A sugar importer has asked the Court of Appeal to dismiss an appeal by Kenya Revenue Authority (KRA), seeking to stop it from releasing 40,000 tonnes of duty-free sugar into the market.
KRA is aggrieved by a High Court order compelling it to allow Darasa Investment Company to offload the sugar from a ship at the Port of Mombasa.
The taxman claims that obeying the order will cost the taxpayer Sh2.5 billion in unpaid import duty.
KRA says the importer should pay for importing the commodity from Brazil outside the grace period for importation of duty-free sugar.
Lawyer Fred Ngatia yesterday told the Court of Appeal that Darasa Investment Company imported 40,000 tonnes of brown sugar from Brazil before August 31, last year, when the grace period for importation of duty-free sugar was to lapse.
Mr Ngatia, in his submission before judges Alnashir Visram, Martha Koome and Wanjiru Kariuki, said his client loaded the sugar at Santos port in Brazil in July, last year, when the importation of such sugar was still allowed.
He said the consignment was later shipped to Kenya but was, not off-loaded at Mombasa port on arrival because there was no space at any of the berths.
But KRA lawyer Gersom Otachi told the judges to allow the appeal, insisting the Government stood to lose Sh2.5 billion as tax because the consignment was imported when the time for importation of duty-free sugar was over.
He told the appellate judges that the decision of the High Court on February 22, this year, compelling KRA to process, clear and release the sugar on duty-free basis was unfair.
Otachi told the court that they want the decision of the High Court overturned on grounds that KRA had found that some documents filed by Darasa Investment Company were not authentic.
But Ngatia dismissed the claim, saying KRA did not tender evidence to prove its claim.
Ngatia disputed assertion by KRA in which it had said the case should have not ended in the court before passing through Tax Complaints Tribunal.
He dismissed the argument, saying his client had a right to go to the court for judicial review because Tax Appeal Tribunal had no powers to check on the excess powers of KRA.
Otachi told the court that Darasa could only be exempted from paying Sh2.5 billion as tax if it imported the sugar in question during the grace period which was gazetted by Ministry of Agriculture.
He told the judges that KRA suspects the sugar did not originate from Brazil because the dates of production, according to documents, show it was produced between August and September and yet it was shipped in July, last year.
The KRA lawyer said the judge did a mistake by concluding that the sugar in question had been imported by the company within the grace period for the importation of duty-free sugar.
But Ngatia said his client followed the law and even paid Sh400 million as import declaration fees, maritime levy railway development levy and VAT.
The Court of Appeal will deliver judgement on April 11.
