High Court Denies Bid to Halt Water Refill Excise Duty

Case Study: Kamau & 33 others v Commissioner General and another & another (Petition E161 of 2022) [2025] KEHC 9039 (KLR) (Constitutional and Human Rights) (26 June 2025) (Judgment)

Background of the Case

The petitioners, who operate water refilling businesses, stated they procure purified water and sell it to customers via water-ATM machines, without undertaking the purification or manufacturing process themselves. They argued that KRA’s public notice of July 17, 2020, which required water refillers to obtain excise licenses and remit excise duty, arbitrarily expanded the definition of “manufacturer” under the Excise Duty Act. They sought various declarations, including that the public notice was unconstitutional, and damages for illegal seizure of their assets.

The KRA, as the 1st Respondent, contended that the petitioners’ process is considered manufacturing under the Excise Duty Act and that the public notice merely reminded businesses of existing legal requirements. They also argued that the petitioners failed to exhaust alternative dispute resolution mechanisms, specifically the Tax Appeals Tribunal, before approaching the High Court. The Attorney General, as the 2nd Respondent, supported KRA’s position, emphasizing that the petitioners misconstrued the constitutional and statutory mandates of the respondents and that the matter falls within the definition of “manufacture” under the Excise Duty Act.

Court’s Analysis and Determination

The High Court focused on a single, pivotal issue: whether the High Court had the jurisdiction to entertain the petition.

The Court underscored the principle that where a specific procedure for redress is prescribed by the Constitution or an Act of Parliament, that procedure must be strictly followed. The judge cited numerous precedents emphasizing the doctrine of exhaustion of remedies, which requires parties to pursue legislatively mandated alternative dispute resolution mechanisms before resorting to the courts.

The High Court found that the core of the dispute revolved around the interpretation of the Excise Duty Act—specifically, whether water vended through water ATM machines should attract excise duty. This, the Court determined, constituted a “decision by the Commissioner on a matter under the provisions of any tax law,” falling squarely within the competence of the Tax Appeals Tribunal as established under Section 3 and Section 12 of the Tax Appeals Tribunal Act. The Tribunal is empowered to affirm, vary, or set aside such decisions.

Furthermore, the Court noted that some of the petitioners had already engaged with KRA under Section 109 of the Tax Procedures Act, even admitting to offences, a fact they did not disclose to the Court. This reinforced the argument that the matter was a tax dispute rather than a purely constitutional challenge in the first instance.

The High Court concluded that the petition, “camouflaged as a Constitution Petition,” primarily sought to challenge a tax decision that should have been heard by the Tax Appeals Tribunal first, with any appeal then proceeding to the High Court.

Conclusion

Based on the High Court’s ruling, the water refill businesses should continue paying the excise duty.

• No Ruling on Legality: The High Court did not rule on whether the KRA’s decision to levy excise duty on water refill is legal or constitutional.
• Procedural Dismissal: The case was struck out on a technicality – the petitioners failed to exhaust the available alternative dispute resolution mechanisms. The judge explicitly stated that the dispute was a “tax dispute arising from the interpretation of the provisions of the Excise Duty Act” and therefore should have been heard by the Tax Appeals Tribunal first.
• KRA’s Position Stands (for now): Since the court did not overturn the KRA’s public notice or their interpretation of the Excise Duty Act, the KRA’s position that water refill businesses are subject to excise duty remains in effect.

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