The High Court has ordered fresh hearing of a Sh1.4 billion tax dispute against manufacturer Menengai Oils after the Kenya Revenue Authority (KRA) claimed that export for goods heading to Tanzania were processed in Nakuru.
Justice David Majanja said the tax appeals tribunal did not interrogate the evidence presented by the Commissioner of domestic taxes, leaving open the question whether the court should affirm the Sh1.45 billion demand.
Justice Majanja also ruled that the company bears the burden of showing that the goods left the country, once KRA has conducted investigations and put its findings to the taxpayer.
“While these concerns by the Commissioner are not entirely unfounded, they beg a couple of factual questions which the Tribunal did not resolve. Why would the certificates of export be issued in Nakuru and not at the border point?” the Judge wondered.
KRA argued that while investigating the company, it identified entries that did not have rotation numbers and certificates of export.
It added that for these set of entries, Menengai obtained certificates of export several years after they had been declared.
The matter was filed before the tribunal after Menengai Oils disputed the assessment done by the commissioner in September 2017.
The tribunal dismissed the case forcing the taxman to challenge the decision before the High Court.
The Tribunal had ruled that Menengai had fulfilled its obligation once the customs official captured the certificates of export on the computer systems.
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