Court blocks KRA’s bid to get Sh10m tax from firm’s account

A decision by the Kenya Revenue Authority (KRA) directing a bank to pay Sh10 million from an account belonging to two businessmen alleged to be tax due has been suspended by the High Court.

Justice Eric Ogola last week issued a stay order restraining KRA and I&M Bank #ticker:I&M from dealing with the accounts belonging to Bipinchandra Raihod and Bhupendra Raihod trading as Pennyways.

In their application, the businessmen said they are not aware on what basis KRA wrote the letter to the bank dated May 20 and that they are in the dark with no communication from them.

“The decision by the KRA is in violation of the applicants’ right to property enshrined under Article 40 of the Constitution and amounts of taking of property arbitrarily,” part of the application states.

According to the businessmen, they deny owing the taxman the funds on account of duty and claim that the dispute has not been heard by any impartial or independent tribunal.

“The applicants to suffer irreparable loss if the respondents illegal, unreasonable and unlawful decision as contained in the letter dated May 20 to I&M Holdings Ltd is not quashed or set aside,” their application states in part.

In his supporting affidavit, Mr Bhupendra said they are not aware for what period the duty is for as they have neither received any demand from KRA on the alleged taxes due.

He said they do not admit owing the KRA the alleged amount of money and dispute the taxman’s action.

“The respondent’s decision is bad in law, unreasonable and designed to frustrate the applicants’ business and breach their Constitutional rights,” states Mr Bhupendra in his affidavit.

The businessman said the KRA’s decision was made in bad faith and is unreasonable for not being proportionate to their rights.

Justice Ogola certified the application as urgent and allowed (granted leave) the two businessmen to apply for an order seeking to quash the decision of the KRA as communicated in a letter to the bank .

“Leave granted to operate as a stay of the decision of the respondent (KRA) contained in a letter to Interested Party (bank) dated May 20,” part of the orders issued by the court states.

The businessmen have been directed to file a substantive application within 10 days from the day the order was granted.