Sugar importer Darasa opposes Sh2.5bn levy

Lawyer Ken Ogeto defends the Kenya Revenue Authority's decision to impose duty on a sugar importer, at the Mombasa High Court on February 14, 2018. PHOTO | PHILIP MUYANGA | NATION MEDIA GROUP

What you need to know:

  • Darasa Investments Ltd wants the court to quash the decision by KRA to levy the Sh2.5 billion tax on its sugar consignment.

A sugar importer at the centre of a Sh2.5 billion tax dispute has termed a decision by the Kenya Revenue Authority (KRA) to levy duty on his consignment unreasonable.

Through lawyer Fred Ngatia and Dennis Mosota, Darasa Investments Ltd said the action by KRA was a case of a public authority going any length to deny it a benefit conferred alongside others.

“Whereas an individual may have liberty to do what he wants, a public authority should never have an axe to grind with a citizen,” Mr Ngatia said.

Mr Ngatia told the court that it is not disputed that the 40,000 metric tonnes of sugar was loaded at the Port of Brazil, within the stipulated period and purchased by Darasa Investments Ltd.

ILLEGAL

He further told Justice Eric Ogola that the vessel carrying the sugar could not dock at the Port of Mombasa due to its size.

“This is routine; the vessel went to Dubai and the cargo was loaded into a smaller vessel,” Mr Ngatia said.

The court was further told that the decision to import the sugar duty-free still stands and the Treasury Cabinet Secretary Henry Rotich is fully aware.

Mr Ngatia further argued that during the period set out by the CS, the sugar was within the country’s territorial waters.

Darasa Investments Ltd says the decision by KRA through its letter to levy full duty to its sugar was illegal and unfair as Treasury CS had exempted it from provisions of Gazette No 4536 dated May 12 as amended by Gazette Notice No 9802 dated October 4.

INCONSISTENCIES
Darasa Investments Ltd wants the court to quash the decision by KRA to levy the Sh2.5 billion tax on its sugar consignment.

It is also seeking an order compelling KRA to process, clear and release on a duty-free basis its entire amount of sugar.

Through lawyer Ken Ogeto, KRA told the court that after it scrutinised the importers’ documents, it noted inconsistencies that suggested the sugar was not loaded onto a vessel in Brazil heading to the country.

Mr Ogeto further argued that there was inconsistency relating to the date of production of the sugar.

“It is illogical for the applicant to contend the sugar was shipped from Brazil in July yet in their documents produced in September, this was a valid legitimate request for clarification,” Mr Ogeto said.

GRACE PERIOD
He said there were serious irregularities that required clarification by the importer, which he failed to provide, hence the decision taken by KRA was procedural.

But Mr Mosota said the alleged inconsistencies were inconsequential because the taxpayer had responded to all the queries.

“The decision by KRA to demand duty of Sh2.5 billion has no legal basis because our client’s sugar was imported within the duty-free window,” he said.

Justice Ogola will deliver judgment on Thursday.