Bidco Oil Refineries ordered to pay Kenya Revenue Authority Sh1.3 billion

By Isaiah Lucheli

Nairobi, Kenya: Bidco Oil Refineries Company will have to pay Kenya Revenue Authority (KRA) over Sh1.3 billion after a petition challenging the amount was dismissed by the High Court.

High Court judge David Majanja gave the verdict yesterday after the company moved to the Judicial Review Division challenging the enforcement and collection of taxes against it on grounds that its fundamental rights and freedoms had been violated.

While dismissing the case, Majanja said the petitioner’s case lacked merit and must be dismissed but gave the company a 21-day reprieve by which time they should have paid the money.

Justice Majanja said there had been no violation of the petitioner’s rights under Articles 47(1) and 48 of the Constitution because the first statutory review requested by Bidco through its letter of September 22, 2009 was determined by the Commissioner’s letter dated September 25, 2009, which proposed formation of the Technical Team of Experts (TTE).

“The review by the Commissioner was confirmed by the consent order recorded which led to the formation of the TTE. The Report by the TTE led to a fresh demand by the Commissioner,” said Majanja.

The judge observed that Bidco had also lodged an appeal to the Tax Appeal Tribunal seeking to set aside the Commissioner’s demand made in April last year following the High Court’s judgment in 2010

“In view of the fact that Bidco has had the opportunity to challenge the claim for tax made against it in accordance with the provisions of EACCMA, there has been no violation of the petitioner’s rights under Article 40 of the Constitution,” said the judge.

The KRA Commissioner General had demanded extra revenue amounting to Sh1,377,505,220 including penalties and interest through a letter dated April 19 last year after the court dismissed an earlier bid by Bidco seeking for a review of the amount demanded by the taxman.

The origin of the dispute between Bidco and KRA can be traced back to a contract for the import of edible oils and related products from Josovina Commodities Limited in Singapore by Bidco.

KRA carried out an audit into Bidco’s imports for the years January 2004 to July 2008, and alleged undervaluation of value added tax and duty payable on the contract due to tariff misclassification and value undervaluation.