KRA loses Sh5bn lawsuit against Coca-Cola at the Supreme Court

Times Tower

Times Tower in Nairobi, the headquarters of Kenya Revenue Authority. 

Photo credit: Dennis Onsongo | Nation Media Group

The Supreme Court has struck out a historical case filed by the Kenya Revenue Authority (KRA) seeking Sh5.6 billion in taxes from soft drinks giant Coca-Cola.

A five-judge bench headed by Deputy Chief Justice Philomena Mwilu found that the case by the taxman was fatally defective over its failure to comply with the court’s rules.

KRA did not include the reliefs or prayers sought and its lawyers also failed to file essential documents relied upon during hearing at High Court and Court of Appeal. As a result, the record of appeal was incomplete, the Supreme Court found.

“There were no actual legally recognised reliefs pleaded by the petitioners for the court to grant and, taking the relevant rules into consideration, we do find that the petition of appeal before us is fatally defective for lack of reliefs sought and ought to be struck out,” the bench ruled yesterday.

Other judges were Justices Mohammed Ibrahim, Smokin Wanjala, Njoki Ndung'u and William Ouko.

The dispute that started at the High Court 10 years ago involved the question of whether Coca-Cola should pay taxes on costs incurred during washing and sanitising of returned bottles. KRA was demanding tax arrears, penalties and interest for the period 2006 to 2009 relating to excise tax on returnable containers.

The taxman had moved to the top court after three judges of the Court of Appeal overturned a High Court decision dated October 26, 2012, which allowed KRA to levy tax on returnable containers. It had sued Coca-Cola’s local franchises—Mount Kenya Bottlers, Rift Valley Bottlers, Nairobi Bottlers and Kisii Bottlers.


The appellate court judges on July 19, 2019 ruled that levying tax on returnable containers—bottles and crates—every time they are refilled would amount to multiple taxation and therefore unlawful.

While striking out the appeal lodged by KRA, the apex judges also directed KRA to pay Coca-Cola the costs incurred in the appeal. KRA wanted the apex court to make pronouncements on the principles of taxation such as Article 201 of the Constitution on Principles of Public Finance.

Equitable society

It says public finance system shall promote an equitable society, “and in particular the burden of taxation shall be shared fairly”.

Article 210 on imposition of tax says no tax or licensing fee may be imposed, waived or varied except as provided by legislation.

If legislation permits the waiver of any tax or licensing fee, a public record of each waiver shall be maintained together with the reason for the waiver; and each waiver, and the reason for it, shall be reported to the auditor.

The Supreme Court’s decision allows release of a guarantee of Sh2.1 billion in Centum Investment Company’s books as a liability to Coca Cola Bottlers Africa (CCBA).

Centum sold its stake in Almasi Beverages and Nairobi Bottlers to CCBA last year for a total of Sh19.3 billion. Although the transactions were completed and the taxman was seeking excise taxes on returnable bottles, KRA could not receive the dues because of the case.


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