The judge said Treasury had overstepped its mandate and abused its power by granting the tax compromise. The appeal was after Court dismissed London Distillers’ Motion dated 16th September 2022 upholding KRA’s decision of 2/3/2022 demanding payment of Ksh. 517,118,680 on account of tax, interests and penalties
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London Distillers (K) has suffered a huge financial blow after High Court Judge Alfred Mabeya of the Milimani Commercial Courts And Tax Division) dismissed their appeal in a Ksh. 500m tax evasion saga. In a ruling dated 31st March 2023, the judge noted that KRA through the Commissioner of Domestic Tax demanded taxes amounting to Ksh. 517,118,680 from London Distillers. The judge further noted that the move by KRA to demand payment was lawful and not illegal, irrational or un-procedural.
In the ruling, the judge revealed that “This is so because, these were admitted taxes which the Cabinet Secretary, in abuse of his office, purported to give a waiver”. The judge noted that it was illegal for Treasury CS to grant the company’s request for lower taxes since only the Commissioner can invoke the provision for tax to be abandoned.
The judge said Treasury had overstepped its mandate and abused its power by granting the tax compromise. The appeal was after Court dismissed London Distillers’ Motion dated 16th September 2022 upholding KRA’s decision of 2/3/2022 demanding payment of Ksh. 517,118,680 on account of tax, interests and penalties.
This ruling, therefore, means that KRA may execute the afore-stated order by way of issuing agency notices and in any other manner to collect the said sum of Ksh. 517,118,680. London Distillers had in their appeal claimed that it would suffer substantial loss should KRA executes the said order since its business would remain indefinitely paralyzed.
In the present case, the respondent demanded taxes amounting to Kshs. 517,118,680/- from the applicant. In the ruling of 16/9/2022, I found that the respondent’s decision of 2/3/2022 demanding payment of this sum was lawful and not illegal, irrational or un-procedural. This is so because, these were admitted taxes which the Cabinet Secretary, in abuse of his office, purported to give a waiver. The respondent filed a notice of appeal dated 21/9/2022 in the Court of Appeal.
