KRA barred from freezing transporter's accounts over Sh21.3 taxes

A court has restrained the Kenya Revenue Authority from freezing or meddling with the bank accounts of a Mombasa transport company over the non-payment of Sh21.3 million in taxes.

In a ruling on Tuesday, Justice Dora Chepkwony also barred the taxman from interfering with or selling property belonging to Jagged Alliance Limited, the company which has sued it.

Ms Chepkwony issued the orders pending the determination of an application by Jagged Alliance, as well as the subsequent suit it filed.

DORMANCY

The company says that on or about March 5, KRA arbitrarily wrote to its main banker, I&M, purporting to exercise powers conferred to it by the Tax Procedures Act in demanding the said amount.

The authority said the Sh21.3 million was tax due in lieu of VAT and Pay As You Earn.

In its suit papers, Jagged Alliance argues that it remained dormant since the date of incorporation until March 2016 when it began trading and making sales.

It says that from the date of incorporation until the end of the 2015-16 financial year, it filed zero returns due to commercial and financial inactivity.

“The plaintiff is ready and willing to be subjected to an in-depth forensic audit to determine whether or not it is liable to paying the alleged taxes levied by the defendant,” the suit papers say.

SECURITY

Jagged Alliance says it operates a fleet of trucks and trailers valued at more than Sh50 million, which it is ready to pledge as security to cover any amounts due in the form of taxes.

“The same adequately covers any amounts that may be demanded by the defendant,” it says.

The company further defended itself saying it always endeavoured, despite tight financial and economic times, to meet its legitimate tax obligations.

It further says that its bankers have communicated to it that its accounts shall remain frozen until the agency notices served are either lifted or revoked.

“In any event, the sums demanded by the defendant have been quantified hence in the event the same is deemed to be indeed due to the defendant, the same can be paid by the plaintiff,” the company states.

PREJUDICED

The company says it has been heavily prejudiced by KRA's actions hence it stands to suffer irreparable losses.

It is seeking a permanent order restraining the authority from freezing its accounts in any bank, and at I&M bank in particular, before a proper forensic audit of taxes due and payable is done.

Jagged Alliance also wants a permanent order restraining KRA from harassing its directors by threatening that its accounts will be frozen and its property sold over the matter.

It also wants the court to issue an order compelling the taxman to revoke its notices and allow its bankers access to its accounts.

Justice Chepkwony set an inter-parties hearing for March 29.