Used car dealers lose in price review row with KRA

Imported secondhand vehicles at a yard in Mombasa.

Photo credit: File | Nation Media Group

The High Court has declined to issue a temporary order stopping the Kenya Revenue Authority (KRA) from obtaining views from the public on planned changes to the current retail selling price (CRSP) of all used imported vehicles in the country.

CRSP is a price template used by the KRA to compare the actual invoice value of the car and uses the higher of the two. The customs value is then calculated by applying the depreciation to the CRSP value. Excise duty, import duty, value-added tax (VAT), and import declaration fee (IDF) are all calculated from the customs value.

Car Importers Association of Kenya (Ciak) had sought to have an order issued restraining KRA from going around the country to collect views from wananchi on the intended new CRSP for the purpose of publication or taking any action intended towards publishing.

Justice Olga Sewe, sitting in Mombasa, however, declined the request and ruled that it would be helpful for KRA to file its response to the application by Ciak for the orders.

This, the judge said, would enable the court to give directions on which orders are to be granted. Ciak had sought the orders pending hearing and determination of its application and petition.

The association has sued KRA accusing it of failing to invite relevant stakeholders to discuss and validate the CRSP of all used imported vehicles in the country.

Through lawyer Gikandi Ngibuini, Ciak had sought the orders arguing that there is a need for full public participation. “Public participation is not an event it is a process, let the court stay (suspend) the process,” Mr Ngibuini told Justice Sewe.

KRA, through lawyer Pius Nyaga opposed the issuance of the temporary orders saying it would only be proper to do so after hearing all parties in the dispute.

“What the petitioners are seeking to stop is public participation exercise, so many areas are yet to be covered. Let the court hear the parties before it makes substantive orders,” said Mr Nyaga.

Ciak, whose membership is drawn from importers of new and used motor vehicle dealers in the country, wants a declaration that KRA violated the constitution in relation to computations of the CSRP values on used imported vehicles.

Ciak argues that the law requires that the formulation of a new CRSP be subjected to public participation involving stakeholders in the motor vehicle dealership business and members of the public who are consumers.

According to Ciak, on or about May 20, KRA held an unlawful forum to deliberate on and approve the new CRSP without inviting it, stakeholders, and members of the public through a public notice and without furnishing a draft of the intended new CRSP in good time in order to prepare.

Ciak is seeking a declaration that the forum by KRA was held unlawfully without notice to the stakeholders.

The case will be mentioned on June 25 for directions.

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