Lecture 18 Β· Osho Drapersβ paperwork could not settle KRAβs supplier questions.
π»ππ πͺπππ πΉπππ: KRA said four of a textile importer's suppliers were missing traders. The company had invoices, delivery notes and receipts. But the receipts said cash and the invoices said cheque, and the company could not produce the bank records to settle which. Three courts upheld the assessment.
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The case
Osho Drapers deals in textiles and drapery and imports goods such as tin products and pressure cookers from India. In April 2018 KRA rejected purchases of KSh 11,224,259 claimed for July 2015 to May 2017, demanding VAT of KSh 1,795,881, and followed with corporation tax assessments of KSh 3,367,278. Its investigation had found that four of Osho's suppliers were missing traders, selling invoices without goods.
Osho objected with the documents section 17 of the VAT Act lists: tax invoices, delivery notes and payment receipts. KRA confirmed the assessments in July 2018. The Tax Appeals Tribunal dismissed Osho's appeal in October 2020, and Justice Alfred Mabeya dismissed its appeal to the High Court in March 2022. He accepted that the basic documents had been produced, but found that the payment records contradicted each other and that Osho had not supplied the cheque details, bank statements or stock records that would have resolved the conflict.
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Lecture 126 Β· A director kept meeting the taxman instead of appealing, and four years on the bill had only grown.
π»ππ πͺπππ πΉπππ: KRA confirmed a KSh 899,328 income-tax bill against Saphira, and its director spent four years in meetings and relied on his compliance certificates instead of appealing. The tribunal held meetings do not stop the thirty-day clock, a certificate is not proof of payment, and refused leave to appeal out of time; the debt had grown to KSh 1.4 million.
Tax and financial judgement Β· 4 min read Β· Paid
Lecture 125 Β· A rice importer called cleaning and repacking manufacturing, and the court said packaging is not making.
π»ππ πͺπππ πΉπππ: Mjengo claimed an investment deduction on KSh 1.5 million of machinery that cleaned and repackaged imported rice, calling it manufacturing. Through three forums the ruling held that packaging alone is not making goods, the rice remained rice, and a definition framed with 'means' is exhaustive. The deduction was refused.
Tax and financial judgement Β· 4 min read Β· Paid
Lecture 124 Β· A contractor said the money was his clients', had no agreements to show it, and the assessment stood.
π»ππ πͺπππ πΉπππ: KRA billed MU-BEI KSh 1.7 million after its eTIMS invoices far exceeded its declared sales. The company said the money was clients' funds for materials, passed on as an agent, but had no written agency agreements and no reconciliation. The tribunal held VAT fell due on the invoices and dismissed the appeal.
Tax and financial judgement Β· 4 min read Β· Paid