Rice Importer Loses Appeal Against Sh1.4 Billion Tax Claim

The Tax Appeals Tribunal has dismissed an appeal filed by Jhulay LAL Commodities Ltd, a rice importer, on grounds that the company had failed to prove that Kenya Revenue Authority’s (KRA) assessment was excessive. Jhulay LAL’s principal activity is the wholesale and retail sale of rice sourced from Pakistan.

Jhulay LAL Commodities Ltd appealed the decision KRA’s, contesting that the entire tax of Ksh1,456,433,604 demanded was excessive. The main grounds of the appeal was that the Commissioner determined the taxable income on the basis of its gross banking against the basic accounting principles and tax law.

KRA successfully argued that it made the assessment after an investigation revealed several irregularities including unexplained bank deposits and that the sales of the rice exceeded the amounts imported.

The Tribunal reviewed the evidence as presented by both parties and held that KRA exercised its powers judiciously to make the decision based on the material before it.

Two businessmen of Pakistani Nationality who run the company were in February 2020 charged before Mombasa Chief Magistrate Ms Edna Nyaloti for evading tax worth Ksh1.5 billion. The traders, Rahim Qasim and Rameez Gulzar Ali alongside their firm Jhulay Lal Commodities Ltd, were found to have been importing rice into the country while deliberately failing to pay Income Tax.

According to investigations, it was established that for the period covering January 2015 and December 2018, the suspects imported rice worth Ksh1.68 Billion. They sold the rice and banked the proceeds in their various companies’ accounts.

The arrest followed lengthy investigations carried out by KRA’s Investigation and Enforcement Department on the tax fraud schemes into the country.  The Tribunal held that the Jhulay LAL Commodities Ltd failed to prove that the assessment was excessive and dismissed the appeal.

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