Fly 540 loses bid to block Sh101m KRA demand

Fly 540 will have to pay the taxman Sh101 million after it lost a case against the revenue agency.

Justice George Odunga ruled Thursday that the Kenya Revenue Authority (KRA) did not overstep its mandate in slapping the airline with a demand for the sum, which accrued from air navigation services in 2012.

After the transport ministry adopted new rules in 2012, KRA calculated tax on air navigation services for the entire year, while Fly 540 expected the new rules would only see it pay for August and September of the same year.

The judge however argued that Fly 540 should have filed a suit challenging the new laws, as it had only challenged the Sh101 million tax in its suit. Had the airline done so and been successful, all actions spawning from the implementation would have been declared illegal.

“Fly 540 in my view ought to have sought an appropriate relief in legal proceedings seeking a declaration that the said new regulations were unlawful and pursuant thereto seek nullification of all the consequential actions which are the subject of these proceedings,” the judge said.

He added that it would be futile to issue orders against the levy if the regulations leading to the Sh101 million amount were to remain legal.

KRA introduced the new rules in August 2011, but amended a clause through a legal notice in September 2012, which Fly 540 protested against.

The airline consequently sued KRA, the Kenya Civil Aviation Authority, the Transport minister and the Attorney-General.

Fly 540 argues that consultations on the new regulations were only done after implementation, which makes the legal notice published by the Kenya Civil Aviation Authority unlawful.