Kenya Revenue Authority wins $1.6 Million case against Italian dam Construction Firm CMC Di Ravenna

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The Kenya Revenue Authority (KRA), the country’s tax collection body, has won a case against Italian Dam Construction company Co-operativa Muratori e Cementisti (CMC) di Ravenna, seeking a Ksh166 million (about $1.64 million) Value Added Tax Refund.

In a judgment delivered this week by Kenya’s 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 KShs.28.9 billion lost the case where it was suing KRA for VAT refund of Ksh166, 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.

Ex parte means with respect to or in the interests of one side only or of an interested outside party.

Zero-rated denotes goods or services on which the buyer pays no value-added tax although the seller can claim back any tax he has paid.

However, in a defense submission led by KRA Legal Services Commissioner Paul Muema Matuku, the 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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