Kenya revenue authority logo. [photo/ standardmedia.co.ke]
The mastermind Tobacco firm has lost bid to stop Kenya Revenue Authority (KRA) from collecting Ksh 442.2 million unpaid tax from the cigarette firm.
The tobacco firm had gone to court to challenge the KRA's decision to demand the money as under declared excise tax and a penalty on its super match brand of cigarette.
The court of appeal, however, upheld the High court decision allowing the taxman to collect the Ksh 442.2 million as unpaid tax from the firm citing the case to lack merit. The court also argued that the KRA had satisfied the court and thus they were legally justified to collect the tax.
Mastermind tobacco firm had argued that KRA had erroneously and unlawfully calculated excise duty payable and that they also made a reference to 'Column 5' that did not exist according to the amendments finance act 2006.
“It is clear to us that the above amendment made a specific provision for determination of duty on cigarettes. The appellant (Mastermind) cannot validly ignore the amendment and rely only on sections 127 and 173 of the Act,” said the court.
In 2003, the excise duty on cigarettes was charged on the basis of production cost but was later changed and calculated on the selling of a mile which was by then 1,000 cigarettes.
By then , the firm was selling a mile at Ksh 1,500 to Ksh 2,500 thus falling into category B of taxman which were Charged Ksh 650 per mille. In 2007, the firm increased the cost of a mile to Ksh 2,560 forcing KRA to move to court seeking orders to categorize the firm as category C.