Italian firm behind dams’ scandal suffers huge loss to KRA

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Italian Dam Construction Company Co-operativa Muratori eCementisti (CMC) di Ravenna has been dealt a huge blow after the Kenya Revenue Authority (KRA) won a case seeking a Kshs 166 million Value Added Tax Refund.

In a judgement delivered on Wednesday 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 KShs.28.9 billion lost the case where it was suing KRA for VAT refund of Kshs. 166, 247, 378.

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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.

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CMC Di Ravenna Kenya had argued that Itare Dam Project is classified as an official funded project under East African Community Customs Management Act of 2013, and Value added Tax 2013.

The firm however expressed regret that KRA had declined its application for refund of VAT, noting that the Project was not Zero rated.

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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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