BLOW TO KEROCHE AS COURT DECLINES TO REVIEW SH500 MILLION DEMAND.

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BY SAM ALFAN.

Keroche Breweries Limited claim that the company can’t manage to pay 500 million to Kenya Revenue Authority over Covid-19 has been dismissed. 

Justice David Majanja declined to review a demand for for the company to pay Kenya Revenue Authority (KRA) Sh500 million, pending the hearing of a tax dispute. 

“I have considered the facts set out by the appellant and I find nothing new has arisen in regard to the nature of the appellant business in relation to its tax ability, hence I decline to vary the appellant an unconditional order of stay.” said Majanja in the ruling. 

High Court dismissed the plea by the company saying it had no funds to pay the taxman as directed. 

The company had also argued that the directive might lead to total collapse of Keroche, with attendant consequences such as employees losing their jobs.

The company said it was willing to deposit Sh10 million in a joint income earning account, pending the determination of the case. 

In the petition, Keroche CEO Tabitha Karanja the order by Justice Majanja was issued during “a very difficult time in this country’s history given the biting effects of Covid-19 pandemic”.

Tabitha added that the closure of many business due to Covid-19, the company can only raise the amount through a bank loan, but which is not possible because Keroche is servicing another loan to Absa Kenya.

She further said the business is cash intensive and its operational costs for the months had outstripped the revenue collected. 

The company is contesting tax demand of Sh9.1 billion, and has accused the taxman of reclassification of its products, backdating of uncollected taxes and change of formula, all in a bid to squeeze more from them.

She said she was apprehensive that the company which has been in existence for 23, would be greatly affected and with it, the livelihoods of some 300 employees.

“I have considered all the factors and I find that the appellant (Keroche) is a going concern and the action by the respondent may cripple its operations.

However, the taxes have been outstanding for long. In the circumstances, I make the following orders,” Judge Majanja said in March.

At the heart of Keroche’s latest troubles is one of its most popular products, Viena Ice Vodka, which the KRA wants taken off the list of fortified wine products.

Fortified wines are alcoholic drinks that have a distilled spirit added to them. The taxman argues that the fortified wine products list is reserved for grape-based drinks, while Vienna Ice is made from fermented pineapples.

Tabitha said Viena Ice is simply a diluted version of Crescent Vodka, another of the brewer’s products, with water hence the process cannot be equated to manufacture.

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