Genesis and Background of the Case

This case arose from the decision of the Kenya Sugar Board (1st Respondent) to revoke the sugar import registration certificate of Western Investments (the ex-parte Applicant) and the subsequent refusal by the Kenya Revenue Authority (2nd Respondent) to release 19 containers of sugar that had already undergone clearance. The applicant, having imported the sugar in November 2007, had initially declared the consignment as rice. Upon discovery and subsequent verification, the applicant paid all duties and fines, but the Kenya Sugar Board later revoked its registration on 23rd June 2008, effectively stalling the release process.

The applicant filed for judicial review seeking orders of certiorari to quash the revocation and mandamus to compel KRA to release the goods. The dispute highlighted the conflict between statutory powers under the Sugar Act, the East African Community Customs Management Act (EACCMA), and administrative fairness principles under the Constitution.

Background of the Case

1. Import Declaration & Mislabeling: Western Investments declared 19 containers of sugar as rice in November 2007 under import entry No. 1167225.
2. Customs Seizure & Penalties: Upon verification, KRA issued a seizure notice and compounded the offense under Section 219 of EACCMA, imposing fines of KES 620,000 and additional duties of KES 8,300,727, plus rent of KES 493,350.
3. Registration Certificate Issued Then Revoked: Kenya Sugar Board granted the applicant a sugar import certificate (KSB/CRI/265/07) in May 2008, valid until June 2008, but later revoked it on 23 June 2008 citing non-disclosure.
4. Block on Release: KRA then declined to release the goods based on a directive from the Sugar Board, despite confirming on 30 June 2008 that delivery could proceed.

Appellant’s Submissions (Western Investments)

1. All Duties Fully Paid: Asserted that they paid all applicable taxes and penalties and had completed all formalities for release.
2. Certificate Revoked Without Hearing: Claimed that the Kenya Sugar Board did not give prior notice or opportunity to be heard before revoking the registration.
3. KRA Lacked Justification: Argued that after taxes were paid and KRA processed the release, they had no legal basis to withhold the goods.
4. No Existing Illegality After Compounding: Highlighted that under Section 219(e) EACCMA, compounding an offense extinguishes further liability.
5. Legal Standing: Defended its right to file suit as a registered business name under judicial review (distinct from ordinary civil procedure).
6. Violation of Legitimate Expectation: Claimed legitimate expectation of release after paying dues and receiving a valid registration certificate.
7. Administrative Abuse: Alleged that the respondents acted capriciously, irrationally, and in violation of Article 47 of the Constitution.

Respondents’ Submissions

Kenya Sugar Board (1st Respondent)

1. Misrepresentation: Asserted that the applicant falsely declared sugar as rice and later sought registration to regularize the illegality.
2. No Retrospective Registration: Claimed that the registration certificate could not apply to already-imported goods.
3. Discretionary Powers: Emphasized that registration under the Sugar Act and 2003 Regulations was discretionary and not subject to mandamus.
4. Applicant Non-Existent in Law: Argued that Western Investments, being a business name, could not sue in its own name under Order XXIX Rule 1.
5. Illegality Doctrine: Invoked the principle that courts should not assist parties involved in illegality, citing Mistry Amar Singh v Kulubya [1963] EA 408.

Kenya Revenue Authority (2nd Respondent)

1. No Breach of Duty: Argued that KRA acted within the law and could not release goods without Sugar Board approval.
2. No Jurisdictional Overreach: Claimed they had no excess of power nor denied natural justice to the applicant.
3. PS Agriculture Letter: Referred to a directive dated 6 August 2008 recommending forfeiture and destruction of the sugar.

Court’s Decision – Key Points

1. Illegality Expunged by Compounding: Held that under Section 219 EACCMA, once the offense was compounded by the Commissioner, no further legal liability attached.
2. No Power to Cancel After Compounding: Ruled that the Kenya Sugar Board acted unreasonably and without lawful authority in cancelling a certificate without notice or hearing.
3. Judicial Review Applicable: Found that judicial review applies to protect against arbitrary administrative decisions, regardless of whether a party is a business name.
4. Orders Granted:
   • Certiorari: Quashed the decision to revoke the certificate.
   • Mandamus: Directed KRA to release the 19 containers of sugar.
   • Costs: Awarded against the 1st respondent.