Kenya: Airline operator Fly540, has lost bid to challenge a Sh101 million charge for air navigation services and regulatory fees for November 2011 to August 2012.
Five Forty Aviation Limited, which operates Fly540 had moved to court after Kenya Civil Aviation Authority (KCAA) slapped it with a Sh101,455,818 Agency Notice in December 2012.
According to Nixon Ooko, a director at the airline operator, KCAA demanded payment of Sh67,296,437 within 14 days or risk two per cent penalty in default in September 26, 2012. The airline told the court that the charges for air navigation services and regulatory fees set by KCAA had been determined arbitrarily without due consultations.
The operator argued that the regulations set in 2011 through Legal Notice 100, breached rules of natural justice as they were drafted without consultations with stakeholders in the industry contrary to provisions of Article 47 of the constitution. They challenged the decisions by Kenya Revenue Authority to take legal and other enforcement measures to recover Sh67,296,437.60 in September 2012 and subsequent decision to issue Agency notice on November 12, 2012 to Fly540 bankers.
However, in response, KRA through Alfred Nzoka Kathonde, a revenue officer, told the court KRA Act gave KCAA legitimate powers to collect and receive revenue while the Customs Excise Act provides issuance of Agency Notices by KRA.
Revised charges
KCAA also told the court that they did not make any legal promise or representation to the airline operator that they would not enforce the taxes set out in the 2011 regulations. KCAA noted that the revised charges prescribed in the 2011 regulations were based on a clear need and the lack of sufficient finances by the Authority to fund its infrastructural development costs and carry out its statutory functions and mandate.
In his ruling, Justice George Odunga dismissed the claims raised by Fly540 that KCAA and KRA had overreached their mandates by issuing Agency Notice in a bid to recover the taxes.
“I have similarly considered the legislation guiding the operations of the KRA and the allegations made herein and I am not satisfied that the respondents or the KRA did overreach its mandate,” Odunga ruled.
He held that the Legal notice 100 of 2011 on civil aviation regulation made in July 19 2011 were binding until it was revoked by legal notice 110 of 2012.
“Therefore, any taxes, which were payable before the revocation of Civil Aviation (Charges for Air Navigation Charges) Regulations 2011, ought to have been paid in accordance with the said regulations,” he ruled.
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