Kenya Breweries Limited (KBL) has suffered a setback in its Sh486 million tax battle with the Kenya Revenue Authority (KRA) after a tribunal rejected its application to block the looming payout.
The Tax Appeal Tribunal said that KBL had filed its appeal outside the statutory timelines, rendering it invalid. The decision effectively upheld KRA’s tax assessment, leaving the brewery with the tax bill to settle.
“The tribunal finds that it is without jurisdiction in this matter since the appeal was filed out of time without its leave. The tribunal cannot move one step forward to delve into the merits of the case and accordingly, the other issues for determination are rendered moot by the finding that the appeal is improperly before the tribunal,” the tribunal said.
“The upshot of the foregoing is that the appeal herein fails and accordingly the tribunal proceeds to make the following orders: The appeal be and is hereby struck out,” it added in its February 28, 2024 decision.
The dispute between KBL and KRA began from a tax assessment issued in March 2021, in which KRA demanded payment of Sh668 million in excise duty and value-added tax (VAT).
KBL objected to this assessment, prompting the taxman to revise the figures, ultimately demanding Sh486,284,863 in unpaid taxes and penalties.
KBL was unsatisfied with this decision and moved to appeal at the Tax Appeal Tribunal. KBL argued that the tax assessment was flawed and that KRA had unfairly disallowed rebates on its exports and misclassified its imported goods.
The brewery insisted that its excise duty rebates were justified as they were tied to legitimate exports, and it had provided the necessary documentation to support its claims.
It added that the imported apple cider concentrate was a raw material, not a finished product, and should have been eligible for excise duty relief. The brewery also told the tribunal that it had correctly declared and remitted VAT on its sales and that KRA’s assessment was unjustified.
On its part, KRA argued that KBL had failed to provide adequate proof that the goods for which it sought refunds had been exported.
According to the taxman, some of the export entries KBL had relied on to claim rebates were not in the company’s name, raising concerns of possible under-declaration. KRA also told the tribunal that KBL had not furnished all the required certificates of export.
The taxman further said that, in cases where goods were shipped to third parties, KBL had failed to provide landing certificates proving that the products had reached their intended destination.
On the issue of excise duty, KRA asserted that the apple cider concentrate in question was a finished product, not a raw material, and was, therefore, subject to excise duty as per its classification under customs law.
The tribunal restrained itself from deciding on the merits of the case. Instead, it determined that KBL had filed its appeal late, missing the deadline by 15 days. According to the tribunal, statutory timelines for filing appeals are not a mere procedural technicality but an express legal requirement.
“The notice of appeal ought to have been filed on or before September 23 2021 but was filed on October 8, 2021, 15 days late contrary to provisions of TATA (Tax Appeals Tribunal Act). The appellant ought to have sought the requisite leave from the tribunal to file its appeal out of time…It is the tribunal’s firm view that the law is settled and that statutory timelines are not a procedural technicality. Statutory timelines are set in mandatory terms and are express statutory edicts,” the tribunal led by Christine Muga said.
