The Kenya Revenue Authority was ordered to pay a sugar importer Sh566.1 million as compensation for losses suffered as a result of its duty-free sugar import date change more than a decade ago.
The High Court further awarded Transouth Conveyors Ltd Sh1 million as exemplary damages to demonstrate its disapproval of KRA’s conduct.
Judge Patrick Otieno said that the KRA, as stated by the Court of Appeal, changed the effective dates of the sugar importation, imposed an undue tariff on the shipment from Transouth Conveyors Ltd of 100 percent and did not release it.
“This behavior seems oppressive, arrogant and aggravates the opinion of the courts about the accused,” said Judge Otieno.
Judge Otieno further said that while KRA held that it should be given the opportunity to make mistakes because it is a public body, it does not agree.
“I refuse to agree because, being a state agency and a public body, it is obliged to observe the values and principles of governance,” said Judge Otieno.
Judge Otieno said the KRA is obligated to act reasonably and efficiently in good faith to inspire public confidence.
The court said it was convinced that KRA’s action was arbitrary, oppressive and justified exemplary damages.
Judge Otieno said that KRA had acted in an overbearing and illegal manner, so the company had the right to insist on fairness and law enforcement not only to protect a property right, but also to cushion and safeguard the status of right.
According to Transouth Conveyors Ltd pursuant to Legal Notice No. 12 of March 1, 2004 from the Minister of Finance, Gazette Notice No. 296 of January 11, 2007 and a letter dated January 12, 2007, from Kenya Sugar Board (KSB), opened necessary letters of credit through African Banking Corporation.
The company says it then imported from Egypt, a member state of the Common Market Free Trade Zone for Eastern and Southern Africa (Comesa), 5,000 metric tons of raw / white sugar valued at $ 1,840,000.
He also informed the court that on February 2, 2007, KRA placed an advertisement in a local newspaper whose effect was to change the effective date of importation of Comesa’s duty-free 2007/8 sugar from February 1, 2007, as stated had previously posted. by KSB until March 2007.
The plaintiff said that, by virtue of the defendant’s decision, his shipment of sugar could be subject to a 100 percent tax contrary to that stated by KSB in Gazette Notice No. 296.
According to the plaintiff, the defendant’s wrongful act resulted in his inability to dispatch his shipment as the tax payable was high.
The company said that African Banking Corporation Ltd returned open letters of credit with it based on a zero tariff to Egypt for cancellation as a result of the KRA’s decision and the application of 100 percent of the tariff on the shipment.
The KRA said that the declaration of Legal Notice No.12 of March 1, 2004 by the Minister of Finance to allow the importation of sugar tax-free from Comesa was not for sugar from member states.
It admitted to having issued press notices without malice, but maintained that it was intentional and that it had been used previously to explain and clarify the implementation of the Legal Notice.
KRA said it had the right to clarify issues that arose between KSB and itself in reference to the Legal Notice issued pursuant to Section 118 of the Customs and Excise Law and as previously implemented by all affected.
The tax collector in denying the imposition of prohibitive tariffs on the plaintiff’s sugar argued that the company had the option of reshipping, cleaning the sugar under protest or providing guarantees pending the determination of a court case.