The High Court has frozen bank accounts belonging to 12 traders who the Kenya Revenue Authority (KRA) is pursuing over alleged tax evasion after the disappearance of uncustomed sugar.
The traders are Kings Commodities Ltd, Boniface Maina Kagechu, Maha Stores, Igaal Trading Company, Beder Wholesalers, Deira Commodities, Highrise Commodities, Tazama Commodities, Tazama Distributors, Highrise Hauliers and Sema Commodities.
Justice Alfred Mabeya allowed the application by KRA saying the traders did not show that they would not frustrate the collection of the taxes as alleged by the taxman.
The judge said the burden lies on a taxpayer once the tax authority alleges an apprehension of frustration in the collection of the taxes due.
“In the premises, I find that the applicant has proved its case on a balance of probabilities. That if the funds in the subject accounts are not preserved, there is a likelihood of the interested parties frustrating the collection thereof,” said the judge.
The court allowed the freezing of the accounts at NCBA Bank, KCB Bank, Guaranty Trust Bank (K), Equity Bank, HFC Kenya, First Community Bank and Ecobank Kenya.
The taxman rushed to court arguing that preliminary investigations had established that Vine Pack Limited was liable to pay tax upon release of uncustomed sugar.
Uncustomed goods include dutiable products on which the full duties due have not been paid.
According to the KRA, the sugar was meant for industrial ethanol but it was released to the market before payment of the requisite taxes.
The KRA said it suspected that the 12 firms were engaged in tax evasion or were accessories to tax evasion.
The court was informed that a tax of Sh20 million had been assessed on Vine Pack Ltd on March 22, this year.
However, the uncustomed sugar disappeared from the warehouses while the matter was being investigated.
The taxman submitted that it was imperative to preserve the funds in the said bank accounts pending the assessments, as there were fears that the traders may frustrate the recovery of taxes if the funds are not preserved.
Whereas the rest of the traders did not respond to the petition, Vine Pack challenged the orders, saying it was not served with the application as required by the Tax Procedures Act.
The judge said in the ruling that all that Vine Pack Ltd was supposed to show but failed to was that there was no reason for the authority’s apprehension it would frustrate the collection of the taxes once assessed.
“I have considered the averments on record. Since all the respondents and the interested parties never responded to the application, the same is hereby considered as unopposed and is allowed as against them as prayed,” the judge ruled.
The taxman has been using various databases to pursue suspected tax cheats, among them bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority, which reveal individuals who own assets such as helicopters.
