High Court rules that Tax Tribunal cannot stay its proceedings.

The High Court has ruled that Tax Appeals Tribunal (TAT) does not have jurisdiction to stay its own proceedings on account of other proceedings pending in the High Court.

The court issued the verdict following Kenya Revenue Authority’s appeal after TAT dismissed KRA’s application to enforce a settlement agreement reached with a taxpayer.

KRA had moved TAT to enforce a settlement agreement entered with the taxpayer through an Alternative Dispute Tribunal (ADR) process.

In the application, KRA wanted the tribunal to direct and order that ADR Agreement was a legally binding agreement on the issues agreed upon and was capable of enforcement.

In the appeal, the High Court ruled that TAT cannot stay its proceedings for an indeterminate period of time on the basis of a suit whose outcome is unknown.

In his judgement, Justice David Majanja further held that ADR Agreement was binding and enforceable.

The arises from TAT’s move to stay its own proceedings pending a case filed by Ethics and Anti-Corruption Commission (EACC) against Estama Investments Limited (above referred as the taxpayer).

Before EACC filed the case against Estama Investment Ltd, KRA had entered an agreement with the company through the ADR process and the company was supposed to pay Kshs. 150.9 million.

As a result, Estama Investments Limited requested KRA to await the determination of the case stating that the judgement will affect the amount of taxes payable under the ADR Agreement.

At the TAT, the company argued that enforcement of the ADR Agreement would be prejudicial and amounts to unfair administrative action in the face of its pending case with the EACC. TAT dismissed the application on 31st March 2020.

KRA argued before High Court that it was not party to the pending case between EACC and Estama Investment Limited and that it was only the High Court which can stay the enforcement of the ADR Agreement.

Following the High Court’s decision, KRA can now move to collect the Kshs. 150.9 million taxes from Estama Investment Limited.

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