KRA seeks court’s aid in Sh156m case

By PAMELA CHEPKEMEI

The taxman wants the High Court to order a company accused of tax evasion to deposit security after being blocked from accessing Sh297 million held at a bank.

The money being pursued by Kenya Revenue Authority (KRA) is part of Sh515 million Erad Supplies is demanding from National Cereals and Produce Board (NCPB).

The taxman says Erad Supplies should provide a guarantee because it has no known assets from which it can recover the tax in the event  the amount is not remitted.

High Court Judge Weldon Korir yesterday directed the application  be heard on June 3. KRA claims that Erad Supplies, which obtained orders against NCPB for payment of Sh514 million, has been filing nil tax returns and has not been voluntarily declaring any income from its business.

Erad Supplies declared nil returns from 2007 to 2010, according to KRA. The company denies having any tax arrears. The taxman accuses three directors of the company, John Waluke, Grace Wakhungu Sarapay and Jacob Juma of failing to remit taxes. “The three who are the directors of Juma Construction Company Ltd have equally not been paying taxes, thus putting revenue at risk from their conduct,” says Peter Wanjohi, a KRA officer.

KRA is laying claim to Sh156 million as unpaid taxes from Erad Suppliers. On March 27, the High Court ordered Kenya Commercial Bank (KCB) to release Sh297 million to Erad Supplies. KRA subsequently issued agency notices demanding tax arrears of Sh156 million from the firm.

The company moved to court and obtained temporary orders restraining KRA from attaching the money deposited at KCB.

KRA in the documents filed in court says that it sent agency notices demanding payment of tax through postal addresses because the physical address of the company and directors could not be located.

KRA argues that the agency notices were issued within the law and Erad Supplies should pay the tax because the money was being disbursed from money emanating from the consolidated fund for payment of services rendered to NCBP.

The court ordered NCPB to pay Erad Supplies for breach of contract arising from a dispute over a tender for supply of maize in 2004. But Erad says the notices issued on February 28, by KRA are irregular.