Travel ban against 2 traders to stay

The High Court has declined to quash travel prohibition orders issued against two businesspeople by the Kenya Revenue Authority (KRA) over fears that they might flee the country without settling a tax demand of more than Sh188 million.

The Departure Prohibition Orders (DPO) were issued against Pratik Mansukhlal Malde and Anile Kumar Malde in July 2020, using section 45 of the Tax Procedure Act, which is granted to restrict a taxpayer from leaving the country.

The duo argued that the DPO was unlawful and the indefinite issuance of the orders was unjustifiable as it curtailed their movement against their rights as guaranteed by the constitution.

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They defended themselves by saying they were no longer directors of Family First Signature Ltd – which owes KRA the unpaid tax – having transferred their shares to Ms Rahab Mwihaki Karoki.

It was their argument that prohibiting them from seeing their immediate family members who reside in India and the United Kingdom violated their right to dignity.

Justice Anthony Mrima dismissed the petition saying the two jointly held over 50 percent of the membership interests in the company, making them have a controlling stake in the firm.

“It is, therefore, apparent that the discriminatory aspect lodged by the petitioners does not hold,” the judge said, adding that the pair may have to make changes in the I-Tax system to reflect the new position.

The court heard that the company has several buildings including Amber House on Mfangano Street, Formation House, along the same street and another building formerly known as Quran House.

The company also owned several blocks of apartments comprising 104 units in Dagoretti.

The petitioners had claimed that they transferred 50 shares to Ms Mwihaki in 2012 and her nominees and in exchange, they took ownership of Superiorfone Communications Limited, a company she previously owned.

In exchange, she allegedly transferred 50 percent proprietary interest and ownership of Bektel Building to Veepison Investments Limited, a Company owned by the petitioners.

Section 45 of the TPA allows KRA to issue a DPO against any person with a tax liability and who is likely to leave the country without first discharging the liability.

Also read: KRA moves its domestic tax unit to Sameer complex

They told the court that their inability to pursue business interests abroad as a result of the DPO had effectively curtailed their right to economic and social freedom.

KRA on its part said the company had a tax liability of Sh188 million, which was confirmed by the tax appeals and affirmed by the High Court in 2020.

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