What you need to know:
- Mr Nyachoti said the notices were premature, irregular and unlawful.
- Estama Investments, whose tax liability is still in dispute, lodged a formal objection to the tax assessments on April 21.
The High Court extended orders barring Kenya Revenue Authority from demanding more than Sh300 million from a firm that supplied the Health ministry with portable clinic containers.
Justice Francis Tuiyott gave the directive today after KRA pleaded for more time to file its responses to an application filed by Estama Investments Ltd, which has alleged that the taxman is making a hasty demand for Sh322.9 million, which is still in dispute.
The orders will be in force until May 10, when the parties will return to court for the hearing.
On April 20, the revenue agency issued notices to banks, where the firm as well as its director, and a sister company (Business Capital Access Ltd), have accounts.
According to their lawyer Philip Nyachoti, the notices were issued based on erroneous interpretation of a recent ruling by the High Court.
He wants the court to issue proper interpretation of the orders, and that the notices be nullified.
Mr Nyachoti said the notices were premature, irregular and unlawful as they had been issued even in respect of the bank accounts owned by Estama Investments’ director, and the sister company, who are tax compliant and have no tax dispute with KRA.
CULTURE OF RELUCTANCE
Estama Investments, whose tax liability is still in dispute, lodged a formal objection to the tax assessments on April 21.
Mr Nyachoti said this was summarily rejected by KRA on the same day, “implying, therefore, that Estama Investments can go to the tax appeals tribunal”.
The law provides that an aggrieved party can appeal within 30 days.
Mr Nyachoti explains in the court papers that the period is yet to elapse.
If all the banks were to simultaneously debit to KRA Sh322.9 million as required by the agency, the firms will be deprived of Sh968.8 million “which may never be refunded easily given KRA’s usual “culture of reluctance to refund overpaid taxes”, Mr Nyachoti argued.