State is scheming to shut down our operations, claims Keroche

Beer-maker Keroche Breweries has claimed in court that the taxman’s refusal to renew its licence for the 2015 to 2016 financial year is part of a scheme by the government to unlawfully shut down its operations.

Keroche on Tuesday told Justice George Odunga that the Ministry of Interior and Co-ordination had opted to unlawfully use the Kenya Revenue Authority (KRA) to effect its closure after failing to find any fault in the brewer’s operations.

The KRA in July ordered Keroche to cease production of any taxable goods, claiming that the brewer had been evading payment of millions of shillings in taxes by cooking up its books. Keroche, however, obtained a court order stopping the taxman from closing its business.

Keroche has filed a separate suit against Interior CS Joseph Nkaissery for including it on a list of manufacturers whose alcoholic drinks are believed to be sub-standard.

Mr Nkaissery has, in the suit, also argued that Keroche is not tax-compliant. “The government is bent on closing down Keroche Breweries. If it is not on poisonous drinks, it is on tax compliance.

‘‘The whole issue was about illicit drinks. Now when they find that none of our products is poisonous and none has killed anyone, they are shifting goal posts with the KRA demand,” lawyer Paul Muite argued. Keroche is fighting the Kenya Bureau of Standards’ (Kebs) decision to cancel its licence to produce Crescent gin, brandy and whisky brands.

Judge Odunga has since revoked the cancellation following a series of suits by various manufacturers, including Keroche.

State counsel Thande Kuria however held that Mr Nkaissery was following a directive by President Uhuru Kenyatta issued in July and that he did not break any law as the order to crack down on manufacturers was issued in the public interest.

But Keroche insists that Kebs, KRA and Mr Nkaissery colluded to ensure the brewer is closed down by hook or crook.

The brewer holds that it would be in the interest of the public to allow firms to produce safe alcohol for low income earners.

READ: KRA hits Keroche with Sh1 billion excise duty claim

Keroche holds that it has complied with almost all KRA regulations but the taxman has declined to issue it a certificate of compliance.

It adds that 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.

Among the causes of Keroche’s standoff with KRA is its Vienna Ice drink. KRA insists that the brewer has not been paying the right amount of tax for the drink.

“Keroche takes a bottle of vodka in respect of which it has paid the right tariffs for and mixes a certain number of tots with its own bottled water then sells it as Vienna Ice. You cannot tax it as if it is a whole new product,” Mr Muite added.

The brewer has also differed with Mr Nkaissery over the state of its Sh5 billion Naivasha factory, which it insists is up to standard. The Interior ministry claimed that Keroche’s facility lacks adequate ventilation and does not have well maintained floors.

But Keroche says the allegations are vague as there are no specific measures for ventilation or floor maintenance stated in the letter to the brewer.

The brewer is also seeking damages from the government for interruptions to its operations. The firm says it had alcoholic drinks worth over Sh1 billion in different production stages at the time KRA cancelled its licence.