A judge has stopped KRA from seeking the Sh90 million owed to it by a company associated with Mombasa Governor Hassan Joho.
In an interim order on Tuesday,
Mombasa High Court judge Dorah Chepkwony told Kenya Revenue Authority to wait until the matter is determined.
KRA had told the court that Portside Freight Terminal, owned by Joho's family, had not paid taxes for 2008, 2009, 2010, 2011 and 2012.
The terminal was closed by the taxman on January 28, 2016 on claims of handling smuggled sugar, rice and ethanol.
Autoports Freight Terminal, also associated with the governor's family, was also shut down at that time.
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In a sworn affidavit,
KRA's Jesse Kamau said the authority requires the company to remit the taxes without further delay.
Kamau also advised that Portside should have written to the commission seeking an extension of time to pay the arrears.
He further told the court the taxman was right to summon the directors of the company for failing to remit the self-assessed taxes.
"The commissioner acted within the law by summoning the directors of the company to appear before him for an interview," Kamau said.
But Portside management said the company was not evading taxes and should be granted time to clear the payments.
The company moved to the High Court in Mombasa seeking a 30-day extension.
Lawyer Paul Buti urged the court to hear the suit expeditiously so that the company does not suffer as a consequence of KRA’s "unlawful" actions.
KRA had made an immediate tax demand to the freight terminal. The money demanded includes accumulated taxes, penalties, and interest.
Buti asked the court to prohibit KRA from demanding, collecting or issuing agency notices for tax for 2008-2012.
A February 3 KRA letter says: "You are also requested to avail the financial documents, including copies of bank statements for the years 2013, 2014 and 2015 as requested earlier."
Buti said his client does not agree with the amount of money stated as accrued tax.
The company also says the requirement to pay the taxes immediately is against the law.
Buti said if the tax amount is in deficit, it should be carried forward under the Income Tax Act for the said period.
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