Kenya Revenue Authority (KRA) has agreed to release 40,000 metric tonnes of sugar owned by an importer from whom it claimed Sh2.5 billion in unpaid duty and VAT arrears.
The taxman reached the agreement with Darasa Investment Ltd in an out of court settlement guided by a consent signed by lawyers for the two parties.
In the deal, Darasa is bound by the consent to seek clearance from relevant government agencies not limited to Kenya Bureau of Standards (KEBS), Port Health, Agriculture & Food Authority, and the Radiation Board.
KRA said in a statement on Friday that the clearance is conducted to ensure that the sugar is fit for human consumption before customs allows the lodgement of import entry.
“Darasa is further required to settle a Sh547 million in ninety (90) days if a waiver of interest and penalties is not granted as per the East African Community Customs Management Act.”
“If the waiver is not granted within the 90 days, the money will be paid to KRA. Upon completion of the due payments, KRA will release the consignments,” the statement reads in part.
The out of court settlement is viewed will bring to an end, the prolonged court battles between KRA and Darasa. The sugar in question has been detained since October 2017.
Darasa had intended to bring into Kenya the consignment of sugar, free of duty. It argued that the consignment docked during the window period announced by Treasury CS Henry Rotich at the height flour shortages in the country.
KRA, however, insisted that duty was payable on the sugar since it didn’t fall under the duty-free window. Darasa won the case in the High court before KRA lodged an appeal and won.
At the time of settling the case, the dispute was pending hearing at the Supreme Court following a petition of appeal filed by Darasa challenging the decision of the Court of Appeal.
The taxman says it has embarked on alternative dispute resolution (ADR) to solve cases through a fair hearing done out of court.
ADR is legally provided for in Article 159 (2)(c) of the Constitution as well as in other tax legislations namely The Tax Procedures Act and Tax Appeals Tribunal Act.
The provisions allow parties to resolve a tax dispute, outside the tribunal, at any stage of the proceedings.
“So far, over Sh8.3 billion has been collected from 181 companies through ADR,” KRA said.