The Ombudsman is demanding answers from the Kenya Revenue Authority commissioner general John Njiraini over the alleged tax evasion by Bidco Refineries Ltd.
In a letter dated October 27, Otiende Amollo said the Commission on Administrative Justice had received a complaint against KRA for allegedly delaying to collect tax arrears from Bidco as per an order by the High Court in 2012.
The Ombudsman said the delay in recovering the taxes owed, since the initial demand in September 2009, has been compounded by an "abuse of the judicial process by Bidco".
"The commission has noted that the Authority (KRA) has condoned the abuse of the judicial process by forbearance, unfair accommodation, preferential treatment and/or favouritism which has mired the payment of over Sh1.3 billion," the letter reads.
The Ombudsman said the KRA must take immediate steps to ensure any pending challenges to the collection of the taxes are determined to finality.
"The Authority should generally desist in frustrating tax collection through unmerited consents in judicial fora, whose cumulative effect defeats the cause of fairness and efficiency in tax collection," Amollo said.
In a separate letter, the Ombudsman has asked the Tax Appeals Tribunal chairman Moses Buyuka to explain why the Bidco matter has delayed for four years.
"This letter is, therefore, to request that you urgently advise on what precipitated the delay, of over four years, of the commencement and hearing of this matter. Kindly advise on the current position of the appeal and progress made by the tribunal in the hearing of the case," Amollo said in the letter dated October 26.
This comes after MPs, last week, demanded that Bidco be investigated for allegedly not paying Sh1.3 billion in tax.
A petition tabled in the National Assembly by Kiambu MP Jude Njomo lays bare instances where Bidco has failed to pay taxes.
Twelve petitioners want the Kenya Revenue Authority to investigate the tax evasion allegations and report to the National Assembly.
On April 19, 2012, the KRA had demanded Sh1.37 billion from Bidco, which included taxes owed amounting to Sh780 million, penalties and interest accrued since 2009.
Bidco filed a case in court challenging the KRA's enforcement of the demand, and obtained conservatory orders stopping the enforcement action.
Bidco's petition was dismissed on August 6, 2013, and the manufacturer sought temporary stay orders pending an appeal, which was granted.
The issue is now pending before the Tax Appeals Tribunal following the appeal.