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
cash.
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.
Leave a Comment
You must be logged in to post a comment.