The Supreme Court has dismissed an application to strike out a Sh5.6 billion tax suit filed by Kenya Revenue Authority (KRA) against international soft drinks manufacturer Coca Cola Company.
Coca Cola had objected to apex court judges hearing the appeal, arguing there was no constitutional issue to be interpreted in the dispute.
However, a four-judge bench led by Chief Justice David Maraga and Justices Mohamed Ibrahim, Smokin Wanjala and Njoki Ndung’u found that the crust of the case was on the application of sections of Customs and Excise Act.
“In view of the reasons tendered, we find that this court has jurisdiction in respect of this appeal. Having so found, we have no option but to dismiss the preliminary objection,” the court ruled.
The case stems from a Sh5.6 billion demand by KRA. The revenue authority argued that the firm failed to pay its excise duty between 2006 and 2008 on returnable crates and empty soda bottles.
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Coca Cola had lost the case before the High Court, which found that KRA was within the law in demanding the contested amount. Aggrieved, the multinational moved to the appellate court.
According to KRA, its audit revealed that a number of returnable containers used by Coca Cola subsidiaries in Kenya had their taxes not paid for.
KRA demanded Sh5.6 billion on account of alleged arrears of excise duty and interests, while maintaining returnable containers (bottles and crates) were subject to taxes.
But Court of Appeal Judges Wanjiru Karanja, Otieno Odek and Sankale ole Kantai disagreed with the taxman by finding that the law does not speak on whether firms should pay taxes on returnable containers.
