Court declares tax on non-alcoholic beverages unconstitutional


Court declares tax on non-alcoholic beverages unconstitutional
Soft drink. PHOTO| COURTESY

In Summary

  • The High Court has declared a law imposing tax on non-alcoholic beverages, food supplements and cosmetics as unconstitutional.
  • In a bid to widen the tax net, the Kenya Revenue Authority (KRA) had sought to impose excise duty on bottled water, juices, soda as well as other non-alcoholic beverages and cosmetics.
  • Activist Okiya Omtatah moved to court claiming that the new system would illegally and unconstitutionally expose manufacturers, importers and consumers to the burden of meeting extra production costs.

The High Court has declared a law imposing tax on non-alcoholic beverages, food supplements and cosmetics as unconstitutional.

Judge John Mativo on Monday ruled that the Legal Notice 110 of 18th June, 2013 and gazette Notice No.12856 of 5 September, 2013 were enacted in a manner inconsistent with the provisions of the constitution and the statutory instruments Act, hence they were null and void.

In a bid to widen the tax net, the Kenya Revenue Authority had sought to impose excise duty on bottled water, juices, soda as well as other non-alcoholic beverages and cosmetics.

KRA had directed manufacturers to affix excise duty stamps on their products as way of ensuring they pay taxes while giving the taxman an indication of goods sold so as to determine the tax they are required to pay.

In his judgment Justice Mativo quashed the award of tender number KRA/HQS/DP-423/2014/2-15 for the Excisable Goods Management Systems awarded by KRA.

“A declaration is hereby issued that public participation must apply to enactment of all subsidiary legislation and policy decisions through the degree and form of such participation will depend on the peculiar circumstances of the case,” the court ruled.

Activist Okiya Omtatah moved to court claiming that the new system would illegally and unconstitutionally expose manufacturers, importers and consumers to the burden of meeting extra production costs.

“Contrary to the requirements of the Fair Administrative Action Act 2015, the EGMS was arbitrarily imposed without public participation involving all stakeholders, including, the affected manufacturers, importers, and consumers,” Omtatah said in his petition.

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