A fuel brokerage firm will now pay the Kenya Revenue Authority (KRA) Sh118 million after the High Court upheld a demand on tax arrears made by the taxman four years ago.
Justice David Majanja said Tropical Oil Movers Limited was to blame for failing to furnish KRA with documents to determine its correct tax position.
The company failed to file timely returns for 2016 and 2017 prompting the taxman's demand. Its objection was then dismissed by the commissioner of domestic taxes before the decision was upheld by the Tax Appeals Tribunal.
Justice Majanja said the taxpayer should have given reasons for late filing and the case was made worse by the failure to provide documents to enable KRA verify contents in the financial statements.
“The appellant did not seek extension of time nor give any reasons for the late objection filed almost a year after the assessments,” the judge said, adding that the delay was inordinate.
Trouble for the company started on September 6, 2018, when KRA wrote to it pointing out that it had not filed tax returns for 2016.
The firm was directed to file all outstanding returns and pay all taxes within seven days, a move that was followed by a demand of Sh59.6 million for 2016 taxes and Sh58.4 million for 2017. The firm objected saying the amount was well above what it deemed to owe going by self-assessments.
According to Tropical, its gross margins as a broker were below Sh2 per litre and the turnover could not attract such high taxes, which had been assessed at 80 percent of the turnover.
The company said it had experienced low sales in August 2016 leading to the closure of the business, which remained dormant for a while.
The company then forwarded its documents including copies of returns for 2016, to 2018 together with its pay-as-you-earn and VAT pin certificate.
KRA then demanded bank statements from 2014 to 2016 together with sales invoices, monthly ETR reports, and sales schedules among other documents.
The commissioner then dismissed the firm’s objections saying the company failed to provide evidence to support its objection.
