BY SAM ALFAN.
London Distillers limited has lost a Sh517 million tax dispute against Kenya Revenue Authority after the High Court that a waiver given to the firm by Treasury was illegal.
Justice Alfred Mabeya allowed the taxman to collect the tax arrears saying an application granted to the distiller by Treasury had no legal effect because the procedure for seeking such a waiver should be initiated by the Commissioner of Domestic taxes.
“…Treasury had no business to purport to allow the abandonment of 80 percent of the admitted taxes. That was extreme abuse of power of power on the part of Treasury,” the judge said.
The judge said the Treasury purported to exercise a power it did not have, adding that the decision by KRA to rescind the abandonment was not malicious.
“Accordingly, the respondent’s (Commissioner of Domestic Taxes) decision of March 2, 2022 was lawful and not illegal, irrational or unprocedural as contended. In the view of forgoing, the application application dated April 1, 2022 is without merit and is hereby dismissed,” ruled the Judge Mabeya.
London Distillers ltd sought to compel the taxman to comply with the decision dated January 1, 2022and accept payment of Sh80 million.
The company said it wrote and applied to Treasury cabinet secretary for abandonment of Sh517,118,680 which the company had collected as excise Duty in the course of its business.
The Treasury allowed the application and approved abandonment of 80 percent of outstanding principal Excise Tax and waived 100 percent of penalties and interest.
Following the deal, the distiller and KRA agreed on weekly payment of Sh7.5 million from February 2, this year. The distiller had already paid Sh55 million, when KRA rescinded the decision and demanded the entire amount within one week.
The company accused KRA of acting arbitrarily and assuming the powers of the Treasury CS and rushed to court to block the taxman from demanding the entire amount.
The company through Mohan Galot said that the stated consent referred to by the the taxman preceded the decision of Treasury.
He added that the decision of Treasury had not been rescinded and the purported rescission had been made by the taxman contrary to the law.
