The Kenya Revenue Authority (KRA) will release the 40,000 metric tonnes of sugar owned by Darasa Investment Limited in a settlement outside the court according to an official statement.
The Agreement
The agreement entails a consent signed by KRA and Darasa’s lawyers guaranteeing that the company will settle the Sh2.5 billion in duty and VAT arrears.
The consent binds Darasa to seek clearance from government institutions like the Kenya Bureau of Standards (KEBS), Port Health, Agriculture & Food Authority, and the Radiation Board. The purpose of the “clearance is to ensure that the sugar is fit for human consumption before Customs allows the lodgement of import entry.”
The firm is also required to settle Sh547, 846, 969 in 90 days “if 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.”
Once the firm has completed all the payments, the revenue authority will release the sugar owned by Darasa. The agreement brings to an end an extended court battle between the two parties.
The Court Battle
Darasa had intended to import to Kenya 40,000 metric tonnes of sugar duty-free under a duty-free window gazetted by the National Treasury’s Cabinet Secretary. However, KRA said the sugar was not inclusive in the duty-free window. Darasa won the High Court case but KRA appealed and won the case at the Court of Appeal.
Although the matter is being settled through an Alternative Dispute Resolution (ADR), Darasa has a pending hearing at the Supreme Court, which it had filed challenging the Court of Appeal’s verdict.
According to the Tax Procedures Act under Section 55 (1), parties are allowed “to hold a tax dispute, within 90 days to resolve a matter while the Tax Appeals Tribunal Act, in Section 28(1), allows parties to resolve a tax dispute, outside the tribunal, at any stage of the proceedings.”
KRA has so far collected Sh8.3 billion from 181 companies through ADR, thereby reducing the number of court cases.
