The Court of Appeal has handed Keroche breweries reprieve in a tax case with the Kenya Revenue Authority (KRA) after setting aside a High Court order requiring the company to pay Ksh500 million to stop the taxman from collecting Ksh9.1 billion in taxes.
In a ruling delivered on Thursday, the Appellate court instead directed the brewer to deposit a sum of Ksh100 million within 45 days.
The decision, the court said, was arrived at after considering all factors in the ruling including the negative effects of the coronavirus pandemic that has disrupted business operations not just in Kenya but the world at large
The court also lifted the taxman’s notice issued on March 11, 2020 to recover funds from Keroche’s bank accounts including Equity Bank Limited and Absa Bank of Kenya as well as any other notice that may have been issued to any the brewer’s bankers and debtors.
High Court Judge David Majanja had in March this year directed the brewer to pay Ksh500 million in 30 days failure to which an order stopping KRA from recovering funds from its bank accounts would lapse.
Keroche Chief Executive Officer Tabitha Karanja protested the move and called on the court to vary the order.
The court declined to stay the orders forcing her to move to the court of Appeal.
Ms Karanja told the court that Justice Majanja erred in law in failing to consider the brewer’s inability to raise the said money.
The company has for a long time now been engaged in a protected row with the taxman over the brewer’s Vienna Ice Vodka.
KRA demands taxes for the Vienna Ice Brand of Vodka, which Keroche argues that is not manufactured, but made by diluting the Crescent Vodka.
The company claims that it has been paying taxes for the Crescent Vodka, which is what is in the 500ml Viena Ice Ready-to-Drink Vodka.
KRA maintains that the process amounts to compounding of denatured spirits, which is taxable a position which was held in March by the Tax Appeals Tribunal (TAT).