• KRA has issued an adverse tax assessment decision against the Ruai-based alcohol manufacturing company, claiming over Sh500 million.
• Platinum Distillers was closed by KRA on February 23 over tax evasion and importation of hazardous ethanol.
Image: FILE
Platinum Distillers might close if the Kenya Revenue Authority sues them for tax fraud and denies them excise stamps.
KRA had issued an adverse tax assessment against the Ruai-based alcohol manufacturing company, claiming over Sh500 million.
A tax assessment decision means the company has tax debts and cannot continue delivering their products to the market.
KRA, in pursuing the alleged debt, threatens the company and its directors with criminal sanctions and refuses to provide necessary excise stamps.
Platinum Distillers want the court to issue orders restraining KRA from declining to approve the issuance of excise stamps "as it enforces a process that entails a violation of rights".
Following entitlement by the Tax Procedure Act, Platinum filed an objection to the assessment in which a decision is yet to be made.
They also want the court to issue orders restraining the taxman from indicting or charging them in respect of the tax assessment before their objection has been heard exhaustively.
On March 29, KRA made an adverse tax decision and issued an assessment notice against Platinum Distillers for January 2015 to February this year claiming Sh502,667,100.
Immediately, they also declined Platinum’s applications for issuance of excise stamps on the basis of the assessment notice and warned them that it would indict them for tax fraud based on the assessment.
Platinum, through one of the directors John Waweru Mbugua, sought a meeting to solve the matter outside court.
“The distillers have attempted alternative dispute resolution and secured an agreement with KRA on the manner of handling the disputes but the tax collector appears to have reneged on the agreement,” Mbugua said.
The director said KRA continues to enforce the assessment notice decision by declining to issue excise stamps.
“Criminalising the alleged tax debt is manifestly prejudicial and a violation of Platinum’s right to fair administrative action,” he said.
In the meeting held on May 17, the two agreed that while objecting to the tax assessment, Platinum Distillers would pay KRA Sh50 million before the end of June when it was anticipated that its objection would have run its course, and actual tax amount payable determined.
“[Platinum was to pay] Sh20 million immediately, Sh10 million before May 30 and Sh20 million before June 24,” Mbugua said.
“Refusal of excise stamps has calamitous consequences on the business of the petitioners because they cannot produce for the market. It is a decision to close the business.”
The director said the threat of criminal sanction in the enforcement of immature tax debt is intimidating and unlawful and will occasion Platinum’s irreparable harm and untold suffering.
KRA closed Platinum Distillers on February 23 over tax evasion and importation of hazardous ethanol.
The company’s attempt to re-open the premises backfired after judge Weldon Korir dismissed their orders to have its premises reopened for lack of merit.
Korir said the distillery was closed for allegedly importing hazardous ethanol and until investigations are complete, he cannot order the plant's reopening.
“KRA holds a serious allegation of the company importing hazardous ethanol. The court will, therefore, give them 30 days to finalise their investigations before allowing the reopening of the manufacturing premises,” he said.
(Edited by R.Wamochie)