The Eastleigh Shopping Mall and its eight directors have taken the taxman to court seeking a reversal of orders freezing their bank accounts and seizure of their assets over a S86 million demand by the agency.
The mall and its owners have filed a constitutional petition seeking to reverse court orders issued in two separate cases allowing the Kenya Revenue Authority (KRA) to seize their property and freeze six bank accounts registered to the mall and 12 belonging to its directors.
“The search and seizure of the petitioners’ property and freezing of their bank accounts comes at a curious time when there is continued harassment of businesspeople with ethnicity and heritage similar to the petitioners by most organs of the State,” claims the petitioners.
Court documents show that between May and July 2014 KRA conducted a tax audit on the mall covering value added tax, PAYE and withholding tax.
The taxman wrote to the mall and its directors demanding S86 million for the period between 2008 and 2013 and gave them a month to object to any of the assessments.
Based on the report the shopping mall said it entered into a payment plan with the taxman to settle the outstanding taxes in August 2014 and since then has not defaulted on the agreed payment schedule.
KRA filed the criminal suit against the mall on April 13 and got orders allowing it to seize from the premises import-export documents, books of accounts and money, data storage devices including CCTV cameras and other records that would enable them carry out a tax investigation between 2007 and 2015.
The revenue collector claimed in the case that while the mall files income tax and VAT returns regularly, the comparison of the declared turnover showed variances in each year adding that while the mall was a commercial building it did not file any rental income.
“On July 3, the respondents in a fresh criminal application obtained ex-parte orders freezing the petitioners’ accounts in various banks,” says the court papers.
The mall owners argue that on July 10 the taxman had notified the public of proposals contained in the Finance Bill 2015, including a 100 per cent tax amnesty for individual landlords on principal taxes, penalties and interest for periods before 2013 and further amnesty on penalties and interest for years 2014 and 2015.
“If any tax liability is established we would be entitled to benefit from the general amnesty contained in sections 1 and 15 of the Finance Bill 2015,” they said. The matter will be mentioned Friday before Justice Mumbi Ngugi.