Senior counsel Paul Muite for Keroche Breweries Company making a call after he successfully argued an application filed by Keroche Industries limited seeking to stop the police from destroying its products in the on-going crackdown on illicit liquor on Friday 17 July, 2015.
BY SAM ALFAN.
Kenya Revenue Authority (KRA) has refused to renew Keroche Breweries’ excise licence for the new financial year, a move that has threatened to collapse the alcohol manufacturer’s operations.
KRA in a letter sent to Keroche last week says the alcohol manufacturer has been stating incorrect excise duty rates while filing its returns, and resultantly owes the taxman huge sums of money. KRA however does not indicate how much the brewer owes it.
The taxman adds that Keroche did not attach copies of its tax compliance certificate and those of its directors while applying for renewal of its licence in January. It has now ordered the brewer to cease production of any taxable goods, and to return unused excise stamps it was issued.
“Reference is made to our letter to you dated February 4 indicating that you failed to submit copies of valid tax compliance certificates for the company and its directors. In addition, your company has failed to declare correct excise duty rates, resulting to huge tax arrears.
“You are forthwith required to cease manufacture of excisable goods, pay excise for all goods manufactured by you, return all unused excise stamps issued to you by KRA,” the letter reads.
Keroche yesterday moved to court seeking to compel the taxman to reverse its decision, as it holds that KRA was yet to issue it with tax compliance certificates at the time it applied for renewal of the licence.
The brewer adds that its directors are separate legal entities hence asking for their tax compliance certificate is illegal.
KRA has also cited the Kenya Bureau of Standards’ cancellation of Keroche’s licence to produce its Crescent gin, brandy and whisky brands. The cancellation has since been revoked by High Court Judge George Odunga following a series of suits from various manufactures, including Keroche.
Keroche now says the taxman can recover undeclared revenue, and that rejecting its licence could cripple its operations despite the millions of shillings it contributes in taxes every year.
The brewer’s managing director Kabutha Nduati adds that her firm had a legitimate expectation that its licence would be renewed after KRA failed to determine its application long after the 30 days stated in law.
“Keroche was not provided with any cogent reason as to why its application for renewal was rejected. KRA which was mandated to consider the application within 30 days from the date it was filed failed to communicate any decision to Keroche. It’s absurd for KRA to require Keroche to submit documents and information which is issued by it,” the brewer says.