The Kenya Revenue Authority (KRA) has won a sh3.8 billion tax claim dispute against a supplier.
The High Court, led by Justice Alfred Mabeya rejected the appeal filed by the taxpayer saying the firm was given time to table evidence supporting claims that it had paid the tax.
According to the evidence provided under the case, KRA gave the firm time to file returns after investigations confirmed they had failed to file for taxes from 2011 to 2015.
Upon filing, the KRA noticed inconsistencies and demanded clarification, but it was not forthcoming.
The taxman then raised a tax assessment of Sh3.83 billion for corporate tax and VAT.
“From the foregoing, it is evident that the appellant was given a reasonable opportunity to present its case. The appellant (Nakuru Cement Supplies Ltd) being the custodian of the necessary documents, was required by law under Section 58 of the Tax Procedures Act 2015 to keep records and submit them to the commissioner if and when called upon to do so,” the judge said.
The investigations allegedly revealed that the supplier had been receiving bonuses and discounts which were not accounted for.
Despite the law requiring the taxpayers to keep records, the taxman said the firm withheld records which in turn forced the KRA to source them from Nakuru Cement Supplies Ltd.
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The Nakuru firm also claimed that it was not given an opportunity to examine the veracity of the information acquired from third parties.
It also argued that the assessment of the taxes was communicated by the commissioner of investigations and reinforcement on August 14, 2017, which was outside the reporting period of five years.
“From the chronology of events as set out above, I find no error in the Tribunal’s holding that the appellant was accorded a fair hearing,” the judge ruled.
“If that were the case, a taxpayer will fraudulently evade tax by failing to submit his returns with the hope that the tax authorities will not catch up with him until after five years,” the judge added.