Kenya Revenue Authority (KRA) has moved to court to lift an order obtained by Kenya Breweries Ltd (KBL) last month blocking a demand for tax amounting to Sh8.2 billion.
The taxman said in an application certified as urgent that the beer manufacturer misled the court to be granted the order suspending the demand.
KBL got the order blocking the demand alleging that the taxman had reneged on a deal agreed upon two years ago after months of negotiations.
The KRA said the beer maker misinterpreted section 37 of the Tax Procedures Act on tax relief, which is applicable when it is impossible to recover the unpaid tax, and the process of recovering it is costly and burdensome.
“That the orders and directions of this court were issued further based on material non-disclosure by the petitioner that the tax relief sought had been recommended by the 3rd respondent (KRA), while in fact, the 3rd respondent had indicated that there was no legal basis for the grant of the tax relief by way of abandonment of taxes,” Weldon
Ng’eno, a deputy commissioner at KRA, said in an affidavit.
High Court judge Mugure Thande directed the matter to be mentioned on May 11 for directions.
KBL said in its petition that the demand by KRA is prejudicial because the taxman made the company withdraw a case it had filed before the tax appeals tribunal, challenging the
Excise Duty and Value Added Tax from June 2015 to March 2017.
The manufacturer says in the agreement which was reached after exploring alternative dispute resolution, the government abandoned Sh11.16 billion if KBL paid Sh3.5 billion and withdrew the case.
Court papers stated that KBL applied for abandonment of taxes and the request was approved by Treasury on January 22, 2021. The company then paid Sh3.5 billion on January 25.
“The withdrawal of the appeals was in the belief that the tax issues had been fully settled and that the appeals were spent upon payment of the KES 3.5 billion,” the company said through senior counsel Kamau Karori.
Mr Karori said the KRA was attempting to ‘steal a march’ on it by luring it to abandon the pursuit of its case at the Tribunal, getting payment of Sh3.5 billion then ‘surreptitiously revive and make demands for payment of an amount it confirmed it had abandoned’.
The KRA now says the law is only applicable when the taxman is unable to recover the tax due.