AN attempt by CFC Stanbic Bank to get a refund of Sh87 million from the taxman has been dismissed by the High Court on grounds of voluntary payment.
Justice Isaack Lenaola ruled that the bank willingly paid the amount to the Kenya Revenue Authority. The case arose from tax computations after the bank acquired computer software worth Sh917 million in 2008 and 2009 after CFC and Stanbic banks merged.
KRA claimed Sh103 million after computation and the parties agreed on the amount to be settled before the payment was made. CFC Stanbic however sought a refund of Sh87 million afterwards citing overpayment.
The lender also sought to stop KRA from demanding Sh51.9 million arising from penalties and interest. It challenged the taxman in court arguing that the amount arrived at by the local committee was not binding because it breached rules of natural justice.
CFC Stanbic argued it had not been represented in the talks and neither was the Kenya Bankers Association allowed to join the case. Justice Lenaola ruled that the bank never objected to the payment.
"The parties had extensively engaged in lengthy discussion over the payment of taxes due and I do not see how the taxation of the petitioner deprived it of its property because it paid the assessed and agreed taxes willingly following a decision of the local committee on the matter," the Judge ruled.
KRA said CFC voluntarily paid the amount and was represented in all discussions. The payment was made before KRA reached the enforcement stage. It also emerged that the lender had applied for a waiver on August 5, 2011 which the Finance minister rejected.