BY SAM ALFAN.
Kenya Revenue Authority has been given a boost after the High Court allowed the taxman to collect over Sh350 million from a fabric buying and garments company.
The taxman will collect the money after the High Court dismissed an appeal by Family Fashion Clothing ltd, which sought to stop the KRA from collecting Sh359,542,702 arising from value added Tax (VAT) and Corporate Tax.
Judge Josephine Mongare dismissed the appeal saying the company had not discharged its burden of proof despite having opportunity to furnish sufficient proof.
“The appeal as filed is dismissed and decision by the Tribunal upheld in entirety,” ruled Judge Mongare.
The judge noted that the company did not table the documents that it claimed it had provided to the taxman to prove purchase from its suppliers, as alleged.
“Therefore, this court like the Tribunal, cannot analyze the said documents in order to determine whether the company acquired stock from suppliers in question,” said the judge.
According to the garments manufacturing company, the tax appeals tribunal erred by failing to provide the required documentation to show that there was indeed a purchase…falled to discharge its burden of proof…”
“This is notwithstanding the fact that the company did procure the merchandise from its suppliers for which was issued with invoices and made payments upon delivery as evidence by the invoices, RTGS and delivery notes furnished to KRA,” said the company.
KRA opposed the appeal argued that the Tribunal rightly held that the taxman had satisfied the requirements of Section 49 of the Tax Procedures Act (TPA) by providing reasons for its decision.
The taxman said the Tribunal rightly held that KRA’s objection decision satisfied Section 58(10) of the TPA as it contained a statement of findings of its investigations and laid out the reason for arriving at the decision as a failure of the company to provide documentation to support its grounds of objection.
The taxman argued that the company failed to show that the invoices provided related to an actual supply or importation that was acquired by the trader to make a taxable supply hence was rejected on the basis that it fell under the ‘missing trader fraudulent scheme” and that the Tribunal rightly interpreted the provisions of Section 30 of the TPA and Section 107 of the Evidence Act which placed the burden of proof on the taxpayer to adduce all the necessary documentation to support its case.
