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KRA fails to stop auction of Lebanese tycoon cars in Sh7bn tax row

times-tower

Summary

  • The Kenya Revenue Authority (KRA) has lost an attempt to prevent an auctioneer from selling 20 motor vehicles and trailers belonging to Lebanese tycoon who built the Mombasa–Nairobi pipeline in a Sh7.3billion tax tussle.
  • Justice David Majanja said the procedure followed by the taxman in placing caveats against the sale and transfer of vehicles owned by Zakhem International Construction was illegal.

The Kenya Revenue Authority (KRA) has lost an attempt to prevent an auctioneer from selling 20 motor vehicles and trailers belonging to Lebanese tycoon who built the Mombasa–Nairobi pipeline in a Sh7.3billion tax tussle.

Justice David Majanja said the procedure followed by the taxman in placing caveats against the sale and transfer of vehicles owned by Zakhem International Construction was illegal.

While defending its decision to place the caveats, KRA said the Zakhem owed it substantial taxes to the tune of Sh7,331,132,411 and in order to secure the taxes it had decided to prevent the sale of the vehicles. KRA has also been demanding payment from cash due to Zakhem International Construction from Kenya Pipeline Corporation (KPC) for building the Sh48 billion Mombasa-Nairobi oil pipeline.

Through letters dated September 8, 2020, KRA had instructed the National Transport and Safety Authority (NTSA) to place caveats to prevent transfer of ownership of the motor vehicles from Zakhem to seven buyers who were in the process of purchasing them. But justice Majanja declared the caveats as illegal, null and void. He found that KRA did not follow the right procedure in placing caveats against sale of the motor vehicles.

“The caveats placed against the suit motor vehicles by KRA are not lawful as they are not based on any law or regulation, they therefore violate Article 47 of the Constitution are therefore null and void and of no effect,” stated the judge.

He found that KRA did not establish any legal basis upon which it can issue instructions to NTSA to place caveats on the motor vehicles without any reference to Zakhem.

“KRA’s action is not only arbitrary but offends Article 47 of the Constitution which requires administrative action to be lawful, reasonable and procedurally fair,” said the judge.

The judge directed the Registrar of Motor Vehicles to transfer and issue the logbooks of Motor Vehicle Registration Numbers to the seven buyers who purchased them by way of a private treaty.

He made the ruling following an application filed by the seven buyers including Pepco Kenya limited, James Chomba Wamwangi, Francis Wambugu Mwangi, Zola East Africa Limited, Danki Ventures Limited, Warda Holdings Limited and Abdisamat Noor Abdi.