedings to ensure that it is not opening up the Justice System frivolous litigation.
76. In the case of Geoffrey Muthinja Kabiru & 2 Others v Samuel Munga Henry & 1756 others[2015] eKLR the Court of Appeal stated that: -
“It is imperative that where a dispute resolution mechanism exists outsi
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