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Court suspends 16% levy on petroleum products

September 7, 2018

By Samuel Ouma

Tresury Cabinet Secretary Henry Roticch was faulted for not putting into consideration the common citizen

Tresury Cabinet Secretary Henry Roticch was faulted for not putting into consideration the common citizen

Bungoma High Court on Thursday, September 6, 2018 temporary suspended the implementation of 16% Value Added Tax on petroleum products which has sparked public outcry since the law took effect in September 1, 2018.

Justice Stephen Riechi reached the decision following an application by three petitioners-Titus Alila, Jackline Otieno and Francis Ogada. They faulted National Treasury Cabinet Secretary Henry Rotich and Energy Regulatory Commission (ERC) for following the implementation of the new levy on fuel under Finance Act (2013) without putting into consideration the common citizens.

Justice Stephen Riechi ordered them to appear before the court in September 12, 2018 for the mentioning of the case.

“Temporary conservatory orders be and are hereby granted quashing the decision by the Kenya Revenue Authority and Energy Regulatory Commission dated 1/09/2018 to implement the Finance Act (2013) levying 16% VAT on petroleum products from 1/09/2018 to enable the President to either assent to or reject the amended Finance Bill passed by the National Assembly,” ruled Riech.

The ruling came barely two days after Nairobi Hight Court declined to suspend the new tax despite the suits filled by Central Organization for Trade Unions (Cotu), an entity spearheading rights of workers and an activist Okiya Omtatah who termed the levy as illegal.

They criticized Kenya Revenue Authority, a body in charge of revenues, National Treasury and Energy Regulatory Commission for ignoring the parliament’s proposal to suspend the levy for two years.

“The Court being one of the state organs, cannot afford cannot attempt to hide under the doctrine of judicial difference but has to listen to the voice of the people of Kenya and their cries brought by the operationalization of the VAT charge. The people of Kenya who live below the poverty line cannot afford the tax levied,” Cotu boss Francis Atwoli said in suit papers.

The new charge triggered protests by motorists and vehicle owners following shortages of fuel due to strike by the Kenya Independent Petroleum Distributors Association (kipeda) Holding Ltd, an entity responsible for the wholesale of petroleum products in the country opposing new levy.

Following Kipeda Holding Ltd protest, Energy Regulatory Commission cancelled its license citing economic sabotage. The commission claimed the company is spearheading the distributor’s strike which has rocked fuel transportation countrywide.

“The commission therefore wishes to inform members of the public that the action by Kipeda Holdings Limited amounts to economic sabotage and hereby cancels the license of the said licensee to the Section 85 of the Energy Act No.12 of 2016,” reads the statement from ERC.

 

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