Farmers sue CS for violating Crops Act on tax

Two cane farmers have moved to court seeking orders to stop Kenya Revenue Authority from collecting tax from sugar millers. The farmers want the Agriculture, Livestock and Fisheries Cabinet Secretary to account for close to Sh3 billion remitted to the taxman. They claim the amount was collected against the law.

The farmers have also enjoined the Directorate of the Agriculture and Food Authority (AFFA) in the case.

Albert Wasonga and William Mokaisi want Agriculture CS Willy Bett and Alfred Busolo, interim Director General of AFFA to explain who sanctioned KRA to collect corporate tax from sugar millers without clear policy direction.

Kisumu High Court Judge Justice Joseph Onguto certified the case as urgent and directed the aggrieved parties to appear in court on June 29. “The petition seeks interpretation of the Crops Act 2013 and AFFA Act and parties involved should respect court orders. I therefore certify it as urgent and order parties be served immediately to fast-track speedy resolution of the matter,” said Justice Onguto.

This is after the petitioners demanded that the cash be refunded. Initially, the money was collected by the Sugar Directorate and then ploughed back to the farmers through various milling companies for cane development.

Kibos and Sony Sugar Companies have already paid Sh285 million and Sh300 million respectively to the taxman. Lawyers representing Sony and Kibos, Geoffrey Yogo and JS Khakula and advocates for the petitioners demanded that KRA refunds the money to the millers. They argued that the law did not allow KRA to collect corporate tax since this defies the Crops Act.

Sugar Levies

The Crops Act says, “Notwithstanding the provisions of subsection (1), all levies imposed under the Act on scheduled crops, shall be applied towards the sustenance, development, provision and for the benefit of the crop or sector in respect of which the levies are imposed.”
In their application, the farmers argue the CS and AFFA boss should have gazetted sugar development levies six months after the Crops Act, 2013 and AFFA Act came into operation in effect rendering the Sugar Act, which introduced the levies redundant.

The Crops Act came into force in August 1, 2014. No sugar development levies were supposed to be charged on farmers or collected by anybody apart from legally sanctioned-Commodity Development Trust Fund, which was to be established.

No levy collections should have been made after February 2015 and no additional charges were expected.