Court to rule on Sh5bn duty stamp tender row 

The Court of Appeal will this week dash or revive the hopes of a Swiss company fighting to retain a multibillion shilling tender for tracking, tracing and accounting of exercisable goods and duty.

The Sh4.8 billion tender awarded to SICPA Securities Sol. SA of Switzerland was quashed in March by High Court judge John Mativo.

But while arguing for the suspension of an order quashing the tender, Treasury Cabinet Secretary Henry Rotich said the Kenya Revenue Authority risks losing more than Sh27.68 billion in the current financial year if the decision is not reversed.

COMPETITION

While delivering the March ruling, Justice Mativo said the direct procurement method, which was adopted by the government, restricted the scope of the principle of competitiveness. He said the law expressly bars the adoption of such a method if the intention is to defeat competition.

Justice Mativo added that before such a method is adopted, the procuring entity must involve the public in its decision to opt for direct procurement. The judge further said the Auditor-General had noted that the tender committee terminated the second contract on the premise that it could not cover the extended scope of excisable goods provided in Legal Notice published in June 2013.

In the appeal, however, Mr Rotich said besides losing revenue targets, the country risks reversing the gains made in the fight against illicit trade in tobacco and alcoholic products.

TRACKING

The CS said Justice Mativo did not appreciate that the integrated control and tracking system known as the Excisable Goods Management System is an information technology tool for tracking, tracing and accounting for all exercisable goods and duty.

The e-tax system affixes a stamp to track and trace each bottle or package coming off a production line.

Mr Rotich had argued that the government had before relied on a manual method of affixing excise and revenue stamps on excisable goods that was only limited to tobacco, wines, spirits, and beer but, there was rampant counterfeiting of stamps that led to under-declaring volumes by manufacturers.

REVENUE

Justices Asike Makhandia, Daniel Musinga and Fatuma Sichale will decide whether to suspend the High Court’s decision pending the appeal.

KRA argued that excise tax is charged not only on goods that can pose harm to the consumer but also on products that can raise significant revenue, hence the introduction of the tax to the  goods in question.

Activist Okiya Omtatah moved to court last year arguing that KRA had published a notice on October 3, 2017 on excise stamps on bottled water, juices, soda, other non-alcoholic beverages and cosmetics. The duty was to take effect  from November 1, 2017.