Times Tower, the Kenya Revenue Authority's head office in Nairobi.
The court has ordered Kenya Revenue Authority (KRA) Commissioner for Customs and Border Control Lilian Nyawanda to obey a directive, which froze a recent decision by the taxman to shift cargo clearance back to its offices instead of the Mombasa port.
This was also to affect 22 customs bond warehouses even as traders and clearing and forwarding agents protested the move.
Mombasa High Court Judge Julius Kipkosgei on Thursday asked the commissioner to obey the conservatory order issued on September 23, 2024, suspending the KRA directive.
He asked the taxman to implement the new system only after conducting public participation as well as comply with the law.
In the changes introduced in July 2024, clearing, and forwarding agents had been required to forward a two-page duly filled form to head verification officerswho are stationed at different KRA offices—unlike before when the documents were approved and signed at the port and warehouses.
The move by KRA was, however, opposed by traders amid claims that it had triggered a fresh upsurge in delays and pilling storage charges.
One of the traders Mohammed Samow sued KRA for shifting cargo clearance without their involvement despite the adverse impact of the move on stakeholders in the logistics sector.
The petitioner argued that there were massive delays in clearing goods, a high rise of storage/demurrage charges, introduction of new verification forms, centralisation of the clearance process, and an increase in the number of days to clear consignments.
He said the new process is cumbersome, increased tariffs and barriers, resulted in frustrations and lacks transparency, accountability and efficiency.
The petitioner had asked the court to declare the system unconstitutional having been implemented without notice to the stakeholders and the public.
Justice Kipkosgei ruled that KRA violated the Constitution of Kenya by implementing the new system and that it should only implement it after conducting public participation and in compliance with the law.
“Public participation is a mandatory pre-condition in administrative action by public bodies and/or in actions that affect the public. And that the Centralization of Head Verification Officers is a new system with far-reaching implications on numerous port users which requires public participation,” the judge said.
The court ruled that cargo clearance should remain as per the provision of the East African Community Customs Management Act supported by the existing Integrated Customs Management Systems (iCMS) and the payment gateway should remain unchanged.
To improve transparency in the exports, the government implemented the use of the iCMS where no cargo will be cleared if not logged in the iCMS and Kilindini Waterfront Automated Terminal Operations Systems (KWATOS) at their time of acceptance at the port.
At the same time, the KPA has enforced a 24-hour cut-off acceptance time for fresh produce exports and all government agencies involved in port operations as well as exporters expected to operate 24 hours.
Also, the government has addressed several bottlenecks of doing business such as the reduction of the number of weighbridges for transit and the implementation of Pre-arrival Clearance to streamline the export process.
