United Millers Ltd. The High Court has stopped KRA from demanding over
Sh800 million in tax arrears from United Millers Ltd until a petition
filed by the company is heard and determined. The company said they had
paid the taxes between January 2008 and May 2013 and that KRA’s demand
violated the East Africa Community Customs Management Act. PHOTO/FILE
The High Court has stopped the taxman
from demanding over Sh800 million in tax arrears from United Millers Ltd
until a petition filed by the company is heard and determined.
Justice
Isaac Lenaola issued the interim orders Monday restraining the Kenya
Revenue Authority or its agents from enforcing the collection of
Sh831,140,476 from the company pending determination of the case.
“Having
read the petition and the affidavit in support of the petition I am
satisfied that giving the interim orders will preserve the status of the
company and therefore grant prayer 3,” Mr Lenaola said.
United Millers manufactures various products including maize flour, wheat flour, cooking oil, bar soaps and animal feeds.
The
company filed an urgent suit on Wednesday last week claiming that KRA
was in the process of issuing agency notices to reclaim the disputed tax
despite filing their returns showing they don’t owe KRA any tax
arrears.
Through lawyer Boniface Munyao, the company
said they had paid the taxes for the period between January 2008 and May
2013 and that KRA’s demand violated the East Africa Community Customs
Management Act.
“KRA demand is based on allegations of
non-declarations, under-valuation and non-export of products yet the
company has fully demonstrated that it imports were declared under the
correct tariff headings and that the correct values were declared based
on commercial invoices,” said Munyao.
He said KRA
demand is also against the law on customs and tariff declaration on
export of goods since value added tax on exported goods has been
zero-rated.
The company adds that the demand for taxes
flouts the EAC Customs Act and is against the provisions of the law on
tax collection.
“It is unfortunate for KRA to demand
the extra taxes, interest and penalties when we have also filed another
appeal at the Customs and Excise Appeals Tribunal over the illegal move
likely to interfere with the company management,” said Munyao.
Mr
Munyao said the contention dates back to January 2008 when the company
imported various goods for use in its processes to manufacture products
for export and for sale locally.
“At the time of the
importations, the company paid the applicable taxes in accordance with
the law and dealt with the goods in a manner consistent with the law,”
Munyao said.
KRA conducted an audit of the company’s operations and has demanded extra taxes totalling Sh1.4 billion.
However when the company raised objections the figure was reduced to Sh831 million.
The
lawyer says the move was illegal since all the company transactions,
including their exports, were done under the supervision and endorsement
of KRA officers.
Justice Lenaola directed KRA to respond to the suit before the inter-parties hearing on December 20.
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