Edible oil firms sue KRA, Treasury over Sh2.3 billion tax refund

High Court outlawed a 10 per cent import tax increase on palm oil. [Courtesy]

Three local edible oil giants have sued the government in a row over more than Sh 2.3 billion.

Golden Africa Kenya Ltd, Pwani Oil Products Ltd and Kapa Oil Refineries Ltd have separately sued the Kenya Revenue Authority (KRA), the National Treasury Cabinet Secretary John Mbadi and the Attorney General, arguing that the authority has declined to refund them money paid in excess before the High Court outlawed a 10 per cent import tax increase on palm oil.

In the case, Kapa argued that KRA owes it Sh867 million, while Pwani said that it is entitled to a Sh935 million refund and Golden Africa, Sh466 million.

“The constitutional question raised is whether the State may retain money it exacted from a person under an instrument which a court of competent jurisdiction has declared unconstitutional, null and void. The petitioner's case is that it may not, and that Articles 2(4), 40, 47, 201, 206, 209 and 210 of the Constitution place the matter beyond serious argument. The Petitioner does not seek to execute a decree to which it was not a party. It sues in its own right, upon its own facts, for money taken from it,” court papers filed before the High Court read in part.

The trio are banking on a judgment delivered by Justice Bahati Mwamuye in December last year. He found that the introduction of the levy was done without following the Constitution or Parliamentary approvals and gazettement.

“Overall, the process and imposition of the impugned 10 per cent duty without compliance with constitutional procedure infringes or threatens to infringe protected rights, and the same also fundamental principles and values that underpin our Constitutional dispensation in a manner that cannot be justified or mitigated. The only route available is, therefore, to strike down the same for being unconstitutional,” ruled Justice Mwamuye.

Kapa, Pwani Oil and Golden Africa argued that KRA ought to have refunded the money immediately after the court read its decision.

They argued that it is illegal and unfair for the authority to cling to the funds it owes them as it neither sought to review nor appeal the judgment.

They insisted that they had to use their own resources to pay the increased amount, as the oil was already at the port of Mombasa when the East African Community (EAC) opted to increase the import duty across the board.

 “The petitioner paid each of the said sums out of its own resources. Payment of the assessed duty was a condition precedent to the release of the petitioner's consignments from customs control. The petitioner had no practical alternative but to pay if it was to obtain possession of its goods and continue its business,” court papers continued to read.

The trio insisted that they were not trying to apply the law in their favour on events that happened in the past. Instead, they further argued that KRA could not hold its claim to the money based on non- existent law.

Kapa, Pwani and Gold Africa were of the view that the money they paid was not public revenue.

“Money which is not lawfully raised is not money “raised or received by or on behalf of the national government” within the contemplation of Article 206(1), and its retention in the public account offends the principles of public finance in Article 201, in particular the requirements of openness, accountability, fairness in the sharing of the burden of taxation, and prudent and responsible use of public money,” they argued.

They asserted that the government was illegally depriving them of their property without following the law. According to them, the amount cannot be substituted to pay other taxes or kept for future taxes waiver, as it was not meant for the same.

The oil companies want the court to force KRA, the National Treasury cabinet secretary and the AG to jointly pay back the money with interest. They are also seeking damages for violation of their right to property.

“Money is property. Article 260 puts the matter beyond argument by defining property to include any vested or contingent right to, or interest in or arising from, money; therefore, it falls outside every gateway permitted by Article 40(3). The deprivation is arbitrary within the meaning of Article 40(2)(a). It rests on no law," they argued.

"Since 27 November 2025, the only instrument capable of justifying it has stood declared void, and the burden of identifying any other lies on the respondents, who have identified none and, having said nothing at all, have not attempted to.”