Three judges of the Court of Appeal agreed that the compensation amount to Transouth Conveyors was huge, yet the appeal by the Kenya Revenue Authority (KRA) is arguable.
The company was awarded the money last May by High Court judge Patrick Otieno, who faulted KRA for changing dates, a move that forced the company to pay 100 percent duty for the 5,000 metric tonnes of white sugar.
The sugar importer accused KRA of pushing the dates from February 1, 2007, as earlier published by Kenya Sugar Board (KSB) to March 2007.
The taxman has been spared from paying a sugar importer more than Sh569 million for damages after changing dates for the importation of duty-free sugar in 2007, pending the hearing of its appeal.
Three judges of the Court of Appeal agreed that the compensation amount to Transouth Conveyors was huge, yet the appeal by the Kenya Revenue Authority (KRA) is arguable.
The company was awarded the money last May by High Court judge Patrick Otieno, who faulted KRA for changing dates, a move that forced the company to pay 100 percent duty for the 5,000 metric tonnes of white sugar it had imported from Egypt in 2007.
In 2003, the Minister of Finance published a Gazette Notice domesticating the arrangements made between Kenya and Common Market for Eastern and Southern Africa (Comesa) in 2003, which provided for duty-free importation of sugar.
The sugar importer accused KRA of pushing the dates from February 1, 2007, as earlier published by Kenya Sugar Board (KSB) to March 2007.
“Firstly, the respondent has not rebutted the applicant’s contention that it may not be in a position to refund the Judgment sum if the appeal succeeded. Secondly, the Judgment sum is in no sense a small sum, it is a huge amount,” said justices Kathurima M’Inoti, Jamila Mohammed and Sankale ole Kantai.
KRA appealed against the decision arguing that there is a real danger of the company enforcing the judgment, yet its appeal has high chances of success. The taxman says the importation was not within the period published for duty-free sugar.
KRA admitted issuing press notices to clarify issues that arose between KSB and itself as previously implemented.
The taxman in denying imposing prohibitive duties on the plaintiff’s sugar contended that the company had the option of reshipping, clearing the sugar under protest or give security pending determination of a case in court.
The firm, however, said it was unable to clear its consignment as the duty payable was high. Justice Otieno said KRA is bound to act reasonably and efficiently in good faith, to inspire public confidence. The court said that it was satisfied that KRA’s action was arbitrary, oppressive and justified an award of exemplary damages.
Justice Otieno said KRA had acted in a high-handed manner and unlawfully, thus the company was entitled to insist on fairness and application of the law to not only protect a property right but also cushion and safeguard the rule of law.
