Court quashes Sh380m tax case against Cussons
PZ Cussons East Africa managing director Dimitris Kostianis(left) during the re-launch of Imperial Leather soap at the Intercontinental hotel in Nairobi on July 16, 2013. A Nairobi court has quashed a Sh380 million tax case filed by the Kenya Revenue Authority claiming duty allegedly evaded by PZ Cussons East Africa. The soap maker maintained that it had paid all the tax due. PHOTO/FILE.
What you need to know:
- The dispute relating to an additional tax assessment was triggered by a letter from KRA dated July 27, 2012 demanding tax in form of corporation and excise duty amounting to Sh319,775,171 and Sh61,609,442 respectively.
- Through its counsel Ms W. Mwaniki, KRA denied withholding information from the company, stating the information on the missing entries was always in the firm’s custody, having been communicated immediately on conclusion of the audit.
- Justice Majanja held that KRA’s action was unreasonable and unfair and in breach of the right to fair administrative action and quashed the additional excise duty and corporate tax assessments in relation to the excise tax as well carried in the letter dated June 29 2012.
A Nairobi court has quashed a Sh380 million tax case filed by the Kenya Revenue Authority claiming duty allegedly evaded by a soap company.
PZ Cussons East Africa Ltd, a manufacturer and marketer of soaps, toiletries, cosmetics and pharmaceutical products filed a suit last year challenging the basis of KRA’s additional tax demands.
The dispute relating to an additional tax assessment was triggered by a letter from KRA dated July 27, 2012 demanding tax in form of corporation and excise duty amounting to Sh319,775,171 and Sh61,609,442 respectively.
However, in his ruling last week, Mr Justice David Majanja said, “I therefore find and hold that the failure by KRA to give information as to how it arrived on the amount was unreasonable.”
Adding: “I find and conclude that KRA’s action of insisting on payment of additional tax assessment in light of claims of fraudulent agents who were not the company’s agent was unreasonable and unfair and in breach of the right to fair administrative action.”
Through its counsel Ms W. Mwaniki, KRA denied withholding information from the company, stating the information on the missing entries was always in the firm’s custody, having been communicated immediately on conclusion of the audit.
“In conducting the audit and raising the additional assessments for tax, we were only exercising a statutory mandate,” KRA said.
The soap manufacturers on the other hand argued that KRA’s decision to demand the taxes was in the circumstances, irrational, disproportionate and totally inconsiderate.
The soap maker maintained that it had paid all the tax due from it noting that “It would be unfair to compel us to make payment of the disputed tax when it was clear that KRA did not want to consider all the facts of the case which should show that no tax is due from the company.”
“KRA’s basis for demanding Corporation Tax and Excise Duty as its assessment was purely based on information claimed to have been obtained from independent sources, but which it had refused to make known to the Company.” The company’s counsel Mr K. Kimani said.
Justice Majanja held that KRA’s action was unreasonable and unfair and in breach of the right to fair administrative action and quashed the additional excise duty and corporate tax assessments in relation to the excise tax as well carried in the letter dated June 29 2012.
