Mastermind Tobacco sues KRA over ‘unreasonable demand’ for Ksh.1.9B

Mastermind Tobacco Kenya Limited has sued the Commissioner of Domestic Taxes over Ksh.1.9 billion alleged to be unpaid arrears of excise duty, VAT and PAYE.

The company argues that on the August 31, Commissioner of Taxes sent them a demand notice for the period between April-July 2018 stating that the company owed KRA the said amount.

Three weeks later the company alleged that the taxman, with no explanation on how the amount was arrived at demanded Ksh.1.9 billion.

The company now says that it has not made sales during the last three weeks to justify the amount being demanded by the tax collector adding that KRA has proclaimed all the assets and if executed, will permanently destroy the business on the basis of unjustified, unlawful and unreasonable demand for taxes that are not due.

“The applicant’s business will be irretrievably ruined as the auctioneer appointed by KRA has proclaimed all its assets,” read the court documents.

The tobacco and cigarettes manufacturing company claims the decision to demand the said amount constitutes substantive unfairness amounting to an abuse of excess of the powers.

Robert Mugambi Mutuma who is the company secretary, accuses the taxman of not affording them an opportunity to respond to the said notice and efforts to resolve the matter reasonably with KRA have not been successful as the agency is unable to justify the said money that is being demanded.

“The respondent is acting outside the law in purporting to inflate the amount of excise duty and VAT payable,” reads the papers.

The company further claims that the decision to demand tax arrears amounting to over Ksh.1.9 billion lacks any foundation in law and is therefore unconstitutional.