An Eldoret-based flour miller has won some reprieve in a protracted battle with the taxman over a Sh567 million demand made by the revenue authority after the High Court ordered fresh hearing of the case.
High Court judge Justice Weldon Korir last week ruled that Eldoret Grains was not accorded a fair hearing before being slapped with the huge tax claim.
The Kenya Revenue Authority (KRA) had demanded the amount from Eldoret Grains after the miller’s ex-employee allegedly furnished it with information that two of his personal accounts had been used to hide undeclared revenue.
The miller denied the claims, saying Ibrahim Ratemo was a disgruntled ex-employee who had been dismissed over misappropriation of funds and was seeking to frustrate its business.
The miller’s appeal before a KRA tribunal was struck out and the Sh567 million claim upheld.
Justice Korir ordered the taxman to set up a tribunal to hear the matter afresh and accommodate additional evidence that Eldoret Grains had intended to adduce.
“On the hearing date the applicant attempted to rely on certain documents in response to the KRA’s case but it was denied an opportunity to do so. Eldoret Grains was indeed entitled to respond to KRA’s case,” the judge said.
Eldoret Grains said it had commenced civil and criminal proceedings against Mr Ratemo over misappropriated funds, and that the move may have motivated him to give false information to the taxman.
Sylvester Okello, a KRA official, however, said investigations had shown that it was the largest grain manufacturer in the North Rift but had a poor record of tax compliance. He accused the firm’s directors of depositing income in employees’ accounts to evade tax.
Justice Korir noted that there are many reasons an ex-employee could give false information about his former boss.
“Whether the information was given in good faith is also in question. Why didn’t the employee give this information during his employment? The applicant’s appeal to KRA is remitted fresh hearing by members other than those who made the decision that resulted in these proceedings,” he said.
The judge also ordered that the Sh100 million deposited by Eldoret grains for security be returned to the miller.