Justice Margaret Muigai has allowed Kenya Revenue Authority to enforce tax collection against defaulters. PHOTO /CORRESPONDENT


By Mercyline Omware

The High Court sitting in Nairobi has upheld the

judgment of the Tax Appeals Tribunal (TAT)

delivered on 8th December 2016 to the effect

that taxes amounting to Kshs. 1,654,846,603

was due and payable by the taxpayer.

Following reports from Parliament that the

taxpayer was dealing in smuggled gold, the

Commissioner carried out investigations into

the affairs of the taxpayer for the years 2010-

2011 and established that the taxpayer, Ushindi

Limited (formerly Ushindi Exporters Limited),

had made exports of gold worth Kshs.

2,595,3838,877 in 2010 and Kshs. 2,940,001,820

in 2011.

When requested for documents to support its

transactions, it was the taxpayer’s position that

it carried out its transactions predominantly in


Further, the taxpayer alleged that most of the

gold was purchased from artisan miners who

normally did not give their personal details nor

tax invoices.

It was also the taxpayer’s contention that it

maintained records in accordance with the

Trading in Unwrought Precious Metals Act (Cap

309 of the Laws of Kenya) which only required

details limited to; the date of transaction, nature

and weight of precious metal and price if any.

There was, in its view, no requirement to give

names or identities of the sellers based on an

alleged correspondence from the then Ministry

of Environment and Mineral Resources

(hereinafter ‘the Ministry’).

In the circumstances, the Commissioner relying

on the provisions of Section 54A of the Income

Tax Act disallowed the costs claimed by the

taxpayer on account of its failure to furnish it

with documents requested.

It was the Commissioner’s view that the

taxpayer had failed to provide documents

sufficient for computation of tax.

As regards the directive from the Ministry, Lady

Justice Margaret Muigai while exercising her

powers under 9, 10 and 11 of the Mining Act,

placed reliance on a the letter by the then

Minister for Mining confirming that the Law did

not provide a waiver of the requirement to keep

a register of transactions.

As such the court held that the Ministry went

beyond its powers to allow dealers to transact

without keeping the requisite records.

Lady Justice Margaret Muigai stressed in her

ruling that the taxpayer had failed to comply

with obligations set out in Section 11 of the

Trading In wrought Precious Metals Act as well

as Section 54A of the Income Tax Act.

Further, the court upheld the TAT observation

that by not disclosing the names of the

suppliers then the taxpayer was shielding the

fraudsters from being assessed to tax.

Consequently, Lady Justice Muigai upheld the

Commissioner’s position (and indeed the ruling

by the Tax Appeals Tribunal) that in view of the

taxpayer’s failure to furnish the Commissioner

with the documents requested, it could not

purport to claim costs under Section 15 of the

Income Tax Act.

It was upon the taxpayer to prove that the tax

assessed had been wrongfully imposed and it

failed to do so.

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