Why Mombasa County will refund Base Titanium millions

 

The Mombasa County government is staring at a huge dip in revenue after the Supreme Court nullified a decision to impose tax on Base Titanium’s trucks transporting minerals from Kwale County to the Mombasa port.

The apex court said the cess of Sh3,000 per truck is unconstitutional, null and void. It was imposed by Governor Hassan Joho's administration on June17, 2014.

The court also paved the way for Base Titanium to pursue a refund of any money paid to the devolved unit from January 1, 2015.

In addition, the five-judge bench led by Deputy Chief Justice Philomena Mwilu directed the county government to refund to the company, which started mineral production in Kwale in late 2013, a sum of Sh1,542,000 paid as cess as of December 31, 2014. 

The other judges on the bench that issued its ruling on Friday were justices Mohamed Ibrahim, Smokin Wanjala, Njoki Ndung'u and Isaac Lenaola. 

Null and void

Ruling on an appeal by Base Titanium challenging the decision of the appellate court to dismiss its petition, the judges declared that the actions of the Mombasa County government to charge the cess or any sum at all, a condition for the titanium company to move its goods across the boundaries of that county is unconstitutional, null and void.

The apex court found that the road used by the trucks transporting Base Titanium's goods to the port is not a county road, but rather a national road maintained by the Kenya National Highways Authority (Kenha).  

As a result, they said, if any access fee is charged, the proper entity to which the money is owed is the national government, not the county government.

"It is not in dispute that to access the port, the appellant must use the Likoni-Ukunda road, which the Kenyan road system identifies as an A14 road. Going by the background and network system, that road falls directly into the category of a national road. That category falls directly under the mandate of Kenha and the national government which is in charge of its development, rehabilitation, management and maintenance,” the judges said. 

It was noted that the Mombasa County government did not clarify how the charge meets the categories it had set out in an item in the County Finance Act, 2014. 

Charges and levies

"They have not stated if they provide street lighting, parking or maintenance of the road accessed by Base Titanium Ltd. While the superior courts (High Court and appeals court) were in agreement with them that the charge was a ‘road service’ charge, we are of a contrary opinion, as the Mombasa County government did not illustrate how such road services are provided," ruled the Supreme Court. 

The court faulted the High Court and the Court of Appeal for their interpretation and application of Article 209(4) of the Constitution in their finding that the cess levied was in line with the Constitution. That article, which is on the power to impose taxes and charges, says that “the national and county governments may impose charges for services”. 

According to the Supreme Court judges, whereas a county government can levy charges, it must do so in exchange for an amenity. Put differently, they said, a county government does not have the authority to charge a cess, levy or tax where they do not offer anything in return.

They stated that the county government's power to impose charges and levies does not go unchecked.

"In the spirit of harmonious interpretation of the Constitution, in enacting the law, county governments must heed the provisions of Article 209 (5) and ensure that the charges invoked will not be detrimental to national economic policies, economic activities across boundaries or the national mobility of goods, services, capital or labor,” said the judges.   BY DAILY NATION