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The Kenya Revenue Authority (KRA) has asked the Court of Appeal to reverse a decision that allowed Nanyuki-based Mount Kenya Breweries to resume operations seven months after being shut down for alleged tax evasion.
In challenging the High Court decision, KRA now claims that further investigations discovered that the brewer had in the past dodged over Sh934 million in taxes.
KRA officer Joan Mwangi argues that the brewer’s officials had admitted to being in possession of 15,000 counterfeit excise duty stamps that would have aided the evasion of Sh2.7 million in taxes.
High Court Judge Weldon Korir ruled that it was not in the best interest of the public or KRA for the brewer to be completely shut down on account of alleged tax evasion, and that allowing the company to resume operations would enable the collection of taxes.
But KRA now argues that the Excise Duty Act allows the taxman to shut down companies that use counterfeit stamps to evade taxes.
Ms Mwangi says that KRA will be exposed to breaking the law whether or not the Nanyuki brewer is allowed to resume operations.
“The instant application ought to be heard urgently as the orders flowing from the ruling of the High Court are contra statute and the appellant (KRA) has been left at a precarious position of choosing between implementing a statutory provision or obeying the court orders,” Ms Mwangi says in court papers.
The KRA insists that after raiding Mount Kenya Breweries in April, it gave the directors sufficient time to state why the brewer should not be shut down.
KRA closed down the factory in April, accusing directors of using counterfeit stamps and failing to install a mass transfer flow meter of the type approved by the taxman.
KRA argued that the meter is one of the major control measures it employs to protect revenue.
While the judge absolved KRA of any blame in raiding the factory, he said the closure was not in the public interest.
“In the instant case, the respondent is actually not protecting the interests of the public, which is to ensure that taxes are collected,” the judge said.
“When the respondent proceeds to kill businesses in the guise of collecting taxes, it becomes an undertaker and will itself eventually die since its survival depends on the existence of income-generating businesses from which it can collect taxes.”
Mount Kenya Breweries had sued at the High Court, arguing that the April raid was conducted without prior notice and that it faced significant loss of income and would default on loans.
The firm had borrowed money from ICDC, Unaitas Society Sacco Ltd and Equity Bank to finance its factory. It said it was also unable to meet other recurrent expenditure after being shut down by KRA. – nation.africa.