23 May 2019

Kenya: KRA Wins Sh166m Case Against Dam Construction Firm CMC di Ravenna Kenya

The Kenya Revenue Authority (KRA) has won a case against Italian dam construction company Co-operativa Muratori e Cementisti (CMC) di Ravenna whic was seeking a Sh166million value added tax (VAT) Refund.

In a judgement delivered Wednesday May 22, by High Court Judges Lady Justice Pauline Nyamweya and John Mativo, CMC Di Ravenna Kenya, a Company contracted by Rift Valley Water Services Board to construct Itare dam for the sum of Sh28.9 billion lost the case where it was suing KRA for VAT refund of Sh166,247,378.

Through an ex-parte Judicial Review application earlier filed at the High Court, CMC Di Ravenna Kenya had sought to recover the VAT refund while contending that the project was fully funded by various Italian banks and therefore, all services made to the project were zero rated as per the East African Community Customs Management Act and VAT Act, 2013.

However, in a defense submission led by KRA Legal Services Commissioner Paul Muema Matuku, the revenue authority, informed the court that the services were not zero rated.

In their ruling, Lady Justice Nyamweya and Justice Mativo struck out the suit noting that the firm had failed to follow the laid down procedures in seeking relief for tax matters. The judges noted that the firm had also failed to disclose that there was an appeal pending before the Tax Appeals Tribunal.

"Given that the nature of the Applicant's case may change depending on the decision made by the Tax Appeals Tribunal, it may be prudent and more orderly for the Applicant to commence fresh proceedings, if it is still desirous of moving this Court for judicial review orders," the two judge bench noted.

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