KRA loses battle to recover Sh2 billion tax from sugar importer

The Kenya Revenue Authority has lost a court battle to recover Sh2 billion tax from sugar importer. [Photo: Courtesy]

 

The Kenya Revenue Authority (KRA) has lost a court battle to recover Sh2 billion from a sugar importer.

High Court judge Erick Ogola allowed Darasa Investment Ltd to offload 800,000 bags of sugar, which have been held on a ship for the last two months.

In his ruling yesterday, Mr Ogola said KRA was discriminatory in its duty by allowing other companies to clear their sugar yet went ahead to impound the complainant's sugar.

The judge also said KRA did not give any reasons as to why they were demanding Sh2 billion.

Tax exemption

Darasa’s sugar was imported during the tax exemption period between May and August last year.

He said the same punishment should have been applicable to the other companies if Darasa had contravened the by-laws of tax-free importation.

He said KRA should have given an appropriate reason why Darasa should pay the amount they were demanding.

The judge further said the importer had proved that the sugar was imported during the period stated by a gazette notice.

He noted that the Treasury and Ministry of Agriculture had also given the green light for the importation of the sugar thus proving the company's imports fell within the period.

Ogola declined to lift his orders by temporarily suspending the offloading of the 40,000 metric tonnes of sugar.

In the proceedings, KRA said the sugar in question never originated from Brazil.

Through lawyer Ken Ogeto, the taxman said a document from Darasa indicated the sugar was produced in August, a time they claimed it had already been loaded onto a vessel.

Changed hands

Mr Ogeto also said the ownership of the cargo changed hands according to documents and that Darasa was not the original importer.

He noted that Darasa bought the brown sugar from Multi Commerce FZC, a United Arabs Emirates-based company.

But Darasa, through their lawyers Fred Ngatia, Ian Tobino, and Dennis Mosota, said the origin of the sugar was not the bone of contention.

Mr Ngatia said the matter of whether the sugar was loaded on to the vessel within the stipulated time should be highly considered.

He denied allegations by KRA that the origin of the sugar was UAE and not Brazil, adding that it was purchased through a Kenyan bank.

Ngatia added the ship left Brazil and was cleared by the Brazilian Chamber of Commerce in July, which was still within the stipulated tax-waiver period.