The Kenya Revenue Authority (KRA) was on Friday blocked by the High Court from recovering Ksh9 billion from Keroche Breweries Ltd’s accounts.
High Court Judge David Majanja’s came to the rescue of the troubled brewer, giving Keroche temporary reprieve as it figures out its next move.
On Friday, KRA froze Keroche’s accounts at Equity Bank and Absa Bank, following a ruling by the Tax Appeals Tribunal (TAT) that allowed the taxman to recover Ksh9 billion in taxes from the brewer.
In a letter to Equity Bank, KRA deputy commissioner of Domestic Taxes department Mr Daniel Kagira ordered that the bank pays KRA Ksh9,116,835,985 on behalf of Keroche until the amount is fully recovered.
“Today morning, we woke up to an agency notice issued by KRA directed to our banks to collect Ksh9 billion. This means Keroche Breweries cannot withdraw any money or transact any business from their accounts until KRA collects the alleged Ksh9 billion, ” said Ms Karanja.
While accusing KRA of misleading the public in the tax evasion case against Keroche, Ms Karanja maintained that what KRA is doing is an illegality as the ruling issued by the tribunal is not final.
She argues that if any party has a tax dispute with KRA, the first step is to take the matter to the tribunal and when the parties fail to strike an agreement, the aggrieved party is allowed to proceed to court.
“As a law-abiding company, we expected that KRA would abide by the process in which we had 30 days by law to appeal the VAT the TAT decision. We are shocked that KRA has no intention of respecting the legal process, ” she added.
“The statement issued yesterday was a public gimmick to mislead and influence the public to support a KRA operation to stop Keroche Breweries from operating.”
Ms Karanja stated that Keroche has moved to court seeking orders to stop KRA from paralyzing its operations.
“This is absolute misuse of power that we the people have bestowed on KRA. They have lied to the public that we owe them Ksh9 billion. They know very well; the legal process in the matter has just began. Immediately the Tax Appeals Tribunal made a decision, we have 30 days to appeal. The Tribunal made its decision 2 days ago, Monday 9th March 2020, ” the statement reads.
“Even as we speak, we do not have the TAT ruling. Our lawyers have been advised to wait for it. Our assumption has been that KRA too doesn’t have the ruling. Is KRA influencing the tribuna?”
Out of the six cases dismissed by TAT, three appeals were related to Viena Ice Vodka, while the three others on the pineapple-based wines.
Keroche announced its dissatisfaction with the Tribunal’s decision, saying that it would head to the High Court.
In the case, KRA was demanding taxes for the Vienna Ice Brand of Vodka, which Keroche argued that was not manufactured, but made by diluting the Crescent Vodka.
KRA argued that the process amounted to compounding of denatured spirits, which is taxable.
“The decision is retrogressive, anti-entrepreneurship and stifles much-needed innovations without which the cause of Kenyan industrialization is hurt. This means that all water added to our vodka to make a ready to drink vodka and consumed to date -backdated for last eight years – now attracts Ksh243.00 per litre. The decision to tax the water added to our vodka at the above rate makes this the most expensive water in the world,” added the statement.
The battle between Keroche Breweries and KRA has been on since 2014.
KRA and Keroche are expected to appear before Justice David Majanja (Monday) tomorrow for further directions on how the case will proceed.