Imported sugar at a godown in Mombasa. /FILE
KRA on Thursday lost a bid to recover Sh2 billion from a sugar importer.
Mombasa High Court Justice Erick Ogola allowed Darasa Investment Limited to offload the 800,000 bags of sugar which has been on a ship for the past two months.
The sugar was imported when the government, through the National Treasury, directed that sugar and other food products be exempted from tax.
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This was to last between May and August 2017.
Justice Ogola said the taxman was discriminatory in their duty by allowing other companies to clear their sugar but held that of Darasa.
He said if Darasa had contravened the by-laws of tax-free importation, then the same punishment should have been applied to other companies.
Ogola further said KRA did not give any reasons on why they were demanding the Sh2 billion.
He said KRA should have given an appropriate reason on why Darasa should pay the money.
The judge further said the importer had proven that the sugar was brought into the country during the period stated by the gazette notice.
He noted that the National Treasury and Agriculture ministry had also given a green light for the importation of the sugar, thus proving the company traded within the period.
Justice Ogola further declined to stay his orders which temporarily suspended offloading of the 40,000 metric tonnes of sugar.
During the hearing, KRA said the 40,000 metric tonnes of sugar in question never originated from Brazil.
Through lawyer Ken Ogeto, the taxman said a document by Darasa indicates the sugar was produced in August, a time they claim it has already been loaded into a vessel.
The taxman argued that the ownership of the cargo changed hands according to documents and Darasa were not the original importers.
But Darasa, through their lawyers Fred Ngatia, Ian Tobino, and Dennis Mosota, held that the origin of the sugar was not the bone of contention.
Ngatia said the issue of whether the sugar was loaded to the vessel within stipulated time should be highly considered.
He denied allegations by KRA that the origin of the sugar was UAE and not Brazil adding that the sugar was purchased through a Kenyan bank by the importer.
The ship importing the cargo left Brazil port and was cleared by the Brazilian Chamber of Commerce in July.
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