Counties

Why KRA is demanding Sh90 million from Joho firm

Mombasa Governor Hassan Joho. FILE PHOTO | NMG 
Mombasa Governor Hassan Joho. FILE PHOTO | NMG  

Kenya Revenue Authority made a demand for Sh90 million in taxes said to be owed to it by a freight firm because the company has not fully paid tax assessed for the years 2008-2012, a court heard.

Lawyer Pius Nyaga for KRA told the court that Portside Freight Terminal Ltd, a firm associated with Governor Hassan Joho's family, was advised to remit the money.

Mr Nyaga argued that a letter by KRA, dated February 3 and addressed to the company’s managing director, was a notification that the freight firm owed taxes that were due and payable.

“The letter accorded the applicant an opportunity to seek clarification before the commission took any further action,” said Mr Nyaga in his submissions.

Remit taxes

He further told the court that the letter had notified the freight firm that it had failed to remit taxes for four years (2008-2012).

Mr Nyaga said failure by the freight firm to remit the taxes to KRA amounted to an offence under Section 95 of the tax Procedures Act 2015.

“This empowered the commissioner to summon the applicant for an interview as provided under Section 61 of the Tax Procedures Act,” said Mr Nyaga in his submissions.

Mr Nyaga told Justice Eric Ogola that the case ought to have been taken before the Tax Appeals Tribunal for determination.

Through lawyer Paul Buti, the freight firm told the court that there is no way tax investigation findings can be equated to self-assessment of tax returns.

'Self-assessment'

“There were no self-assessment returns,” said Mr Buti adding that the matter cannot be dealt by a Tax Appeals Tribunal.

“If there was need for the matter to go to a tribunal, the letters (by KRA) should not have been written,” said Mr Buti in his submissions.

The freight firm which says it does not admit the Sh90 million taxes alleged owed wants KRA prohibited from issuing the notices for the years 2008 to 2011 or any years thereafter.

It also wants the taxman prohibited from issuing the notices to either its directors, shareholders bankers or any of its creditors pursuant to the letter by KRA dated February 3.

The freight company said by a letter dated February 3 addressed to the managing director, KRA demanded various tax sums as tax due for the four years.

The freight firm argues that where a tax payer has not paid tax on its due date, after assessment, then the Tax Procedure Act, 2015 comes into operation.

Quash decision

Portside Freight Terminal Ltd is also seeking an order to quash the decision by KRA demanding various amounts of money as tax due from it.

It is also seeking an order to compel KRA to follow the law as clearly spelt out in the Act in matters of assessment and recovery of tax and related matters.

KRA said the freight firm total tax liability amounts to Sh90 million, which has been due since the last day of the fourth month following the end of every year of income or the company’s accounting period.

Through Mr Jesse Kamau, a supervisor at its Investigations and Enforcement Department, KRA further said that its actions are premised on the provisions of tax statutes.

Judgement will be delivered on November 6.