The Kenya Revenue Authority (KRA) has been barred from enforcing a Sh2.3 billion tax demand against steel manufacturer Doshi Ironmongers until it complies with a court order to return equipment it seized more than a decade ago.
High Court judge Patrick Otieno further directed the taxman to pay Doshi Sh2 million in damages for violation and infringement of its constitutional rights.
“This however does not amount to a prohibition against the respondents (KRA) from ever collecting tax due from the petitioner, that statutory mandate must be executed but done in compliance with the statutes and the Constitution,” he said.
He further said that if KRA deems it right to return the outstanding books and materials, Doshi will be obligated to answer any questions raised and assessment of tax demanded.
The dispute stems from an August 18,2010 letter in which KRA demanded income tax and valued added tax dues from Doshi—prompting the steel manufacturer to protest the illegal seizure of its assets including computers and office files between 2003 and 2007.
Doshi said KRA carried out several raids and seizures on it premises carting away files, computers, equipment, software materials and books of accounts on the allegations of tax evasion.
Justice Otieno also faulted KRA for the long-drawn-out investigation.
“The court takes the view that expeditious execution of public duty is now an indispensable norm and that a period spanning more than 10 years can never be deemed reasonable for the purpose of conducting investigation,” said justice Otieno.
He said the delay suggested the taxman and its officers lacked desire to seek recovery of any taxes due.
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