Judgment summary
The Applicant, Gicheha Investments Limited, filed a Notice of Motion seeking to lift or stay an Agency Notice issued by the Respondent to Stanbic Bank Kenya Limited, requiring payment of KES 8,278,407 (para 1).
The Applicant argued it had no outstanding tax liability, having paid tax due for 2014 and fully settled its position, with a tax credit of KES (1,340,514) for 2015, and that the Agency Notice was issued without a prior assessment or objection process as required under the Tax Procedures Act (para 2).
The Respondent did not file a response to the Application (para 27).
The Tribunal found that an appeal, TATC E513 of 2026, had been lodged against the Agency Notice, and pursuant to Section 18 of the Tax Appeals Tribunal Act, it was appropriate to stay the Respondent's enforcement actions to preserve the appeal pending its hearing and determination (paras 29-32).
Background
The Respondent issued an Agency Notice addressed to CFC Stanbic Bank Limited on 3rd March 2026 in respect of Income tax assessments (para 29a).
On 16th April 2026, the Applicant lodged its Notice of Appeal, and on 30th April 2026, it lodged its Memorandum of Appeal against the Agency Notice dated 3rd March 2026, in Appeal TATC E513 of 2026 (para 29b).
The Applicant filed the Notice of Motion dated 29th April 2026 and filed on 30th April 2026, supported by an Affidavit sworn by Melvin Opot, the Applicant's head of finance, dated 29th April 2026 and filed on 30th April 2026 (paras 1-2).
Core dispute
The issue for determination, as framed by the Applicant, was whether the Agency Notice issued by the Respondent was lawful, having regard to the provisions of the Tax Procedures Act (para 4).
The Applicant argued that under Section 42(1) of the Tax Procedures Act, an Agency Notice could only be issued where a taxpayer is liable to pay tax and has not paid it, or will become liable and the Commissioner reasonably believes the tax will not be paid when due (para 6). It contended that neither condition applied, as there had been no prior assessment, objection, or objection decision, and the tax was in dispute (paras 7-10).
The Applicant further relied on Section 42(14)(e) of the Tax Procedures Act, submitting that the Commissioner is prohibited from issuing a notice under Section 42 where the taxpayer has appealed, and that the Agency Notice itself was the subject of Appeal TATC E513 of 2026 (paras 20-25).
The Applicant cited Katahira & Engineers International Limited v Kenya Revenue Authority & Others (Judicial Review Application No. E022 of 2026) [2026] KEHC 4661 (KLR) (28 April 2026), which held that an assessment process and written demand must precede issuance of an agency notice (para 11).
Court findings
The Tribunal noted the chronology of events, including the issuance of the Agency Notice on 3rd March 2026 and the subsequent lodging of the Notice of Appeal on 16th April 2026 and Memorandum of Appeal on 30th April 2026 (para 29).
The Tribunal referred to Section 18 of the Tax Appeals Tribunal Act, which permits the Tribunal to stay or otherwise affect the implementation of a decision under review where an appeal has been filed, for the purpose of securing the effectiveness of the proceedings and determination of the appeal (para 30).
The Tribunal relied on its previous decision in Shop and Deliver Limited v Commissioner of Domestic Taxes [Tax Appeal No. 141 of 2019], which held that the filing of an appeal is a ground for stay by the Tribunal, to avoid a situation where monies are collected only to later find the demand erroneous (para 31).
Being cognizant of the pending Appeal TATC E513 of 2026 against the Agency Notice, the Tribunal found it appropriate, pursuant to Section 18 of the Tax Appeals Tribunal Act, to stay the Respondent's enforcement actions in respect of the appealed decision, so as to preserve the Appeal pending its hearing and determination (para 32).
Outcome
The Tribunal found the Application merited (para 33).
The Notice of Motion dated 29th April 2026 and filed on 30th April 2026 was allowed (para 33a).
The Agency Notice dated 3rd March 2026 was lifted unconditionally pending the hearing and determination of the Appeal (para 33b).
No orders as to costs were made (para 33c).
Major issues / areas of contention
- Whether the Agency Notice issued by the Respondent under Section 42(1) of the Tax Procedures Act was lawful in the absence of a prior assessment or demand.
- Whether the conditions under Section 42(1) of the Tax Procedures Act, requiring unpaid tax or reasonable belief of non-payment, were met.
- Whether Section 42(14)(e) of the Tax Procedures Act barred the Respondent from issuing or maintaining the Agency Notice once an appeal had been filed.
- Whether the Applicant was entitled to a stay of the Agency Notice pending determination of Tax Appeal No. E513 of 2026, pursuant to Section 18 of the Tax Appeals Tribunal Act.