Rift Valley Railway Kenya Limited appeals decision to pay Sh 1.6 billion tax

Milimani Law Courts

The Rift Valley Railways Kenya Limited has appealed the decision by the Tax appeals Tribunal To pay Kenya Revenue Authority Sh 1.6 billion tax.

The company is seeking an order of stay of the execution of the said judgement and decree delivered on 25th September 2020 pending the hearing and determination of the application inter-partes.

The applicant further wants a temporary stay order to be issued staying the execution of the judgment pending the hearing and determination of the appeal.

Through lawyer Philip Nyachoti, The railways firm argues that the Tax Tribunal erred in law and grossly misapprehended the evidence on record, leading to the perverse decision and further ignored material evidence in making its findings.

“The Honourable tribunal erred in law and misapprehended the evidence on record by finding that the National Treasury did not issue exemption to the appellant on all the capital goods it intended to import whereas the National Treasury had granted full exemption in its letter dated 15th August 2011 as read with the approval of the Minister in charge of finance as required by the VAT Act,” argues Nyachoti.

READ:KRA to collect sh 1.6b from Rift Valley Railways Kenya ltd after losing appeal

According to the appellant, the tribunal also erred by finding that they were not granted remission in respect of locomotives whereas the actual approval by the Minister in charge of the National Treasury had indicated that the exemption was granted for all capital goods applied for.

Further, it is stated that the tribunal erred in law by finding that the appellant is bound by the respondent’s assessment on undervaluation of freight charges for locomotives and diesel engines despite the same having been exempted by the National Treasury.

The applicant instituted the Tax appeals Tribunal appeal against the commissioner of domestic taxes having been aggrieved and dissatisfied with the objection decision of the commissioner, investigations and enforcement issued by way of a letter dated 11th December 2017 upholding tax assessment against the applicant in the aggregated sum of Sh 1,696,233,674.

“By way of the said judgment, the tribunal partly allowed the applicant’s appeal by ordering for the reduction of the applicant’s withholding tax liability in respect of local and imported services only, in the sum of Sh 56,717,291,” says the lawyer.

The tribunal, however dismissed the applicant’s appeal in respect of the rest of the assessed tax liabilities thereby paving way for the commissioner to issue agency notices and/or initiate recovery measures against the applicant in respect of the colossal balance  of S1,639,516,383.

The company argues that if the respondent proceeds with execution and recovery measures against them, they will be exposed to to enormous and substantial financial loss and damage on account of all its operations which will be crippled completely and they will be rendered impecunious and unable to manage its day-to-day affairs in view of the colossal sum sought to be recovered and also taking into account the Covid-19 situation which has naturally slowed down and/or paralysed businesses all over the world.