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Companies

Relief for KRA in Sh1.3bn tax demand from salt company

Kenya Revenue Authority
Kenya Revenue Authority head office at Times Towers in Nairobi. FILE PHOTO | NMG 

The High Court has dismissed an application by a salt production company seeking to quash a Sh1.3 billion tax demand by the Kenya Revenue Authority (KRA).

Krystalline Salt had gone to court last August seeking orders to stop from KRA from demanding Sh1,358,754,214 arguing the decision was done in violation of due process as laid out in the Tax Procedures Act and in contravention of the Constitution.

The company also sought orders to prohibit KRA from issuing agency notices to its bankers freezing its bank accounts, suspending its PIN or threatening to enforce demand notices.

Justice John Mativo heard that since 2013, the company and KRA has been locked in a court battles, with some cases pending at the Court of Appeal. The company through Hasmita Patel maintains that it does not owe KRA any taxes.

The taxman says the amount arose from Pay As You Earn and withholding tax. The demand was made in June 2016.

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KRA said the company wrote back acknowledging the tax liability in July 2016, and asked for time to liaise with the parent ministry. Further, the company allegedly made a proposal to pay a monthly amount but failed to honour the pledge.

KRA faulted the company for rushing to court arguing that the matter should have been referred to the Tax Appeals Tribunal first. But Krystalline had argued that the tribunal was not properly constituted as it lacks quorum and that the issues for determination were beyond its competence.

Justice Mativo said the matter dis not raise any constitutional question to warrant invoking the High Court’s jurisdiction.

The judge said: “It has not been established that the dispute is purely legal and must be determined by the court. A look at the jurisdiction of the tribunal and the facts of this case suggests otherwise. It has not been shown that the mechanism is not effective nor has it been demonstrated that the firm cannot obtain an effective remedy from the tribunal.

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