The Court of Appeal has ruled on a Ksh296 million case involving Jomo Kenyatta University of Agriculture and Technology (JKUAT) and ICEA Lion Life Assurance Company Limited.
JKUAT applied for a stay of execution against a High Court judgment dated October 4, 2024, that ordered it to pay ICEA Lion Ksh296 million in Value Added Tax (VAT), plus interest and costs, regarding the sale of a property L.R. No. 209/8287.
The amount was based on a Settlement Agreement dated 30th September 2019.
However, JKUAT filed a notice of appeal arguing that the payment would result in a huge financial loss using public funds.
JKUAT claimed the ICEA Lion’s financial capacity to refund the money, if the appeal succeeds, is questionable.
The University cited an alleged 2017 Kenya Revenue Authority (KRA) private ruling exempting it from VAT.
JKUAT emphasized that the appeal was arguable and not frivolous.
The court dismissed the petition and awarded costs to ICEA Lion only since KRA didn’t respond to the motion.
Consequently, the applicant having failed to establish that the appeal is arguable and that it will be rendered nugatory if the orders sought are not granted, the application dated 15th November 2024 brought under rule 5(2)(b) cannot succeed and is hereby dismissed. Costs are awarded to the 1st respondent only, since the 2nd respondent did not file a response to the Motion.
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JKUAT Failed to Prove Allegations
The Court said the appeal was not arguable since JKUAT had issued an unequivocal deed of indemnity, and the VAT was paid.
“The applicant did not provide evidence of imminent financial hardship on the part of ICEA, оr that it would be unable to refund the money in the event the appeal succeeds, so that the appeal would be rendered nugatory. This limb, therefore, fails,” the court ruled.
Besides, the Court said the decree wasn’t irreversible since JKUAT failed to show ICEA could not refund the sum.
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ICEA Lion Response
On the other hand, ICEA Lion asserted the payment was made to KRA as required, and that JKUAT had indemnified the Company.
Besides, the respondent claimed JKUAT was fully aware of the VAT obligation during the sale.
ICEA Lion produced 2023 audited financials showing a turnover of Ksh3.4 billion and assets of Ksh148 billion to refute claims of inability to refund.
The Company argued that JKUAT failed to prove the risk of hardship or that it lacked refund capacity.
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