Kenya Revenue Authority (KRA) headquarters, Times Tower, Nairobi.

The Court of Appeal has rejected a request to lift an order preventing the Kenya Revenue Authority (KRA) from doubling excise stamp taxes on alcohol, bottled water, and cosmetics.

The regulations, published earlier this year, aimed to revise the pricing of excise stamps for excisable goods by raising their costs.

The proposed regulations aim to raise the fees for excise stamps applicable to bottled water, juices, and other non-alcoholic beverages, cosmetics, alcoholic beverages, tobacco and nicotine products, as well as export products.

In May, the court halted KRA from enacting the regulations following a challenge by the LSK, which contended that the implementation posed a threat to the survival of manufacturing businesses dealing in consumables. The argument was based on the absence of justification for increasing the cost of revenue stamps.

Subsequently, the tax authority moved to the Court of Appeal, arguing that it faced potential revenue loss in terms of acquiring excise stamps, as it would be compelled to use taxes to procure the same.

A panel of three Appellate judges said they were not convinced by KRA’s argument, highlighting that High Court Judge Hedwig Ong’udi did not prevent the tax authority from collecting revenue using the existing stamps, even while the petition is pending determination.

“Therefore, the claim that the appeal will be rendered nugatory on account of emasculation of its tax collection mandate is a far cry in the wild; and cannot hold,” Justices Helen Omondi, John Mativo, and Grace Ngenye ruled.

In the ruling, the judges emphasized that state organs are obligated to fulfill their mandates in accordance with the Constitution and established statutory laws.

“The exercise of this mandate contrary to the law not only prejudices the petitioner but the public at large. In this matter, I am persuaded that the public interest outweighs the respondent’s mandate and tilts in favour of the petitioner. Therefore, putting the above in mind, I am satisfied that the principles of granting conservatory orders sought in this matter have been satisfied as will aid in meeting the ends of justice,” the judge said.