BY SAM ALFAN
The taxman wants the court to compel Keroche Breweries to pay up money owed to it over Vienna Ice Vodka.
Kenya Revenue Authority has petitioned the court to allow them to implement the Tax Appeals Tribunal judgement against Keroche Breweries Limited for Sh9 billion.
The agency has urged the court not to hesitate to order Keroche to immediately pay principal taxes or make proposals to KRA on when to settle the tax pending hearing of substantive appeal to save each other cost.
“It is in the interest of justice Keroche breweries to pay the said assessed taxes as the said sum continues to accumulate penalties and interests,” taxman.
However, High Court Judge David Majanja suspended the implementation of tax appeals tribunal judgment to collect 9 billion tax that could plunge Keroche into financial crisis.
The court further suspended a notice by KRA to Equity Bank to freeze Keroche’s bank accounts to recover the alleged taxes amounting to over 9 billion.
In affidavit filed by Kenya Revenue Authority large taxpayers office (LTO) division chief manager Francis Muiruri, said Keroche has enjoy stay of execution since the matter was filed at the tax tribunal in 2015 and 2017 respectively for a period of over three years and there is no reason to be allowed for a further uncertainty period which exposes the risk of KRA not recovering the tax.
“The fact that the tribunal was out with its staff was not a bar or reason for Keroche making representations to KRA on how to settle tax from March 9 to March 11,2020 when the agency notice was issued”, Say’s Muiruri.
Muiruri adds that the company owned by Tabitha Mukami Karanja should now than be forthright and face the reality taxation is here to stay and no individual or enterprise can avoid to shoulder the burden of with the rest of the citizenry and none will be treated differently from set in the process.
The agency dismissed Tabitha’s arguments that the appeal raises matters that affect Keroche products and the business and cash flow will be affected if the court will not suspend the agency enforcement action.
According to KRA, Keroche Breweries ought to have put in place contingency measure to address the negative outcome from the tribunal such as making provision for payment in whatever amount.
The agency also accused Keroche of consistently misguiding the public on the issues in dispute and have made attempts to shade the agency as acting in bad faith and thus has been done without letting the public know that they have been indulged for over years in an attempt to reach a workable solution with the law.
Tabitha also said the company has numerous contractual obligations with third parties such as suppliers , stockists and distributors of its products and the obligations will not be met is the agency is allowed to enforce the tribunal decision that will expose Keroche to damages for breach of contracts.
Both Keroche and KRA have been involved in the dispute over the correct tax treatment of the Keroche’s Vienna Ice brand of Vodka from the year 2012 and KRA position is that Vienna Ice is a distinct excisable product for which duty should be levied and accounted for based on the volumes which are produced.
On the other hand, Keroche has maintained that Vienna Ice brand of Vodka is not a distinct product from its crescent vodka.
Keroche says that Vienna Ice is produced from diluting the crescent vodka and as such the taxes should be accounted for based on the volumes of crescent vodka and not based on the volumes of Vienna Ice.
According to KRA ,on July 22,1015 having finalized the audit which started in 2012 and having involved Keroche through the whole process issued an objection decision dismissing the company’s objection.
This was accompanied with a demand of shilling 787,054,999 which comprised of excise Duty and VAT , for the period of June ,2014 to February, 2015.
The agency further on April 21, 2017 issued Keroche with an objection decision with regard to Vienna Ice Brand of Vodka of Shilling 1,726,671,637.20 billion for January 2014 to May, 2014.
On Friday, Keroche Breweries Limited filed application in court seeking to suspend the implementation of Tax Appeals Tribunal judgement delivered on March 9, compelling the company to pay 9 billion tax.
Keroche urged the court to temporarily suspend the implementation of the judgement that KRA is claiming shilling 9,116,835,985.00 billion pending hearing and determination of the application.
An order of stay be issued staying the enforcement of the judgement of the Tax Appeals Tribunal delivered on March 9,2020 pending hearing and determination of the case.” Keroche urged.
In the court documents, Keroche Breweries urged the to suspend KRA notice to Equity Bank dated March 11,2020 and any other agency notice issued on Keroche’s bankers and debtors be lifted and KRA stopped from taking any steps to collect any money pursuant to the said agency notices issued to the Keroche’s debtors.
