Kenya’s Court of Appeal has lifted an order issued in June suspending the implementation of the Finance Act 2023.
A bench of three judges led by Justices Mohammed Warsame, Kathurima M’Inoti and Hellen Omondi ruled that:
“We have no doubt in our mind that the Finance Act and the Appropriation Act are interdependent. While the former provides for generation of the funds, the latter provides for the expenditure,” the judges said.
“There can be no expenditure where the mode of generation of the funds has not been provided for.”
The court ruling discussed the appeal of a conservatory order issued by the High Court suspending the implementation of the Finance Act 2023.
These include the Income Tax Act, Value Added Tax Act, Excise Duty Act, Tax Procedures Act, Tax Appeals Tax Act, Employment Act 2007, Miscellaneous Fees and Levies Act 2016, Betting, Gaming, and Lotteries Act, Kenya Roads Board Act, Kenya Revenue Authority Act, Alcoholic Drinks Control Act, Unclaimed Financial Assets Act, Statutory Instruments Act 2013, Special Economic Zones Act, Export Processing Zones Act and Retirement Benefits (Deputy President and Designated State Officers) Act.
The appeals court’s ruling considered whether the appeal is arguable and whether the conservatory order would render the appeal nugatory.
The Judges found that many contested issues needed to be evaluated and determined upon hearing the appeal, including the presumption of constitutionality of a statute, judicial overreach, and the doctrine of separation of powers.
The court concluded that there are indeed arguable points in the intended appeal and that the nugatory aspect is contested.
The ruling does not draw a definitive conclusion on these issues but rather leaves them to be argued in the appeal.
The applicants argued that the damage caused by the conservatory orders is irreversible, while the respondents argued that reimbursement of taxes is impossible.
“As there are no saving provisions in the Finance Act, 2023, the repealed provisions of the Finance Act 2022 has the effect of affecting revenue collection leading to service disruptions for already budgeted revenue,” Treasury CS Prof Njuguna Ndung’u said in his affidavit.
The court considered the unique circumstances of the case and concluded that the applicants had satisfied the twin principles for the grant of the orders sought.
The court allowed the application and lifted the order suspending the Finance Act 2023 pending the hearing and determination of the appeal.
“The upshot of our decision is that the application has merit and the same is allowed as prayed with the effect that the order made on 10th July 2023 suspending the Finance Act 2023, and the order prohibiting the implementation of the Finance Act 2023, be and is hereby lifted pending the hearing and determination of the appeal,” the judges said.