TAXPAYERS’ RIGHTS AND ADMINISTRATIVE JUSTICE: A DEEP DIVE INTO THE HIGH COURT’S DECISION IN GEBERY LIMITED VS KENYA REVENUE AUTHORITY.

The High Court has once again reaffirmed the importance of due process, fair administrative action and strict compliance with statutory procedures by government agencies. In a judgment delivered in Gebery Limited v Kenya Revenue Authority (Petition E021 of 2024) KEHC 16807 (KLR) (14 November 2025) (Judgment), the Court quashed a KRA penalty order of Kshs. 300,000, declaring it unconstitutional, illegal and procedurally flawed.

This decision is a stark reminder that tax enforcement must be anchored on the law, procedurally sound, transparent and respectful of taxpayers’ rights.

Background

On 15th April 2024, officers from the Kenya Revenue Authority (KRA) attempted to forcibly enter Gebery Limited’s business premises. The said officers subsequently issued a Notice of Offence, citing various alleged tax violations and requesting various documents, including POS summaries, monthly Z-reports, Cash Sale books and statements of accounts.

Gebery protested the actions of KRA and the allegations contained in the Notice of Offence. In response to the protest, KRA remained adamant that the alleged offences had been committed. The Authority summoned the directors of the company and/or a representative for what they called “case settlement”. The Authority insisted that when honouring the summons, the directors and/or representative provide the documents requested in the notice of offence. The company sent a representative on its behalf to only provide the documents requested in the notice of offence.

However, in an unexpected turn, KRA issued an Order for Settlement imposing a fine of Kshs. 300,000, allegedly based on a “request for settlement” signed by the representative sent to avail the documents requested in the notice of offence. The representative denied ever requesting for compounding of offences or having the authority to do so.

Gebery challenged the penalty through an objection, and when KRA upheld the penalty, the company filed a constitutional petition challenging both the Order of Settlement and subsequent Objection Decision issued by KRA.

Key legal issue

At the heart of the case was Section 109 of the Tax Procedures Act, which governs how KRA can compound a tax offence. The said Section provides that KRA can only compound the offence if: -

i.  The taxpayer admits in writing that they committed the offence; AND

ii.  The taxpayer expressly requests the Commissioner to compound the offence;

iii.  A compounding committee of not less than three officers considers the application for the compounding of offences;

iv. An order by the Commissioner must:

a. Be in writing under the hand of the Commissioner and the offender and witnessed by an officer;

b. Specify the name of the offender, the offence committed, the sum of money ordered by the Commission to be paid, and the date or dates on which the payment is to be made;

c. Attach the written admission;

d. Be served on the taxpayer;

The Court found that none of the above requirements were satisfied by KRA. There was no written admission, no evidence of a request for compounding, and no minutes or proof that a compounding committee was ever constituted, and that KRA did not attach the admission allegedly made by Gebery, the Petitioner in the matter. The Court also found and held that the representative who allegedly signed documents, had no authority beyond delivering the documents requested. The Court held that any actions taken outside his mandate could not bind the company.

The court also found that KRA’s actions violated the Petitioner’s right to fair administrative action. KRA never followed the right procedure in arriving at its decision to fine the Petitioner Kshs. 300,000. It never afforded the Petitioner an opportunity to appear before a compounding committee, which actions infringed on the Petitioner’s right to fair administrative action guaranteed under Article 47 of the Constitution.

Court’s determination

The High Court declared that the Order for Settlement dated 9th May 2024 and the subsequent Objection Decision dated 28th May 2024 were unfair, unreasonable, procedurally flawed, illegal, unconstitutional, null and void ab initio as they contravened the provisions of the Tax Procedures Act and the Constitution of Kenya.

The Court also affirmed that the Petitioner is entitled to due process, fair administrative action, fair hearing and access to justice as guaranteed and safeguarded under the Constitution.

The Court quashed the Order for Settlement and the subsequent Objection Decision.

The Court further prohibited KRA from enforcing or acting on the penalty imposed in the impugned Order of Settlement.

Key takeaways for businesses and taxpayers

1. KRA must follow the law, fair administrative action is not optional - Even in tax enforcement, KRA must strictly adhere to statutory procedures. Any deviation can invalidate its actions.

2. Written admission is mandatory for compounding of offences - No penalty can be imposed through compounding unless the taxpayer themselves admits the offence in writing and requests compounding.

3. Representatives must have express authority – a representative cannot bind a principal for actions done outside the scope of his mandate.

4. Businesses should respond formally and document everything - written protests, proper authorization letters and preserving correspondence can be critical in disputes of such nature.

Conclusion

The above judgment is a powerful affirmation that taxpayer rights are protected under the Constitution and that administrative bodies must act lawfully and fairly.

For Kenyan businesses, the ruling underscores the importance of understanding and asserting their rights when dealing with tax compliance issues.

A full copy of the judgment can be accessed on the following link: -

https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/16807/eng@2025-11-14 

As a law firm, we are proud to have successfully represented the Petitioner in this matter.