Companies

Marshalls fears closure in bank account freeze row with KRA

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The Marshalls outlet. The court had dismissed the auto dealers’ initial suit against the taxman. PHOTO | FILE

The High Court has extended an order un-freezing the bank accounts of Marshalls East Africa, offering temporary reprieve for the car dealer in an ongoing row with the taxman.

Justice Eric Ogola on Thursday extended orders barring Kenya Revenue Authority (KRA) from freezing bank accounts of the NSE-listed company until October 30 when he will give further directions on the matter.

Marshalls wants the court to compel the taxman to retract orders it issued to Ecobank and Kenya Commercial Bank to block its two bank accounts, arguing that the move threatens to paralyse its operations over a tax claim it has denied owing.

“This debit without informing Marshalls was an affront to the rules of natural justice as it was done contrary to all banking rules and runs counter to the Constitution of Kenya,” Marshalls said in its suit papers.

It also wants KRA to issue it with particulars of the tax claim, arguing that Marshalls is a public listed company with liquefiable assets hence can comply with the claim if it is proven to be genuine.

KRA made a Sh17 million tax claim in June last year through a letter to Marshalls, which the car dealer replied with a query on the specifics of the claim.

READ: Marshalls East Africa wins reprieve in KRA step to freeze bank accounts

The car dealer alleges that the taxman did not respond to the query and instead proceeded to instruct Ecobank to deduct Sh2.9 million from two of its accounts with Ecobank and KCB, before serving the banks with orders to freeze the accounts.

“KRA’s decision to exercise its discretion to issue notices to Ecobank and KCB are all in the circumstances exercised with bias, as is apparent from KRA having ignored Marshall’s letter and is an abuse of such power,” Marshalls added.

It has also faulted KRA for issuing the instructions to the banks without giving it a hearing, and refusing to supply it with supporting documents for the tax claim.

Marshalls, which has faced a major struggle to survive in the vehicle industry over the past few years since losing two of its largest clients, Peugot and Tata, has claimed that the accounts if left frozen could lead to its shutting down.

It added that the fate of its over 300 employees lies in the balance if the Court does not bar the taxman from effecting a freeze of its accounts.

“The directives of KRA and the actions of Ecobank and KCB in blocking Marshall’s accounts continues to seriously interfere with the applicant’s business operations,” the car dealer added.

“KRA has not given credit for all the payments made and it is impossible to determine what is exactly due in the circumstances. It is only the taking of account that will determine what Marshalls should pay,” said Marshalls.

Marshalls’ initial suit against the taxman was dismissed by Judicial Review judge Weldon Korir, and shortly after KRA proceeded to make the claim, part of which the car dealer insists it had already paid.

The judge argued that Marshalls had insisted on settling the amount in Sh700,000 monthly installments instead of the Sh3.5 million the taxman wanted every month, but that the car dealer still went back on its proposed settlement.