Okello & another v National Assembly & 2 others; Shop & Deliver Limited t/a Betika & 7 others (Interested Parties); Kiragu & 2 others (Cross Petitioner) ((suing on behalf of, as the Chairperson, Secretary and Treasurer respectively of, the Association of Gaming Operators of Kenya)) (Constitutional Petition E010 of 2021) [2022] KEHC 3059 (KLR) (6 May 2022) (Judgment)

Neutral citation: [2022] KEHC 3059 (KLR)

Republic of Kenya

In the High Court at Machakos

Constitutional Petition E010 of 2021

GV Odunga, J

May 6, 2022

IN THE MATTER OF: THE ENFORCEMENT OF THE BILL OF RIGHTS UNDER ARTICLE 22 (1) OF THE CONSTITUTION OF KENYA (2010) IN THE MATTER OF: THE VIOLATION OF ARTICLES 3, 10, 20, 21, 23, 40, 43, 45, 47, 201 AND 258 OF THE CONSTITUTION

Between

Isaiah Onyango Okello

1^st Petitioner

Cliff Odolo Mboya

2^nd Petitioner

and

National Assembly

1^st Respondent

Commissioner General, Kenya Revenue Authority

2^nd Respondent

Attorney General

3^rd Respondent

and

Shop & Deliver Limited t/a Betika

Interested Party

Mozzart Bet Kenya Limited t/a Mozzart Bet

Interested Party

Sporty Bet Limited

Interested Party

Blue Jay Limited t/a Betway

Interested Party

Karecop Holdings Limited t/a Odibets

Interested Party

Pevans East Africa Limited

Interested Party

Association of Gaming Operators, Kenya

Interested Party

Milestone Games Limited t/a Sportpesa

Interested Party

and

Judith Kiragu

Cross Petitioner

Daniel Masi Mogeni

Cross Petitioner

Nickson Mwangi Maina

Cross Petitioner

(suing on behalf of, as the Chairperson, Secretary and Treasurer respectively of, the Association of Gaming Operators of Kenya)

High Court declares provision of 7.5% excise duty of the amount wagered or staked on betting by the Excise Duty Act unconstitutional

The petitioners challenged the constitutionality of section 4A of Part II of the First Schedule to the Excise Duty Act which provided that excise duty on betting would be 7.5% of the amount wagered or staked. The court held, among other holdings, that the stake, which was distinct from the betting account/wallet, was what constituted the charge for betting services for the purposes of excise duty. The court also held that the mere fact that a law imposed different taxation regimes on a transaction, did not ipso facto make it unfair or unlawful particularly if payment was imposed upon different people in the same transaction.

Reported by Kakai Toili

Tax Law – double taxation - imposition of excise duty and withholding tax on betting - whether imposition of excise duty and withholding tax on betting amounted to double taxation and thus unconstitutional – whether the levying of two taxes in respect of the same transaction and payable by different people amounted to double taxation - Constitution of Kenya, 2010, article 201.Tax Law – taxes – types of taxes – excise duty – excise duty charged on betting services - what constituted the charge for betting services for purposes of excise duty - Excise Duty Act, Cap 493, sections 4(1A), 6(3) and 5(3)(b).Constitutional Law – constitutionality of statutes - factors to consider in determining the constitutionality of a statute - whether the difficulty or inconvenience in the implementation of a statute could lead to the statute being declared unconstitutional - whether the fact that the Legislature rejected a similar Bill earlier on meant that its subsequent approval was unconstitutional.Constitutional Law – fundamental rights and freedoms – right to equality and freedom from discrimination - criteria for determining whether a provision of law was discriminatory - whether applying selective taxes to different sectors amounted to discrimination - Constitution of Kenya, 2010, articles 27(1), (4) and 201(b)(i) and (ii).Constitutional Law – national values and principles of governance – public participation - what was the nature of public participation required in the enactment of legislation.Words and Phrases – double taxation – definition of double taxation – to constitute double taxation that tax must be imposed on the same property by same governing body during same taxing period and for same taxing purpose - Black’s Law Dictionary, 5^th Edition, 1979.

Brief facts The petitioners pleaded that they were punters and not sellers of any category of specified goods or services in the gaming sector but investors who stake bets on platforms provided by the interested parties. According to the petitioners, as punters, they paid total of 20% withholding tax on all their winnings from games staked while the interested parties also paid a total of 15 % betting tax on the gross gaming revenue. The petitioners stated that they paid additional tax through charges on mobile phone excise tax every time they transferred money from their wallets to stake a bet and whenever they withdrew winnings. It was however pleaded that the respondents, under Part II of the First Schedule to the Excise Duty Act, which provided rates of excisable services through the Finance Act, 2021 introduced an excise duty of 7.5 % on betting stake which sum was to be computed on the amount wagered or staked by the player.The petitioners contended that in introducing the excise tax on deposits amounts staked or wagered by punters, the respondents would in essence tax a punter just for having money and being a player and taking a risk [stake] and without effectively consuming the good/service which in fact was being purchased. The petitioners lamented that since punters already pay withholding tax on their winnings, to subject them to additional tax in the manner proposed amounted to double taxation on the same transaction.The petitioners argued that to the extent that the impugned law sought to place the burden on taxation on punters at the expense of international gaming players and investors in the money markets, it violated the equity and fairness principle on sharing of burden of taxation. The petitioners therefore sought for among other orders; a declaration that section 4A of Part II of the First Schedule to the Excise Duty Act as introduced by the Finance Act, 2021 was illegal and unlawful; and an order of prohibition restraining the 2^nd respondent from the implementation of section 4A of Part II of the First Schedule by collecting and/or demanding payment of Excise duty on betting.

Issues

Whether imposition of excise duty and withholding tax on betting amounted to double taxation and was thus unconstitutional.
What constituted the charge for betting services for the purposes of excise duty?
What were the factors to consider in determining the constitutionality of a statute?
Whether the difficulty or inconvenience in the implementation of a statute could lead to the statute being declared unconstitutional.
Whether applying selective taxes to different sectors amounted to discrimination.
What was the criteria for determining whether a provision of law was discriminatory?
Whether the fact that the Legislature rejected a similar Bill earlier on meant that its subsequent approval was unconstitutional.
Whether the levying of two taxes in respect of the same transaction and payable by different people amounted to double taxation.
What was the nature of public participation as required in the enactment of legislation?

Relevant provisions of the Law Excise Duty Act, Cap 493First SchedulePart IISection 4AExcise duty on betting shall be seven-point five per cent of the amount wagered or staked.

Held 1. When considering the constitutionality of an Act, one had to bear in mind the rebuttable principle of presumption of constitutionality of statutes which stated that statutes should be presumed to be constitutional until the contrary was proved.2. Though under article 1 of the Constitution of Kenya, 2010 (Constitution) sovereign power was delegated to Parliament and the legislative assemblies in the county governments; the national executive and the executive structures in the county governments; and the Judiciary and independent tribunals; those organs had to perform their functions in accordance with the Constitution.3. The Constitution having been enacted by way of a referendum, was the direct expression of the people’s will and therefore all State organs in exercising their delegated powers had to bow to the will of the people as expressed in the Constitution. Otherwise, article 2 of the Constitution allowed for the recall of any law, including customary law that was inconsistent with the Constitution, or any act or omission in contravention of the Constitution for the purposes of being voided and or invalidated.4. An unconstitutional statute was to be considered as though it had never been enacted by the Legislature. Under article 259 of the Constitution, the court was enjoined to interpret the Constitution in a manner that promoted its purposes, values and principles, advanced the rule of law, human rights and fundamental freedoms in the Bill of Rights and in a manner that contributed to good governance. In exercising its judicial authority, the court was obliged under article 159(2)(e) of the Constitution to protect and promote the purposes and principles of the Constitution. There was the general presumption that every Act of Parliament was constitutional and the burden of proof lay on every person who alleged otherwise.5. In determining whether a statute was constitutional or not, the court had to determine the object and purpose of the impugned statute for it was important to discern the intention expressed in the Act itself. Further, in examining whether a particular statutory provision was unconstitutional, the court had to have regard not only to its purpose but also its effect. The Constitution should be given a purposive, liberal interpretation and its provisions had to be read as an integrated, whole, without any one particular provision destroying the other but each sustaining the other. The spirit of the Constitution had to preside and permeate the process of judicial interpretation and judicial discretion. 6. Unless there was an allegation of a specific violation of the Constitution, the court could not question the wisdom of legislation or its policy object. The fact that the implementation of the statute could be difficult or inconvenient as opposed to being unconstitutional or unlawful, did not warrant it being declared unconstitutional since it was within the authority of the Legislature to enact legislation governing the manner in which a particular form of tax was administered including the manner in which it imposed, calculated and enforced because such issues went to the application of the Act, rather than its constitutionality. 7. It was not for the court to decide what the best practice in comparative jurisprudence was unless it was shown that the the taxation regime in force in those other jurisdictions went contrary to the Constitution. However, if the Legislature, based on the best practices enacted a law that violated or contravened the Constitution, such a law would not stand. The Legislature while considering any policy had to ensure that the same whether in its enactment or operations, adhered to the constitutional values and principles.8. If the respondents were of the view that betting was harmful to the interest of the society, then they ought to take legal measures to abolish it instead of subjecting those who earned their livelihood from that which had been legalised to punitive measures. Therefore, the respondent could not rely on such broad terms as negative impacts to justify their actions where such actions could not be legally justified. Such vague and ambiguous terms could not be a basis for imposition of tax.9. Unless the stake was considered a charge for betting services, excise duty could not be imposed thereon. The stake was the amount that a punter paid from his wallet or account towards a specific bet. It was not the amount in the wallet. Once the bet was made, the same was not refundable in the event that the bet was lost. In other words, the stake ceased to be the punter’s property once the bet was made and the betting took place. However, if no bet took place then the stake was refundable.10. Bookmarkers were under section 16(1)(c) of the Excise Duty Act required to register to be able to supply the betting service. Having registered, it only followed that they were obliged to collect excise duty on behalf of the 2^nd respondent. That duty was based on the charge levied for the service offered.11. The petitioners’ argument that under the tax regime they were not liable to pay any excise duty defeated the provisions that required the bookmarkers to register under the Excise Duty Act as well as section 5(3)(b) as read with section 4(1A) and 6(3) that enjoined the bookmarkers to collect and pay the excise duty at the point the punters wagered or placed the stake. Since the stake constituted revenue for the bookmarkers in the event of a loss, and since there was no other stage at which the bookmarkers charged for their services and based on the aforesaid legal provisions, the stake, which was distinct from the betting account/wallet, was what constituted the charge for betting services for the purposes of excise duty. 12. The Excise Duty Act had to be considered holistically so as not to render any part thereof of no use. Sections 5(3)(b) as read with section 4(1A) and 6(3) of the Act only made sense if the stake was deemed as the chargee for services under the Act.13. Section 47(1) of the Tax Procedures Act provided that the bookmarker could apply for refund of the amount relating to the cancelled or postponed games. In addition, the bookmarker could seek that the amount overpaid be applied against its current or future tax liability as provided under sections 47(4) and 47(4)(A). That adequately took care of cancellation or postponement of bets.14. A double tax was the taxing of the same income twice. It was not only unconstitutional and unlawful to subject one to double taxation but the same was also economically punitive in nature. Excise duty was a different levy from withholding tax which was income tax. Whereas the two taxes could well impose burdens on the tax payer, that did not make them unconstitutional unless the imposition violated article 201 of the Constitution. 15. Article 201(b)(i) and (ii) of the Constitution provided that some of the principles meant to guide all aspects of public finance in Kenya included the fact that the public finance system should promote an equitable society, and in particular the burden of taxation should be shared fairly. Taxes needed not look the same and selective taxes could be applied to different sectors for different reasons such as to address distribution and equity hence the tax needed not be similar to another for it to be rational and not discriminatory. 16. Article 27(1) of the Constitution guaranteed every person the right equal benefit and treatment by the law while article 27(4) provided that the State would not discriminate directly or indirectly against any person on any ground. Based on the material placed before the court, the court could not determine that the offshore players were being treated differently from the local players. The averment that the impugned section discriminated against the petitioners was not supported by any cogent evidence at all as the petitioners did not place any material before court to prove that the impugned provisions discriminated against them.17. The criteria for determining whether a provision of law was discriminatory as follows:

Whether the provision differentiated between people or categories of people. If so, whether the differentiation bore a rational connection to a legitimate purpose. If it did not, then there was a violation of the Constitution. Even if it bore a rational connection, it could nevertheless amount to discrimination.
Whether the differentiation amounted to unfair discrimination. That required a two-stage analysis:-

i. Whether the differentiation amounted to discrimination. If it was on a specified ground, then discrimination would have been established. If it was not on a specified ground, then whether or not there was discrimination would depend upon whether, objectively, the ground was based on attributes and characteristics which had the potential to impair the fundamental human dignity of persons as human beings or to affect them adversely in a comparably serious manner.ii. If the differentiation amounted to discrimination, whether it amounted to unfair discrimination. If it had been found to have been on a specified ground, then the unfairness would be presumed. If on an unspecified ground, unfairness would have to be established by the complainant. The test of unfairness focused primarily on the impact of the discrimination on the complainant and others in his or her situation. If, at the end of that stage of the enquiry, the differentiation was found not to be unfair, then there would be no violation.c. If the discrimination was found to be unfair then a determination would have to be made as to whether the provision could be justified under the limitations clause of the Constitution, being article 24.18. The fact that the Legislature rejected a similar Bill earlier on did not necessarily mean that its subsequent approval was unconstitutional. It was upon the person challenging the constitutionality of a statute to show that the reason why the earlier Bill was rejected was because it was unconstitutional. The Legislature could well reject a Bill depending on the existing economic situation at any particular time. That did not mean that a similar enactment could not be passed in future. There was nothing inherently unlawful or unconstitutional in changing the law or the nature of the income tax as long as the same was in accordance with the law since the Legislature was empowered to legislate new tax laws depending on the policies of the day. 19. For the court to uphold the plea for discrimination, it had to be shown that persons or entities undertaking similar activities were taxed at different rates. Differential taxation schemes were therefore not necessarily unconstitutional. The petitioners had not proved the existence of unfair discrimination to warrant the court's intervention.20. Article 40 of the Constitution barred the State from arbitrarily acquiring private property. However, the Constitution recognized situations where a person could be obliged to part with property for the general good of the society. That included the requirement for the payment of taxes in order to enable the Government to fulfill the obligations it owed to its subjects. Therefore, articles 10, 201, 209 and 210 of the Constitution provided for imposition of tax as a mandatory obligation.21. The respondents were within their powers to enact legislation on the manner of collection of the excise duty as provided for in law which mandated that the duty be collected at the point of placing the wager in a betting transaction. Unless collected at that point, the said duty would be lost as there was no other point in the transaction that it could be collected. The other levies in the transaction were not excise duty.22. Any legislation, and a tax law in particular, that lacked clarity could not be allowed to stand. The taxes and duties being levied to bookmarkers like gross gaming revenue could not amount to double tax since the excise duty was payable by the punters while the gross gaming revenue was payable by the bookmarkers. While the two taxes were being levied in respect of the same transaction of betting, the two taxes were different and were payable by different people. That did not amount to double taxation. The mere fact that a law imposed two different taxation regimes on a transaction, did not ipso facto make it unfair or unlawful particularly if payment was imposed upon different people in the same transaction. 23. While public participation had to inculcate the principles of openness, democracy, accountability and representation, it had to be appreciated that the yardstick for public participation was that a reasonable opportunity had been given to the members of the public and all interested parties to know about the issue and to have an adequate say. It could not be expected of the Legislature that a personal hearing would be given to every individual who claimed to be affected by the laws or regulations that were being made. What was necessary was that the nature of concerns of different sectors of the parties should be communicated to the law maker and taken in formulating the final regulations. 24. The mere fact that particular views had not been incorporated in the enactment did not justify the court in invalidating the enactment in question. Public participation was not the same as saying that public views had to prevail. The steps taken by the respondents met the threshold of public participation as required under the Constitution.25. The amendment of Part II of the First Schedule to the Excise Duty Act through the Finance Act, 2021 which introduced section 4A of Part II aforesaid amendment could not be successfully impugned. That was due to the fact that a holistic consideration of the Excise Duty Act revealed that betting was an excisable service and bookmarkers were licensed to supply the betting service.

Petition dismissed.

Orders No order as to costs.

Citations Cases

Association of Gaming Operators-Kenya & 41 others v Attorney General & 4 others (Petition 56 of 2014 ;[2014] eKLR) — Explained
Bidco Oil Refineries Ltd v Attorney General & 3 others (Petition 177 of 2012; [2013] eKLR) — Explained
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Centre for Rights Education and Awareness (CREAW) & 7 others v Attorney General (Petition 16 of 2011; [2011] eKLR) — Explained
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Commissioner of Income Tax v Westmont Power (K) Ltd (Income Tax Appeal No 626 of 2002; [2006] eKLR) — Explained
Council of County Governors v Attorney General & another (Constitutional Petition 56 of 2017; [2017] eKLR) — Explained
County Government of Nyeri & another v Cecilia Wangechi Ndungu (Civil Appeal 2 of 2015; [2015] eKLR) — Explained
Diani Business Welfare Association and others v County Government of Kwale (Petition 39, 45, 61 & 63 of 2014; [2015] eKLR (Consolidated )) — Explained
Dr. Rev. Timothy Njoya v The Hon. Attorney General and Kenya Review Authority (HC Constitutional and Human Rights Division Petition No. 479 of 2013) — Explained
EG & 7 others v Attorney General; DKM & 9 others (Interested Parties); Katiba Institute & another (Amicus Curiae) (Petition 150 & 234 of 2016 (Consolidated)) — Explained
Engineers Boards of Kenya v Jesse Waweru Wahome & others & 5 others (Civil Appeal 240 of 2013; [ 2015] eKLR) — Explained
Evelyn College of Design Ltd v Director of Children’s Department & another (Petition 228 of 2013; [2013] eKLR) — Explained
Federation of Women Lawyers Kenya (FIDA K) & 5 others v Attorney General & another (Petition 102 of 2011; [2011] eKLR) — Explained
George Bala v Attorney General (Petition 238 of 2016; [2017] eKLR) — Explained
George Lesaloi Selelo & another v Commissioner General, KRA & 4 others; Pevans EA Limited (t/a Sportpesa) & 3 others (Constitutional Petition 9 & 10 of 2018 (Consolidated); [2019] eKLR) — Explained
Grayned v City or Rockford ([1972] 408 US 104) — Explained
Institute of Social Accountability & another v National Assembly & 4 others (Petition No 71 of 2014; [2015] eKLR) — Explained
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Kenya Union of Domestic, Hotels,Education Institutions and Hospital Workers (KUDHEIHA Workers Union) v Kenya Revenue Authority & 3 others (Petition No 544 of 2013; [2014] eKLR) — Explained
Keroche Industries Ltd v Kenya Revenue Authority & 5 others (Misc Civ Appli 743 of 2006; [2007] eKLR) — Explained
Law Society of Kenya v Kenya Revenue Authority & another (Petition 39 of 2017; [2017] eKLR) — Explained
Leonard Otieno v Airtel Kenya Limited (Petition 218 of 2017; [2018] eKLR) — Explained
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Unilever Kenya Limited –vs- The Commissioner of Income Tax (Income Tax Appeal No.753 of 2003 [2005] eKLR) — Explained
Cantonment Board, Poona v Western India Theatres Ltd. (AIR 1954 Bom 261) — Explained
Cape Brandy Syndicate v I.R Commissioners ([1921] 1KB) — Explained
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Statutes

Constitution of Kenya, 2010 — Section 10, 27(1)(4); 40(1)(a)(2); 43; 46(1); 118(1)(b); 159(2)(e); 201(b)(i); 209(2); 210 — Interpreted
Kenya Revenue Authority Act (No. 2 of 1995) — Section 5(1)(2)
Kenya Revenue Authority Act, 1995 (Act No 2 of 1995) — Section 5(2) — Interpreted

AdvocatesMr Osiemo for PetitionersWillis for the 6th Interested PartyMr Ochieng for the 2nd RespondentKuyoni for 1st Respondent

Judgment

Introduction

1.The petitioners are adult males of sound mind, who engages in gaming as a source of entertainment and earning upon which they support themselves and their family and dependents.

2.The 1^st respondent is the National Assembly of Kenya, a body established under the Constitution of Kenya and vested with amongst others the responsibility of enacting laws for the Republic of Kenya.

3.The 2^nd respondent is the Commissioner General of the Kenya Revenue Authority, a public body established by law and vested with the responsibility of amongst others, collecting taxes and administering tax laws within the Republic.

4.The 3^rd respondent is the Attorney General of the Republic of Kenya and also the chief legal adviser of the Government of the Republic of Kenya and has a legal obligation to advise and guide the government and the respondents in all matters relating to the Constitution and the law.

5.The 1^st to 6^th and 8^th interested parties are limited liability companies that provide a platform for betting on which punters place odds and wage on games while the 7^th interested party is an association of gaming players in Kenya and works on advocacy to improve the welfare of gaming customers.

The Petitioners’ Case

6.According to the petitioners, they are citizens of Kenya and punters who engage in acts of betting on several platforms operated by the interested parties who are duly licensed to carry on the business of gaming within the Republic of Kenya.

7.Going by the definition of Excise Duty as a form of tax levied by the government on the sale of specified goods or services, it was pleaded that the petitioners and punters are not sellers of any category of specified goods or services in the gaming sector but investors who stake bets on platforms provided by the interested parties. To do so, they use mobile phone platforms provided by the interested parties with support from mobile phone companies to carry out their gaming activities. in this regard, it was pleaded that the petitioners maintain a mobile money wallet on the mobile platforms from which they transfer money to the interested parties’ wallets to wage a bet and also withdraw monies that may have been earned through winnings. All these transactions, according to them, are subject to excise duty on the mobile phone money transfer charges payable to the government as specified in the Part II (Excisable Services) of the First Schedule to the Excise Duty Act. (hereinafter referred to as “the Act).

8.According to the petitioners, as punters, the petitioners pay total of 20% withholding tax on all their winnings from games staked while the interested parties also pay a total of 15 % betting tax on the gross gaming revenue. The petitioners also pay additional tax through charges on mobile phone excise tax every time they transfer moneys from their wallets to stake a bet and whenever they withdraw winnings.

9.It was however pleaded that the respondents, under part ii of the first schedule to the Act, which provides rates of excisable services through the Finance Act 2021 introduced an Excise Duty of 7.5 % on betting stake which sum is to be computed on the amount wagered or staked by the player. The petitioners contended that in introducing the excise tax on deposits amounts staked or wagered by the petitioners and other punters, the respondents will in essence tax a punter just for having money and being a player and taking a risk [stake] and without effectively consuming the good/service which in fact is being purchased.

10.The petitioners lamented that the respondent’s seek to irregularly levy tax on the amounts staked by the petitioners and other punters despite the petitioners and other punters neither providing a specified excisable service nor consuming an excisable service from the interested parties. In their view, the effect of this provision of the law is that the respondents will be levying tax on a punter on his stake whether he wins or losses. A direct comparison would be to say that the respondents desires to tax a person for merely having money in his possession.

11.They further asserted that the respondents will be charging excise duty on the entire value of the transaction as provided in the first schedule to the Act which conflicts with the substantive provisions of section 9 thereof on what constitutes the base and value of an excisable service. According to them, for instance, a person using mobile money transfer services to transfer KES 500, the excise duty is levied on the transaction charges collected by the telecommunication company (the basis of the tax is the transaction charge by the telecommunications company), and not on the KES 500 transferred. Similarly, in banking, excise duty applies on the transactional banking charges/ fees and not on the money deposited or withdrawn by an account holder.

12.According to the petitioners, the net effect of this law is to the effect that a punter will be losing 7.5 % of his money just by merely placing a bet. This is akin to a bank account holder losing 7.5 % of his money just by merely depositing his money into a bank account. Another example would be an investor who deposits his money in unit trusts who is made to pay 7.5% of his deposits just by merely depositing the money; or an investor in treasury bonds and bills being made to pay 7.5 % of his deposits as excise duty just by merely depositing the money for the transaction.

13.The petitioners lamented that since punters already pay a total of 20% withholding tax on their winnings, to subject the petitioners and other punters to additional tax in the manner proposed in the impugned law amounts to double taxation on the same transaction which is contrary to the principles of taxation generally. The net effect of this provision, they contended, is to ultimately deprive the petitioners and other punters of their property over a cumulative period. In a tabular form, they explained the effect of the impugned law and reiterated that since they use online and mostly mobile phone telephony services in waging bets on platforms provided by the interested parties on their pay bill wallets they pay excise duty on money transfers from their mobile money accounts to the interested parties’ pay bill wallets through transactional fees and charges.

14.According to the petitioners, in the gaming industry, the amount staked is not the fee charged for the service and since there is no fee charged to place a bet, there is no basis for the respondent’s imposition of excise duty in line with the provisions of section 9 of the Act. According to them, the correct value of the excisable service would be the transactional charges when transferring funds (or when withdrawing) from his/ her mobile money wallet or the gross gaming revenue tax that is paid by the betting companies under the Act.

15.The petitioners averred that there are offshore betting companies and operators found online including amongst others Bet365 and 22Bet who have access to the Kenyan gaming public but are not subject to the local tax laws. The said companies will not be subject to the introduced and impugned 7.5% excise duty and thereby giving them an undue advantage in the gaming business. The petitioners’ contention was that whereas the petitioners and other punters who wage bets on the platforms offered by the interested parties will be subjected to the impugned tax, offshore, online platforms offered by other companies will not be affected by this provision thereby leading to a capital flight to these foreign companies at the expense of Kenya and this will be detrimental to the economic interests of the republic.

16.It was pleaded that international best practice has been that betting and gaming companies are only taxed on their gross gaming revenue which is calculated as the difference between the amount wagered minus the amount paid out. However, the impugned law seeks to go beyond the international practice and best practice by seeking to levy a tax on amounts wagered or staked, a position that has been adopted under the Betting, Gaming and Licensing Act which imposes a gaming tax.

17.Since, the impugned tax is levied on amounts wagered and not gains or profits, it was contended that even those making losses on their wagered bets are required to pay the excise duty on their sums staked. This, according to the petitioners, means that a punter who has no profit or is in a loss-making position will still have to pay the exercise duty on his wagered stake. The impugned law, in their view, in essence seeks to tax a transaction that has not occurred, yet in principle a tax should only be imposed on a transaction that has occurred whereupon the tax becomes payable based on the transaction. A direct example would be to require a party to pay stamp duty on an agreement to sell even before the agreement is executed.

18.The petitioners averred that there are instances where a punter will wage a bet and cancel the same before the event occurs or the game gets delayed, postponed or cancelled and in such instances whereas there is no active bet, under the impugned law, the punter will still be expected to pay excise duty on his waged amount. Their complaint was that the net effect of the impugned provision is that the petitioners and other punters will have to consistently pay the respondents 7.5 % of their capital contribution every time they wager a bet leading to exhaustion of funds. Since the petitioners’ stakes in bets are mostly recycled bets from winnings staked, continued taxation based on amounts staked will lead to exhaustion of the petitioners’ funds through multiple taxation of the same funds with the effect that within no time, once the petitioners’ funds are exhausted, they will not be able to engage in gaming activity any more.

19.It was noted that the 1^st respondent in its report adopted in the year 2020 recognized the adverse effect of the impugned tax on wagered stakes on betting companies in Kenya and proceeded to delete a similar proposal in the Finance Bill 2020 and that the reasons that led to the said deletion have not changed and in any event, the industry has been in more dire straits than even in 2020.

20.According to the petitioners, contrary to article 27 of the Constitution, the impugned law discriminates against the petitioners and other local punters to the extent that it levies tax against them on money held as opposed to winnings or transactions engaged in, a treatment which is not accorded to persons who wager bets on offshore platforms. Further, the Petitioners being investors and players are discriminated against under the impugned law by being required to pay a tax on their investments whereas persons who invest in the money market; on treasury bills and bonds; on unit trusts; in the stock market or deposit their monies in bank accounts are not subjected to pay a similar excise duty on their deposits. According to the petitioners, persons who invest on the stock market are only required to pay tax on their income/ profits and where the stock on which they invest suffers losses they are not subjected to pay tax. the impugned law however, discriminates against the petitioners and other punters to the extent that it requires them to pay a tax on their waged investment whether they win or lose.

21.It was the petitioners’ case that since there is no justifiable reason why the respondents would accord differential treatment to the petitioners against other investors in the gaming industry or in the money market, the impugned tax is punitive and meant to penalise the petitioners and other punters unfairly.

22.Apart from article 27, it was contended that article 40 of the Constitutionis contravened to the extent that the impugned provision seeks to arbitrarily deprive the petitioners and other punters their property staked or wagered on bets. The petitioners complained that the respondents through the impugned provision seek to arbitrarily and without adequate compensation, deprive the petitioners and other punters their property in money just for merely being punters who desire to participate in gaming.

23.To the extent that the impugned law seeks to burden the petitioners and other punters and expropriate their investments/stakes irrespective of whether they win or lose leading to depletion of that investment over time, it was the contention of the petitioners, that article 43 which secures the economic and social rights of every person, including the right to engage in the social and economic life of the society in which a person operates by pursuing economic ventures that uplifts his social and economic status, was contravened since their right to earn a benefit was thereby threatened through the impugned law.

24.In addition, it was their contention that the impugned law contravenes the provisions of article 201(b) of the Constitution which provides as a principle to guide public finance system that the burden of taxation shall be shared fairly. To the extent that the impugned law seeks to place the burden on taxation on the petitioners and other punters at the expense of international gaming players and investors in the money markets, it violates the equity and fairness principle on sharing of burden of taxation. Further, the impugned excise duty is levied on amounts wagered by a punter and not on winnings or gains from a stake, all punters irrespective of whether they win or lose will be required to pay an excise tax out of their pocket or capital investment.

25.The petitioners reiterated that the impugned law contravened section 5 of the Act which provides that excise duty is chargeable on excisable goods which demonstrates that the imposition of excise duty is pegged on provision of a service by a licensed person. In this case, it was contended that the petitioners and other punters do not provide any services to qualify to be considered as qualified for payment of excise duty as sought by the impugned provision. In addition, the impugned provision seeks to levy excise on monies owned by a person that the person seeks to invest and not on any service provided by the person.

26.The petitioners further complained that whereas section 15 of the act provides for licensing of suppliers of excisable services under the act and makes it a criminal offense for one to provide excisable services without a license, the impugned provision does not provide a framework for licensing of the petitioners and other punters hence is ambiguous and self-contradictory and incapable of being implemented.

27.The petitionerstherefore sought the following reliefs:(i)A declaration that section 4A of part II of the first schedule to the Excise Duty Act as introduced by the Finance Act, 2021 is illegal and unlawful and contrary to the provisions of article 10 of the Constitutionand as such null and void ab initio;(ii)A declaration that section 4A of part ii of the first schedule to the Excise Duty Act as introduced by the Finance Act, 2021 is illegal and unlawful and contrary to the provisions of article 27 of the Constitutionand as such null and void ab initio;(iii)A declaration that section 4A of part ii of the first schedule to the Excise Duty Act as introduced by the Finance Act, 2021 is illegal and unlawful and contrary to the provisions of article 40(1)(a) and (2) (a) of the Constitutionand as such null and void ab initio ;(iv)A declaration that section 4A of part ii of the first schedule to the Excise Duty Act as introduced by the Finance Act, 2021 is illegal and unlawful and contrary to the provisions of article 46(1) of the Constitutionand as such null and void ab initio;(v)A declaration that section 4A of part ii of the first schedule to the Excise Duty Act as introduced by the Finance Act, 2021 is illegal and unlawful and contrary to the provisions of article 201(b)(i) of the constitutionand as such null and void ab initio;(vi)An order of prohibition be and is hereby issued restraining the 2^nd respondent whether acting jointly or severally by themselves, their servants, agents, representatives or howsoever otherwise from the implementation, further implementation, administration, application and/or enforcement of section 4a of part ii of the first schedule to the Excise Duty Act, as introduced by the Finance Act, 2021, by collecting and/or demanding payment of Excise duty on betting;(vii)The costs of this petition be borne by the respondents;(viii)Any other or further order or relief that this honorable court deems fit to grant.

28.The petition was supported by an affidavit sworn by the 2^nd petitioner herein in which he reiterated the foregoing and added that excise duty is defined as a form of tax levied by the government on the sale of specified goods or services. By this definition, the petitioners and other punters are not sellers of any category of specified goods or services in the gaming sector but investors who stake bets on platforms provided by the interested parties.

29.It was averred that under the impugned law the respondents will be charging excise duty on the entire value of the transaction as provided the first schedule to the Excise Duty Act which conflicts with the substantive provisions of section 9 the Excised Duty Act on what constitutes the base and value of an excisable service. According to him, in the gaming industry, the amount staked is not the fee charged for the service and that since there is no fee charged to place a bet, there is no basis for the respondent’s imposition of excise duty in line with the provisions of section 9 of the Excise Duty Act. The correct value of the excisable service, according t him, would from the punter’s perspective be the transactional charges when transferring funds (or when withdrawing) from his/her mobile money wallet or the gross gaming revenue tax that is paid by the betting companies under the Act. It was explained that a person using mobile money transfer services to transfer KES 500, the excise duty is levied on the transaction charges collected by the telecommunication company (the basis of the tax is the transaction charge by the telecommunications company), and not on the KES 500 transferred. Similarly, in banking, excise duty applies on the transactional banking charges/ fees and not on the money deposited or withdrawn by an account holder.

30.It was contended that the impugned law as framed in essence seeks to tax a transaction that has not occurred, yet in principle a tax should only be imposed on a transaction that has occurred whereupon the tax becomes payable based on the transaction.

31.It was deposed that article 27(1) of the Constitution guarantees every person the right equal benefit and treatment by the law while article 27(4) thereof provides that the state shall not discriminate directly or indirectly against any person on any ground, the impugned law discriminates against the petitioners and other local punters to the extent that it levies tax against them on money held as opposed to winnings or transactions. Citing article 27(1) of the Constitution that guarantees every person the right equal benefit and treatment by the law, it was contended that while article 27(4) of the Constitution provides that the state shall not discriminate directly engaged in as done to persons in similar ventures. In their view, being investors and players, they are discriminated against under the impugned law by being required to pay a tax on their investments whereas persons who invest in the money market; on treasury bills and bonds; on unit trusts; in the stock market or deposit their monies in bank accounts are not subjected to pay a similar excise duty on their deposits. It was disclosed that a proposal that sought to levy excise duty on Mpesa deposits was rejected and the reasoning accepted by the interested party. According to the petitioners, there is no justifiable reason why the respondents would accord differential treatment to them against other investors in the gaming industry or in the money market.

Petitioners’ Submissions

32.On behalf of the petitioners, it was submitted that the introduction of Excise Duty of 7.5% on betting stake amounts to amongst others, double taxation, discrimination and therefore the law as Amended is unconstitutional. It was urged that section 4A of part ii of the first schedule to the Excise Duty Actas introduced by the Finance Act, 2021 be declared as illegal and unconstitutional as being contrary to article 10,27,40,46, 201(a)(i) of the Constitution. The petitioners further sought an order of prohibition restraining the 2^nd respondent from implementing, applying and/or enforcing of section 4A of part ii of the first schedule to the Excise Duty Act by collecting and/or demanding payment of Excise Duty on betting.

33.While Excise duty is defined as a form of tax levies by the government on the sale of specified goods and services, the petitioners submitted by that very definition, they are not sellers of any category of specified goods or services as listed in the schedules to the Act.

34.It was the petitioners case and submission that by the introduction of the impugned section, the petitioners will be required to pay 7.5% excise duty by just having money on their betting wallets. In other words, Kenya Revenue Authority will in essence tax the petitioners (and indeed all the punters) just for having money and being a player and taking a risk(stake) and without effectively consuming the goods/services which in fact is being purchased. Should the amendment be allowed to stand, it was submitted that the 2^nd respondent will irregularly levy tax on the amounts staked by punters despite the punters neither providing a specified excisable service nor consuming an excisable goods from the interested parties. To the petitioners, the effect of this amendment which the petitioners are challenging is that the 2^nd respondent will be levying tax on a punter on his stake whether he wins or losses and that the conflict can be seen that while the respondents will be charging excise duty on the entire value of the transaction as provided for in the First Schedule to the Excise Duty Act, the substantive provisions of section 9 charges on what constitutes the base and value of an excisable service. The petitioners, in their submissions cited the holdings in County Government of Nyeri & another v Cecilia Wangechi Ndungu (2015) eKLR, Cape Brandy Syndicate v IR Commissioners [1921] 1KB, Scott v Russell (Inspector of Taxes), [1948]2 All ER and the court of Appeal decision in Mount Kenya Bottlers Ltd & 3 others v Attorney General & 3 others [2019]eKLR.

35.While citing article 27 of the Constitution, The Black’s Law Dictionary, 9^th Edition, Peter K Waweru –vs- Republic [2006] eKLR it was submitted that while this law seeks to target punters within the Republic and to have them in one tax bracket, the offshore betting companies and operators found online who have access to the Kenyan gaming but are not subject to the local tax laws hence the said companies will not be subject to the impugned 7.5% excise duty and thereby giving them an undue advantage in the gaming business. Therefore, in so far that the offshore betting companies who have access to the Kenya market not required and not subjected to local tax laws, the same is discrimination and goes against article 27 of the Constitution.

36.According to the petitioners, when faced with a contention that there is a differentiation in legislation and that such differentiation is discriminatory, what the court has to consider is whether the law does indeed differentiate between persons; if it does, whether such differentiation amounts to discrimination, and whether such discrimination is unfair and reference was made to In EG &7 others v Attorney General; DKM & 9 others (interested parties); Katiba Institute & another; Petition 150 & 234 of 2016 (Consolidated).

37.In their submissions, from the above definition, it is safe to state that Constitution only prohibits unfair discrimination which is differential treatment that is demeaning and that this happens when a law or conduct, for no good reason, treats some people as inferior or less deserving of respect than others. It also occurs when a law or conduct perpetuates or does nothing to remedy existing disadvantages and marginalization. According to the petitioners, the impugned law discriminates against them and other local punters to the extent that it levies tax against them on monies held as opposed to winning or transactions engaged in similar treatment is not accorded to persons who wager bets on offshore platforms.

38.It was further submitted that the petitioners being investors and players are discriminated against under the impugned law by being required to pay a tax on their investments whereas person who invest in the money, on treasury bills and bonds, on unit trust, in the stock market or deposit their monies in bank accounts are not subjected to pay a similar excise duty on their deposits. They lamented that since there is no justifiable reason why the respondents would accord differential treatment to the petitioners against other investors in the gaming industry or in the money market, the impugned tax is therefore punitive and meant to penalize the petitioners and other punters unfairly.

39.According to the petitioners, article 40 of the Constitution is contravened to the extent that the impugned provision seeks to arbitrarily deprive the petitioners and other punters their property in money just by merely being punters who desires to participate in gaming hence seeks to expropriate the petitioners property without adequate compensation. Reference was made to Evelyn College of Design Ltd –vs- Director of Children’s Department & Another [2013] eKLR and it was submitted that the impugned law contravenes the provision of article 201(b) of the Constitution which provides as a principle to guide public finance system that the burden of taxation shall be shared equally. To the extent that the impugned law seeks to place the burden on taxation on the petitioners and other punters at the expense of international gaming players and investors in the money market, it violates the equity and fairness principle on sharing of burden of taxation. In this regard reliance was placed on Kenya Bankers Association v Kenya Revenue Authority [2018] eKLR where reference was made to R v Inland Revenue Commissioners exp National Federation of Self Employed and Small Business Limited [1981] UKHL at page 22, Samura Engineering Limited & others v Kenya Revenue HC Petition No 54 of 2011 [2012]eKLR, Nelson Andayi Havi v Law Society of Kenya & 3 others[2018] eKLR at paragraph 92 and Law Society of Kenya v Kenya Revenue Authority & Another[2017] eKLR,

40.The court was further urged to find the impugned law lacking in clarity and uncertain in its enforcement. In support, the petitioners relied on the case of Keroche Industries Ltd v Kenya Revenue Authority & 5 others Nairobi HCMA No 743 of 2006; [2007]2 KLR 240, Grayned v City of Rockford [1972] 408 US 104, Commissioner of Income Tax v Westmont Power(K) Ltd [2006] eKLR.

41.In this case it was submitted that section 5 of the Act provides that a tax to be known as excise duty, shall be charged in accordance with the provisions of this Act on—excisable goods manufactured in Kenya by a licensed manufacturer; excisable services supplied in Kenya by a licensed person; or excisable goods imported into Kenya. To the petitioners, a literal reading of the above provision demonstrates that the imposition of excise duty is pegged on provision of a service by a licensed person. In this case, the Petitioners and other punters do not provide any services to qualify to be considered as qualified for payment of excise duty as sought by the impugned provision. Reference was also made to section 5(3)(b) that provides that the excise duty payable by a service provider shall be payable by the licensed person making the supply of services.

42.It was the petitioners’ case that the impugned provision contradicts the provisions of section 5 of Excise Duty Act which provides that excise duty is payable on a service rendered or a good manufactured and imported into Kenya by seeking seeks to levy excise on monies owned by a person that the person seeks to invest and not on any service provided by the person.

43.Reference was further made to section 15 of the Act that provides for licensing of suppliers of excisable services under the Act and makes it a criminal offense for one to provide excisable services without a license. The impugned provision, it was contended does not provide a framework for licensing of the petitioners and other punters. To this end the impugned provision is ambiguous and self-contradictory and incapable of being implemented.

44.In light of the foregoing, the petitioners urged this court to find for the petitioners and allow the petition as pleaded.

The 8^th Interested Party’s Case

45.The petition was supported by the 8^th interested party vide an affidavit sworn by Bernard Chauro, the Operations Manager of the 8^th interested party, a private limited company that carries on the business of Bookmarkers within the Republic of Kenya.

46.According to the deponent, the 8^th interested party in the course of its business provides an online platform through which punters wage and or stake bets on games that have been selected to be in play. He explained that a punter wages a bet by selecting games and predicting the outcome of those games by placing a sum that would earn him a premium if correct or he loses the sum waged if the prediction of the selected games is not accurate. At the time when a punter selects games and places a bet there is no financial transaction that is deemed to have occurred and that the transactions become alive when the selected games are played to their conclusion and there is a definite outcome at the end of the game(s).

47.It was averred that that there are instances where once a punter selects and wages a bet/ stake on a game, the event/game does not occur; a game may be postponed, cancelled or abandoned for whatever reason that may affect or impair its conclusion. In such an instance since no transaction has taken place, the punter is entitled to return of the full amount of the stake wagered on the game.

48.It was disclosed that as a betting company the 8^th interested party collects a raft of taxes from punters who wage bets on its platform on behalf of the respondents and these include 20 % withholding tax on all winnings from games staked. However, where a punter who stakes a bet loses in the bet, the total sum that he wagered is paid to the company. In such instances, under the Betting, Lotteries and Gaming Act, the 8^th interested party and other betting companies pay a total of 15% of the gross revenue collected from losing stakes as the company’s gross gaming revenue.

49.In this case it was deposed that the respondents have sought to introduce an excise duty on sums staked or wagered. The import of this provision of the law is that as long as a punter wagers a bet, they will be required to pay 7.5 % of the sum staked as excise duty. The import of this provision is that this tax will be collected without and before a transaction occurs and it is levied on a global sum staked and not on charges levied by the betting companies for providing a service.

50.While citing section 9 of the Excise Duty Act, it was deposed that in the betting industry, the amount staked is not the fee charged for providing betting services. If betting companies charged a fee for staking/waging a bet then that is what would qualify as a service fee on which an excise duty would be levied. It was explained that the income earned in the betting industry is not from any fees or commissions but from the lost bets by punters. This is what is referred to the Gross Gaming Revenue (GGR).

51.It was averred that if an excise duty were to be levied on betting, which it should not, the excisable value, based on the provisions of section 9 the Excise Duty Act, would technically be the gross gaming revenue as this is fee/charge earned from betting transactions. The said sum is only revenue earned by the companies from losing bets and is already subjected to 15 % GGR tax under section 29A of the Betting Lotteries and Gaming Act. However, under the impugned law the respondents will be charging excise duty on the entire value of the transaction as provided under section 4A of the Excise Duty Actwhich conflicts with the substantive provisions of section 9 the Excised Duty Act on what constitutes the base and value of an excisable service.

52.According to the deponent, there are offshore betting companies and operators found online including amongst others Bet365 and 22Bet who have access to the Kenyan gaming public but are not subject to the local tax laws. The said companies will not be subject to the introduced and impugned 7.5% excise duty and thereby giving them an undue advantage in the gaming business. It was deposed that international best practice, as exemplified by some countries which the deponent sampled, is that betting and gaming companies are taxed on their gross gaming revenue which is calculated as the difference between the amount wagered minus the amount paid out. The impugned law seeks to go beyond the international practice and best practice by seeking to levy a tax on amounts wagered or staked. This international practice is the adopted position under the Betting, Gaming and Licensing Act which imposes a gaming tax.

53.According to the deponent there has been a previous attempt to introduce the impugned excise duty on sums staked and the 1^st respondent upon considering submissions of parties and assessing the impact of the law on the betting industry determined that the impugned tax would adversely affect the betting industries leading to closures. It was the view that the same reasons which informed rejection of law last year still exist today. The 1^st respondent having made a determination that introducing the impugned provisions in Kenya would affect betting companies, they should not retrograde at this point and reintroduce the same provision within the year.

8^th Interested Party’s Submissions

54.On behalf of the 8^th interested party, it was submitted that in introducing the excise tax on deposits amounts staked or wagered by the petitioners and other punters, the respondents will in essence tax a punter just for having money and being a player and taking a risk [stake] and without effectively consuming the good/service which in fact is being purchased.

55.The impugned provision of the law enables the respondents to levy tax on a punter on his stake whether he wins or losses. It imposes an excise duty at the point when a punter wages his bet even before the transaction takes place. It is the petitioners’ case that a betting transaction takes place once the event against which a bet is waged takes place eg once the game which a bet is staked is played to its logical conclusion.

56.It was further the petitioners’ case that pursuant to section 9(4) of the Excise Duty Act, the impugned law as framed would be contrary to the above provision of section 9(4) of the Act since it departs from the settled basis of charging excise duty being the fee, commission or charge payable for the services. The law as framed seeks to charge the excise duty on the actual sum staked even before the transaction takes place. The correct position would have been to levy an excise duty on any fees, charges or commission levied for the wagered bet.

57.It was submitted that the impugned law contravenes article 201(b)(i) of the Constitution to the extent that it seeks to lay the burden of taxation on a particular class of people engaged in acts of gaming under the Betting Lotteries and Gaming Act. Article 201(b)(i) provides that the public finance system shall promote an equitable society and in particular- the burden of taxation shall be shared fairly. It is our submission that the impugned law to the extent that it requires punters to pay tax before the transaction occurs infringes on article 201(b) (i) and imposes an unfair burden of taxation on punters. Reliance was placed on the case of Law Society of Kenya v Kenya Revenue Authority & another [2017] eKLR.

58.It was submitted that to the extent that the impugned law seeks to impose a tax on stakes held by punters it is unfairly taxing them whereas other cluster of persons in almost similar situation are not taxed on their gross deposits but on transaction fees, charges and or commissions. In a betting transaction as it is there are a plethora of taxes which punters pay in the course of their transactions and to impose an additional levy on their stakes is an unfair targeting of that group of citizens in a manner that offends the provisions of article 201(b)(i) of the Constitution. Therefore, to add an additional tax on their stakes and not winnings is to unfairly target and burden this cluster of citizens. They are made to bear an unfair burden of taxation as compared to other citizens who have money in their pockets. Reference was made to the case of Kenya Flower Council v Meru County Government[2019] eKLR and the court was urged to be guided by the above decision and find that the impugned law infringes on the provisions of article 201(b)(i) of the Constitution.

59.It was further submitted that the respondents in coming up with the impugned law violated the provisions of article 10 of the Constitution which provides the national values and principles of governance amongst them participation of the people, social justice, and non discrimination which are indicated to be binding on all State organs, state officers, public officers and all persons whenever they make or implement public policy decisions. In this regard reference was made to the case of George Bala v Attorney GeneraL[2017] eKLR.

60.It was submitted that the 8^th interested party in its presentation to the parliamentary Committee on Finance made representation to demonstrate the unfairness of the impugned law. All the stakeholders who appeared and represented on the same were of similar opinion and view. The Report of the Committee captures the representations. To the extent that the Committee ignored and failed to take into account the representations by stakeholders on the impugned law that was a violation of article 10 on participation of the people. According to the 8^th interested party, the courts have held that public participation must be qualitative and not merely quantitative. The Committee in its report failed to set out why they ignored or failed to take into account the representations received from the stakeholders during the public participation process. Public participation is a key governance cog and not merely a conveyor belt where the policy maker meets the people and ignores their input. Reference was made to the case of Robert N Gakuru & others v Governor Kiambu County & 3 others [2014] eKLR.

61.It was averred that in the previous year the 1^st respondent after undertaking public participation on the same subject arrived at a decision that introducing a similar provision as the impugned law would have dire consequences to the betting industry in Kenya and proceeded to reject a proposal to introduce a similar excise tax in that year’s Finance Bill 2020. Therefore, it was contended, it is irrational for the same 1^st respondent to ignore the same reasons that led it to reject a similar proposal one year ago and reintroduce them in 2021. There are no reasons for the apparent change of heart and differing position on the same subject matter one year down the line. This is irrational and an abuse of administrative discretion which the court should frown upon.

62.It was further submitted that the impugned provision infringes on article 40 of the Constitution to the extent that it seeks to progressively deplete a punter’s investment in the betting ecosystem. According to the 8^th interested party, it is an accepted principle of taxation is the principle of economic capacity which states that the percentage of the income of the taxpayers that can be legitimately affected by a tax must not be excessive than the wealth objectively available.

63.It was submitted that the impugned law to the extent that it requires a tax to be levied on a punters stake (win or loss) will lead to capital exhaustion when there is progressive taxation every time a punter wages a bet. The sum (capital) introduced into the system will be constantly subjected to an excise tax and reduce at 7.5%. Cumulatively the whole sum will dissipate leading to loss of income and a revenue earning opportunity to the nation. This is contrary to the national economic interest which should aim to sustain a continuous revenue stream to increase the national cake. It was therefore contended that the impugned law to the extent that it will lead to progressive capital exhaustion of wagered bets unfairly infringes on the punters right to property and seeks to arbitrarily deprive them of their property that they invest in betting activities without any transaction taking place.

64.The interested party took the same view as the petitioners, that the impugned provision is discriminatory to the extent that it treats local punters and betting companies differently from punters betting on off shore platforms and off shore betting companies that have a presence in Kenya, contrary to the provisions of article 27 of the Constitution. According to them, off shore betting companies not registered in Kenya are exempted from this provision of the law and hence will have an unfair advantage over betting companies registered in Kenya. Accordingly, the impugned law in essence encourages off shore gaming thereby leading to capital flight and a blot on the nation’s economic interest. It is partly due to this realization that the 1^st Respondent in the year 2020 in the Report of the Departmental Committee on Finance and National Planning on the Consideration of the Finance Bill, removed a similar provision as the impugned provision.

65.It was further contended that local punters are also discriminated against when juxtaposed against punters who wager bets on off shore platforms that are exempt from the impugned law. The impugned provision discriminates against local betting companies as compared to off shore companies that also have access to the Kenyan gaming population. It gives the off shore betting companies an unfair advantage in the Kenyan gaming field at the expense of Kenyan companies since they are exempt from the application of the impugned law.

66.It was further contended that persons in almost similar situations involving deposits of monies are not equally subjected to excise duty on their deposits. Persons who deposit money in their bank accounts or mobile wallets are not charged an excise duty on the total sum deposited but only on the transaction costs charged by the bank or mobile company. The interested party cited the case of Stanley Waweru- Chairman & 3 others (Suing as Officials of Kitengela Bar Owners Association) v National Assembly & 2 others[2021] eKLR Kenya Bankers Association v Kenya Revenue Authority(2018) eKLR where reference was made to R v Inland Revenue Commissioners exp National Federation of Self Employed and Small Business Limited [1981] UKHL 2 , Samura Engineering Limited & others v Kenya Revenue Authority HC Petition No 54 of 2011 [2012] eKLR, Nelson Andayi Havi v Law Society of Kenya & 3 others [2018] eKLR and it was submitted that the list provided in article 27 is not exhaustive but merely indicative. To impose an excise duty on sums held by punters and not on persons depositing monies on mobile wallets or banks is to discriminate against the punter. According to them, the point of taxation should be at a similar scale and level; at the point of transaction and on the transaction fees or charges and not at the entry point even before the transaction occurs.

67.Just like the petitioners, the 8^th interested reinforced the fact that the impugned provision contradicts the provisions of section 9(4) of the Excise Duty Act thereby leading to ambiguity and uncertainty in the law on levying excise duty tax.

68.Based on the above submissions the 8^th interested party prayed that the court allows the petition and grants the orders sought.

1^st Respondent/National Assembly’s Response

69.In response to the petition, the 1^st respondent, the National Assembly relied on the affidavit sworn by Michael Sialai the 1^st respondent’s clerk, in which the deponent cited article 209 of the Constitution as empowering the National Assembly to impose taxes and charges including income tax, value-added tax, customs duties and other duties on import and export goods and excise tax. According to him, the manner in which the tax is defined, administered and collected is a matter for parliament to define. Under article 209 of the Constitution, it was deposed, the legislature retains wide authority to define the scope of the tax.

70.The deponent also relied on article 210 of the Constitution which requires that there be legislation duly enacted by Parliament before taxes can be levied and contended that it is therefore constitutional for Parliament to pass the Finance Act, 2021 approving that taxes be levied. It was his position that it is within the authority of the National Assembly to enact legislation governing the manner in which a particular form of tax is administered including the manner in which it imposed, calculated and enforced.

71.Based on article 209 of the Constitution, it was deposed that the national government is permitted to impose taxes as a means of raising national revenue and that specifically, article 209(2) of the Constitution provides that an Act of Parliament may authorize the National Government to impose any other tax or duty except a tax specified in Clause 3 (a) or (b). In view of this article of the Constitution, the national government powers to impose any tax is broad.

72.It was explained that the Finance Bill (National Assembly Bill No 18 of 2021) was read a first time on May 11, 2021 and thereafter committed to the Departmental Committee on Finance and National Planning pursuant to Standing Order 127 of the National Assembly Standing Orders. The said Bill proposed amendments to various Laws, including the Excise Duty Act, 2015. The Finance Bill, 2021 was tabled before the House of the National Assembly on June 22, 2021 when it was read a second time where various amendments were proposed to the bill and the debates on the second reading of the Bill proceeded on the June 23, 2021. On May 20, 2021 and in accordance with the requirements of article 118 of the Constitution on public participation the National assembly facilitated public participation of the Finance Bill, 2021 through print media by placing an advertisement in both the Standard and Daily Nation newspapers asking for memoranda from stakeholders.

73.It was averred that following placement of adverts in the print media on May 20, 2021 requesting for comments on the Bill from members of the public and relevant stakeholders pursuant to article 118(1)(b) of the Constitution and Standing Order 127, the Committee received memoranda from fifty-six (56) stakeholders including the Institute of certified Accountants (ICPAK) and Milestone & Gaming Limited. On 2^nd and June 3, 2021 the Committee on Finance and National Planning held public hearings on the Bill in Trademark Hotel, Village Market, wherein the Committee heard further views from stakeholders and the public.

74.Thereafter, it was deposed, the National Assembly’s Departmental Committee on Finance and National Planning compiled its report having considered the nature of the views concerns of the different stakeholders which report was laid before the National Assembly on June 22, 2021. It was disclosed that during the consideration of the report by the National Assembly at the second reading on June 22, 2021, Members proposed that taxation on betting activities be increased and spread out all the areas of betting to ensure the spread of the taxation burden equally amongst all users and beneficiaries of these services. Accordingly, the Committee recommended insertion of the provision on excise duty for gaming at 7.5% of the amount wagered or staked; excise duty on price competition at 7.5% of the amount paid or charged to participate in a prize competition; and Excise Duty on lottery (excluding charitable lotteries) at 7.5% of the amount paid or charged to buy the lottery ticket. It was averred that the Committee had in fact reduced the amount from the proposed 20%.

75.Apart from that at the Sitting of the National Assembly held on June 24, 2021 the Chairperson of the Departmental Committee on Finance and National Planning duly moved amendments to the Finance Bill, 2021 introducing excise duty of 7.5% of the amount wagered or staked on gaming which amendments were considered by the House and passed.

76.According to the deponent, in passing the Finance Act, 2021, the National Assembly adhered to its own internal procedures and constitutional requirements when considering the amendments and no reasons have been given for the court to interfere with the manner in which the House conducts its business.

77.It was therefore deposed that the imposition of Excise Duty of the amount wagered or staked on gaming cannot be unconstitutional as the Constitutionpermits the national government to impose taxes as a means of raising revenue. Further, a statute cannot be unconstitutional merely because it does not meet the economic interest of the petitioners.

78.It was urged that in determining the constitutionality of an Act of Parliament, the court should look at the purpose and effect of the impugned statute and if the purpose and/or the effect of the statute do not infringe on a right guaranteed by the Constitution, the statute is not unconstitutional. In this case, the purpose and effect of the impugned section is to widen the government’s revenue base which will be utilized for a public purpose.

79.Based on legal advice, the deponent averred that the rate of taxation is a policy decision solely within the mandate of the Executive and enacted by parliament and this court ought to decline to make policy decisions which are solely within the realm of the other arms of government. In any case, the enactment of the impugned section is within the powers of the state and that the state may impose legislation at its discretion having regard to the state of the economy.

80.According to the deponent, while article 27(1) provides for equality, the same provisions do not prohibit differentiation or classification based on different requirements and that what the Constitution requires is that any classification or differentiation based on prohibited grounds set out in article 27 must bear a rational connection to a legitimate government purpose. In this case, it was contended that it has been clearly justified by the respondents, being mandated to formulate policy decisions in regard to taxation, that there are many areas within the betting and Lottering transactions not being subjected to taxes, not forgetting the negative implications of such activities.

81.It was the deponent’s position that the petitioners had not shown that persons and/or entities undertaking similar activities are taxed at different rates. Therefore, the averment that the impugned section discriminates against the petitioners is not supported by any or any cogent evidence at all as the petitioners did not place any material before court to prove that the impugned provisions discriminates against them.

82.It was further averred, with regard to the burden of taxation being shared fairly, that there is no doubt that taxing the gambling industry ensures that gamblers particularly majority who loose in the games of chance can receive services from the government either in form of education and rehabilitation from addiction. The whole society benefits when taxation for the gambling industry is designed to help redress the social harm to the society from the profit activities of betting companies. Equity should therefore not be seen in the narrow lenses of comparing various corporates, rather on the actual activity underlying the taxation, relative incomes generated, relative economic standings of investors in gambling, and consumers among others. It was therefore averred that the impugned provision strikes a fair balance between the interests of the Petitioners and those of the other taxpayers and ought not to be declared unlawful since it creates in a fair balance between the taxpayer concerned and the interests of the other taxpayers in the country.

83.In the case of related industries, it was averred that whenever tobacco and beer industries impose economic and social costs on society through addiction and other ills, it is the government that steps through various programs including taxation to aid those affected. Short of banning gambling activities, the government has instead chosen the fairer route of allowing the activities but using a more robust and equitable tax design to help serve public good.

84.Taxes, according to the deponent, are a form of raising revenue sanctioned by the Constitutionand the imposition of taxes does not deprive the petitioners of the right to property provided under article 40 or any other article of the Constitution and as such the petitioners’ allegations that they have been deprived of their property by paying taxes has no basis in law. Since the imposition of tax by legislation has been duly enacted, it was his case that the collection of such tax, cannot amount to infringement of the constitutional right to taxation that is fair, or any other constitutional right or freedom. Further, the impugned provision has not subjected the petitioners to double taxation contrary to their claim.

85.It was deposed that the petitioner is wrongly summing up taxes imposed on punters with those imposed on betting companies and that this distinction must be expressly established in order to understand the intention of the provision. To the deponent, the imposition of taxes at different levels in an economic activity is not uncommon. It is often the case that taxes are imposed on different transactions to serve different purposes. This is the case in the payment of taxes by businesses who incur withholding taxes, excise duty, income tax among others.

86.Regarding the allegation that the impugned amendment negatively impacts upon the petitioners, it was averred that the payment of taxes is an obligation imposed on all businesses and individuals. Therefore, if the court were to uphold the petitioners’ arguments, it would open the flood gates since nearly all businesses and individuals would raise similar issues about taxation, fairness issues, double taxation, among others with possible abandonment of the need to pay taxes.

87.According to the deponent, the circumstances existing in other jurisdictions are in variance to those in Kenya, specifically in respect to the Kenyan economy. Therefore, the Respondents have the mandate to assess the economic conditions existing within our context and legislate accordingly in line with our needs and priorities.

88.Since the imposition of tax is by legislation that has been duly enacted, the collection thereof cannot amount to infringement of the constitutional right to taxation that is fair, or any other constitutional right or freedom. To the contrary, the Finance Act is a crucial piece of legislation that impacts on the entire budget of a particular year and if it is interfered with, the operations of government will be affected due to the deficit in expenditure that is required to service development programs.

89.The court was therefore urged not to exercise its discretion by granting the orders sought in the said petition and instead dismiss the petition dated July 8, 2021 with costs.

1^st Respondent’s Submissions

90.On whether the impugned provision offends article 201(b) of the Constitution on burden of taxation, the 1^st respondent, while reiterating the foregoing, submitted that the petitioners, taxing the gambling industry ensures that gamblers particularly majority who loose in the games of chance can receive services from the government either in form of education and addiction rehabilitation hence the whole society benefits when taxation for the gambling industry is designed to help redress the social harm to the society from the profit activities of betting companies. Accordingly, equity should therefore not be seen in the narrow lenses of comparing various corporates, rather on the actual activity underlying the taxation, relative incomes generated, relative economic standings of investors in gambling, and consumers among others.

91.In the case of related industries, it was submitted that whenever tobacco and beer industries impose economic and social costs on society through addiction and other ills, it is the government that steps through various programs including taxation to aid those affected. Short of banning gambling activities, the government has instead chosen the fairer route of allowing the activities but using a more robust and equitable tax design to help serve public good. The 1^st respondent, in support of its submissions relied on the case of Partington v Attorney General (1869): - 4HL 100, 122.

92.The 1^st respondent also submitted that the rate of taxation is a policy decision solely within the mandate of the executive and enacted by parliament and this court ought to decline to make policy decisions which are solely within the realm of the other arms of government. This submission was based on the case of Scotch Whisky Association and others vs. the Lord Advocate and another (2017) UKSC 76 where the Supreme Court of Scotland set the minimum pricing of alcohol to target the problematic drinking.

93.On the issue of double taxation, the 1^st respondent submitted that it cannot arise as argued by the petitioners. First, in a betting transaction, the petitioners are only charged Excise duty on stake under the Excise Duty Act when they place a bet and withholding tax on winnings as provided under the Income Tax Act at the point they have an effectual outcome. The two taxes are distinct from each other. According to the 1^st respondent, withholding tax on winnings is an income tax while Excise duty on the other hand is levied on excisable goods and services.

94.It was contended that the imposition of taxes at different levels in an economic activity is not uncommon. For example, imported goods such as vehicles are subject to import duties, VAT, excise duties, and other port fees. A company in the business of selling used vehicles in Kenya would further need to pay other taxes such as income tax.

95.Overall, the 1^st respondent submitted, the danger of the argument advanced by the petitioners if allowed would render taxation of businesses and individuals impossible. Nearly all businesses and individuals would raise similar issues about taxation, fairness issues, double taxation, among others with possible abandonment of the need to pay taxes. Indeed, even wage employees who are subject to PAYE but continue to pay consumption taxes such as VAT and excise duties on their purchases would equally argue they are overburdened by taxation on their take home pay.

96.Based on the foregoing, it was submitted that the impugned tax does not violate the provisions of article 201(b) of the Constitution as alleged by the petitioner or at all.

97.Regarding the alleged violation of the petitioners’ rights under 40 of the Constitution, it was submitted that article 210 of the Constitution requires that since a statute be enacted by Parliament before taxes can be levied and that the Finance Act complied with the Constitution, the petitioners cannot claim violation of the right to property in this instance since the imposition of the tax has clearly been instituted by dint of a constitutionally legislated law. Reliance for this position was sought on the case of George Lesaloi Selelo & another v Commissioner General, KRA & 4 others; Pevans EA Limited (t/a Sportpesa) & 3 others[2019] eKLR, Kenya Union of Domestic, Hotels, Education Institutions and Hospital Workers (Kudheiha Workers Union) v Kenya Revenue Authority & 3 others[2014] eKLR and Bidco Oil Refineries Limited vs. Attorney General & 3 others [2013] eKLR.

98.According to the 1^st respondent, in Huitson v HMRC [2011] EWCA Civ 893 where the appellant challenged the retroactive legislation on the basis that it violated his right to enjoy his property as contained in the First Protocol to the European Convention on Human Rights. Among the grounds that were advanced for challenging the retroactive legislation, the appellant contended that it violated his legitimate expectation as a taxpayer and that it was against the principle of legality. The court held that the enactment of fiscal legislation is within the powers of the state and that the state may impose legislation at its discretion having regard to the state of the economy. Moreover, the court stated that the legislation strikes a fair balance between the interests of the appellant and those of the other taxpayers. In effect the court expressed the view that legislation cannot be declared unlawful if it creates in a fair balance between the taxpayer concerned and the interests of the other taxpayers in the country.

99.Therefore, 1st respondent further submitted that taxes are a form of raising revenue sanctioned by the Constitution and the imposition of taxes does not deprive the petitioners of the right to property provided under article 40 of the Constitution and as such the petitioner’s allegations that they have been deprived of their property by paying taxes has no basis in law.

100.As such, the 1st respondent urged this court to note that payment of taxes is an obligation imposed on all businesses and individuals. Therefore, if the court were to uphold the petitioners’ arguments, it would open the flood gates since nearly all businesses and individuals would raise similar issues about taxation with possible abandonment of the need to pay taxes.

101.In any case, it was submitted, the petitioners have not established any concrete controversy, and that their assertions are simply premised on general development or underlying facts. In the premises, the 1st respondent submitted that the courts is required to balance the interests of society with those of individuals and groups and that it is in public interest that taxes must be paid. As such, the impugned legislation does not infringe on the petitioners rights to property, but it is aimed at serving a legitimate public interest.

102.Regarding article 10 of the Constitution, the 1st respondent reiterated the steps taken in enacting the Act and it was submitted that the public was involved in the process of enactment of the impugned law through submissions and memoranda from stakeholders and the public hearing held at Trademark Hotel. The fact that the outcome did not result in what the petitioners wanted does not negate public participation. Consequently, the process of enactment of the impugned law did not violate the principle of public participation under the Constitution.

103.As to whether the impugned amendments discriminates against the petitioners, it was submitted that this averment is not supported by any or any cogent evidence at all as the petitioners have not placed any material before court to prove to this court that the Act discriminates against them. According to the 1st respondent, while article 27(1) provides for equality, the same provisions do not prohibit differentiation or classification based on different requirements of the law. What the Constitution requires is that any classification or differentiation must bear a rational connection to a legitimate government purpose. This has been achieved by the provision of the impugned section which seeks to discourage the habit of gambling and at the same time provide an avenue for the state to increase its revenue through taxes.

104.The 1^st respondent’s also submitted that, taxes need not look the same. Selective taxes may be applied to different sectors for different reasons. Selective methods of taxation may be used to address distribution, equity among others. The taxes and rates on wealth, property and different types of income (eg consultancy fee) are not the same. Thus, the tax need not be similar to another for it to be rational and not discriminatory.

105.For the court to uphold the plea for discrimination, it must be shown that persons or entities undertaking similar activities are taxed at different rates. In this case, the petitioners have not shown that persons or entities undertaking similar activities are taxed at different rates.

106.The 1^st respondent submitted that courts have on numerous occasions made it clear that differential taxation schemes are not unconstitutional. In this regard the 1^st respondent relied on the decision of the Court of Appeal in the case of Mohammed Abduba Dida v Debate Media Limited & another [2018] eKLR and Nelson Andayi Havi v Law Society of Kenya & 3 others [2018] eKLR and submitted that from the evidence on record, other than general assertions, no discrimination, as understood in law was disclosed by the petitioners and that the petitioners have not demonstrated how they have been discriminated against.

107.According to the 1^st respondent, various sectors are subject to different tax regimes which ordinarily would not also apply to the petitioners, thereby the government has the power to generate policies and impose taxes as it deems practical for the various industry players. Selective methods of taxation may be used to address matters on equal distribution of the tax burden. In this regard, the 1^st respondent relied on the case of EG & 7 others v Attorney General; DKM & 9 others (Interested Parties); Katiba Institute & another (amicus curiae) Petition 150 & 234 of 2016 (Consolidated).

108.Based on the foregoing, it was submitted that where there is a legitimate reason to differentiate, then, the conduct complained of cannot amount to discrimination and further reliance was placed on the case of Federation of Women Lawyers Kenya (FIDA-K) & 5 Others vs. Attorney General & Another[2011] eKLR wherein the court stated that differentiation in treatment that results in inequality does not amount to discrimination.

109.The petitioners, according to the 1^st respondent, have failed to provide evidence to prove the inequality alleged and has not shown how the provisions of the Act have imposed unfair discrimination. On the contrary, the impugned provisions seek to enhance the public interest by increasing revenues available to the state in order to meet the needs of Kenyan citizens. Since taxes are a form of raising revenue sanctioned by the Constitution, the mere imposition of taxes cannot be unconstitutional as the Constitution permits the national government to impose taxes as a means of raising revenue. The government may further impose various conditions and exemptions as it deems fit in the circumstances to ensure the efficient implementation of the law. The 1^st respondent therefore contended that the introduction of the impugned provision is not in violation of the right to equality and non-discrimination. This was based on the decision in the case of Pevans East Africa Limited & another v Chairman, Betting Control & Licensing Board & 7 others [2018]eKLR.

110.The court was urged to discern the intention of the legislators in raising revenue for the general public in accordance with the Constitutionand to find that the application of the impugned tax has in no way discriminated against the petitioners before court since the introduction of the tax has been necessitated by a gap in the law that has been considered through policy measures of the government and the imposition of the tax. Further, that the imposition of taxes does not amount to discrimination and as such the Petitioners’ allegations that they have been discriminated against by paying taxes has no basis in law.

111.On the issue whether the impugned law contradicts section 9(4) of the Excise Duty Act leading to vagueness, ambiguity and uncertainty of law, the 1^st respondent set out section 5(1) of the Excise Duty Act and also reproduced part II of the first schedule of the Excise Duty Act as amended by the Finance Act, 2021 under which section 4 provides for betting as an excisable service hence betting is an excisable service and was correctly brought to charge. It was submitted that the stake is the charge that allows punters to participate in a bet, game or a lottery. To that extent, there is no uncertainty or ambiguity created by the impugned provision.

112.For the reasons stated above it was the 1^st respondent’s submission that;a)Under articles 94(1), 109 and 210(1) of the Constitution, Parliament, in every year, enacts the Finance Act to sanction measures and impose taxes to raise national revenue. As such, the Finance Act is a crucial piece of legislation that impacts on the entire budget of a particular year, if it is interfered with, then the government will have no option than to abandon part of the already approved expenditure, potentially affecting government operations and development programs.b)The National Assembly did conduct public participation on the impugned provision and took the views of the public into account as well as the views of all members of the National Assembly as representatives of various constituencies.c)It is within the authority of the 1^st respondent to enact legislation governing the manner in which a particular form of tax is administered including the manner in which it imposed, calculated and enforced. Consequently the 1^st respondent did not breach its parliamentary role in enacting the impugned provisions.d)Collection of taxes through the procedures provided by the law cannot, constitute an arbitrary deprivation of property.e)The Finance Act, 2021 and the rate of taxation which is a policy decision solely within the mandate of the Executive and enacted by Parliament.f)From the evidence on record, other than general assertions, no discrimination, as understood in law was disclosed by the petitioners. Further, the petitioners have not demonstrated how they have been discriminated against.g)The imposition of tax by legislation that has been duly enacted, and the collection of such tax, cannot amount to infringement of the constitutional right to taxation that is fair, or any other constitutional right or freedom.h)In any case, the mere fact that impugned section imposes burdensome consequences does not require that a court find such legislation to be an unconstitutional.i)The petition has not disclosed how the Constitutionhas been violated by the state raising revenue through enactment of taxation measures.j)Betting is not a right. There is absolutely no right to bet and or game.

113.In the result, the 1^st respondent urged that this petition lacks merits and ought to be dismissed with costs.

The 2^nd Respondent/Kenya Revenue Authority’s Case

114.In opposing the petition, the 2^nd respondent, Kenya Revenue Authority, (hereinafter referred to as KRA) relied on the affidavit sworn by Mourice Oray, an officer within the 2^nd respondent’s Strategic Innovation and Risk Management Department. He disclosed that he was working with the Corporate Policy Unit which is tasked with coming up with budget proposals which are presented to National Treasury.

115.He averred that Kenya Revenue Authority is established under the Kenya Revenue Authority Act, cap 469 Laws of Kenya and under section 5(1) thereof, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all revenue. Further, under section 5(2) with respect to the performance of its functions under subsection (1), the Authority is required to administer and enforce all provisions of the written laws set out in part 1 and 2 of the first schedule for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. He deposed that under Part i of the first schedule to the Kenya Revenue Authority Act, the 2^nd respondent is mandated to enforce the provisions of the Income Tax Act cap 470, Value Added Tax Act, 2013, East African Community Customs Management Act and the Excise Duty Act, 2015.

116.The deponent explained in graphic form that the first step in the betting process in Kenya is the opening of an account with the bookmarkers with the phone number of the account holder hereinafter referred to as the punter’s betting account. The punter then makes an Mpesa deposit into his/her Mobile Money account after which the money is transferred into the punter’s betting account created with the bookmarkers. The pay bill number through which the deposit is made into the punters account varies across the Bookmarkers. Once the money has been successfully sent to the punters betting account which is hosted in the bookmarkers platform, the punter has the discretion of either placing the bet manually or online. At this point the punter confirm his betting account balance for example Kshs 1310.

117.In a single online or manual betting, the punter presses or keys in the game identity number then 1, 2 or X depending on whether he bets on a win for the home team, a win for the away team or a draw respectively followed by the amount to be staked before it is sent. In a multiple bet, the game identity number(s), the choice of the punter and the amount to be staked is each separated by #. Once the bet is placed, the Bookmarker sends a message to the punter as a confirmation that the bet is successfully placed as the message shows the possible win which is the whole amount inclusive of the stake. At this point the punter has lost the stake and it belongs to the Betting company as the consideration for assessing the betting service, that is why his balance has been debited. The punter at this point only withdraws the money that still remains in its betting account and not the money which stakes has been placed. The stake or the amount wagered is what allows the Punter to enjoy the betting service. It is therefore evidently the charge for placing the bet. According to the deponent the operation herein is the same as one buying a charity sweeps stake ticket and decide to go scratch it at home.

118.It was therefore deposed that the role of the stake in the whole betting transaction is to:i.Allow the punter the opportunity to be able to participate in a bet. it is what allows the punter to be in a position to gain or loss;ii.It is the charge levied by the bookmarkers to enable the punters utilize the betting service. The bookmarker do not charge the punters any other fees as the business structure is such that several punters pool the money and thereafter a few are awarded as winners while the majority loss;iii.It is the value of the stake that determine how much you can win in the bet depending with the odd selected.iv.For every stake that is successfully placed and the bet proceeds the punter losses the right and it is only winnings that will be recovered and in case he losses the bet he lives to try again their luck.

119.From the foregoing, it is evident that the stake is the charge for participating in a bet, a lottery or a game under the Betting, Gaming and Lotteries Act.

120.In this case, it was contended that the petitioners and the co-petitioners have decided to mislead the court on the taxes levied in the betting industry and to whom the same is levied. According to the deponent, the petition herein being the Excise Duty on Stakes, is a consumption tax and it is borne by the punters. The only other tax levied on the punters is withholding tax on winnings. The same is charged upon successful outcome as provided under the Income Tax Act. The Bookmarker herein being the interested parties are only a collector of Withholding tax on winnings and Excise Duty on stake and not the bearers. In our above scenario, it was averred that if the bet is successful, the punter gets a confirmation message showing the amount staked (Kshs 1,000.00); Possible win if based on ODD 2.58 (2,386.50), Excise Duty per Finance Act, 2021 being 7.5% (Kshs 75); Withholding Tax on Winnings under the Income Tax of 20% (Kshs 292.30) leaving pay out of Kshs 2,094.20. According to the deponent, these are the only taxes charged on the punter in a betting transaction and not any other taxes. The charges for the mobile money transfer is however, an independent transaction which is not unique to the punters alone but everyone who use mobile money service.

121.It was explained that the Excise Duty on stake under the Excise Duty Act when a bet is placed and withholding tax on winnings as provided under Income Tax Act at the point they have a successful outcome are unique taxes. Withholding tax on winnings is an income tax since under the Income Tax Act, all incomes are subject to tax and there is nothing unique about betting that the punters should not be levied that tax on that income. Excise Duty on the other hand is levied on excisable goods and services and betting is listed under the first schedule as an excisable service which attracts excise duty on stake.

122.It was noted that the bookmarkers have over time become creative and installed betting booths or shops within the estates where the players can place a bet without having to suffer mobile money charges and that this does not in any way affect the constitutionality of the law. It was the deponent’s case that this petition is not about taxes and duties levied to the bookmarkers like the Corporation Tax and Gross Gaming Revenue.

123.According to the deponent, under section 5(1) of the Excise Duty Act as read with part ii of the first schedule of the Excise Duty Actas amended by the Finance Act at section 4A, betting is an excisable service within the Act and properly brought to charge and that the taxing point for excise is the time of the supply of the service and that once the betting company enables the punter to wager a bet the service has been provided. Section 16(1)(c) of the Excise Duty Act, it was averred requires all bookmarkers to register to be able to supply the betting service. Whereas most of the Bookmarkers are currently registered under the Excise Duty Act to issue betting service, those who were not registered were informed upon the enactment of the law to register. The deponent also referred to section 9(4) of the Excise Duty Actand reiterated that the stake is the charge that allows punters to participate in a bet, a lottery or a game under the Betting, Gaming and Lotteries Act and that no other charge is levied by the platform owners for the service. It is therefore proper to levy excise duty on the stake for betting, gaming and lottery. According to the deponent, this is not the first time that Excise Duty on stake for betting is introduced as the same was in existence and was only removed last year by the Finance Act, 2020 which delete paragraph 5 of part II of the Excise Duty Act wherein the same was contained. The deponent narrated the process followed in the enactment of the impugned provision and stated that though the Finance Bill, 2021 as published on May 5, 2021 provided for the excise duty on betting at twenty per cent of the amount wagered or staked, after being subjected to public participation both at the National Treasury level and at the National Assembly in the Finance Act, 2021 the duty on betting was reduced to seven-point five per cent of the amount wagered or staked. The deponent insisted that since the stake or the amount wagered is the charge which enables the punter to have access to the betting service, the charge is proper.

124.It was contended that the law was taken through public participation and the deponent set out the steps taken in the enactment process and it was contended that excise duty on betting was subjected to adequate public participation as provided by the Constitutional and the Standing orders of the National Assembly.

125.Regarding the allegation of double taxation, it was averred that double taxation can either be juridical or economic. Juridical double taxation can be defined as the imposition of comparable taxes by two or more sovereign countries on the same item of income of the same taxable person for the same taxable period. This is not the case herein. Economic double taxation occurs when two separate persons are each taxed on the same income by two or more states. In this case it was deposed that there are no two similar taxes as excise duty that is levied on stakes and that it is important to note that:i.Excise duty herein is being borne by the punters and not the bookmarkers as such the taxes and duties being levied to bookmarkers like gross gaming revenue cannot amount to double tax. The bearers of the two taxes are different;ii.The taxes on mobile money transfer is for a distinct service and is not for betting. The stake which attracts excise duty herein is not the charge for the mobile money transfer. The same cannot therefore be said to be double taxation;

126.It was therefore deposed that neither juridical nor economic double taxation arise herein.

127.Regarding the allegation of discrimination, it was averred that article 27 applies to persons and not a sector; it envisions equal protection and equal benefit of the law by all persons irrespective of their political economic, cultural and social sphere and bars discrimination directly or indirectly against any person on any ground, including race, sex, pregnancy, marital status, health status, ethnic or social origin, colour, age, disability, religion, conscience, belief, culture, dress, language. In this case since the impugned law which provides for excise duty on betting, chargeable on the amount wagered or stake, the provision does not exempt anyone from complying with the same. The Excise Duty Actas read with the amendments introduced by the Finance Act, 2021 applies to all persons in Kenya and it is levied on all betting staked in Kenya.

128.As regards the allegation that investors in money markets, treasury bonds, unit trust, stock market or deposit money in bank account are not subjected to pay a similar excise on their deposits, it was contended that this is misguided as discrimination can only arise where persons who are in the same field or sector, are accorded different treatments, which is not the case herein. Further the Punters seems to be confusing income tax which is levied on gains accrued or derived within Kenya yet this case relates to excise duty which is a tax on a charge and not on an income.

129.It was averred, that there cannot be said to be discrimination by virtue that National Assembly decides to place tax on a product while others are exempt. In any case excise duty is not levied on betting alone, other services as listed under part ii of the first schedule of Excise Duty Act. Further the decision to place tax on a product is a policy issue and the said is informed by the government’s reasons/ needs/ vision and the views of the public which is received through their representatives in parliament and their representations made at memorandum submissions and is not in any way discriminative.

130.The deponent asserted that nothing has since the enactment of the law stopped the petitioners from invoking article 119 and move Parliament to amend or repeal the legislation if for any reason they deem it discriminative.

131.Regarding the alleged breach of articles 40, 43 and other provisions within the Bill of rights, the deponent’s view was that there was public participation in the enactment of the Finance Act, 2021 as envisioned under article 118 and all the due constitutional and standing order requirements were met. According to him, the enactment of a law is a legislative process which is a mandate of the parliament as provided under chapter eight of the constitutional and it has been demonstrated that parliament properly enacted the law, the same is proper and court is not at liberty to interrogate wisdom of the legislation. It was explained that the respondent has not sought to tax the money that is held in the betting wallet but only sought to tax the amount which is staked or wagered. In response to the contention that excise duty will be levied even when the petitioners lose the bet, the deponent stated that excise duty is not levied on an income, it is not an income tax. It is levied on a fee, a commission, and charge or as otherwise guided by the Act. In the current law provide that the excise duty on betting is 7.5 % of the amount staked. In response to the contention that the punter will be charged excise duty even when they place a stake and opt to cash out before or during the bet event, the deponent averred that the excise duty is levied based on the tax point as provided under the Excise Duty Act. Once the taxing point has been reached, an obligation to pay tax or duty arise.

132.Regarding the contention that the stake is a recycled win and continued taxation will lead to exhaustion of petitioners funds, it was averred that the law does not dictate how the petitioners chooses to invest their money and it is up to them to exercise prudence wherever they opt to invest while ensuring they comply with all the applicable laws. It was further contended that the decision to levy a tax rest with the National Assembly as advised by the current government policies and needs. If the government policy and needs change then the National Assembly is within the constitutional mandate under article 209 and 210.

133.As regards the issues raised by the 8^th interested party, it was averred that the said party advanced different issues beyond what is contained in the petition. Any issue which is not properly pleaded including issues to do with lotteries and gaming should therefore be ignored in totality. The supporting affidavit, it was deposed, is misleading in the following extent:i.the only taxes borne by the punters in the betting industry are only two: Withholding tax on winnings and Excise Duty on stakes. Hence not a raft of taxes as the 8^th interested party is insinuating.ii.the Gross Gaming Revenue (GGR) levied as per the Betting, Lotteries & Gaming Act and is borne by the bookmarkers. The case before the Court is Excise Duty which is borne by the Punters. The comparison and the insinuations therein are misplaced.iii.the stake is what allows the punter to enjoys the betting service and it is the charge of the service. The Excise Duty is on a charge and it is what allows the punters to access to the service. In this case to be able to enjoy a betting service you place a stake. No other charge is levied to the punters by the bookmarkers for the same.iv.the law provides for excise duty on stakes by all punters and it does not except any category of punters.v.The issue of how it is to be administered to foreign based entities does not in any way affect the constitutionality of the law. The 2^nd respondent has full mandate under section 5 of the Kenya Revenue Authority to find ways to ensure compliance by everyone.vi.Further nothing has been placed to show any discriminative treatment on the enforcement of the law.

2^nd Respondent’s Submissions

134.In its submissions, KRA reiterated the foregoing and it was submitted that the most important thing is to distinguish the money held in the punters betting account (betting wallet) and stake. The betting wallet is a punter’s account with the bookmarker where the funds are held prior to making any wager or stake. It is also the account where the bookmarker deposits the wins from a bet. this is very different from stake and the petitioners from their submissions are misleading to insinuate that the excise duty is levied on this account. In this regard reference was made to part iii of the first schedule of the Excise Duty Act, 2015 which defines “amount wagered or staked" some of the betting information websites that define stakes and it was re-asserted that immediately the punter wages or place a stake, he losses the title of the same and he cannot claim the same back. He losses the legal right to the stake and the amount in his betting account is lessened by the amount staked. From the foregoing, it is evident that the betting account/wallet is different from the stakes and stakes is the amount wagered to enable one to access the betting facility. It is what allows the punter to participate in a bet.

135.It was therefore submitted that the role of betting is clearly shown as:i.Allow the punter the opportunity to be able to participate in a bet. it is what allows the punter to be in a position to gain or loss;ii.It is the charge levied by the bookmarkers to enable the punters utilize the betting service. The bookmarkers do not charge the punters any other fees as the business structure is such that several punters pool the money and thereafter a few are awarded as winners while the majority loses;iii.It is the value of the stake that determine how much you can win in the bet depending with the ODD selected. The ODD is risk taken.iv.Once a stake is successfully placed and the bet proceed, the punter losses the right to the stake. The punter will only recover the same in case of a win. In case of a loss, the Punter will not recover anything.

136.It was noted that after a stake has been wagered, the legal right to the same is transferred to the bookmarker and that punters cannot lay claim on it and their only option is to await for the event for which the bet has been placed to confirm a win or a loss. It is the stake that allow the punter to access the betting service. From the foregoing, it was submitted that the stake is the charge levied by the bookmarkers on the punter to enable them participate in a bet. It is the consideration that allows the Punter access the betting service.

137.In this case it was submitted that the amendment to the Excise Duty Actdoes not levy tax on the betting account/wallet but on the stake which are distinct. While the betting accounts hold the punter funds, the stake is the amount charged on the punter to participate in a game of betting.

138.Having submitted that the amount wagered or staked is the consideration for the betting service, the next issue is to understand the taxing regime, the 2^nd respondent while acknowledging that one can only be brought to tax under clear provision, relied on Republic v Kenya Revenue Authority Exparte Bata Shoe Company (Kenya) Limited [2014] eKLR which set out the principles that guide the interpretation of a taxing statute. In that case Korir, J cited with approval the decision of Gopal Sri Ram, JCA (as he then was) in Palm Oil Research and Development Board Malaysia & another v Premium Vegetable Oils SDN BHD [2004] 2 CLJ 265 in which he stated the principles governing the interpretation of statutes.

139.In its submissions, the 2^nd respondent reproduced section 5(1) of the Excise Duty Act as read with part ii of the first schedule of the Excise Duty Act, 2015 as amended by section 4A of the Finance Act, 2021 and submitted that betting is an excisable service.

140.It was submitted that the Bookmarkers have, in line with section 15(1)(c) of the Excise Duty Act, applied and have been issued with the excise license to enable them continue to operate the betting platform. This is in line with sections 15(1)(c) and 16(1) of the Excise Duty Act.

141.According to the 2^nd respondent, having shown that the bookmarkers are licensed to supply the betting service, section 5(3)(b) as read with section 4(1a) and 6(3) provides that the bookmarkers shall collect and pay the excise duty at the point the punter wagers or places the stake.

142.In the 2^nd respondent’s view, the petitioners in their submissions failed to appreciate that excise duty is a consumption tax whose obligation to collect and remit is on the supplier at the point of issuing the supply. It is for this reason that the Excise Duty Act requires the bookmarkers, at the point of giving access to the betting service to the punters, to charge excise duty on the stake, the stake being the fee payable by the punter to participate in the game of betting. It was clarified that at no point has the 2^nd respondent resorted to collecting the excise duty from the punters as they are not the suppliers of the service, hence the petitioner’s submission to that extend is therefore misguided.

143.Regarding the excisable value, reliance was placed on section 9(4and it was submitted that the Excise Duty on betting is on the amount wagered or staked in a betting transaction. As already demonstrated, the amount wagered or staked is the charge that allows the punter to part in a game of betting. it is the charge that allows the punter to participate in a bet, therefore rightly chargeable to excise duty.

144.In the event that a game is postponed or cancelled, it was submitted that this issue was introduced the 8^th interested party in its submissions to change the course of the case yet the role of an interested party in proceedings is peripheral and he cannot purport to change the tangent of the case as framed by the principal parties as was expressed in Methodist Church in Kenya v Mohamed Fugicha & 3 others [2019] eKLR, and by a five judge bench in William Odhiambo Ramogi & 3 others v Attorney General & 4 others; Muslims for Human Rights & 2 others (interested parties) [2020] eKLR.

145.It was further submitted that the issue of postponed and cancelled games was only introduced in the 8^th interested party submissions which are not pleadings and reliance was placed on the case of Republic v Chairman Public Procurement Administrative Review Board & another ex-parte Zapkass Consulting and Training Limited & another [2014] eKLR.

146.It was nevertheless submitted that as the due date for excise duty is 20^th day of the next month as provided under section 35 of the Excise Duty Act, for the betting transactions that took part in the month ending March 30, 2022 the same will only be accounted for and remitted on April 20, 2022. If the bookmarker is yet to account for the taxes, they can simply refund the amount and also adjust their accounting books to recognize that the said transaction was never completed, hence no betting service was issued. But in the case where the bookmarker has fully accounted for the excise tax, this will mean that the bookmarker would have overpaid excise duty for the period and also have refunded the punter the full stake. Section 47(1) of the Tax Procedures provide that the bookmarker may apply for refund of the said amount relating to the cancelled or postpone games. In additional, the bookmarker may seek that the amount overpaid be applied against its current or future tax liability as provided under sections 47(4) and 47 (4)(A).

147.It was therefore submitted that even in the case of cancelled or postpose game, the same does not affect the character of stake and also that excise duty is properly levied on it.

148.On the alleged uncertainty in the excise regime for betting, it was submitted that from all the foregoing, it is clear that the law on excise is very clear and fully address all the foreseeable circumstances in a betting transactions. The impugned provisions in perfect consonance with all the existing provisions with the EDA and no uncertainty arise. The petitioners have not shown how the law in the instance case can be said to be uncertain or attract several interpretations. In this regard, the 2^nd respondent cited Law Society of Kenya v Kenya Revenue Authority & another [2017] eKLR.

149.According to the 2^nd respondent, this case fails to meet the threshold for uncertainty set above as follows:a.The term stake is very certain and cannot be confused by any word. Further the meaning of stake has both in the betting industries and ordinary dictionary is same. The Petitioner have not shown how the same may attract any other meaning;b.The amount wagered or stake is the charge that allows the punter to take part in a bet as such excise duty is rightly levied upon it.c.Further the provisions of the impugned provisions are in perfect consonance with all the provisions of the Excise Duty Actand as such proper.d.Also ambiguity rarely arises in indirect taxes such as excise duty. Excise Duty is levied on a specific good or service and is very specific on the target. The issues of uncertainty of taxing statute is mostly common with direct taxes like Income Tax and not indirect taxes such as the case herein.

150.The only thing that is certain from the petition, is that the petitioners failed to comprehend the legal regime on excise on betting. Further they did not appreciate how indirect taxes operate, where it is the supplier who remits the taxes and not the consumer.

151.It was noted that excise duty on betting is not a new tax. It is a law which was in existence until 2021 when the provision containing it and others was deleted by an amendment in the Finance Act, 2020 and the same provisions returned in 2021. It was therefore contended that the amendment of Excise Duty Act to re-introduce excise duty on betting is in sync with all the applicable provisions or the Excise Duty Act and is not in any way contradictory.

152.On the alleged discrimination, it was reiterated that article 27 applies to persons and not a sector or a service; it envisions equal protection and equal benefit of the law by all persons irrespective of their political economic, cultural and social sphere. In this case it was submitted that the impugned provision levies excise duty on all betting services, as such it cannot be said to be discriminatory. It does not have exemption for anyone or any of the groups identified by the Constitution. Further, the provision is applicable to both the local and international betting companies hence the submission that the international companies are exempt is misguided. As long as the betting services is offered within the Republic of Kenya, the betting company have an obligation to comply. Reliance was placed on Republic v Minister for Finance & 2 others[2006] eKLR and Karnataka Bank Ltd v Union of India on 12 August, 2003.

153.It was in any case submitted that no evidence of discriminatory enforcement has been placed before the court or that the respondents have granted any special treatment to the international betting platforms and reference was made to the Supreme Court decision in the case of Samson Gwer & 5 others v Kenya Medical Research Institute & 3 others[2020] eKLR

154.On the issue that the law requires paying on taxes on their waged investment whether they win or loss and similar treatment is not accorded to persons who invest in stocks, on treasury bills and bonds, unit trust. same, the 2^nd respondent relied on article 27 which envisions equal protection and equal benefit of the law by all persons irrespective of their political economic, cultural and social sphere does not relate to items. According to the 2^nd respondent, betting, treasury bills and bonds, unit trust are not persons but items. It has also not been shown that they are of the same class. They are very distinct issues and not comparable. The 2^nd respondent cited Willis vs. The United Kingdom where the European Court of Human Rights observed that discrimination means treating differently, without any objective and reasonable justification, persons in similar situations. That article 27 relate to persons and not to items was emphasised in Waweru & 3 others (suing as officials of Kitengela Bar Owners Association) & another v National Assembly & 2 others; Institute of Certified Public Accountants of Kenya (ICPAK) & 2 others (Interested Parties) (Constitutional Petition E005 & E001 (Consolidated) of 2021) [2021] KEHC 58 (KLR) (20 September 2021) (Judgment).

155.It was further submitted that choosing which item to levy excise duty is a purely a policy issue. The court is being called about to appraise the decision to satisfy itself whether other items ought also to be levied excise tax. The same falls outside the mandate of this court based on Kenya Association of Stock Brokers and Investment Banks vs Attorney General & Another High Court, Nairobi, Pet 22 of 2015 [2015] eKLR and that this is against the Political question doctrine as was discussed by the Court of Appeal in Kenya Airports Authority v Mitu-Bell Welfare Society & 2 others and Ndora Stephen v Minister for Education & 2 others, Nairobi High Court Petition No 464 of 2012.

156.From the foregoing, it was urged that this court would not be the best forum to make a decision which service or good ought to be levied excise and which ought not to. The obligation to impose tax is preserved for the parliament and if their wisdom and policy of the day requires them to impose excise on betting service and not any other service, that decision should rest with parliament and not the court.

157.It therefore follows that impugned provision being applicable to all Punters in Kenya, the same is not discriminatory in any manner.

158.As regards breach of article 40 of the Constitution, it was submitted that betting transaction is not the only service being subjected to Excise Duty under the EDA. The first schedule to the Act provide a list of goods and services which are all subject to Excise Duty Act. The right to property under article 40 of the Constitution is not one of the absolute right hence it can be limited under reasonable and legally sound ground and taxation is one of the grounds under which the right to property can be limited.

159.It was submitted that it is vital to appreciate the nexus between taxation and enforcement of rights by the state. The Constitution establishes a social contract between the state and its citizens. Under the social contract the state guarantee the Bill of Right while the people pay taxes to enable the State undertake this mandate. article 21 of the Constitutionwas cited as stating that: It is a fundamental duty of the state and every State organ to observe, respect, protect, promote and fulfil the rights and fundamental freedoms in the Bill of Rights. Reliance was also placed on the United Nations Declaration of Human Rights and the African (Banjul) Charter on Human and Peoples’ Rights have three mandatory obligations to protect human rights namely the obligation to ‘The obligation to respect human rights, the obligation to protect human rights and the obligation to protect human rights. According to the 2^nd respondent, the obligation to fulfil human rights requires the state to take proper measures to ensure that every individual is at the disposal of the basic needs that they cannot get on their own. And basic needs include those recognized in the human rights instruments.

160.In this case it was submitted that articles 10, 201, 209 and 210 of the Constitutionprovides for imposition of tax as a mandatory obligation and it is itself a display of sovereignty and reliance was placed on Prof. Fareed Moosa in his paper Tax Administration Act: Fulfilling human rights through efficient and effective tax administration, Basco Products (K) Limited & 4 others v National Assembly & 3 others; Kenya Association of Manufacturers (Interested party)(Petition E 286 of 2021) [2022] KEHC 168 (KLR) (Constitutional and Human Rights) (24 February 2022) and Bidco Oil Refineries Limited v Attorney General & 3 others [2013] eKLR.

161.It was contended that in this case, the petitioner have also not provided any evidence as to how the levying of the Excise Duty on betting service will amount arbitrary deprivation of property as such the ground must fail.

162.From the foregoing, taxation is the vessel used by the government to respect, promote and fulfil the fundamental rights envisioned under the Bill of Right under the Constitution & other recognized human rights instruments, and taxation itself cannot be said to be a breach of the same rights.

163.It was submitted that when the constitutionality of enactment is challenged on grounds of violation of an article, the ascertainment of its purpose and intent have to be ascertained. This was the position of the superior court in Hamdard Dawakhana v Union of India (1959).

164.Based on written works, it was submitted that Excise Tax or sin Tax as it is commonly referred, is a tool used to influence social behaviour and also generate revenue. The decision as to what to regulate and how to regulate an item rest with the parliament and the executive as was stated in Ndora Stephen v Minister for Education & 2 others, Nairobi High Court Petition No 464 of 2012.

165.According to the 2^nd respondent, the soundness of the decision to levy excise on betting and not money market despite the two having no correlation is outside the scope of the court. The levying of tax on an item cannot be in anyway said to be a breach of article 201(b) as the same envisions equal sharing of tax burden by persons not items. The Petition must therefore fall on this ground.

166.On double taxation, it was submitted that the petitioner did not show two taxes of similar nature being imposed on the stake to warrant the discussion around the concept of double taxation and reliance was placed on the Black’s Law Dictionary, 6th Ed.

167.The Court have further defined double taxation as the taxing of the same income twice in Kenya Pharmaceutical Association & another v Nairobi City County and the 46 other County Governments & another [2017] eKLR, where the court found that payment of trade license to the respondents and professional license fees to the professional body did not amounts to double taxation. This position was further upheld in Cantonment Board, Poona v Western India Theatres Ltd., AIR 1954 Bom 261 where the court affirmed that being levied two taxes of different nature does not amount to double tax.

168.According to the 2^nd respondent, for double taxation to exist, taxation must be carried on the same person, same item, same tax head and within the same financial year. Absence of any of the aforementioned critical components of double taxation means that the same is not double taxation. In the current case, the only tax imposed on the betting at the point of placing the wager in a betting transaction is excise duty.

169.Nonetheless, it was noted that double taxation does not make a law unfair or unconstitutional in itself as was held by the superior court in India in the case of Karnataka Bank Ltd v Union of India:

170.In the current case, it was submitted that the petitioner has not shown which other excise tax or tax of similar nature that is levied on stake so as the court to find double taxation. To the 2^nd respondent, the petitioners have not only failed to provide an explanation how double tax arise but also failed to discharge the burden of showing that indeed double taxation exist at the point of placing a wager and reference was made to Leonard Otieno v Airtel Kenya Limited [2018] eKLR.

171.As to whether the imposition of excise duty on betting amounts to breach of article 10, 43 and 46 (1) of the Constitution, it was contended that though mentioned in the petition no submissions nor explanation was advanced with regard to the same. According to the 2^nd respondent, excise duty on betting does not in any way deplete the stake or investment by the punter. At the point of wagering, he losses the right to the stake and the stake is removed from his betting wallet. The issue complained for by the petitioner does not fall under article 43 which relates to provision of healthcare, housing, food, water, social security and education. It has nothing to do with pursing an economic venture as raised by the petitioner.

172.With regard to article 10, 43 and 46(1), it was submitted that the current petition and the petitioner’s submissions fails to show the existence of any action for which the test of constitutionality can be placed. The petitioner cited only the provisions of the Constitution alleged to be violated however, no indication on manner in which they were violated. Reliance for this submission was placed on Anarita Karimi Njeru No 1 [1979] 1KLR as quoted with approval in the Court of Appeal case Mumo Matemu v Trusted Society of Human Rights Alliance Civil Appeal No 290 Of (2012) eKLR and Dr Rev Timothy Njoya vs The Hon Attorney General and Kenya Review Authority HC Constitutional and Human Rights Division Petition No 479 of 2013.

173.From the foregoing, the 2^nd respondent faulted the petition as:i)The impugned section 4A on excise duty on betting as re-introduced by the Finance Act, 2021 does not breach any provision of the Excise Duty Act;ii)The impugned section 4A of part II of the first schedule to the Excise Duty Act as introduced by the Finance Act, 2021 does not infringe articles 10, 27, 43, 46(1), 201(b)(i) or any other provision of the Constitution;iii)The imposition of Excise Duty on betting does not amount to double taxation.

174.As such, it was urged that the petition is without merit and ought to be dismissed with costs to the 2^nd respondents.

Determination

175.The facts of these petitions are largely not in dispute. What provoked this petition was the amendment of part ii of the first schedule to the Excise Duty Actthrough the Finance Act 2021 which introduced section 4A of Part II aforesaid. The impugned states as follows;Excise duty on betting shall be 7.5% of the amount wagered or staked.

176.In other words, the effect of the said amendment was the introduction of an Excise Duty of 7.5 % on betting stake which sum is to be computed on the amount wagered or staked by a betting player. It is this amendment that aggrieved the petitioners who describe themselves as citizens of Kenya and punters who engage in acts of betting on several platforms operated by the interested parties who are duly licensed to carry on the business of gaming within the Republic of Kenya.

177.It is therefore clear that what is being challenged is the constitutionality of a statutory provision. The question that needs interrogation is the circumstances under which the court can interrogate the constitutionality or legality of a statutory provision. When considering the constitutionality of an Act, one must bear in mind the rebuttable principle of presumption of constitutionality of statutes which states that statutes should be presumed to be constitutional until the contrary is proved. The general rule or principle guiding such matters was restated by the Supreme Court of India in Hambardda Wakhana v Union of India Air [1960] AIR 554 as follows:“In examining the constitutionality of a statute it must be assumed the legislature understands and appreciates the needs of the people and the law it enacts are directed to problems which are made manifest by experience and the elected representatives assembled in a Legislature enacts laws which they consider to be reasonable for the purpose for which they are enacted. Presumption is therefore in favour of the constitutionality of an enactment.”

178.Therefore, the presumption of constitutionality of statutes is not in doubt. This position was affirmed by the Court of Appeal of Tanzania in the celebrated case of Ndyanabo v Attorney General [2001] EA 495 which was a restatement of the law in the English case of Pearlberg v Varty [1972] 1 WLR 534. In the former, the court held that:“Until the contrary is proved, a legislation is presumed to be constitutional. It is a sound principle of constitutional construction that, if possible, a legislation should receive such a construction as will make it operative and not inoperative”

179.This was clearly appreciated in Ndyanabo v Attorney General [2001] 2 EA 485 where it was held inter alia that in interpreting the Constitution, the court would be guided by the general principles that there is a rebuttable presumption that legislation is constitutional hence the onus of rebutting the presumption rests on those who challenge that legislation’s status save that, where those who support a restriction on a fundamental right rely on a claw back or exclusion clause, the onus is on them to justify the restriction.

180.Though under article 1 of the Constitutionsovereign power is delegated to parliament and the legislative assemblies in the county governments; the national executive and the executive structures in the county governments; and the Judiciary and independent tribunals; the said organs must perform their functions in accordance with the Constitution. Our Constitution having been enacted by way of a referendum, is the direct expression of the people’s will and therefore all State organs in exercising their delegated powers must bow to the will of the people as expressed in the Constitution. Otherwise article 2 of the Constitution allows for the recall of any law, including customary law that is inconsistent with the Constitution, or any act or omission in contravention of the Constitutionfor the purposes of being voided and or invalidated.

181.This position is supported by Coleman v Mitnick, etc No 19,955 137 Ind App 125 (1964) 202 NE 2d 577 where it was state that:“When a statute is adjudged to be unconstitutional, it is as if it had never been. Rights cannot be built up under it; contracts which depend upon it for their consideration are void; it constitutes a protection to no one who has acted under it, and no one can be punished for having refused obedience to it before the decision was made."

182.Similarly, in Carr, Auditor v State ex rel Coetlosquet, 127 Ind 204, 215, as approvingly quoted in Frost v Corporate Commission of Oklahoma - 278 US 515 (1929), the Supreme Court of the State of Indiana (USA) held that:“An act which violates the Constitutionhas no power and can, of course, neither build up or tear down. It can neither create new rights nor destroy existing ones. It is an empty legislative declaration without force or vitality."

183.That an unconstitutional statute is to be considered as though it had never been enacted by the legislature is also the view of the United States Supreme Court, which in Chicago, Indianapolis, & Louisville Railway Company, Plff In Error, v Haynes l Hackett No 889, said:“That act was therefore as inoperative as if it had never been passed, for an unconstitutional act is not a law, and can neither confer a right or immunity nor operate to supersede any existing valid law."

184.In Norton v Shelby County , Justice Field said:“An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been.”

185.The courts have now set out the factors to be considered when faced with allegations of unconstitutionality of statutes. I agree that that the Constitution itself qualifies this presumption of constitutionality and that such statutes must meet the constitutional criteria. In it was held in Coalition for Reform and Democracy (CORD) & 2 others v Republic of Kenya & 10 others [2015] eKLR as follows;“96.However, we bear in mind that the Constitution itself qualifies this presumption with respect to statutes which limit or are intended to limit fundamental rights and freedoms. Under the provisions of article 24 which we shall analyse in detail later in this judgment, there can be no presumption of constitutionality with respect to legislation that limits fundamental rights: it must meet the criteria set in the said article.97.The court is also required, in determining whether an Act of parliament is unconstitutional, to also consider the objects and purpose of the legislation: see Murang’a Bar Operators and Another vs Minister of State for Provincial Administration and Internal Security and others Nairobi Petition No 3 of 2011 [2011] eKLR and Samuel G Momanyi v Attorney General and another High Court Petition No 341 of 2011.98.In addition, in determining whether a statute meets constitutional muster, the court must have regard not only to its purpose but also its effect. In the case of R v Big M Drug Mart Ltd, [1985] 1 SCR 295, cited by CIC, the Canadian Supreme Court enunciated this principle as follows;“Both purpose and effect are relevant in determining constitutionality; either an unconstitutional purpose or an unconstitutional effect can invalidate legislation. All legislation is animated by an object the legislature intends to achieve. This object is realized through impact produced by the operation and application of the legislation. Purpose and effect respectively, in the sense of the legislation’s object and its ultimate impact, are clearly linked, if not indivisible. Intended and achieved effects have been looked to for guidance in assessing the legislation’s object and thus the validity.”99.The case of Re Kadhis’ Court: The Very Right Rev Dr Jesse Kamau & others v Attorney General & Another Nairobi HCMCA No 890 of 2004 also offers some guidance with regard to constitutional interpretation, particularly in so far as the provisions of the Bill of Rights are concerned. In that case, the court expressed itself as follows:“The general provisions governing constitutional interpretation are that in interpreting the Constitution, the court would be guided by the general principles that; (i) the Constitutionwas a living instrument with a soul and consciousness of its own as reflected in the preamble and fundamental objectives and directive principles of state policy. Courts must therefore endeavour to avoid crippling it by construing it technically or in a narrow spirit. It must be construed in tune with the lofty purposes for which its makers framed it. So construed, the instrument becomes a solid foundation of democracy and the rule of law. A timorous and unimaginative exercise of judicial power of constitutional interpretation leaves the Constitutiona stale and sterile document; (ii) the provisions touching fundamental rights have to be interpreted in a broad and liberal manner, thereby jealously protecting and developing the dimensions of those rights and ensuring that our people enjoy their rights, our young democracy not only functions but also grows, and the will and dominant aspirations of the people prevail. Restrictions on fundamental rights must be strictly construed.”100.Finally, it is worth bearing in mind the words of the US Supreme Court in US vs Butler, 297 US 1 [1936] in which the court expressed itself as follows:“When an Act of Congress is appropriately challenged in the courts as not conforming to the constitutional mandate, the judicial branch of the government has only one duty; to lay the article of the Constitution which is invoked beside the statute which is challenged and to decide whether the latter squares with the former. All the court does, or can do, is to announce its considered judgment upon the question. The only power it has, if such it may be called, is the power of judgment. This court neither approves nor condemns any legislative policy. Its delicate and difficult office is to ascertain and declare whether the legislation is in accordance with, or in contravention of, the provisions of the Constitution; and, having done that, its duty ends.”

186.It is therefore clear that the presumption of constitutionality of a statute is a rebuttable one the effect of which is to shift the onus of proof to the person alleging its unconstitutionality. What the court ought to consider in those circumstances was set out in Doctors for Life International v Speaker of the National Assembly and others (CCT12/05) [2006] ZACC 11; 2006 (12) BCLR 1399 (CC); 2006 (6) SA 416 (CC) where it was held that:“When legislation is challenged on the grounds that parliament did not adopt it in accordance with the provisions of the Constitution, courts have to consider whether in enacting the law in question parliament has given effect to its constitutional obligations. If it should hold in any given case that parliament has failed to do so, it is obliged by the Constitution to say so. And insofar as this constitutes an intrusion into the domain of the legislative branch of government, that is an intrusion mandated by the Constitution itself. What should be made clear is that when it is appropriate to do so, courts may – and if need be must – use their powers to make orders that affect the legislative process. Therefore, while the doctrine of separation of powers is an important one in our constitutional democracy, it cannot be used to avoid the obligation of a court to prevent the violation of the Constitution. The right and the duty of this court to protect the Constitution are derived from the Constitution, and this court cannot shirk from that duty. As O’Regan J explained in a recent minority judgment, ‘the legitimacy of an order made by the court does not flow from the status of the institution itself, but from the fact that it gives effect to the provisions of our Constitution.’ In order for the founding values that lie at the heart of our Constitution to be made concrete, it is particularly important for this court to afford a remedy, which is not only effective, but which should also be seen to be effective. The provisions of section 172(1)(a) are clear, and they admit of no ambiguity; ‘[w]hen deciding a constitutional matter within its power, a court...must declare that any law or conduct that is inconsistent with the Constitution is invalid’. This section gives expression to the supremacy of the Constitutionand the rule of law, which is one of the founding values of our democratic state. It echoes the supremacy clause of the Constitution, which declares that the ‘Constitution is supreme...; law or conduct inconsistent with it is invalid’. It follows therefore that if a court finds that the law is inconsistent with the Constitution, it is obliged to declare it invalid…”

187.In Katiba Institute & Another vs. Attorney General & another [2017] eKLR the court delivered itself as hereunder:“That there is a presumption of constitutionality of statutes is not in doubt... It is therefore clear that the constitutionality of legislation is a rebuttable presumption; and, where the court is satisfied that the legislation fails to meet the constitutional muster, nothing bars the court from declaring it to be unconstitutional. Furthermore, there is no limitation period within which a party should present a petition challenging the constitutionality of a statute. In our view, the court may interrogate the constitutionality of legislation at any time and grant an appropriate remedy. The courts have over time fashioned appropriate remedies including the suspension of the declaration of unconstitutionality of statute to enable Parliament take remedial action. Such suspended action does not mean that the impugned legislation is not unconstitutional. It simply postpones the decree that may cause more hardship to the public…The question that we must ask is: what is the effect of ambiguity and or vagueness in a statutory provision? Do they affect constitutionality of those provisions? In our view, ambiguity or vagueness in statutory provision makes that provision void. A provision will be said to be void where when the average citizen is unable to know what is regulated and the manner of that regulation; or, where the provision is capable of eliciting different interpretations and different results. Such a provision would not meet constitutional quality…Therefore elementary justice demands legal certainty of rules affecting the citizen. A legislation or provision can also be unconstitutional on grounds of cause and effect otherwise known as purpose or effect. Where the purpose or effect results into unconstitutional effects the provision or statute may be nullified for being unconstitutional…Therefore whereas the legislative authority vests in parliament and the County Assemblies, where a question arises as to whether an enactment is inconsistent with the Constitutionor is passed in contravention of the Constitution, the High Court is the institution constitutionally empowered to determine the issue. This is of course subject to the appellate jurisdiction given to the Court of Appeal and the Supreme Court. There is nothing like supremacy of the legislative assembly outside the Constitution. Under article 2(1) and (2), the Constitutionis the supreme law of the Republic and binds all persons and all State organs at both levels of government. No person may claim or exercise State authority except as authorised by the Constitution…The jurisdiction of the court to invalidate laws that are unconstitutional is in harmony with its duty to be the custodian of the Constitution. Similarly, the general provisions of the Constitution, which are set out in article 258 contain the express right to every person to “… institute court proceedings, claiming that this Constitution has been contravened, or is threatened with contravention.”

188.In Olum and another v Attorney General [2002] 2 EA 508, the Constitutional Court of Uganda stated;“To determine the constitutionality of a section of a statute or Act of Parliament, the court has to consider the purpose and effect of the impugned statute or section thereof. If its purpose does not infringe a right guaranteed by the constitution, the court has to go further and examine the effect of the implementation. If either its purpose or the effect of its implementation infringes a right guaranteed by the constitution, the impugned statute or section thereof shall be declared unconstitutional…”

189.Similarly, in the case of Institute of Social Accountability & another v National Assembly & 4 others (2015) eKLR, the court opined that while determining constitutionality of a statute, the court must not only consider the general presumption of constitutionality of the Act, but must also look into the object and purpose of the impugned amendments for it is important to discern the intention expressed in the Act from a historical concept.

190.Taking those pronouncements into consideration this court therefore ought to interrogate the constitutionality of the impugned provision by taking into account the provisions of article 201(b)(I) of the Constitutionas well as the constitutional obligation of the petitioners as imposed under articles 209 and 210 of the Constitution with a view of giving the law a purposive interpretation. That is what a holistic interpretation requires. As was held in The Engineers Board of Kenya v Jesse Waweru Wahome & others Civil Appeal No 240 of 2013:-“One of the canons of statutory interpretation is a holistic approach…no provision of any legislation should be treated as “stand alone.” An act of Parliament should be read as a whole, the essence being that a proposition in one part of the Act is by implication modified by another proposition elsewhere in the Act.”

191.I therefore agree with Mativo, J in Council of County Governors v Attorney General & another [2017] eKLR that:-“Under article 259 of the Constitution, the court is enjoined to interpret the constitutionin a manner that promotes its purposes, values and principles, advances the rule of law, human rights and fundamental freedoms in the bill of rights and in a manner that contributes to good governance. In exercising its judicial authority, this court is obliged under article 159(2)(e) of the Constitution to protect and promote the purposes and principles of the Constitution.There is the general presumption that every Act of Parliament is constitutional and the burden of proof lies on every person who alleges otherwise. (The court should start by assuming that the Act in question is constitutional)…In determining whether a statute is constitutional or not, the court must determine the object and purpose of the impugned statute for it is important to discern the intention expressed in the Act itself. Further, in examining whether a particular statutory provision is unconstitutional, the court must have regard not only to its purpose but also its effect. The constitutionshould be given a purposive, liberal interpretation and that the provisions of the constitution must be read as an integrated, whole, without any one particular provision destroying the other but each sustaining the other. It is important to bear in mind that the spirit of the constitutionmust, preside and permeate the process of judicial interpretation and judicial discretion.”

192.Since the matter before this court revolves around taxation, it is important to set out the general principles of law regarding taxation. Tax law, and any legislation for that matter, is guided by and is a reflection of the policy of the government at any one given point in time. In this case the policy was enacted into law by the 1^st respondent and is to be implemented by the 2^nd respondent since under section 5(2) of the Kenya Revenue Authority Act, the 2^nd respondent, as part of its functions under subsection (1), is required to administer and enforce all provisions of the written laws set out in part 1 and 2 of the first schedule for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. In the Canadian case of Just v R in Right of BC (Vancouver No C822279), Justice McLachlin of the Supreme Court of British Columbia observed thus:“In general, policy refers to a decision of a public body at the planning level involving the allocation of scarce resources or balancing such factors as efficiency and thrift. The operational function of government, by contrast, involves the use of governmental powers for the purpose of implementing, giving effect to or enforcing compliance with the general or specific goals of a policy decision...one hallmark of a policy, as opposed to an operational, decision is that it involves planning...A second characteristic of a policy decision as opposed to an operational function is that a policy decision involves allocating resources and balancing factors such as efficiency or thrift.”

193.However, it is not for this court to determine whether in arriving at a particular policy decision, the policy maker’s decision was wise or merited. It therefore follows that the timing of a policy decision based on the prevailing circumstances do not justify the court’s interference with the policy in question. As was appreciated by Majanja, J in Mark Obuya & others v Commissioner of Domestic Taxes & 2 others [2014] eKLR:“The legislature is the law making organ and it enacts the laws to serve a particular object and need. In the absence of a specific violation of the Constitution, the court cannot question the wisdom of legislation or its policy object. The fact that the particular provision of the statute merely may be difficult to implement or inconvenient does not give the court licence to declare it unconstitutional…It is within the authority of the legislature to enact legislation governing the manner in which a particular form of tax is administered including the manner in which it imposed, calculated and enforced. The arguments made by the petitioner concern how the customs duty is calculated, that is an issue of the application of the Act, rather than its constitutionality.”

194.This was appreciated by the Supreme Court of India in the case of Hambardda Dawakhana vs. Union of India Air (1960) AIR 554. The same court in case of Union of India v M/S Exide Industries Ltd on 24 April, 2020 expressed itself as follows:-“11.The approach of the court in testing the constitutional validity of a provision is well settled and the fundamental concern of the court is to inspect the existence of enacting power and once such power is found to be present, the next examination is to ascertain whether the enacted provision impinges upon any right enshrined in Part III of the Constitution. Broadly speaking, the process of examining validity of a duly enacted provision, as envisaged under article 13 of the Constitution, is premised on these two steps. No doubt, the second test of infringement of part III is a deeper test undertaken in light of settled constitutional principles. In State of Madhya Pradesh v Rakesh Kohli & Anr 4, this aourt observed thus:‘17.This court has repeatedly stated that legislative enactment can be struck down by court only on two grounds, namely (i) that the appropriate legislature does not have competence to make the law, and (ii) that it does not take away or abridge any of the fundamental rights enumerated in part III of the 4 (2012) 6 SCC 312 Constitution or any other constitutional provisions….’That brings us to the next step of examination i.e. whether the said clause contravenes any right enshrined in part III of the Constitution, either in its form, substance or effect. It is no more res integra that the examination of the court begins with a presumption in favour of constitutionality. This presumption is not just borne out of judicial discipline and prudence, but also out of the basic scheme of the Constitutionwherein the power to legislate is the exclusive domain of the legislature/parliament. This power is clothed with power to decide when to legislate, what to legislate and how much to legislate. Thus, to decide the timing, content and extent of legislation is a function primarily entrusted to the legislature and in exercise of judicial review, the court starts with a basic presumption in favour of the proper exercise of such power.”

195.In State of MP v Rakesh Kohli & anr on 11 May, 2012, the same Court had this to say:-“29.While dealing with constitutional validity of a taxation law enacted by parliament or state legislature, the court must have regard to the following principles:(i),there is always presumption in favour of constitutionality of a law made by Parliament or a State Legislature(ii),no enactment can be struck down by just saying that it is arbitrary or unreasonable or irrational but some constitutional infirmity has to be found(iii),the court is not concerned with the wisdom or unwisdom, the justice or injustice of the law as the parliament and state legislatures are supposed to be alive to the needs of the people whom they represent and they are the best judge of the community by whose suffrage they come into existence(iv),hardship is not relevant in pronouncing on the constitutional validity of a fiscal statute or economic law and(v),in the field of taxation, the legislature enjoys greater latitude for classification.”

196.Back home in Bidco Oil Refineries Limited v Attorney General & 3 others [2013] eKLR it was held that:“It is within the authority of the legislature to enact legislation governing the manner in which a particular form of tax is administered including the manner in which it is imposed, calculated and enforced. The arguments made by the Appellant concern how the customs duty is calculated, that is an issue of the application of the Act, rather than its constitutionality. Since statutory application is really the issue here, the consideration whether article 47(1) has been violated is dispositive. In any case, the collection of taxes through the procedures provided by the law cannot, at least in the circumstances of this case, constitute an arbitrary deprivation of property.”

197.That position resonates with the opinion held in Association of Gaming Operators-Kenya & 41 others v Attorney General & 4 others [2014] eKLR where Kenya Union of Domestic, Hotels, Education, Institutions and Hospital Allied Workers (KUDHEIHA) Union v Kenya Revenue Authority and others Nairobi Petition No 544 of 2013 [2014] eKLR, was cited in which it was held that:“Article 209 of the Constitution empowers the national government to impose taxes and charges. Such taxes include income tax, value-added tax, customs duties and other duties on import and export goods and excise tax. The manner in which the tax is defined, administered and collected is a matter for parliament to define and it is not for the court to interfere merely because the legislature would have adopted a better or different definition of the tax or provided an alternative method of administration or collection. Under article 209 of the Constitution, the legislature retains wide authority to define the scope of the tax.”

198.What comes out from the above authorities is that unless there is an allegation of a specific violation of the Constitution, the court cannot question the wisdom of legislation or its policy object. The fact that the implementation of the statute may be difficult or inconvenient as opposed to being unconstitutional or unlawful, does not warrant it being declared unconstitutional since it is within the authority of the legislature to enact legislation governing the manner in which a particular form of tax is administered including the manner in which it imposed, calculated and enforced because such issues go to the application of the Act, rather than its constitutionality. It is therefore within the sole mandate of the legislature/parliament to decide when to legislate, what to legislate and how much to legislate and to decide the timing, content and extent of legislation. Further vague contentions as arbitrariness, unreasonableness or irrationality without more do not warrant the striking out of an enactment unless some constitutional infirmity has to be found. Since it is presumed that parliament and state legislatures are alive to the needs of the people whom they represent hence the best judge of the community by whose suffrage they come into existence, the court ought not to concern itself with the wisdom or unwisdom, the justice or injustice of the law. Similarly, hardship is not relevant in pronouncing on the constitutional validity of a fiscal statute or economic law since in the field of taxation, the legislature enjoys greater latitude for classification. Accordingly, it is within the authority of the legislature to enact legislation governing the manner in which a particular form of tax is administered including the manner in which it is defined, imposed, calculated, calculated enforced or administered. Therefore, it is not for the court to interfere merely because the legislature would have adopted a better or different definition of the tax or provided an alternative method of administration or collection.

199.In this petition the petitioners made reference to other jurisdcitions and how they operate their taxation systems regarding betting. While I agree that as regards the ‘best practice’ comparative jurisdiction, circumstances befalling different jurisdictions vary immensely and one of the most salient variances amongst different jurisdictions is the economic status of a state and that of its citizens as well as the unique and peculiar income generating activities and the circumstances surrounding them, as stated hereinabove, it is presumed that parliament and state legislatures are alive to the needs of the people whom they represent hence the best judge of the community by whose suffrage they come into existence are what dictate the taxation policies of the country. It is therefore not for the court to decide what “the ‘best practice’ comparative jurisdiction is unless it is shown that the said the taxation regime in force in those other jurisdictions go contrary to our Constitution. It is on that basis that I agree with the opinion expressed in Unilever Kenya Limited v The Commissioner of Income Tax – Income Tax Appeal No 753 of 2003, that:“The ways of doing modern business have changed very substantially in the last 20 years or so and it would be fool-hardy for any court to disregard internationally accepted principles of business as long as these do not conflict with our own laws. To do otherwise would be highly short sighted.”

200.However, if the Legislature, based on the said ‘best practices’ enacts a law that violates or contravenes our Constitution, such a law will not stand. It therefore follows that the Legislature while considering any policy must ensure that the same whether in its enactment or operations, adhere to the constitutional values and principles.

201.In this case, the respondents contended that the decision to impose the impugned tax was partly informed by the negative impact of betting. With due respect, if the respondents are of the view that betting is harmful to the interest of the society, then they ought to take legal measures to abolish it instead of subjecting those who earn their livelihood from that which has been legalised to punitive measures. Therefore, the respondent cannot rely on such broad terms as negative impacts to justify their action where such actions cannot be legally justified. Such vague and ambiguous terms cannot be a basis for imposition of tax.

202.To that extent I agree with the decision in Republic v Commissioner of Domestic Taxes Large Tax Payer’s Office ex-parte Barclays Bank of Kenya LTD [2012] eKLR where it was held that:“The approach to this case is that stated in the often cited case of Cape Brandy Syndicate v Inland Revenue Commissioners [1920] 1 KB 64 as applied in TM Bell v Commissioner of Income Tax [1960] EALR 224 where Roland J stated, “ …in a taxing Act, one has to look at what is clearly said. There is no room for intendment as to a tax. Nothing is to be read in, nothing it to be implied. One can only look fairly at the language used… If a person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be.” As this case concerns the interpretation of the Income Tax Act, I am also guided by the dictum of Lord Simonds in Russell v Scott [1948] 2 All ER 5 where he stated, “My Lords, there is a maxim of income tax law which, though it may sometimes be overstressed yet ought not to be forgotten. It is that the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax upon him” adopted in Stanbic Bank Kenya Limited v Kenya Revenue Authority CA Civil Appeal No 77 of 2008 (Unreported) [2009] eKLR per Nyamu JA (See also Jafferali Alibhai v Commissioner of Income Tax [1961] EA 610, Kanjee Naranjee v Income Tax Commissioner [1964] EA 257). Any tax imposed on a subject is dictated by the terms of legislation and taxing authority must satisfy itself that the transaction fits within the definition of the statute. In Adamson v Attorney General (1933) AC 257 at p 275 it was held that, “The section is one that imposes a tax upon the subject, and it is well settled that in such cases it is incumbent on the Crown to establish that its claim comes within the very words used, and if there is any doubt or ambiguity this defect-if it be in view of the Crown a defect can only be remedied by legislation.”

203.This position was restated in Tanganyika Mine Workers Union v The Registrar of Trade Unions [1961] EA 629, where it was held that where the provisions of an enactment are penal provisions, they must be construed strictly and that in such circumstances you ought not to do violence to its language in order to bring people within it, but ought rather to take care that no-one is brought within it who is not brought within it in express language.

204.The Court of Appeal decision in Mount Kenya Bottlers Ltd & 3 others v Attorney General & 3 others [2019] eKLR expressed itself as hereunder:“This common law position is what pertains here and has been adopted by our courts as good law. In our view there cannot be an equitable construction of income tax legislation. The norm is that a taxing legislation must be construed with perfect strictness whether or not such construction is against the State or against the person sought to be taxed. If however there is any real ambiguity in a taxing Act, such ambiguity may be resolved in favour of the taxpayer or, as it is sometimes state; contra fiscum. The following excerpt from the renowned author of Bennion on Statutory Interpretation, 5^th Edition, summarises the correct position in law as far as interpretation of tax is concerned:“I find that they cannot tax the applicant twice over Bennion adds:-‘Nevertheless taxation is clearly “penal” within this section of the Code, and must be enforced by the courts unless clearly imposed. As Evans LJ said in the context of tax legislation it necessary to consider the legal analysis with the utmost precision so that the taxpayer shall bot become liable to tax unless this is clearly and unequivocally the object of the statutory provisions. The courts are reluctant to adopt a construction permitting a person’s tax liability to be fixed by administrative discretion.’This is how this court has regarded the assessment of tax on an arbitrary input-output formulae because it is not supported by any law nor is its retroactivity permitted by law…The same principles as above, were accepted and applied in the case of Cape Brandy Syndicate v Inland Revenue Commissioners [1921] KB 64 where Ronlat J, restate the principle in these words; ’in a taxing Act clear words are necessary in order to tax the subject. Too wide and fanciful a construction is often to be given to that maxim, which does not mean that words are to be unduly restricted against the Crown or that there is to be any discrimination against the crown in those Acts. It simply means that in a taxing Act one has to look merely at what is clearly said. There is no reason for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing to be implied. One can only look fairly on the language used.’ Again, in the case of Ramsay Ltd v Inland Revenue Commissioner [1992] AC 300 the same principles were expressed as follows;-‘A subject is only to be taxed on clear words not upon intendment, or upon the “equity” of an Act. Any taxing Act of Parliament as to be construed in accordance with this principle.”

205.In this petition, I agree that the issues that fall for determination are, broadly, the following:i.Whether excise duty was properly be levied on stake and whether the same is in breach of any provision of Excise Duty Act?ii.Whether the imposition of excise duty on betting amounts to double taxation;iii.Whether the imposition of excise duty on betting amounts to breach of article 27 of the Constitution?iv.Whether the imposition of excise duty on betting amounts to breach of article 40 of the Constitution?v.Whether the imposition of excise duty on betting amounts to breach of article 201(b) of the Constitution?vi.Whether the imposition of excise duty on betting amounts to breach of article 10, 43 and 46(1) of the Constitution

206.According to the petitioners, excise duty is defined as a form of tax levied by the government on the sale of specified goods or services. However, the petitioners and other punters are not sellers of any category of specified goods or services in the gaming sector but investors who stake bets on platforms provided by the interested parties. Under the impugned law, however, the respondents have set out to charge excise duty on the entire value of the transaction as provided the first schedule to the Excise Duty Act. This action, according to them, is in conflicts with the substantive provisions of section 9 the Excised Duty Act on what constitutes the base and value of an excisable service. For avoidance of doubt section 9(4) of the Excise Duty Act provides as hereunder:“Subject to subsections (5) and (6), the excisable value of excisable services shall be—(a)if the excisable services are supplied by a registered person in an arm's length transaction, the fee, commission, or charge payable for the services; or(b)in any other case, the open market value of the services.

207.According to the petitioners, in the gaming industry, the amount staked is not the fee charged for the service and that since there is no fee charged to place a bet, there is no basis for the respondent’s imposition of excise duty in line with the provisions of section 9 of the Excise Duty Act. The correct value of the excisable service, according to them, would be the transactional charges when transferring funds (or when withdrawing) from his/ her mobile money wallet or the gross gaming revenue tax that is paid by the betting companies under the Act.

208.According to the petitioners, while Excise Duty is defined as a form of tax levies by the government on the sale of specified goods and services, by that very definition, they are not sellers of any category of specified goods or services as listed in the schedules to the Act. To the petitioners, the effect of this amendment is that the 2^nd respondent will be levying tax on a punter on his stake whether he wins or losses and that the conflict can be seen that while the respondents will be charging excise duty on the entire value of the transaction as provided for in the first schedule to the Excise Duty Act, the substantive provisions of section 9 charges on what constitutes the base and value of an excisable service.

209.According to the petitioners, at the time when a punter selects games and places a bet there is no financial transaction that is deemed to have occurred and that the transactions become alive when the selected games are played to their conclusion and there is a definite outcome at the end of the game(s). It was averred that that there are instances where once a punter selects and wages a bet/ stake on a game, the event/game does not occur; a game may be postponed, cancelled or abandoned for whatever reason that may affect or impair its conclusion. In such an instance since no transaction has taken place, the punter is entitled to return of the full amount of the stake wagered on the game. By imposing 7.5 % of the sum staked as excise duty, it was contended that this tax will be collected without and before a transaction occurs and it is levied on a global sum staked and not on charges levied by the betting companies for providing a service. According to the petitioners, if betting companies charged a fee for staking/waging a bet then that is what would qualify as a service fee on which an excise duty would be levied. It was explained that the income earned in the betting industry is not from any fees or commissions but from the lost bets by punters. This is what is referred to the Gross Gaming Revenue (GGR) which sum is already subjected to 15 % GGR tax under section 29A of the Betting Lotteries and Gaming Act.

210.The respondents were however of a different view. According to them, the Excise Duty on stake under the Excise Duty Act when a bet is placed and withholding tax on winnings as provided under Income Tax Actat the point they have a successful outcome are unique taxes. Withholding tax on winnings is an income tax since under the Income Tax Act, all incomes are subject to tax and there is nothing unique about betting that the punters should not be levied that tax on that income. Excise Duty on the other hand is levied on excisable goods and services and betting is listed under the first schedule as an excisable service which attracts excise duty on stake.

211.According to them, under section 5(1) of the Excise Duty Act as read with part ii of the first schedule of the Excise Duty Act as amended by the Finance Act at section 4A, betting is an excisable service within the Act and properly brought to charge and that the taxing point for excise is the time of the supply of the service and that once the betting company enables the Punter to wager a bet the service has been provided. Section 16(1)(c) of the Excise Duty Act, it was averred requires all Bookmarkers to register to be able to supply the betting service. It was asserted that most of the bookmarkers herein are currently registered under the Excise Duty Act to issue betting service and those who were not registered were informed upon the enactment of the law to register.

212.According to the respondents, the stake is the charge that allows punters to participate in a bet, a lottery or a game under the Betting, Gaming and Lotteries Act and that no other charge is levied by the platform owners for the service. It is therefore proper to levy excise duty on the stake for betting, gaming and lottery. According to the deponent, this is not the first time that Excise Duty on stake for betting is introduced as the same was in existence and was only removed last year by the Finance Act, 2020 which delete paragraph 5 of part II of the Excise Duty Act wherein the same was contained. The respondents’ position was that since the stake or the amount wagered is the charge which enables the punter to have access to the betting service, the charge is proper.

213.It was explained that the respondent has not sought to tax the money that is held in the betting wallet but only sought to tax the amount which is staked or wagered. In response to the contention that excise duty will be levied even when the petitioners lose the bet, the deponent stated that excise duty is not levied on an income, it is not an income tax. It is levied on a fee, a commission, and charge or as otherwise guided by the Act. In the current law provide that the excise duty on betting is 7.5 % of the amount staked. In response to the contention that the punter will be charged excise duty even when they place a stake and opt to cash out before or during the bet event, the deponent averred that the excise duty is levied based on the tax point as provided under the Excise Duty Act. Once the taxing point has been reached, an obligation to pay tax or duty arise.

214.According to the respondents, the most important thing is to distinguish the money held in the punters betting account (betting wallet) and stake. The betting wallet is a punter’s account with the bookmarker where the funds are held prior to making any wager or stake. It is also the account where the bookmarker deposits the wins from a bet. This is very different from stake hence the petitioners from their submissions are misleading to insinuate that the excise duty is levied on this account. Based on the definition of “amount wagered or staked" in part iii of the first schedule of the Excise Duty Act, 2015, it was contended that immediately the punter wages or place a stake, he losses the title of the same and he cannot claim the same back. He losses the legal right to the stake and the amount in his betting account is lessened by the amount staked. From the foregoing, the respondents asserted that the betting account/wallet is different from the stakes and stakes is the amount wagered to enable one to access the betting facility. It is what allows the punter to participate in a bet. In the Respondents’ view, since it is the bet that allows the punter to be in a position to gain or loss, it is the charge levied by the bookmarkers to enable the punters utilize the betting service since the bookmarker do not charge the punters any other fees as the business structure is such that several punters pool the money and thereafter a few are awarded as winners while the majority lose. Once a stake is successfully placed and the bet proceed, the punter losses the right to the stake. The Punter will only recover the same in case of a win. In case of a loss, the Punter will not recover anything.

215.According to the respondents, having shown that the bookmarkers are licensed to supply the betting service, section 5(3)(b) as read with section 4(1A) and 6(3) provides that the bookmarkers shall collect and pay the excise duty at the point the punter wagers or places the stake. The provisions states as follows:Section 5(3)(b): The excise duty payable—(b)under subsection (1)(b), shall be payable by the licensed person making the supply:Section 4(1A): (1A) In relation to a betting transaction, the time of supply shall be the time a person wagers or stakes money on a platform or other medium provided by a Bookmarker.Section 6(3) The liability of a licensed person for excise duty on excisable services shall arise at the time of the supply of the services.

216.In the respondents’ view, the petitioners in their submissions failed to appreciate that excise duty is a consumption tax whose obligation to collect and remit is on the supplier at the point of issuing the supply. It is for this reason that the Excise Duty Act requires the bookmarkers, at the point of giving access to the betting service to the punters, to charge excise duty on the stake, the stake being the fee payable by the punter to participate in the game of betting. It was clarified that at no point has the 2^nd respondent resorted to collecting the excise duty from the punters as they are not the suppliers of the service, hence the petitioner’s submission to that extent is therefore misguided.

217.I have considered the submissions made by the respective parties. The petitioners’ position on this issue, in a nutshell is that the stake cannot be treated as a charge for service as contemplated under section 9 of the Excise Duty Act since at the point of placing a bet no transaction takes place and the punters do not offer any service. The respondents on the other hand contend that it is the bookmarkers that offer service to the punters and the service they offer is the avenue for the punters to place their bets.

218.I agree that unless the stake is considered a charge for betting services, excise duty may not be imposed thereon. I therefore agree with the position in the case of Law Society of Kenya v Kenya Revenue Authority & another [2017] eKLR where the court held;‘Also, as correctly pointed out by counsel for the petitioner, requiring payment of the tax before registration of the transfer essentially means the tax is payable before the prerequisites enunciated in Halsbury's laws of England cited earlier. The effect is that a citizen may be called to pay tax before it is legally due, thereby creating an unfair tax burden to the citizens. The term unfair burden must be defined taking specifically into account the degree and capacity of the citizens to shoulder the tax in question, bearing in mind what may be burdensome to one person may not be so to another.Article 20(b)(i) of the Constitution provides that the burden of taxation shall be shared fairly. The impact of a possible unfair burden must also be taken into account while construing the statute in question. Paragraph 11A requires that Capital Gains Tax be paid upon presenting the transfer as opposed to upon registration of the transfer. The effect is that the tax will be payable prior to transfer. In practice this means that a vendor must pay the tax before the conclusion of the transaction, thus, payment will be required before property is transferred or ownership is legally passed to the purchaser. It is common knowledge that where the sale agreement provides that payment shall be made upon transfer, then a vendor who is not financially able will not be able to sale his property and a willing buyer may also not be able to proceed with the transaction. To me, this infringes on both the vendors and purchasers right to property, hence, it is unconstitutional.

219.That issue requires an interrogation of what stake is. As explained the stake is the amount that a punter pays from his wallet or account towards a specific bet. It is not the amount in the wallet. Once the bet is made, the same is not refundable in the event that the bet is lost. In other words, the stake ceases to be the punter’s property once the bet is made and the betting takes place. However, if no bet takes place then the stake is refundable.

220.I therefore agree with and

221.It is not contested that bookmarkers are under section 16(1)(c) of the Excise Duty Act, required to register to be able to supply the betting service. Having registered, it only follows that they are obliged to collect excise duty on behalf of the 2^nd respondent. That duty is based on the charge levied for the service offered. This is appreciated by the petitioners. What then is this charge upon which the bookmarkers are to collect the duty? The petitioners have stated that the only charge which they are liable to pay is the withholding tax in the event of a win. That tax, however, is not excise duty but income tax.

222.Taken to its logical conclusion, the petitioners’ argument is that under the current tax regime, they are not liable to pay any excise duty. That argument however defeats the provisions that require the bookmarkers to register under the Excise Duty Act as well as section 5(3)(b) as read with section 4(1A) and 6(3) that enjoin the bookmarkers to collect and pay the excise duty at the point the punters wager or place the stake. Since the stake constitute revenue for the bookmarkers in the event of a loss, and since there is no other stage at which the Bookmarkers charge for their services and based on the aforesaid legal provisions, it only follows that the stake, which is distinct from the betting account/wallet, is what constitutes the charge for betting services for the purposes of excise duty.

223.I agree with the general legal proposition in Indian case of RBI v Peerless General Finance and Investment Co Ltd, [(1987) 1 SCC 424], where it was held;“that interpretation is best which makes the textual interpretation match the contextual.” Speaking for the court, Chinappa Reddy, J noted the importance of rule of contextual interpretation and held:-“Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted.”

224.I therefore agree with the opinion of the Supreme Court of India in Reserve Bank of India v Peerless General Finance and Investment Co Ltd , 1987 SCR (2) 1 that:“No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place.”

225.Therefore, the Excise Duty Actmust be considered holistically so as not to render any part thereof of no use. In my view, sections 5(3)(b) as read with section 4(1A) and 6(3) only make sense if the stake is deemed as the chargee for services under the said Act.

226.However, the 8^th interested party raised the issue regarding postponement or cancellation of a bet. According to the 8^th interested party, if the stake is considered a charge for the betting services and excise duty is levied on it, then in the event of postponement or cancellation the punter would have lost part of the sum betted without the transaction having taken place.

227.The respondentshave however explained that, where the bet is cancelled or postponed before the accounting and remission date, the bookmarker can simply refund the amount and also adjust their accounting books to recognize that the said transaction was never completed, hence no betting service was issued. But in the case where the bookmarker has fully accounted for the excise tax, this will mean that the bookmarker would have overpaid excise duty for the period and also have refunded the punter the full stake. Section 47(1) of the Tax Procedures Actprovide that the bookmarker may apply for refund of the said amount relating to the cancelled or postpone games. In additional, the bookmarker may seek that the amount overpaid be applied against its current or future tax liability as provided under sections 47(4) and 47 (4)(A).

228.To my mind, the foregoing adequately takes care of cancellation or postponement of bets.

229.The petitioners further contended that the introduction of Excise Duty of 7.5% on betting stake amounts to amongst others, double taxation, discrimination and therefore the law as amended is unconstitutional.

230.According to Black’s Law Dictionary 5^th Edition, 1979, double taxation is defined in the following terms:“To constitute ‘double taxation’, that tax must be imposed on the same property by same governing body during same taxing period and for same taxing purpose.”

231.In Kenya Pharmaceutical Association & another v Nairobi City County and the 46 other County Governments & another [2017] eKLR, Mativo, J held that a double tax is the taxing of the same income twice.

232.I associate myself with the holding in Kenya Flower Council v Meru County Government [2019] eKLR, where the court noted that:“the Constitution is alive to the fact that the burden of taxation should be shared fairly, as the national and county government raise revenue through imposition of taxes and charges. This is to avoid double taxation or creating a heavier burden of taxation on concerned taxpayers. Therefore, there is absolute necessity of a mechanism that does not produce unnecessary duplication of taxes and one that averts creation of unduly heavy burden of taxation on particular category of taxpayers.”

233.I agree that it is not only unconstitutional and unlawful to subject one to double taxation but the same is also economically punitive in nature. In Keroche Industries Limited v Kenya Revenue Authority and 5 others HC Misc Civil Appl No 743 of 2006 [2007] eKLR it was observed that:“It is of course regarded as penal for a person to be taxed twice over in respect of the same matter.”

234.According to the petitioners, since they are expected to pay withholding tax in the event of a win, to subject them to payment of excise duty on the stake subjects them to double taxation.

235.The respondents contended that in a betting transaction, the petitioners are only charged Excise duty on stake under the Excise Duty Act when they place a bet and withholding tax on winnings as provided under the Income Tax Actat the point they have an effectual outcome. The two taxes are distinct from each other. According to the respondents, withholding tax on winnings is an income tax while Excise duty on the other hand is levied on excisable goods and services.

236.I have considered the rivalling arguments and I do not find any merit in the submissions made on behalf of the petitioners. Excise duty is clearly a different levy from withholding tax which is income tax. Whereas the two tax may well impose burdens on the tax payer, that does not make them unconstitutional unless the imposition violates article 201 of the Constitution.

237.That leads me to article 201 of the Constitution. Article 201(b)(i) of the Constitution provides that one of the principles guiding public finance in this country is that the burden of taxation shall be shared equally. According to the petitioners, to the extent that the impugned law seeks to place the burden on taxation on the petitioners and other punters at the expense of international gaming players and investors in the money market, it violates the equity and fairness principle on sharing of burden of taxation. I agree that any system of taxation that does not seek to have the burden of taxation shared equally would clearly violate the said article. As was held in Kenya Bankers Association v Kenya Revenue Authority [2018] eKLR where reference was made to R v Inland Revenue Commissioners exp National Federation of Self Employed and Small Business Limited [1981] UKHL at page 22 where the court was:“Persuaded that the modern case law recognises a legal duty owed by the Revenue to the general body of the taxpayer to treat taxpayers fairly; to use their discretionary powers so that, subject to the requirements of good management, discrimination between one group of taxpayer and another done not arise; to ensure that there are no favourites and no sacrificial victims. The duty has to be considered as one of several arising within complex comprised in the management of tax, every part of which it is their duty, if they can, to collect.”

238.I also associate myself with the decision of Majanja, J at paragraph 58 in Samura Engineering Limited & others v Kenya Revenue HC Petition No 54 of 2011[2012]eKLR where it was emphasised that:“Kenya Revenue as the State agency charged with the collection of taxes is bounded by the provisions of the Bill of Rights to the fullest extent in the manner in which it administers the laws concerning the collection of taxes. The values contained in Article 10 must all times permeate its functions and activities which it is mandated to carry out of by statute.”

239.According to Nelson Andayi Havi v Law Society of Kenya & 3 others [2018] eKLR at paragraph 92;“It is safe to state that the Constitutionprohibits unfair discrimination. In my view, unfair discrimination is differential treatment that id demeaning. This happens when a law or conduct, for no good reason, treats some people as inferior or less deserving of respect than others. It also occurs when a law or conduct perpetuate or does nothing to remedy existing disadvantages and marginalization.”

240.In addition, in Law Society of Kenya v Kenya Revenue Authority & another [2017]eKLR, the court held thus;“Article 201(b)(i) of the Constitution provided that the burden of taxation shall be shared fairly. The impact of a possible unfair burden must also be taken into account while construing the statute in question. Paragraph 11A requires that Capital Gains Tax be paid upon presenting the transfer as opposed to upon registration of the transfer. The effect is that the tax will be payable prior to transfer. In practice this means that a vendor must pay the tax before the conclusion of the transaction, thus payment will be required before property is transferred or ownership is legally passed to the purchaser. It is common knowledge that where the sale agreement provides that payment shall be made upon transfer, then a vendor who is not financially able will not be able to sale his property and a willing buyer may also not be able to proceed with the transaction. To me, this infringes on both the vendors and purchasers right to property, hence it is unconstitutional.Article 2 of the Constitution, is emphatic that the Constitution is supreme, and any law that is inconsistent with the Constitution is void to the extent of the inconsistency. Article 259 provides the manner in which the Constitutionis to be interpreted. Article 159(2) (e) of the Constitution mandates the court, in exercising its judicial authority, to protect and promote the purpose and principles of the Constitution.Guided by the principles in the Constitution and their principles of statutory interpretation discussed earlier, and the need to construe a statute in manner that does not lead to absurdity, contradiction, unworkable or illogical result and the need to adopt an interpretation that will best serve public interest, and guided by the letter and spirit of the Constitution, I find that the impugned law is unconstitutional and therefore null and void.”

241.The case of Kenya Flower Council v Meru County Government [2019] eKLR makes it clear;‘ This would certainly violate the core of the canon on equality and equity in taxation which demands that tax should be imposed in such manner that its burden is borne on the basis of equal sacrifice by taxpayers. Similarly, such eventuality would offend principles of public finance which aim at promoting equitable society, in particular that the burden of taxation is shared fairly. See article 201(b)(i) of the Constitution.18.The Constitution is alive to the fact that the burden of taxation should be shared fairly, as the national and county government raise revenue through imposition of taxes and charges. This is to avoid double taxation or creating a heavier burden of taxation on concerned taxpayers. Therefore, there is absolute necessity of a mechanism that does not produce unnecessary duplication of taxes and one that averts creation of unduly heavy burden of taxation on particular category of taxpayers.

242.It was further submitted that the impugned law contravenes the provision of article 201(b) of the Constitution which provides as a principle to guide public finance system that the burden of taxation shall be shared equally. To the extent that the impugned law seeks to place the burden on taxation on the petitioners and other punters at the expense of international gaming players and investors in the money market, it violates the equity and fairness principle on sharing of burden of taxation. According to the petitioners, foreign gaming players would not be subjected to the same tax regime.

243.Article 201(b)(i) and (ii) of the Constitution provides that some of the principles meant to guide all aspects of public finance in the Republic include the fact that the public finance system shall promote an equitable society, and in particular the burden of taxation shall be shared fairly.

244.I therefore agree with the position expressed in State of Bombay v FN Balsara AIR 1951 SC 318 at p 326 in which the opinion of Professor Willis’ Constitutional Law, 1^st ed at 578 where it is stated that:“The guarantee of the equal protection of the laws means the protection of equal laws. It forbids class legislation, but does not forbid classification which rests upon reasonable grounds of distinction. It does not prohibit legislation, which is limited either in the objects to which it is directed or by the territory within which it is to operate. It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and conditions both in the privileges conferred & in the liabilities imposed. The inhibition of the amendment…was designed to prevent any person or class of persons from being singled out as a special subject for discriminating & hostile legislation.’ It does not take from the states the power to classify either in the adoption of police laws or tax laws, or eminent domain laws, but permits to them the exercise of a wide scope of discretion, & nullifies what they do only when it is without any reasonable basis.”

245.In Kenya Bankers Association v Kenya Revenue Authority (2018) eKLR the court relied on the decision in R v Inland Revenue Commissioners exp National Federation of Self Employed and Small Business Limited [1981] UKHL 2 at page 22 where the court was:“…persuaded that the modern case law recognises a legal duty owed by the revenue to the general body of the taxpayers to treat taxpayers fairly; to use their discretionary powers so that, subject to the requirements of good management, discrimination between one group of taxpayers and another does not arise; to ensure that there are no favourites and no sacrificial victims. The duty has to be considered as one of several arising within complex comprised in the management of tax, every part of which it is their duty, if they can, to collect.”

246.In this case, it was further submitted that other sectors are not subjected to the same tax regime hence the burden excise duty is not being shared equally. While that contention may well be true, it cannot be that every exemption made by the government on certain sectors must be frowned upon or that every tax imposed upon a certain sector must be shot down. If the government has satisfactory reasons for doing so, the question whether or not it was right in so doing must then be a matter of policy and I therefore associate myself with the position in the case of Scotch Whisky Association and others v The Lord Advocate and another (2017) UKSC 76 where the Supreme Court of Scotland expressed itself as follows;“The Scottish parliament and government have as a matter of general policy decided to put great weight on combatting alcohol-related mortality and hospitalisation and other forms of alcohol related harm. That was a judgement which it was for them to make and their right to make it militates against intrusive review by a domestic court that minimum pricing will involve a market distortion, including the EU trade and competition is accepted. However, I find it impossible even if it is appropriate to undertake the exercise at all in this context, to conclude that this can or should be regarded as outweighing the health benefits which are intended by minimum pricing.”

247.It was therefore held in Federation of Women Lawyers Kenya (FIDA-K) & 5 others v Attorney General & another [2011] eKLR that:“In our view mere differentiation or inequality of treatment does not per se amount to discrimination within the inhibition of the equal protection clause. To attract the operation of the clause, it is necessary to show that the selection or differentiation is unreasonable or arbitrary that it does not rest on any basis having regard to the object which the legislature has in view or which the Constitutionhad in view. An equal protection is not violated if the exception which is made is required to be made by some other provisions of the Constitution.”

248.As appreciated in Pevans East Africa Limited & another v Chairman, Betting Control & Licensing Board & 7 others [2018] eKLR:“Where the Constitution had reposed specific functions in an institution or organs of State, the courts must give those institutions or organs sufficient leeway to discharge their mandates and only accept an invitation to intervene when those bodies are demonstrably shown to have acted in contravention of the Constitution, the law or that their decisions are so perverse, so manifestly irrational that they cannot be allowed to stand under the principles and values of our Constitution. Courts must decline to intervene at will in the constitutional spheres of other organs, particularly when they are invited to substitute their judgment over that of the organs in which constitutional power reposes, because those organs have expertise in their area of mandate, which the courts do not normally have. We must accordingly shun invitation to dabble in matters of national economic policy, when what is placed before us are the views of only two players in one industry.”

249.I further agree that in determining this issue the test to be applied is the one set out in the case of Okiya Omtatah Okoiti v Cabinet Secretary, National Treasury & 3 others [2018] eKLR where the court found:“…that it is not disputed that State has the obligation to collect taxes, and that parliament therefore has the obligation to legislate to this effect. Indeed, article 209(1) of the Constitution empowers the national government to impose taxes. The respondents’ case was that the impugned legislation(s) was not intended to harm the public but rather intended to facilitate the fulfilment of the responsibility of the state to collect taxes. 45. My humble view is that the importance of taxation and the collection of taxes for any government cannot be gainsaid. The respondents’ position was that this court should not interfere with the legislative process. To my mind however, what is before this court is not a question on whether the respondents have fulfilled/are fulfilling a constitutional mandate but rather, whether the impugned legislation(s), and the processes leading thereto, met the relevant legal and constitutional thresholds, and whether the citizen’s rights have been violated and/or are threatened with violation in the circumstances of this case”.

250.I therefore agree that taxes need not look the same and that selective taxes may be applied to different sectors for different reasons such as to address distribution and equity hence the tax need not be similar to another for it to be rational and not discriminatory.

251.It is true that article 27(1) of the Constitution guarantees every person the right equal benefit and treatment by the law while article 27(4) of the Constitution provides that the State shall not discriminate directly or indirectly against any person on any ground. According to the Petitioners, the impugned law discriminates against them and other local punters to the extent that being investors and players, they are required to pay a tax on their investments whereas persons who invest in the money market; on treasury bills and bonds; on unit trusts; in the stock market or deposit their monies in bank accounts are not subjected to pay a similar excise duty on their deposits.

252.It was similarly submitted that while this law seeks to target punters within the Republic and to have them in one tax bracket, the offshore betting companies and operators found online who have access to the Kenyan gaming but are not subject to the local tax laws hence the said companies will not be subject to the impugned 7.5% excise duty and thereby giving them an undue advantage in the gaming business. Therefore, in so far that the offshore betting companies who have access to the Kenya market not required and not subjected to local tax laws, the same is discrimination and goes against article 27 of the Constitution.

253.I have considered the material placed before me in this petition and I cannot, based thereon, determine that the offshore players are being treated differently from the local players. Apart from bare averments, the petitioners have not proved the said averments. The petitioners have not shown that persons and/or entities undertaking similar activities are taxed at different rates. Therefore, the averment that the impugned section discriminates against the petitioners is not supported by any or any cogent evidence at all as the petitioners did not place any material before court to prove that the impugned provisions discriminates against them.

254.In State of Bombay v FN Balsara AIR 1951 SC 318 at p 326, which decision was based on the opinion of Professor Willis’ Constitutional Law, 1^st ed At 578, it was stated that:“The guarantee of the equal protection of the laws means the protection of equal laws. It forbids class legislation, but does not forbid classification which rests upon reasonable grounds of distinction. It does not prohibit legislation, which is limited either in the objects to which it is directed or by the territory within which it is to operate. It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and conditions both in the privileges conferred & in the liabilities imposed. The inhibition of the amendment…was designed to prevent any person or class of persons from being singled out as a special subject for discriminating & hostile legislation.’ It does not take from the states the power to classify either in the adoption of police laws or tax laws, or eminent domain laws, but permits to them the exercise of a wide scope of discretion, & nullifies what they do only when it is without any reasonable basis.”

255.In Kenya Bankers Association v Kenya Revenue Authority (2018) eKLR the court relied on the decision in R v Inland Revenue Commissioners exp National Federation of Self Employed and Small Business Limited [1981] UKHL 2 at page 22 where the court was:“…persuaded that the modern case law recognises a legal duty owed by the Revenue to the general body of the taxpayers to treat taxpayers fairly; to use their discretionary powers so that, subject to the requirements of good management, discrimination between one group of taxpayers and another does not arise; to ensure that there are no favourites and no sacrificial victims. The duty has to be considered as one of several arising within complex comprised in the management of tax, every part of which it is their duty, if they can, to collect.”

256.I agree with the decision in Pevans East Africa Limited v Betting Control and Licensing Board & 2 others; Safaricom Limited & another (interested parties) [2019] eKLR, where the court cited with approval the test applied in the case of Harksen v Lane NO and Others (1997) 11 BCLR 1489 (CC) where the South African Constitutional Court established the criteria for determining whether a provision of law is discriminatory as follows:a)Does the provision differentiate between people or categories of people? If so, does the differentiation bear a rational connection to a legitimate purpose? If it does not, then there is a violation of the constitution. Even if it does bear a rational connection, it might nevertheless amount to discrimination.b)Does the differentiation amount to unfair discrimination? This requires a two-stage analysis: -c)Firstly, does the differentiation amount to ‘discrimination’? If it is on a specified ground, then discrimination will have been established. If it is not on a specified ground, then whether or not there is discrimination will depend upon whether, objectively, the ground is based on attributes and characteristics which have the potential to impair the fundamental human dignity of persons as human beings or to affect them adversely in a comparably serious manner.d)If the differentiation amounts to ‘discrimination’, does it amount to ‘unfair discrimination’? If it has been found to have been on a specified ground, then the unfairness will be presumed. If on an unspecified ground, unfairness will have to be established by the complainant. The test of unfairness focuses primarily on the impact of the discrimination on the complainant and others in his or her situation. If, at the end of this stage of the enquiry, the differentiation is found not to be unfair, then there will be no violation.e)If the discrimination is found to be unfair then a determination will have to be made as to whether the provision can be justified under the limitations clause of the ..Constitution, being article 24 of the Constitution in the instant case.

257.That was the position in Centre for Rights Education and Awareness (CREAW) & 7 others v Attorney General [2011] eKLR, of the court citing the South African case of Jacques Charl Hoffmann v South African Airways, CCT 17 of 2000 held that to determine whether or not there is infringement of the right to equality, then it ought to determine:a)whether the provision under attack that makes a differentiation bears a rational connection to a legitimate government purpose. If the differentiation bears no such connection, there is a violation of section 9(1). If it bears a rational connection, the second enquiry arises.b)That enquiry is whether the differentiation amounts to unfair discrimination. If the differentiation does not amount to unfair discrimination, the enquiry ends there and there is no violation of section 9(3).c)If the discrimination is found to be unfair, this will trigger the third enquiry, namely, whether it can be justified under the limitations provision. Whether the third stage, however, arises will further be dependent on whether the measure complained of is contained in a law of general application.

258.According to the deponent there has been a previous attempt to introduce the impugned excise duty on sums staked and the 1^st respondent upon considering submissions of parties and assessing the impact of the law on the betting industry determined that the impugned tax would adversely affect the betting industries leading to closures. It was the view that the same reasons which informed rejection of law last year still exist today. The 1^st respondent having made a determination that introducing the impugned provisions in Kenya would affect betting companies, they should not retrograde at this point and reintroduce the same provision within the year.

259.In my view the fact that the legislature rejected a similar bill earlier on does not necessarily mean that its subsequent approval is unconstitutional. It is upon the person challenging the constitutionality of a statute to show that the reasons why the earlier bill was rejected was because it was unconstitutional. The legislature may well reject a bill depending on the existing economic situation at any particular time. That does not mean that a similar enactment cannot be passed in future. There is nothing inherently unlawful or unconstitutional in changing the law or the nature of the income tax as long as the same is in accordance with the law since the Legislature is undoubtedly empowered to legislate new tax laws depending on the policies of the day. As appreciated by Dickson, J in the case of Gustavson Drilling (1964) Ltd v MNR [1977] 1 SCR 271 at 283 (quoted in Piennaar Brothers Case):“No one has a vested right to continuance of the law as it stood in the past; in tax law it is imperative that legislation conform to changing social needs and governmental policy. A taxpayer may plan his financial affairs in reliance on the tax laws remaining the same; he takes the risk that the legislation may be changed”.

260.For the court to uphold the plea for discrimination, it must be shown that persons or entities undertaking similar activities are taxed at different rates. Differential taxation schemes are therefore not necessarily unconstitutional as was appreciated by the Court of Appeal in the case of Mohammed Abduba Dida v Debate Media Limited & another [2018] eKLR in which it was stated as follow:-“And direct and indirect discrimination was distinguished in the case of Nyarangi & others vs Attorney General [2008] KLR 688 when it was stated that;“Direct discrimination involves treating someone less favourably because of their possession of an attribute such as race, sex, religion compared to someone without that attribute in the same circumstances. Indirect or subtle discrimination involves setting a condition or requirement which is a smaller proportion of those with the attribute are able to comply with, without reasonable justification. The US case of Griggs vs. Duke Power Company 1971 401 US 424 91 is a good example of indirect discrimination, where an aptitude test used in a job application was found “to disqualify negros at a substantially higher rate than white applicants”.With regard to differential or unequal treatment it was observed in the case of Kedar Nath v State of WB (1953) SCR 835(843) that;“Mere differentia or inequality of treatment does not per se amount to discrimination within the inhibition of the equal protection clause. To attract the operation of the clause it is necessary to show that the selection or differentiation is unreasonable or arbitrary; that it does not rest on any rational basis having regard to the object which the legislation has in view.”

261.As was held by Mativo, J in the case of Nelson Andayi Havi v Law Society of Kenya & 3 others [2018] eKLR: -“94.The clear message emerging from the authorities, both local and foreign, is that mere discrimination, in the sense of unequal treatment or protection by the law in the absence of a legitimate reason is a most reprehensible phenomenon. But where there is a legitimate reason, then, the conduct or the law complained of cannot amount to discrimination.95.It is not every differentiation that amounts to discrimination. Consequently, it is always necessary to identify the criteria that separate legitimate differentiation from constitutionally impermissible differentiation. Put differently, differentiation is permissible if it does not constitute unfair discrimination.96.The jurisprudence on discrimination suggests that law or conduct which promotes differentiation must have a legitimate purpose and should bear a rational connection between the differentiation and the purpose. The rationality requirement is intended to prevent arbitrary differentiation. The authorities on equality suggest that the right to equality does not prohibit discrimination but prohibits unfair discrimination.”

262.In this case the petitioners have not proved the existence of unfair discrimination to warrant the court to intervene. As was held in Leonard Otieno v Airtel Kenya Limited [2018] eKLR:“It is a fundamental principle of law that a litigant bears the burden (or onus) of proof in respect of the propositions he asserts to prove his claim. Decisions on violation of constitutional rights should not and must not be made in a factual vacuum. To attempt to do so would trivialize the constitutionand inevitably result in ill considered opinions. The presentation of clear evidence in support of violation of constitutional rights is not, a mere technicality; rather, it is essential to a proper consideration of constitutional issues. Decisions on violation of constitutional rights cannot be based upon the unsupported hypotheses.”

263.Regarding the alleged violation of the petitioners’ rights under 40 of the Constitution, the petitioners’ case was that article 40 of the Constitutionis contravened to the extent that the impugned provision seeks to arbitrarily deprive the petitioners and other punters their property in money just by merely being punters who desires to participate in gaming hence seeks to expropriate the Petitioners property without adequate compensation. It is true that under the current constitutional dispensation, article 40 bars the State from arbitrarily acquiring private property. This position was upheld in Evelyn College of Design Ltd v Director of Children’s Department & another [2013] eKLR where it was held as follows;“The requirement of due process is underpinned by several provisions of the Constitution. First, it is implicit in article 40(2)(a) which prohibits the legislature from passing legislation that arbitrarily deprives a person of any interest in or right over any property of any description. Second, article 40(6) is clear that rights acquired under this article do not extend to any property that is found to have been unlawfully acquired. Such “finding” cannot be by any other means other than due process. Third, article 47(1) guarantees every person fair administrative action which includes due process.”

264.However, the Constitution recognizes situations where a person may be obliged to part with property for the general good of the society. This includes the requirement for the payment of taxes in order to enable the government to fulfill the obligations it owes to its subj3cts. Therefore, articles 10, 201, 209 and 210 of the Constitution provides for imposition of tax as a mandatory obligation. Prof Fareed Moosa in his paper Tax Administration Act: Fulfilling human rights through efficient and effective tax administration states that:Section 7(2) of the Constitutionobliges the state to “respect, protect, promote and fulfil” the rights entrenched in the Bill of Rights. To do so necessitates that the government has sustained access to adequate finance. Financial constraints in the public treasury will hinder the state’s ability to achieve social justice through the fulfilment of, inter alia, socio-economic rights. Unless the problem of strained governmental resources is overcome, the aspiration of a fully transformed society with human dignity, freedom and equality for all will have a hollow ring…Finances derived from taxes are, thus, crucial. Success of the social transformation project hinges on the efficiency and effectiveness of tax collection by the South African Revenue Service (SARS). Inadequacy in public finances will hamstring the South African government’s ability to fulfil the human rights of its people which, in turn, will give rise to cries that the government is failing in its duty under the Constitutionto perform all constitutional obligations “diligently and without delay”

265.Makau, J in Basco Products (K) Limited & 4 others v National Assembly & 3 others; Kenya Association of Manufacturers (Interested party)(Petition E 286 of 2021) [2022] KEHC 168 (KLR) (Constitutional and Human Rights) (24 February 2022) stated that:“It is imperative to take notice that citizenry in order to enjoy all the rights under the constitutionsurrenders a part of their property as taxes and duty and the said surrender cannot be said to be unconstitutional. It is clear that taxes are a form of raising revenue sanctioned by the Constitutionand the imposition of taxes does not deprive the Petitioners of the right to property provided under article 40 of the Constitutionand as such the petitioner’s allegations that they have been deprived of their property by paying taxes has no basis in law. The payment of taxes is an obligation imposed on all businesses and individuals. I am alive to the fact that if this honourable court was to uphold the Petitioners’ arguments, it would open the flood gates of litigation since nearly all businesses and individuals would raise similar issues about taxation with possible abandonment of the need to pay taxes which no country can do without levying taxes.”

266.Further in Bidco Oil Refineries Limited v Attorney General & 3 others [2013] eKLR the court held that:-“It is within the authority of the legislature to enact legislation governing the manner in which a particular form of tax is administered including the manner in which it is imposed, calculated and enforced. The arguments made by the appellant concern how the customs duty is calculated, that is an issue of the application of the Act, rather than its constitutionality. Since statutory application is really the issue here, the consideration whether article 47(1) has been violated is dispositive. In any case, the collection of taxes through the procedures provided by the law cannot, at least in the circumstances of this case, constitute an arbitrary deprivation of property.

267.In this case, however, I have found that the levy of excise duty on stakes is proper and lawful. In any case once a punter stakes a bet, unless the bet is postponed or cancelled, he loses property over his state even if he loses the bet. Where the bet is cancelled or postponed, he is entitled to refund of his stake. Accordingly, he is not arbitrarily deprived of his property by the mere fact that excise duty is levied on the stake. I associate myself with the case of George Lesaloi Selelo & another v Commissioner General, KRA & 4 others; Pevans EA Limited (t/a Sportpesa) & 3 Others [2019] eKLR where the court held expressed itself as hereunder:“I have said enough elsewhere above to show that I am not persuaded that there has been any violation of any constitutional rights or freedoms of the petitioners. The imposition of tax by legislation that has been duly enacted, and the collection of such tax, cannot amount to infringement of the constitutional right to own and hold property, or any other constitutional right or freedom.”

268.Similarly, in Kenya Union of Domestic, Hotels, Education Institutions and Hospital Workers (Kudheiha Workers Union) v Kenya Revenue Authority & 3 others [2014] eKLR the court held as follows;“Finally, the imposition of taxes is a constitutional imperative and the power to impose taxes is reposed in the legislature. The imposition of tax by statute cannot, of itself, amount to arbitrary deprivation of property contrary to article 40 of the Constitution.”

269.The respondents, in my view, were within their powers to enact legislation on the manner of collection of the excise duty as provided for in law which mandated that the duty be collected at the point of placing the wager in a betting transaction. Unless collected at that point, the said duty would be lost as there is no other point in the transaction that it can be collected. The other levies in the transaction are clearly not excise duty. In the case Bidco Oil Refineries Limited v Attorney General & 3 others [2013] eKLR the court appreciat3d that;“It is within the authority of the legislature to enact legislation governing the manner in which a particular form of tax is administered including the manner in which it imposed, calculated and enforced. The arguments made by the appellant concern how the customs duty is calculated, that is an issue of the application of the Act, rather than its constitutionality. Since statutory application is really the issue here, the consideration whether article 47(1) has been violated is dispositive. In any case, the collection of taxes through the procedures provided by the law cannot, at least in the circumstances of this case, constitute an arbitrary deprivation of property.”

270.The court was further urged to find the impugned law lacking in clarity and uncertain in its enforcement. It is true that any legislation, and a tax law in particular, that lacks clarity cannot be allowed to stand. Nyamu, J (as then was) in the case of Keroche Industries Ltd v Kenya Revenue Authority & 5 others Nairobi HCMA No 743 of 2006[2007]2 KLR 240 stated that:“one of the ingredients of the rule of law is certainty of law. Surely the most focused deprivations of individual interest in life, liberty or property must be accompanied by sufficient procedural safeguards that ensure certainty and regulating of law. This is a vision and a value recognised by our Constitution and it is an important pillar of the rule of law.”

271.Similarly, in the case of Grayned v City or Rockford [1972] 408 US 104, the United Court Supreme stated that:“a basis principle of due process that an enactment is void of vagueness if its prohibition are not clearly defined. Vagueness offends several impotent rules…a vague law impermissibly delegated basic police matters to policemen, judges and juries for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discrimination application.”

272.The same position was taken in Commissioner of Income Tax v S Westmont Power(K) Ltd [2006]eKLR where Alnashir Visram J (as he then was) observed that:“even though taxation is acceptable ad even essential in democratic societies, taxation laws that have the effect of depriving citizens of their property by imposing pecuniary burdens resulting also in penal consequences must be interpreted with great caution. In this respect, it is paramount that their provisions must be express and clear so as to leave no room for ambiguity.”

273.In this case it was submitted that section 5 of the Act provides that a tax to be known as excise duty, shall be charged in accordance with the provisions of this Act on—excisable goods manufactured in Kenya by a licensed manufacturer; excisable services supplied in Kenya by a licensed person; or excisable goods imported into Kenya. To the petitioners, a literal reading of the above provision demonstrates that the imposition of excise duty is pegged on provision of a service by a licensed person. In this case, it was contended that the petitioners and other punters do not provide any services to be considered qualified for payment of excise duty as sought by the impugned provision. Reference was also made to section 5(3)(b) that provides that the excise duty payable by a service provider shall be payable by the licensed person making the supply of services.

274.It was the petitioners’ case that the impugned provision contradicts the provisions of section 5 of Excise Duty Act which provides that excise duty is payable on a service rendered or a good manufactured and imported into Kenya by seeking seeks to levy excise on monies owned by a person that the person seeks to invest and not on any service provided by the person.

275.Reference was further made to section 15 of the Act that provides for licensing of suppliers of excisable services under the Act and makes it a criminal offense for one to provide excisable services without a license. The impugned provision, it was contended does not provide a framework for licensing of the petitioners and other punters. To this end the impugned provision is ambiguous and self-contradictory and incapable of being implemented.

276.In response, the respondents relied on sections 5(1) and 9 (4) of the Excise Duty Act as read with section 4 of part II of the first schedule of the Excise Duty Act as amended by the Finance Act, 2021 and contended that betting is an excisable service and was correctly brought to charge. They reiterated that the stake is the charge that allows punters to participate in a bet, game or a lottery. To that extent, there is no uncertainty or ambiguity created by the impugned provision.

277.On the alleged uncertainty in the excise regime for betting, it was submitted that from all the foregoing, it is clear that the law on excise is very clear and fully address all the foreseeable circumstances in a betting transactions. The impugned provisions in perfect consonance with all the existing provisions with the EDA and no uncertainty arise. The Petitioners have not shown how the law in the instance case can be said to be uncertain or attract several interpretations.

278.In this case, I have found that in betting transactions, it is proper to levy excise duty on the stake. The service for which the excise duty is levied is the avenue offered by the bookmarkers to the punters to place their debt since, as the petitioners rightly admit, there is no other excise duty payable after the bet save for the withholding tax which is an income. In the same vein, the taxes and duties being levied to bookmarkers like gross gaming revenue cannot amount to double tax since the excise duty is payable by the punters while the gross gaming revenue is payable by the bookmarkers. While it is true that the two taxes are being levied in respect of the same transaction of betting, the two taxes are different and are payable by different people. That, in my view, does not amount to double taxation. To that extent I agree with the opinion in Cantonment Board, Poona v Western India Theatres Ltd, AIR 1954 Bom 261 where the court expressed itself as follows:“But we fail to understand that there is anything in our Constitution which prevents double taxation being levied. It is quite true that if ordinarily a Provincial Legislature wanted to levy for itself a tax, it would not pass two laws levying two different duties in respect of the same subject-matter, in this case an entertainment. There is nothing to prevent the Provincial Legislature from charging in respect of entertainments as much tax as it likes. It would not therefore dream of passing of two Acts levying two separate entertainments duties…When a similar question arose before the Judges of the Nagpur High Court in the case of -- 'Mulji Sicka & Co v Dist Council, Bhandara', AIR 1945 Nag 171 (B), they found themselves unable to accept the contention that there was anything in the Constitutionwhich required them to hold that a tax was illegal on the ground that it involved double taxation in respect of the same subject-matter, and with respect we are in agreement with the view which had been expressed in that case.

279.In my view, the mere fact that a law imposes to different taxation regimes on a transaction, does not ipso facto make it unfair or unlawful particularly if payment is imposed upon different people in the same transaction. To that extent, I agree with the decision in the case of Karnataka Bank Ltd v Union of India (supra) that:“13.It is also necessary to point out that even if it is held that the impugned Act amounts to levying tax on income and it is traceable to Entry 82 of List-I of Schedule-VII, still we are of the view that the said Act is not liable to be struck down as unconstitutional on the ground urged by the learned counsel appearing for the appellant…The Honble Supreme Court in the case of Jain Bros (supra) has taken the view that double taxation is not alien to fiscal statute. In this connection, it is useful to refer to the observation made by the Hon'ble Supreme Court at paragraph 6 of the Judgment which reads as hereunder:"6.It is not disputed that there can be double taxation if the legislature has distinctly enacted it. It is only when there are general words of taxation and they have to be interpreted they cannot be so interpreted as to tax the subject twice over to the same tax (vide Channell, J, in Stevens v Durban-Roddepoort Gold Mining Co Ltd STC 402. The Constitutiondoes not contain any prohibition against double taxation even if it be assumed that such a taxation is involved in the case of firm and its partners after the amendment of section 23(5) by the Act of 1956. Nor is there any other enactment which interdicts such taxation. …… If any double taxation is involved the legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over."Further, in the case of Avinder Singh (supra), the Hon'ble Supreme Court while repelling the contention that double taxation is not permissible, at paragraph 4 of the judgment has observed as follows :“.... A feeble plea that the tax is bad because of the vice of double taxation and is unreasonable because there are heavy prior levies was also voiced. Some of these contentions hardly merit consideration, but have been mentioned out of courtesy to counsel. The last one, for instance, deserves the least attention. There is nothing in article 265 of the Constitutionfrom which one can spin out the constitutional vice called double taxation. (Bad economics may be good law and vice versa). Dealing with a somewhat similar argument, the Bombay High Court gave short shift to it in Western India Theatres. Some undeserving contentions die hard, rather survive after death. The only epitaph we may inscribe is: Rest in peace and don't be re-born. If on the same subject-matter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure save where other prohibitions exist…”

280.As regards public participation, the respondents have set out the steps taken in enacting the impugned provisions. While it is trite that public participation must be inculcate the principles of openness, democracy, accountability and representation, it must be appreciated that the yardstick for public participation is that a reasonable opportunity has been given to the members of the public and all interested parties to know about the issue and to have an adequate say. It cannot be expected of the legislature that a personal hearing will be given to every individual who claims to be affected by the laws or regulations that are being made. What is necessary is that the nature of concerns of different sectors of the parties should be communicated to the law maker and taken in formulating the final regulations.

281.Therefore, the mere fact that particular views have not been incorporated in the enactment does not justify the court in invalidating the enactment in question. As was appreciated by Lenaola, J in Nairobi Metropolitan PSV Saccos Union Ltd & 25 others v County of Nairobi Government & 3 others Petition No 486 of 2013, public participation is not the same as saying that public views must prevail.

282.As this court held in Republic v County Government of Kiambu ex parte Robert Gakuru & another [2016] at page 12 paragraph 48:“48.This issue calls into question what amounts to public participation facilitation. As was held by Ngcobo, J in Doctors for Life International v Speaker of the National Assembly and Others (supra):“The phrase “facilitate public involvement” is a broad concept, which relates to the duty to ensure public participation in the law-making process. The key words in this phrase are “facilitate” and “involvement”. To “facilitate” means to “make easy or easier”, “promote” or “help forward”. The phrase “public involvement” is commonly used to describe the process of allowing the public to participate in the decision-making process. The dictionary definition of “involve” includes to “bring a person into a matter” while participation is defined as “[a] taking part with others (in an action or matter); . . . the active involvement of members of a community or organization in decisions which affect them”. According to their plain and ordinary meaning, the words public involvement or public participation refer to the process by which the public participates in something. Facilitation of public involvement in the legislative process, therefore, means taking steps to ensure that the public participate in the legislative process. That is the plain meaning of section 72(1)(a). This construction of section 72(1)(a) is consistent with the participative nature of our democracy. As this court held in New Clicks, “[t]he Constitution calls for open and transparent government, and requires public participation in the making of laws by Parliament and deliberative legislative assemblies.” The democratic government that is contemplated in the Constitutionis thus a representative and participatory democracy which is accountable, responsive and transparent and which makes provision for the public to participate in the law-making process.”

283.Further the court stated:“50.However, it must be appreciated that the yardstick for public participation is that a reasonable opportunity has been given to the members of the public and all interested parties to know about the issue and to have an adequate say. It cannot be expected of the legislature that a personal hearing will be given to every individual who claims to be affected by the laws or regulations that are being made. What is necessary is that the nature of concerns of different sectors of the parties should be communicated to the law maker and taken in formulating the final regulations. Accordingly, the law is that the forms of facilitating an appropriate degree of participation in the law-making process are indeed capable of infinite variation. What matters is that at the end of the day a reasonable opportunity is offered to members of the public and all interested parties to know about the issues and to have an adequate say. What amounts to a reasonable opportunity will depend on the circumstances of each case.”

284.The court went on to observe that:“

51.Therefore the mere fact that particular views have not been incorporated in the enactment does not justify the court in invalidating the enactment in question. As was appreciated by Lenaola, J in Nairobi Metropolitan PSV Saccos Union Ltd & 25 Others v County of Nairobi Government & 3 others Petition No 486 of 2013, public participation is not the same as saying that public views must prevail”

52.The respondent has however adduced evidence showing that not only was the Bill leading to the said Act widely advertised but that the applicants themselves participated by giving their views thereon. Whereas the views of the applicants may not have been swallowed hook, line and sinker, that does not necessarily mean that there was no public participation. However the caution expressed by Sachs, J in Merafong Demarcation Forum and others v President of the Republic of South Africa and Others (CCT 41/07) [2008] ZACC 10; 2008 (5) SA 171 (CC); 2008 (10) BCLR 968 (CC) must always be kept in mind. In that case the learned Judge of the Constitutional Court of South Africa pronounced himself thus:“The passages from the Doctors for Life majority judgment, referred to by the applicants, state reasons for constitutionally obliging legislatures to facilitate public involvement. But being involved does not mean that one’s views must necessarily prevail. There is no authority for the proposition that the views expressed by the public are binding on the legislature if they are in direct conflict with the policies of Government. Government certainly can be expected to be responsive to the needs and wishes of minorities or interest groups, but our constitutional system of government would not be able to function if the legislature were bound by these views. The public participation in the legislative process, which the Constitutionenvisages, is supposed to supplement and enhance the democratic nature of general elections and majority rule, not to conflict with or even overrule or veto them. To say that the views expressed during a process of public participation are not binding when they conflict with government’s mandate from the national electorate, is not the same as cynically stating that the legislature is not required to keep an open mind when engaging in a process of that kind. Public involvement cannot be meaningful in the absence of a willingness to consider all views expressed by the public. It is the specific conjunction of these three factors which, in my view, must guide the evaluation of the facts in this matter. Civic dignity was directly implicated. Indeed, it is important to remember that the value of participation in governmental decision-making is derived not only from the belief that we improve the accuracy of decisions when we allow people to present their side of the story, but also from our sense that participation is necessary to preserve human dignity and self-respect…Given that the purpose of participatory democracy is not purely instrumental, I do not believe that the critical question is whether further consultation would have produced a different result. It might well have done. On the facts, I am far from convinced that the outcome would have been a foregone conclusion. Indeed, the Merafong community might have come up with temporising proposals that would have allowed for future compromise and taken some of the sting out of the situation. For its part, the Legislature might have been convinced that the continuation of an unsatisfactory status quo would have been better even if just to buy time for future negotiations than to invite a disastrous break-down of relations between the community and the government. Yet even if the result had been determinable in advance, respect for the relationship between the Legislature and the community required that there be more rather than less communication…There is nothing on the record to indicate that the Legislature took any steps whatsoever even to inform the community of the about-turn, let alone to explain it. This is not the sort of information that should be discovered for the first time from the newspapers, or from informal chit-chat.”53.This position was adopted by Majanja J’s decision in Commission for The Implementation of the Constitution v Parliament of Kenya & Another & 2 others & 2 others (supra) when he expressed himself as follows:“The National Assembly has a broad measure of discretion in how it achieves the object of public participation. How this is affected will vary from case to case but it must be clear that a reasonable level of participation has been afforded to the public. Indeed, as Sachs J observed in Minister of Health and another NO v New Clicks South Africa (Pty) Ltd and others 2006 (2) SA 311 (CC) at para 630, “The forms of facilitating an appropriate degree of participation in the law-making process are indeed capable of infinite variation. What matters is that at the end of the day a reasonable opportunity is offered to members of the public and all interested parties to know about the issues and to have an adequate say. What amounts to a reasonable opportunity will depend on the circumstances of each case.”54.What the courts are saying was that whereas the views expressed by the public are not necessarily binding on the legislature due consideration must be given to them before they are dismissed.

285.At page 17 paragraph 58 it was stated that:58.As Ngcobo, J rightly appreciated:‘Where Parliament has held public hearings but not admitted a person to make oral submissions on the ground that it does not consider it necessary to hear oral submissions from that person, this court will be slow to interfere with parliament’s judgment as to whom it wishes to hear and whom not. Once again, that person would have to show that it was clearly unreasonable for parliament not to have given them an opportunity to be heard. Parliament’s judgment on this issue will be given considerable respect. Moreover, it will often be the case that where the public has been given the opportunity to lodge written submissions, parliament will have acted reasonably in respect of its duty to facilitate public involvement, whatever may happen subsequently at public hearings.’”

286.Similar views were expressed in Diani Business Welfare Association and others v The County Government of Kwale [2015] eKLR where the court held that:“it does not matter how public participation was effected. What is needed in my view is that the public was accorded some reasonable level of participation…it is an indictment against the Petitioners that they would chose to ignore an important civic and constitutional duty to shape the financial and budgetary policy, the implementation of which would affect them in terms of revenue measures and the utilization of that revenue.”

287.Having considered the material placed before me in this petition, it is my view and I hold that the steps taken by the respondentsmet the threshold of public participation as required under the Constitution.

Findings and Conclusion

288.Having considered the issues raised in this petition, i find that the amendment of part ii of the first schedule to the Excise Duty Act through the Finance Act 2021 which introduced section 4A of Part II aforesaid amendment cannot be successfully impugned. This is due to the fact that a holistic consideration of the Excise Duty Actreveals that betting is an excisable service and bookmarkers are licensed to supply the betting service. Section 5(3)(b) as read with section 4(1A) and 6(3) enjoins the bookmarkers to collect and pay the excise duty at the point the punter wagers or places the stake. Since the only amount in question at that point is the stake which is distinct from the punter’s wallet or account, the only reasonable conclusion is that the stake is the charge that punters pay for the purposes of placing a debt since in the event of a loss, the stake is not refundable and forms the Gross Gaming Revenue (GGR).

289.Since the excise duty, which is paid at the point the punter wagers or places the stake, and the withholding income tax, paid upon winning, are two distinct taxes paid by different people, the issue of double taxation does not arise.

290.On the basis of the foregoing findings, I find that there is no breach of article 201 of the Constitution.

291.Based on the material on record, I find that the threshold of public participation as required under the Constitution was met in the enactment of the impugned provision.

Order

292.Having arrived at the aforesaid findings, the order that commends itself to me and which I hereby make is that this petition lacks merit and is hereby dismissed but with no order as to costs as the petition was brought on behalf of the betting public members.

293.Judgement accordingly.

JUDGEMENT READ, SIGNED AND DELIVERED IN OPEN COURT AT MACHAKOS THIS 6^TH DAY OF MAY, 2022G V ODUNGAJUDGEDelivered the presence of:Mr Osiemo for the Petitioners and holding brief for Mr Otieno Willis for the 6^th Interested Party.Mr Ochieng for the 2^nd Respondent and holding brief for Mr Kuyoni for the 1^st Respondent.CA Geoffrey

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