Kenya: Wananchi Group Kenya has lost a bid to stop the Kenya Revenue Authority (KRA) from recovering Sh124.87 million unremitted Value Added Tax (VAT).
The group, had moved to the Court of Appeal following the High Court's decision in February last year which dismissed a case challenging the tax man demands of Sh124,866,992.80.
It wanted Court of Appeal to temporarily stop KRA from recovering the unremitted tax pending appeal of the High Court decision.
In 2012, KRA's Commissioner of Enforcement had demanded Sh124,866,992.80 after a compliance audit discovered that the Group had not paid VAT for imported set top boxes and decoders. However, Wananchi Group which is also proprietor of pay TV Zuku argued that it had applied for tax remission from Minister of Finance between June 2007 and December 2011 for imported hardware and equipment. The remission issued by the Minister of Finance did not include spares and accessories.
Set top boxes
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Wananchi had contended that decoders and set top boxes were not spares and accessories hence qualified for remission of VAT granted by the Minister of Finance. According to KRA, decoders and set top boxes are not spares and accessories.
While seeking to stop KRA from demanding the unpaid VAT pending appeal, the group argued KRA had acted illegally and in excess of its jurisdiction.
Peter Gachuhi on behalf of Wananchi Group added that the Minister of Finance had granted tax remission under the VAT Act and added that KRA had no power to challenge the decision by the minister.
KRA, however, opposed the application arguing that the group had failed to stop execution of the High Court and added that in case the appeal succeeded the tax man would refund the taxes or offset the same in its present or future liability.
Appellate judges Kihara Kariuki, Kathurima M'inoti and Agnes Murgor declined to issue orders stopping KRA's Commissioner of Enforcement arguing that the decision will not render the appeal nugatory.
Intended appeal
"We are not satisfied that should the intended appeal succeed, the same would be rendered nugatory. It is not suggested that the applicant will not be able to refund the sum in dispute should the Court find that it is not payable to the respondent," Appellate judges noted.
The appellate judges also expressed doubt whether Wananchi's appeal is arguable before the Court of Appeal.
