Philip Moi’s firm landed Sh240m tax blow

Photo/FILE Judge Mumbi Ngugi at the High Court in Nairobi. The Judge has struck out Cut Tobacco’s entire petition.  NATION MEDIA GROUP

By BENSON WAMBUGU benwambugu62@gmail.com
Posted  Saturday, April 20   2013 at  23:30

The court has allowed the Kenya Revenue Authority to attach the assets of a company associated with retired President Moi’s son, Philip, to recover Sh240 million in tax arrears.

Judge Mumbi Ngugi threw out a petition lodged by Cut Tobacco Kenya Ltd seeking to block the taxman from attaching the company properties over the eight-year-old debt.

The judge further declined a plea by the troubled firm to restrain KRA and the Attorney-General from withholding its trading licence or to authorise it to conduct its business, saying doing so would be tantamount to allowing a blatant abuse of the court process.

Cut Tobacco moved to the High Court in April last year seeking an injunction to restrain KRA and the AG from attaching or interfering with its assets until the suit it had filed was heard and determined.

The firm complained that it had been denied income through the violent and unreasonable takeover of its properties and premises by the taxman over failure to remit Sh240 million.

KRA descended on the Cut Tobacco premises on Mombasa Road in 2004 and sealed its factory in a bid to enforce the tax payment.

It also revoked its licence forcing the cigarette manufacturer to collapse.

Cut Tobacco told the court through a sworn affidavit by managing director Avichal Amritial that by closing the factory, the taxman had violated the firm’s constitutional and fundamental rights and freedoms and sought various court orders and declarations against KRA and the State Law Office.

Mr Amritial said instead of KRA allowing the company to continue operating and pay the tax arrears, it sealed off the company premises and seized its assets to hammer the last nail to its coffin.

He said following the 2004 events, the firm was forced to declare hundreds of its employees redundant, consequently denying them their livelihoods.

The manufacturer further complained that KRA frustrated its operations by withdrawing its licence, saying the firm was a fully fledged medium enterprise operating at the optimum as of March 2003 when KRA demanded tax arrears in excess of Sh400 million.

Mr Amritial said in court documents that after the company contested the huge tax bill, KRA adjusted the amount to Sh107 million.

However, due to the complexity of the tax regime and lack of regular statements by KRA, the firm was unable to effect payment and fell into arrears.

But the taxman informed the court that Cut Tobacco was to blame, saying the firm made proposals to pay the tax arrears in instalments but failed to do so.

Opposing Cut Tobacco’s application, KRA told Justice Ngugi that the petitioner had failed to show any violation of its rights.

In her ruling, the judge observed that from 2004 when the factory was shut, Cut Tobacco had filed not less than five suits “dealing with the dispute now before the court, involving the same parties and filed by the same company or associated firms”.

The judge noted that a party cannot be allowed to litigate the same matters, under different guises before different divisions of the High Court.

On April 11, the judge struck out Cut Tobacco’s application and the entire petition saying it was a blatant abuse of the court process and ordered the company to pay the taxman and the AG costs of the suit.

But reacting to the judgment, Cut Tobacco’s Nzioka and Company Advocates said: “This suit is a constitutional petition and this court has jurisdiction notwithstanding other matters before other divisions of the High Court.
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