In the Constitutional Petition No. 190 of 2018, Car Importers Association of Kenya sued The Kenya Revenue Authority and two others for publishing the Current Retail Selling Price for imported cars without conducting stakeholder/public participation and discrimination in applying the said prices among different stakeholders in car importation industry. In the petition the Cars Importers Association of Kenya argued that Kenya Revenue Authority published the Current Retail Selling Price that became effective on 5th February 2018 which its members together with clearing and forwarding agents use for the purpose of calculating import duty payable to KRA.

The car importers association of Kenya contented that there was no public participation in formulating the said selling prices as well as discrimination in applying them. As the Petitioner, Car Importers Association of Kenya argued that: the CRSP was introduced by the law to ensure that taxes payable by car importers was fair, reasonable, uniform and neutral to all importers of used motor vehicles in Kenya and should reflect commercial reality to the extent possible. Contrary to how KRA had formulated the said prices. 

The issues for determination before the Court included:

  • Whether or not there was stakeholder participation in the formulation of CRSP which took place on 5 Feb, 2018?
  • Whether or not the CRSP values which took effect on 5 Feb, 2018 should be declared a nullity?

On the issue of stakeholder participation the court observed as follow:

That the importation of motor vehicle is something which affects the public at large.  As such, while coming up with the CRSP values (regulations) which determine the amount of taxes payable for imported motor vehicles the public must be involved.

 In particular, the Car Importers Association of Kenya which is the association governing car importers, should have been given a chance to express its views.  As state organs, KRA was under obligation to ensure that all the stakeholders in the car importation industry were involved in the formulation of the CRSP values.  However, it did not consider this constitutional imperative an important consideration hence the said CRSP were declared unconstitutional for violation of article 2(4) of the Constitution in the manner in which they were passed.

On whether or not the said CRSP should be declared a nullity? The court had this to say:

This question is important because transactions have taken place with these CRSP values since 5.2.18.  A declaration of unconstitutionality of the process would lead to a lot of inconveniences which this Court should not allow.  This Court is aware that prices of motor vehicles keep changing and that the CRSP of 5.2.18 may soon be outdated and a new one brought in as a result of price changes.  It would therefore not be prudent to nullify the transactions which have so far proceeded on the basis of CRSP of 5.2.18. However, the Respondents would be constitutionally obligated to comply with the law on public participation when formulating the next CRSP.

The court then proceeded to issue a declaration that for the purposes of continuity and in the interest of the public the transactions already effected via the said CRSP shall remain valid for all intents and purposes, and that the said CRSP shall continue to apply until such a time as KRA will establish a new CRSP value in accordance with the law within twelve (12) months from the date of the Judgment.

Drafted by Andrew Wanga and Kevin Muthini

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