The High Court has dismissed an application by troubled petroleum dealer Hashi Energy, seeking to table additional documents as the firm fights a tax demand of Sh7.1 billion.
The court rejected the application, saying that the firm, which is under liquidation, made the plea too late in the day.
According to the court, the application was made two days before a judgment on the appeal against Kenya Revenue Authority’s (KRA) tax demand was rendered.
The court further noted that apart from listing the documents proposed to be admitted, Hashi did not attach the documents to support its case, hence the court was unable to form any opinion as to the actual relevance of the proposed documents.
“Further, I agree with the respondent’s (KRA) submissions that the documents listed in the application are transactional and financial records ordinarily within the appellant’s control. Save for general assertions of jurisdictional challenges and third-party consent, no sufficient explanation has been given why they could not be produced earlier,” said the court.
KRA slapped the company with a Sh7.1 billion tax demand for the period between 2017 and 2022, a decision that was upheld by the Tax Appeals Tribunal in October 2024.
Hashi Energy then moved to the High Court seeking to overturn the demand. The case was heard, but before the judgment was delivered, the firm made an application to attach the documents.
The firm said the tribunal dismissed its appeal primarily on the ground that it failed to discharge its burden of proof, for not producing crucial documents requested by KRA.
The company said it had since obtained and compiled additional documentary evidence, which is directly relevant to the determination of its tax liability.
The documents sought to be introduced included the contract for supply of fuel to the United Nations, detailed sales ledgers and stock movement schedules, evidence of payments from the UN, and loan agreements/statements from Democratic Republic of Congo, and bank statements and account reconciliations to explain variances in audited financial statements, which the firm contended are relevant to the case.
While rejecting the application, the court noted that while the tribunal’s decision was made on October 4, 2024, the company filed the appeal and never indicated its intention to file any additional documents.
“Further, the court is of the considered view that admitting evidence at this stage would, in my view, violate the principle of finality in litigation, as a party should not be allowed to patch up weak points in their case after realising they may be unsuccessful,” said the court.
The firm was involved in the sale and distribution of LPG and the provision of food rations and related services to UN stabilisation missions in the DR Congo.
Evidence presented before the tribunal was that KRA carried out an audit on the firm’s business covering corporation tax, withholding tax, VAT, and pay-as-you-earn (PAYE) for the period 2017 to 2022.
The company had faulted the KRA on the assessment, although it admitted that it did not file the tax returns for the years 2021 and 2022 on the due dates due to delays in completion of the annual audit.
However, the firm said once the audits were completed, it supplied the KRA with the audited financial statements for the years 2021 and 2022, although the taxman proceeded with the default assessment.
The company said it explained to the KRA through supporting documents and agreements that the food supply business to the UN in DRC was carried out by the holding company, Hashi Energy Holdings, hence was not an income as per Section 3 (1) of the Income Tax Act.
Consequently, the costs relating to holding firm’s operations in DRC had not been considered as business expenses in the updated books of the firm.
