The Kenya Revenue Authority (KRA) and Bidco Oil Refineries are engaged in a vicious dispute over Sh1.3 billion the taxman is claiming in unpaid revenue for undeclared insurance and crude edible oils imported between 2004 and 2008.
The dispute has been brought to light by a suit the KRA has filed in the High Court seeking to stop proceedings in the Tax Appeals Tribunal after its only expert witness was barred from testifying.
The protracted battle begun in 2009 when the KRA demanded Sh702 million from Bidco and issued agency notices to five banks the consumer goods manufacturer held accounts with and four supermarkets that stocked its products.
The KRA’s demand stems from Bidco’s alleged undervaluation of crude palm oil, crude soya bean oil and crude kernel oil it imported alongside undeclared insurance taken while importing the edible oils.
Bidco filed an appeal against the demand. The KRA’s witness, an employee named John Gathatwa, was barred from testifying before the tribunal after his witness statement was filed 17 days after the agreed-on deadline for parties to file their documents.
The taxman says in court filings that the tribunal was wrong in declining to extend it time to file Mr Gathatwa’s statement and in barring the KRA employee from testifying.
Justice Joseph Sergon has ordered that hearings be stopped temporarily until he hears arguments from both parties on September 28.
“The Tax Appeals Tribunal made an order expunging from its records the KRA’s only witness statement signed by John Gathatwa and ordered that the hearing of the appeal proceeds. The KRA is now prejudiced…’’ David Ontweka, a KRA legal manager, says in court filings.