The Kenya Revenue Authority (KRA) has been forbidden by the Court of Appeal from demanding taxes totalling up to Sh5.6 billion from the Coca-Cola company.
According to KRA, the global soft drinks manufacturing company had allegedly failed to pay its excise duty between 2006 and 2008 on returnable crates and empty soda bottles.
The court of appeal three-judge-bench which was composed of; Wanjiru Karanja, Otieno Odek and Sankale Ole Kantai nonetheless ruled that the law was not clear on whether companies should pay taxes on returnable containers or not.
“Why would Parliament have expressly excluded the tax on returnable containers before 2004 and re-introduce sub-sections (3)(b) and (d) to again expressly exclude the returnable containers from the tax bracket through Section 5 of the Finance Act No. 10 of 2010?” the judges stated as quoted by the Standard Digital.
The judges also considered the fact that the returnable bottles had been excluded from the prices of Coca-Cola company's products.
"In our view, the exclusion of returnable containers from the ex-factory selling price as per the previous legislations must have appreciated the unique nature of the practice in the industry and the dealing in such containers," the judges' ruling read.
KRA however unsuccessfully argued that the bottles were being sold to distributors.