Attorney-General Dorcas Oduor has asked the High Court to dismiss a petition challenging the Special Operating Framework Agreement (Sofa), which was enacted six years ago to give tax relief to manufacturers in a bid to stimulate industrial growth.
In reply to a petition filed by lawyer Apollo Mboya, Ms Oduor said he has not demonstrated any basis for suspending laws that have been in force for the past six years.
Mr Mboya faulted the government for unfairly introducing the framework and for giving a 10-year exemption on import taxes to Blue Nile Rolling Mills (BNRM) and 17 other firms, without subjecting it to public participation.
But the A-G said in reply that Mr Mboya was improperly urging the court to usurp the function of the government in determining national economic policies and economic activities, which owing to its polycentric nature, was within the remit of the political organs of State and not the judiciary.
“It is apparent from the pleadings that both the executive and the legislature operated within the constitutional scheme of their respective powers, within the safeguards of the separation of powers and consequently quite legitimately outside the path of the ordinary motions of the judicial arm of the State, on that basis, there is hardly any scope for deployment of the Court’s Conservatory orders,” Ms Oduor said through chief State counsel Emmanuel Bitta.
Mr Bitta asked the High Court to dismiss the petition stating that it sought to infringe on the constitutional mandates and discretion of State offices.
Further, Mr Bitta wondered why it took Mr Mboya more than six years to challenge the tax incentive.
The State counsel further said the case is supported by an affidavit that contains matters not ordinarily within the knowledge of Mr Mboya yet he does not disclose the source of the information.
In his petition, Mr Mboya argued that exemptions to the steel manufacturer also creates an uneven playing field in the steel industry and deprives the government of revenue.
He said the provisions introducing and legitimising such frameworks between the government and ‘special’ entities arbitrarily, unjustifiably grant them blanket tax exemptions and reduce tax rates.
The lawyer said the provisions introducing and legitimising such frameworks between the government and ‘special’ entities arbitrarily as it unjustifiably grants them blanket tax exemptions and reduced tax rates.
“Unless the conservatory orders sought herein are granted, the respondents (CS Trade and Investment and Treasury) will continue exempting companies from numerous taxes to the detriment of Kenyans,” he said.
BNRM has urged the court to dismiss the case arguing that the issue of public participation was captured in a decision in 2020 through a finding that the Finance Act 2018 was adequately subjected to public participation.
The manufacturer added that former Attorney General Justin Muturi (now CS Public Service) had warned against withdrawing the incentives under Sofa, saying it had created a legitimate expectation on the investor.
Mr Muturi had warned any withdrawal of the incentive would attract disputes, which, if pursued, would likely expose the government to liability.
