Price of Salt Set to Increase as Supreme Court Dismisses Tax Case

Kenyans may soon face an increase in the price of salt after the Supreme Court dismissed a case filed by Krystalline Salt Limited, a major player in the salt manufacturing industry. The case, which revolved around the non-payment of charges levied by the Water Resources Management Authority (WARMA), has significant implications for the salt industry and consumers alike.

The Supreme Court, in a unanimous decision by Judges Philomena Mwilu, Mohammed Ibrahim, Smokin Wanjala, and Isaac Lenaola, ruled that the court lacked jurisdiction to hear the appeal brought by Krystalline Salt Limited. The manufacturer had been ordered by the Court of Appeal to pay a sum of Sh185 million, covering almost a decade of operations during which it extracted salt without paying WARMA charges.

Krystalline Salt Limited had initially challenged the ruling, arguing that the financial burden imposed by the court would cripple its operations. The company’s CEO, Hasmita Patel, expressed concerns that the company might be forced to close its operations and sell its assets to meet the financial demands. However, WARMA countered that the amount demanded was minimal compared to the billions the company had made from the salt business over the years. The water agency maintained that the charges were justified and that the case did not involve any constitutional interpretation, a position the Supreme Court ultimately agreed with.

The legal battle traces back to the Environment and Lands Court, where Judge Kossy Bor had ruled that salt companies were obligated to pay for the seawater used in salt extraction. This ruling was later upheld by the Court of Appeal, where Judges Daniel Musinga, Hellen Omondi, and Ngenye Macharia affirmed the decision, solidifying WARMA’s right to impose the charges.

Krystalline Salt Limited was not the only company affected by this ruling. Kensalt, another major player in the salt industry, faced a similar predicament with a demand of Sh270 million from WARMA. Kensalt had sought relief from the High Court, but the case was dismissed before it could proceed to trial.

The charges imposed by WARMA span from 2007 to 2017, a period during which Krystalline Salt Limited had been operating without paying the mandated fees. WARMA’s claim included an annual interest charge of Sh185,000, accumulating to the substantial sum now owed by the company.

The implications of this ruling are far-reaching. For years, salt has been one of the few household commodities in Kenya that has not experienced a price increase. On average, a kilogram of salt currently costs Sh25, with the smallest packet of 250 grams priced at Sh5. However, with the financial burden now placed on manufacturers like Krystalline Salt Limited, it is likely that these costs will be passed on to consumers, leading to an increase in the price of salt.

The legal principles behind the case also underscore the government’s role in managing natural resources. Justice Bor, in her ruling, emphasized that the Constitution mandates the State to utilize the environment and natural resources for the benefit of the people of Kenya. This principle forms the basis for the charges imposed by WARMA on water usage and other natural resources, highlighting the government’s authority in regulating these resources.

As the dust settles on this case, consumers and industry players alike will be closely watching how the impending price increase affects the market. The case serves as a reminder of the broader implications of environmental management policies and their impact on both businesses and everyday Kenyans.