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Court blocks trio from dropping KRA tax case, cites public interest
The court found no justification for permitting the withdrawal, noting that the Nairobi petition raised "serious constitutional issues" requiring full participation from all stakeholders.
The High Court has rejected an attempt by three petitioners to withdraw a constitutional challenge against the Kenya Revenue Authority’s (KRA) decision to bar businesses from filing returns, ruling that public interest litigation cannot be abandoned without judicial scrutiny.
The court dismissed the petitioners’ application, stating that their actions—including filing a similar case in Bomet High Court before securing authority to withdraw the Nairobi petition —raised procedural red flags and risked undermining public accountability in tax disputes.
The petitioners Peter Opiyo, Peter Gacheru, and Denis Nyambati, had sought to withdraw their petition filed in May 2025, in which they claimed that KRA’s enforcement of the VAT Special Table was "unconstitutional and discriminatory."
The VAT Special Table is a compliance tool deployed by KRA to restrict specific VAT-registered taxpayers who show a pattern of non-compliance. The taxman uses the table as a watch list to flag businesses for suspicious VAT compliance behaviour and prevents them from performing key functions until they resolve the identified issues.
Central to the case was a claim that in April this year, KRA placed businesses on the VAT Special Table on grounds of an alleged fraudulent VAT scheme, a decision that allegedly made it impossible to make transactions, file returns or present claims for refunds.
KRA argued that the alleged fraudulent VAT scheme denies the exchequer collections of an estimated Sh2.5 billion every month, prompting the crackdown that elicited an uproar from the businesses. VAT Special Table is an administrative process where VAT-registered taxpayers are blocked from filing VAT returns.
The petitioners sued, contending that KRA’s decision was illegal and that it had denied the businesses the right to a fair administrative process.
The court emphasised that Constitutional petitions are not "private suits" that can be withdrawn at whim.
"Public interest litigation must be shielded from abuse," noted the court, referencing concerns over forum-shopping.
The ruling leaned heavily on Rule 27 of the Mutunga Rules, which requires courts to assess whether withdrawal would harm public interest or conceal ulterior motives.
However, in their withdrawal application, they argued that allowing the case to proceed would prejudice a related petition they later filed in Bomet.
But the court noted that the petitioners failed to serve their withdrawal notice on key parties, including the Attorney General, KRA, the Institute of Certified Public Accountants, and the Law Society of Kenya.
“The court also notes that the petitioners did not even annex copies of the petition in Bomet High Court,” reads the ruling.
The rules require courts to be satisfied that the withdrawal of public litigation is made in good faith and not for any ulterior motive or personal gain.
In this case, the court found no justification for permitting the withdrawal, noting that the Nairobi petition raised "serious constitutional issues" requiring full participation from all stakeholders.
“Whereas the High Court has jurisdiction to hear applications for violation of rights and fundamental freedoms under Article 165 of the Constitution, the court will resist and frown upon any attempt at forum-shopping or suits that may run afoul of rules on sub judice,” ruled the court.
The court directed that both petitions—Nairobi and Bomet—remain active pending further orders. It also mandated service of the ruling on all parties, including the Bomet High Court, signaling potential consolidation or transfer of the cases.
KRA, the Attorney General, and the other parties did not comment on the application.
