KRA stopped from closing Keroche as excise tax licence renewal dispute rages

Keroche Breweries has obtained court orders temporarily stopping the Kenya Revenue Authority (KRA) from shutting down its business following its refusal to renew its excise tax licence for the current financial year.

The taxman had written to the brewer ordering it to cease manufacturing as it was unlicensed, a move that would have stalled its operations.
KRA accuses Keroche of stating incorrect duty rates while filing returns, which it claims has denied it huge sums of money.

The brewer is also accused of not attaching copies of its tax compliance certificate and those of its directors while applying for the licence renewal.

Keroche has asked the court to quash the directive and compel KRA to issue it with an excise licence.

Justice George Odunga ordered KRA not to implement its directive pending determination of the case and also asked Keroche to file a substantive motion on its request for an excise licence within 14 days.

“Leave so granted herein shall operate as a stay of the decision contained in the letter dated 14th July, 2015 pending hearing and determination of the said motion or until further orders of this court,” the judge said.

The case comes up for hearing on September 22.

The court order, issued on Thursday, came a day before the authority published a list of licensed manufacturers and importers of excisable goods in a schedule that did not include Keroche.

READ: Keroche risks closure as KRA refuses to renew tax licence

Excisable goods include beer, spirits, polythene bags, tobacco products, juices, bottled water and soda among others.

KRA’s schedule, which included Kenya Breweries Limited, warned unlicensed firms against continuing with business while also informing retailers and consumers that it is illegal to possess them.

“Kindly note that it is an offence…to be in the possession, purchase, or consume excisable goods manufactures or imported or sold by unlicensed persons,” KRA said in the public notice.

“All manufacturers, wholesalers, retailers, other outlets and consumers are informed that the manufacture or possession of unexcisable goods constitutes an offence.”

Keroche moved to court last Wednesday seeking to compel the taxman to reverse its decision, holding that KRA was yet to issue it with tax compliance certificates at the time it applied for renewal of the licence.

The brewer added that its directors are separate legal entities hence asking for their tax compliance certificates is illegal.

The brewer said the taxman can recover undeclared revenue, and that denying it a licence could cripple its operations despite the millions of shillings it pays in taxes every year.

Keroche added that it had a legitimate expectation that its licence would be renewed after KRA failed to determine its application long after the 30 days stated in law.

Keroche has written a letter to the Industrialisation cabinet secretary Adan Mohammed requesting him to intervene in what it referred to as “malicious targeting” of its firm.