KRA loses bid to store sugar in tax dispute

The Kenya Revenue Authority has lost its bid to have a consignment of 40,000 tonnes of Brazilian brown sugar at the centre of a Sh2.5 billion tax dispute offloaded from a ship to a Customs bonded warehouse.

Justice Eric Ogola dismissed the application in which the taxman sought to have court orders issued on December 27 last year directing the sugar to be offloaded to a private warehouse set aside.

CUSTOMS

KRA wanted orders issued on December 22 directing the sugar to be discharged at the port sheds under Customs control to remain in force.
On Monday, the judge directed the sugar to be offloaded to JB Maina Warehouse, according to the court order issued on December 27 in favour of Darasa Investments, the importer.

“Should there be a delay in compliance of the orders, KRA will be condemned to pay demurrage charges,” said Justice Ogola.

The judge said it seemed KRA was not keen to enforce court orders or have regard to escalating costs being incurred.

“I have no doubt that JB Maina has space to store sugar all at once contrary to the proposed warehouses by the respondent, which are one kilometre apart,” said Justice Ogolla.

The judge said he was not persuaded that KRA will suffer prejudice for loss of tax should the sugar be offloaded at the JB Maina Warehouse.

PORT SHEDS

Through lawyer David Ontweka, KRA had argued that if Darasa wanted to have the sugar offloaded at JB Maina Warehouse it ought to execute a bond (security for tax).

The court also heard that the port sheds where KRA wanted to have the sugar offloaded were in good condition and had adequate space.

However, through lawyer Dennis Mosota, Darasa told the court the port sheds were not suitable for sugar storage since they are distances apart.

“The Customs port sheds are not suitable because the applicant will incur more costs,” said Mr Mosota, adding that the company was not interested in taking possession of the sugar until the case is heard and determined.

PAY POLICE

Mr Mosota had argued that Darasa was ready to pay police to provide security at JB Maina Warehouse to ensure the sugar’s safety.

“The applicant is incurring running charges amounting to over Sh100 million on account of chartered ship and other related charges,” said Mr Mosota.

The lawyer added that unless the court intervenes, the company will suffer irreparable financial losses

In its suit, Darasa Investment wants the court to quash the decision by KRA to levy Sh2.5 billion tax on the sugar consignment.

The case will be heard on January 23.