KEROCHE NOW HEADS TO APPELLATE COURT OVER SH9 BILLION TAX DISPUTE.

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BY SAM ALFAN.

Keroche Industries ltd has now moved to the Court of Appeal seeking to stop Kenya Revenue Authority from attaching its accounts over tax claims amounting to Sh9 billion.

The Naivasha based brewer further says in papers filed that it is unable to pay KRA Sh500 million as directed by the High Court in March, as a condition for stopping the taxman from attaching its accounts.

Now the company wants the Appellate court to issue temporary orders, suspending plans by KRA to enforce agency notices to its bankers- Equity and Absa Banks.  

“Pending hearing and determination of this application inter-parties, the agency notice issued on Equity Bank limited and Absa Bank of Kenya by KRA on March 11, 2020 and any other agency notice issued on any of the Keroche breweries bankers and debtors, be and are hereby stayed,” the application stated.

The brewer wants KRA or agents restrained from taking any steps towards collection of any monies pursuant to the agency notices.

According to the company, KRA will proceed with the enforcement action including serving agency notices on the Keroche’s other bankers and the banks already served with agency notices will be compelled to aid the agency in collecting the disputed taxes.

“The effect of the agency notices is that the company will not operate its bank accounts and this will cripple its operations”, Keroche said.

Keroche say they were unable to repay a loan it took from Absa Bank which it is required to service through monthly installments of 57 million and the bank will then call up the loan and liquidate the company’s assets including its machinery. This would lead to an automatic collapse of the company.

The company will also be compelled to break contractual agreements with third parties and face multiple suits. The company says it has 290 employees and their families will lose livelihood during these difficult economic times.

Tabitha Karanja in her affidavit says that the company’s average annual tax liability which has been met over the last five years for the company’s entire range of ten brands is Kshs. 1.5 billion.

However, the Covid-19 pandemic has impacted the company’s business so negatively that the current output is below 20 percent further complicating the company’s cash flow.

The CEO Tabitha Karanja adds that the company current cash flow or credit worthiness cannot therefore cannot fulfill payments of Sh500 million to the taxman.

The company faulted the judge decision for failing to consider whether the payment of Sh500 million fettered the company’s right to appeal and he erred in failing to grant the request for variation when the tax liability of the Keroche to the taxman was a matter in dispute.

The company argue that that the high court judge erred in the law in failing to consider the company inability to raise half-a-billion and the court erred in law in failing to ascertain whether the conditional order to pay the amount would imperil the financial position of the company and render the appeal pending before the high court, nugatory.

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