Company's move to report competition to KRA bites them

A decision by a motor vehicle parts distributor to report unfair competition from its business rivals to the Kenya Revenue Authority (KRA) has come back to haunt them. Autoxpress Limited complained to KRA that unscrupulous traders and competitors were smuggling and under-invoicing imported tyres. Their claim was investigated by the taxman who found that several importers valued identical tyres from China at different prices. KRA then harmonized the values and uplifted duty on some tyres imported by various companies including those sold by Autoxpress. The company sought to be refunded the taxes they had paid after the review. This prompted the company to file an appeal at the tax tribunal. In an August 4, 2020, decision the tribunal found that KRA erred in law by departing from the Transactional Value Method in valuing which denied Autoxpress an opportunity to justify the value declared. The tribunal directed KRA to re-assess the customs duty payable by the company in respect of the imports in dispute within 60 days after the delivery of the judgment. A meeting between the two entities took place in a bid to resolve the stalemate, and KRA said that the documents tabled by Autoxpress were not related to the assessment in question. On June 25, 2021, KRA said that the value uplifts were justified and Autoxpress' demand for a refund was not viable. The company applied for a review of the judgment before the tax tribunal but it was dismissed because it did not satisfy any of the preconditions for the grant of review orders. The tribunal also found KRA complied with its judgment. They appealed the tribunal's decision at the High Court where they raised 10 grounds which were however dismissed by Justice Josephine Wayua. According to the company, the tribunal failed to find that KRA's move violated the right to fair administrative action. "THAT the Tribunal erred in law and in fact in holding that the Respondent's had issued a fresh assessment of additional taxes in accordance with the judgment by its letter of 25 June 2021 that reconfirmed the that the initial uplift of duties based on similar or identical goods was conducted in accordance with the provisions of Section 122 EACCM Act 2004, as read with the Fourth Schedule part I Par 3 that ought to inform a new cause of action." Autoxpress faulted the tribunal for holding that they concealed material facts relating to the engagements with KRA after the delivery of their judgment. They further faulted the tribunal for holding that they failed to controvert any material facts disclosed by KRA that demonstrated their compliance with the tribunal directions. According to the company, the tribunal failed to appreciate that they sought a review and variation of the judgment by seeking to have the tribunals make a final determination on the taxes refundable to the company. They also faulted the tribunal for failure to appreciate its powers to vary its judgment to calculate the taxes they ought to have been refunded by KRA. Autoxpress said that the tribunal erred in law by relying on the threshold of review of discovery of new and important matter or evidence; mistake or error apparent on the face of the record or any other sufficient reasons. The company further faulted the tribunal for determining that they did not meet the threshold for review of the orders made by the tribunal in their judgment. They said that the tribunal failed to re-assess the customs they were to pay and also failed to make a final determination on the tax refundable. KRA said that the tribunal was right to dismiss Autoxpress' application for a review of the decision since the company did not raise ground for review as provided for by the law. The taxman argued that Autoxpress wanted the tribunal to usurp its legislative mandate of determining taxes payable which is solely the mandate of KRA. "Therefore, I find that the Tribunal was correct to pay regard to the general principles to be considered in review applications by Courts and Tribunals," said Justice Wayua. She found that the tribunal was right in finding that the company deliberately concealed material facts relating to the engagement between them and KRA. "To my mind, the Appellant's complaint about the Respondent's non-compliance with the orders of the Tribunal, though a good ground of appeal was not a proper ground for review."

Company's move to report competition to KRA bites them

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