CHURCH .VS. KRA: A CASE OF TYRANNY UNDER THE SHIELD OF LAW .VS. TYRANNY IN THE NAME OF JUSTICE?

Charles-Louis de Secondat, generally referred to as simply Montesquieu, was more than a French judge; he was a political philosopher and because of his many literary pursuits and fine writing ability, he was fondly tagged, a man of letters as well. In his characteristic nature and while delivering one of his many sober judgments, he quipped; “there is no greater tyranny than that which is perpetrated under the shield of law and in the name of justice."

The case tax appeals tribunal no. Tat 389 of 2018 is a legal battle between Thika Road Baptist Church Ministries .vs. Commissioner of Domestic Taxes. The Appellant, (Thika Road Baptist Church) is a religious organization registered under Section 10 of the Societies Act for furtherance of the Christian faith. After filing NIL returns for the years 2015-2017; the Respondent, (Kenya Revenue Authority) objected to this and issued additional assessments for the years 2015- 2017 in the sum of KShs. 6,678,386 and herein lies the bone of contention.

According to the Appellant, the Church’s sole income is tithes and offerings which are exempt from tax as per the First Schedule of Income Tax Act. In the submissions, the appellant notes that its surplus realized from tithes and offerings less operating expenditure is carried forward to subsequent years for the benefit of church members and is never distributed to anyone as dividend or bonus. The Appellant therefore asserts that in accordance with Section 28 of the Tax Procedures Act, having submitted Nil tax returns for years 2015,2016, and 2017, it should be held as having made a proper assessment of the tax payable being nil amount for each of the years but woo unto them, Caesar still feels theirs some coin for him here. The Respondent however, is of the view that the Appellant’s income could only be granted relief from payment of taxes if it (the Appellant) had a valid tax exemption certificate issued pursuant to Paragraph 10 of the First Schedule.

Same tenet of the law, supporting same case and used by both parties-so, in this raging dilemma, is Caesar rightfully asking for what is to be rendered unto him or is this the dreaded case of Man trying to rob “God?” Is it a case of one tyrant taking cover under the shield of law and the other tyrant perpetrating the same in the name of seeking justice? Can you tell who is who here?

Well, here’s where things stand currently. Dated and Delivered at Nairobi on the 19th day of February, 2020, the tribunal while ruling on these two grounds: one, whether the objection decision by the Respondent was valid and two, whether the Respondent erred in taxing tithes and offerings, ruled as follows. The first ground of appeal was ruled in favour of KRA whereas the second was in favor of the Appellant. In so ruling, the judge noted that; “tithes, freewill donations, and offerings to churches and other religious organizations do not fall within the scope of income upon which tax is chargeable as per Section 3(2) of the Income Tax Act. No amount of violence would fit tithes and offerings to the list of income subject to tax as provided under Section 3(2) of the Income Tax Act. As such, income from tithes and offerings is not taxable. If then tithes and freewill offerings are not taxable, then the church does not need an exemption certificate for what was not taxable in the first place.”

So, as Caesar ponders over the soundness of the Tribunals judgment and considers making an appeal against this decision, here’s a simple story on the law of evidence that might help to clear things out. John and Peter get into a gruesome fight. John, by way of a blunt object knock on Peter’s head, kills him. While appearing in court, the Defendant presents video evidence of the fight, the postmortem and the burial but the Crown still insists on a death certificate. My point is this, in choosing to Appeal, Caesar must consciously ponder on the probative value of any new evidence it seeks to present to the court. Is he going to be the Crown retreating to ask for a death certificate? Whereas the intended new evidence may be admissible, what is its strength on account of relevancy? Does it stand any chance of increasing the probability of truth or fact in his favor? How material will it be to the appeal? Does it tilt the legal significance of the already delivered Judgment? Taking time to fully build confidence in the probative value is not just key for a successful appeal, but first and foremost, to make sure the case survives the discretionary powers of the court.

Having weighed both sides of the argument, my outsider take is guided by the script in Section 3(2) of the Income Tax Act and the case law Vestey vs. Inland Revenue Commissioners [1979] 3 All ER at 984 where it was held that: “Taxes are imposed on subjects by parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined.” Just as is the case in warranty law, I believe the Appellant is protected having gotten into a contractual agreement and Caesar should direct it’s appetite elsewhere.

I do understand the times that we are living in as a country and the urgent need to fill our tills and meet our bills. That be as it may, relationships are bound and protected by contracts, the Appellant got into one and Caesar should guarantee her protection within those limits. As we seek for more, let Caesar not be the perpetrator of tyranny in the name of Justice. As for the other party? May wrath befall upon you if you are the bigger tyrant taking shield under a loophole of the law.

This whole case got me thinking of my late grandfather’s wisdom. One day he told me, “My child, you cannot use sugarcane as a walking stick”. Might KRA have realized something we don’t know?