Keroche Breweries has been directed to deposit Sh500 million in one month as a condition for extending an order stopping KRA from recovering Sh9.1 billion tax.
Judge David Majanja issued the directive on Monday, emphasizing that if Keroche did not deposit the amount then the temporary order stopping the Kenya Revenue Authority from recovering tax arrears will automatically lapse.
“I have considered all the factors and I find that the appellant (Keroche) is a going concern and the action by the respondent may cripple its operations. However, the taxes have been outstanding for long,” Majanja said.
The temporary order which was extended yesterday was first issued last Friday.
It arose out of an application filed by Keroche challenging a decision by the tax appeal tribunal which allowed KRA to recover the arrears.
Justice Majanja further ordered the tribunal to furnish Keroche with typed proceedings and copies of the judgement delivered last week, to enable the brewer to challenge taxes payable for its ready to drink Viena Ice Vodka.
Keroche boss Tabitha Karanja said in court documents that while the latest claim by the KRA is for Sh9.1 billion, the taxman had in the last few months made several demands for a cumulative payment of Sh23 billion from the company.
KRA is of the view that Keroche’s Viena Ice is a fermented beverage which attracts 60 per cent excise duty and not fortified wine.
However, Keroche claims the product is in the right category since it is a diluted version of Crescent vodka.
The tribunal ruled that Keroche’s Viena Ice falls under fermented beverages, which gave KRA the green light to recover the unpaid levies.
KRA demanded Sh1.1 billion from Keroche in 2006 and backdated taxes on Viena Ice by five years. This resulted in a court case.
The Court of Appeal ordered KRA to issue reasonable notice with supporting documents.
The taxman then issued demands for excise duty (Sh467,704,167), VAT (Sh388,594,657) and corporate and withholding tax (Sh737,333,959).
The parties in the case are expected back in court on April 23.