BY SAM ALFAN.
Botswana’s retail supermarket choppies Enterprises has suffered a major in it bid to unfreeze its bank accounts.
This is after the high court rejected an application by retail supermarkets chain Choppies Enterprises limited , seeking to unfreeze its accounts over a tax dispute with Kenya Revenue Authority (KRA).
“I dismiss the notice of motion dated April 8,2020 with costs to Kenya Revenue Authority. Choppies Enterprise limited is at liberty to apply for any further or other orders. In the meantime , the status quo regarding the agency notices shall remain in force for 14 days to enable the parties explore amicable settlement or for the choppies to move to court appropriately”, ruled the judge.
The retail chain, wanted the court to compel KRA to unfreeze its account at Standard Chartered Bank over a tax dispute of Shilling 173 million. Evidence in court showed that KRA issued two agency notices dated February 28, to StanChart for Shilling 173,388,416 and to Quick Mart ltd for Shilling 125,255568, on account of tax liability.
Choppies Enterprises filed a suit seeking declarations that the agency notices are contrary to the Tax Procedure Act,2015.
The supermarket also sought to set aside Kenya Revenue Authority notices and also mandatory orders suspending , cancelling or setting aside the agency notices.
The supermarket through the managing director Parin Patel said it had held talks with KRA but the taxman demanded a bank guarantee for Shilling 173 million, yet it was willing to give a security of Shilling 15 million.
He pleaded with the court to lift the freeze, to enable it might its financial obligations including paying Sh60 million to employees who were declared redundant. He said it was also owed Shilling 224,317,697 by more than 400 suppliers.
He added that KRA had not made a determination on its objections on the tax due, but had gone ahead and issued the agency notices, with no basis.
However, the taxman said there are reasonable grounds to believe that the taxpayer will not pay taxes due or it might never recover the dues in the future.
This was because the owners were winding up its business in Kenya and was in the process of disposing of its branches, assets and stocks without informing the commissioner of domestic taxes.
The court heard that it had already sold five of its branches to Quickmart Supermarkets ltd and had received an advance payment of Shillings 25 million. It had also sold some branches to Appmart ltd.
And by the time the case is determined, the court heard, it would have sold all its assets in Kenya and closed its bank account, hence making it difficult for KRA to recovering the amount.
Justice David Majanja said the law allows the taxman to issue agency notice where a taxpayer may become liable to pay tax and the commissioner has reasonable grounds to believe that the taxpayer will not pay tax by the due date.
The judge observed that the evidence before him, hhe find that there was sufficient evidence that Choppies is disposing off its business.
Choppies revealed plans to exit the Kenyan market four years last year after acquiring Ukwala stores for Ksh1 billion.
The retailer has been struggling to grow market share in an increasingly competitive retail market characterised by the merger of some of its rivals like Quick Mart and Tumaini and the declining fortunes of erstwhile big players like Uchumi and Nakumatt.
