Tata Chemicals Magadi Limite v County Government of Kajiado (Civil Appeal 530 of 2019) [2025] KECA 1721 (KLR) (24 October 2025) (Judgment)

Tax Type

Key Facts

Issues

• Whether the respondent's closure of the appellant's operations violated the lease agreement, breached constitutional Article 209(5) (national economic policy protection), and infringed on the appellant's constitutional right to property (Article 40).
• Whether the Kajiado County Finance Act 2014 and subsequent Finance Bills were validly enacted and conflicted with the Rating Act, Valuation for Rating Act, and constitutional provisions (Articles 201, 209(3), 209(5)).
• Whether the respondent's demand for land rates and royalties (Kshs.17,448,485,646/=) was lawful, given the lease agreements and constitutional limits on county government taxation powers.

Tax Years

• 2018
• 2015
• 2016
• 2014
• 2013
• 2017

Holdings

• The respondent's closure of the appellant's operations was found to breach the lease agreement, Article 209(5) of the Constitution, and the appellant's constitutional right to property under Article 40.
• The court held that the demand for royalties in respect of soda ash was not payable under the Mining Act and Article 62 of the Constitution, as mineral taxation is a national government function.
• The court determined that the appellant was not obliged to pay the demanded Kshs.17,448,485,646/= in land rates as the rates were not determined in compliance with the Rating Act, Valuation for Rating Act, and Articles 201 and 209(3) and (5) of the Constitution.

Remedies

• A permanent injunction was granted to restrain the respondent from demanding and collecting the sum of Kshs.17,448,485,646 or any other amounts in respect of the alleged arrears of land rates and royalties for the period between 2013-2018.
• The court quashed the respondent's demands for the payment of Kshs.17,448,485,646 in alleged arrears of land rates and royalties for the period 2013-2018, as these demands were found to be unlawful.
• The court declared that any provisions of the Kajiado County Finance Acts providing for the levying of royalties on soda minerals, particularly soda ash, are null and void for contravening Article 191(2) and (3) of the Constitution, which vests minerals in the National Government.
• The court declared the Kajiado County Finance Bills for the years 2013/2014, 2015/2016, 2016/2017, and 2017/2018 as null and void, finding they were enacted contrary to Articles 201, 209(3), and 209(5) of the Constitution. These provisions relate to the proper enactment of legislation, the exercise of taxation powers, and the protection of national economic policies and mobility of goods, respectively.
• The court granted a prohibition order, directing the respondent and its agents to refrain from trespassing, entering, remaining on, closing, locking, blocking, or interfering with the appellant's premises, factories, gates, and properties in Kajiado and Magadi.
• The court issued a prohibition order to prevent the respondent from demanding and collecting royalties on soda ash as per the Kajiado County Finance Acts, which were deemed unconstitutional under the Mining Act and Article 62 of the Constitution.

Tax Issue Category

Legal Principles

• The court determined that the current dispute was not res judicata, distinguishing it from prior cases (Kajiado Judicial Review Case No. 13 of 2016 and Kajiado Constitutional Petition No. 3 of 2015) because the appellant challenged the respondent's powers under Articles 209(3) and 209(5) of the Constitution, which were not previously addressed.
• The court conducted a judicial review to assess whether the Kajiado County Finance Act 2014 and subsequent Finance Bills were ultra vires the Constitution and national legislation (Rating Act, Valuation for Rating Act). It concluded that the respondent's demand for land rates and royalties violated constitutional principles, particularly Article 209(5), which prohibits actions prejudicing national economic policies.
• The court applied the purposive approach in interpreting the Constitution and lease agreements, emphasizing the intent behind Article 209(5) to protect national economic activities and the lease terms reserving mineral rights to the national government under Article 62(1).

Disputed Tax Amount

Precedent Name

• Lucy Wanjiru & Another -vs- The Attorney General & Another
• County Government of Kwale -vs- Kenya Airports Authority
• Anne Wanjiru Kingori & Others -vs- The Kajiado County Assembly & Others
• Anarita Karimi Njeru -vs- The Republic
• Gitobu Imanyara & 2 Others -vs- Attorney General

Cited Statute

• Interpretation and General Provisions Act (Cap. 2)
• Rating Act (Cap. 267)
• Kajiado County Finance Act 2014
• Constitution of Kenya 2010, Articles 62(1) and (3)
• Mining Act 2016
• Court of Appeal Rules, 2022, Rule 31(1)(a)
• Constitution of Kenya 2010, Articles 209(3) and (5)
• Government Lands Act (repealed)
• Valuation for Rating Act (Chapter 266)

Judge Name

• Fred Ochieng
• A. O. Mucelule
• S. Gatembu

Passage Text

• the respondent's closure of the operations of the appellant breached the appellant's lease Agreement with the National Government, breached Article 209(5) of theConstitution,and infringed on the appellant's constitutional right to property under Article 40.
• the demand of Kshs.17,448,485,646/= that related to royalties was not payable under the Mining Act and Article 62 of the Constitution; and
• the appellant was not obliged to pay the Kshs.17,448,485,646/= as demanded by the respondent because the land rates had not been determined in compliance with the Rating Act, the Valuation of Rating Act Articles 201 and 209(3) and (5) of the Constitution;