The High Court has refused to issue interim orders suspending the implementation of the directive to impose a fee of $350 (Sh44,878.51 at current exchange rates) on each container of all goods destined for South Sudan.
A preservation order maintains the status quo to preserve a matter until the motion for a lawsuit is heard.
Clearing agents in Kenya are challenging the $350 tax and seeking orders pending hearing and determination of their petition.
Judge Olga Siwi ruled that the clearing agents under the umbrella of the Kenya International Freight Forwarding and Warehousing Association (KIFAWA) had not presented a preliminary issue, and granted the principle of sovereign immunity.
Clearing agents have filed a lawsuit against the Mombasa Control Station – National Revenue Authority of South Sudan.
“Unless the contrary is proven, there will be no basis to prevent the defendant from implementing the directive,” Judge Siwi ruled while rejecting the application filed by Kifwa.
The judge also ruled that it was clear that this directive was issued by or on behalf of the Government of South Sudan in relation to exports and imports from the country (South Sudan).
“The defendant has made it clear that the $350 can only be paid by his own citizens, and therefore he has the right to determine the methods of payment,” Judge Siwi ruled.
The Mombasa Monitoring Station – South Sudan National Revenue Authority had informed the court that the money should be paid, not through the clearing agents, but through the consignees who are South Sudanese citizens.
She said South Sudan’s decision to impose fees on its citizens could only be appealed in that country, and there was nothing beyond the legal powers of the directive.
“The importer or exporter of goods entering or leaving South Sudan shall at all times pay this service charge,” reads part of the response submitted to the court by the Mombasa Monitoring Station of the National Revenue Authority of South Sudan.
Kifwa alleged that the Mombasa Control Station – South Sudan’s National Revenue Authority issued a directive that money be paid to a private company in Uganda, Invesco Uganda Limited, for a tracking system called the Electronic Cargo Tracking Note (ECTN).
However, the Mombasa Monitoring Station – South Sudan National Revenue Authority says the ECTN certificate is a mandatory document that must be obtained by importers/consignees and exporters of goods to and from South Sudan.
In its petition, Kivwa says it is licensed by the Kenyan Commissioner of Customs to clear goods and collect taxes and duties due to the government.
“As clearing agents, we operate under the laws of Kenya and the East African Community Customs Administration Act and regulations made thereunder,” part of the petition reads.
Kifwa wants a declaration that the tax imposed on each unit of all imports into South Sudan is unconstitutional.
It also seeks an order to quash the directive and prevent the Mombasa Monitoring Station – South Sudan National Revenue Authority from implementing the directive.
According to Kivua, there is a customs-controlled cargo tracking and monitoring system in Kenya – the Regional Electronic Cargo Tracking System – which is effective, mandatory and free within East Africa.
They argue that the electronic money transfer network in South Sudan is of no significance in terms of tracking shipments except for collecting the money and directing the funds to a special account in Uganda.
The petition read in part: “The directive to collect revenue through ECTN in the country is implemented at the port, inland container depots, container freight terminals (CFS) and border points at Malaba and Busia.”
Kenyan clearing agents are forced to implement and collect the ECTN advance service fee, Kivoa says.
It alleges that using Kenyan agents to process and collect ECTN service fees or any other taxes within Kenyan customs is illegal and not within the scope of their mandate.
Kafua says the directive has severely impaired the fundamental rights of clearing agents to earn a living, is harmful and runs counter to the constitution on economic empowerment of truck owners.
“The tax imposed by the defendant is beyond the law because it has no constitutional basis and has not been approved by Parliament as required by law,” Kivoa says in its petition.
She says under the directive, no trucks will leave the port, the Food Security and Control Centre and the border posts, because the Mombasa Control Station – South Sudan National Revenue Authority does not release any trucks heading to South Sudan before paying the tax.
The petitioner also states that goods destined for South Sudan are cleared under the Kenya Revenue Authority Customs Regulations under transit entry covered by a Regional Customs Transit Guarantee Bond.
Kafwa also seeks a declaration that the directive issued by the respondent is unconstitutional and inconsistent with the petitioner’s right to fair administrative justice as enshrined in the Constitution.
The court also wants a declaration that the directive issued by the respondent is unconstitutional because it is inconsistent with the petitioner’s right to economic empowerment enshrined in the Constitution.