Lecture 18 Β· Osho Drapersβ paperwork could not settle KRAβs supplier questions.
π»ππ πͺπππ πΉπππ: KRA said four of a textile importer's suppliers were missing traders. The company had invoices, delivery notes and receipts. But the receipts said cash and the invoices said cheque, and the company could not produce the bank records to settle which. Three courts upheld the assessment.
Precursor
The case
Osho Drapers deals in textiles and drapery and imports goods such as tin products and pressure cookers from India. In April 2018 KRA rejected purchases of KSh 11,224,259 claimed for July 2015 to May 2017, demanding VAT of KSh 1,795,881, and followed with corporation tax assessments of KSh 3,367,278. Its investigation had found that four of Osho's suppliers were missing traders, selling invoices without goods.
Osho objected with the documents section 17 of the VAT Act lists: tax invoices, delivery notes and payment receipts. KRA confirmed the assessments in July 2018. The Tax Appeals Tribunal dismissed Osho's appeal in October 2020, and Justice Alfred Mabeya dismissed its appeal to the High Court in March 2022. He accepted that the basic documents had been produced, but found that the payment records contradicted each other and that Osho had not supplied the cheque details, bank statements or stock records that would have resolved the conflict.
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Lecture 22 Β· Yarde Park bought maize from farmers without receipts
π»ππ πͺπππ πΉπππ: A maize trader supplying a flour miller could not produce invoices for much of what it bought from smallholders. KRA disallowed 40% of its purchases and added VAT, for a KSh 593.5m bill. The Tribunal upheld it because the ledgers KRA asked for never arrived.
Tax and financial judgement Β· 3 min read Β· Paid
Lecture 21 Β· Premier Caterers sent its documents a week too late.
π»ππ πͺπππ πΉπππ: A catering company lost most of a KSh 4.4m dispute because its bank deposits ran ahead of its declared sales and its expenses lacked proof of payment. Its further documents arrived seven days after KRA's decision, and nothing in the law let KRA look at them.
Tax and financial judgement Β· 4 min read Β· Paid
Lecture 20 Β· Harley Berry filed nil while its customers reported sales.
π»ππ πͺπππ πΉπππ: A company filed nil VAT returns while its customers' withholding VAT certificates showed it was trading, and claimed input tax from suppliers who had declared far less. Asked for invoices, it asked instead for a flat 40% allowance. The Tribunal upheld KSh 317.9m.
Tax and financial judgement Β· 4 min read Β· Paid