The High Court has rejected the Kenya Revenue Authority’s bid to overturn a stay order issued by the High Court on Friday stopping its agency notice to collect Ksh 9Billion from Keroche Breweries bankers.
Justice David Majanja also dismissed KRA’s bid to have Keroche provide security for its Ksh 9billion demand.
The court observed that KRA’s demand could destroy the Breweries business yet the company is exercising its right to appeal against the two decisions by the Tax Appeals Tribunal.
In order to do justice to the parties, the court instead ordered a stay of the enforcement action and directed Keroche Breweries to pay KRA Ksh 500M within 30 days.
The Judge also ordered that the tribunal release their decision issued on 9th March 2020 withing 48 hrs and all proceedings within 7 days. The case will be mentioned on 23rd April 2020 for directions.
Keroche Breweries through its lawyers had argued that KRA’s agency notice on its bankers -ABSA and Equity Bank – was tantamount to collapsing the brewery.
They further complained that the TAT was yet to avail a copy of its decision to enable Keroche to exercise its right to appeal.
The case will be mentioned on 23rd April 2020 for directions.
What started out as a Ksh 1.1 billion tax demand on November 29, 2006, has now grown nearly tenfold and threatens to ground Kenya’s largest indigenous brewery.
Keroche’s fate now lies with the court system, which has for nearly 15 years kept the taxman at bay.
The Court of Appeal eventually ordered KRA to issue a reasonable notice with supporting documents.
The taxman then issued demands for excise duty (Ksh 467,704,167), VAT (Ksh 388,594,657) and corporate and withholding tax (Ksh 737,333,959).
It is these demands, totalling Ksh 1.5 billion, that Keroche has been battling at the Tax Appeals Tribunal and which KRA says have grown to Ksh 9.1 billion.
Keroche’s fight with KRA, however, is just half the battle, as it is also fighting competitor East African Breweries Ltd (EABL) in two other lawsuits.
In the latter cases, Keroche has accused EABL of illegally branding beer bottles and keg containers and then using authorities to harass its distributors and suppliers.
It argues that the bottles and containers are universal and hence no company can claim exclusive use.