How Firm Cooked Books To Evade Over Half A Billion In Taxes

A Kenya Revenue Authority enforcement officer has told a Nairobi court that 10 companies out of 17 that did business with a company being probed for alleged tax evasion are not manufacturers.

Abdul Hassan Robow further told the court that the said companies that allegedly dealt with Shreeji Enterprise Limited are not registered distributors of steel products.

Robow, who is an investigating officer further told Milimani Chief Magistrate Martha Mutuku that the said companies had no history of importation.

According to the investigator, after checking where the 10 suppliers including Lalgi, Wanali, Walios, Climo, Vinati, Barwil, Josiki, Quantu, Kishna and Vidija Enterprises sourced their products, he established that they had not been filing tax returns.

He said this gave him an indication that the companies were either inactive tax payers or entities which existed merely on a paper.

During cross examination, the defense lawyer brought to the attention of the investigating officer that the company filed objection over the tax demand by KRA.

He was informed that the Tax Tribunal agreed with company and ruled on their favour. According to the defense, the Tribunal ruled the company filed their obligation.

He was testifying in a case where directors of Shreeji Enterprise (K) Limited are charged with tax evasion of over half a billion shillings.

Dhaval Vinoodbhai Soni and Shreeji Enterprises (K) Limited are accused that, on diverse date between January to December 20, 2017 being the director of Shreeji Enterprise (K) Limited, a liability company jointly and knowingly claimed value added tax relief not entitled amounting to Sh454.8 million from commissioner domestic taxes.

Shupathiraju Maheswara Varma is accused that on diverse dates between January 20, 2016 and December 20, 2017, being the financial controller of the company, he aided in the offence by preparing false books of accounts.

The court heard that the move affected payment of corporation tax amounting to Sh980.4 million due to the commissioner domestic tax.

Varma is further accused that on the same dates he aided the said company in preparing false books of account, thereby affecting payment of value added tax amounting to Sh454,867,754.

The investigator told the court that the company’s itax system revealed that the director’s pin and those of the entities were registered around the same time and this was an issue.

“All the directors of these entities are young people under the age of 25 years denied knowledge of such business or the said entities,” Robow told the court.

He also noted that these suppliers were allegedly buying the same products from each other in a cycle and this was an issue and did not make any business sense.

According to the investigating officers, these suppliers only filed their VAT for sometimes.

The directors are out on a cash bail of 1 million and a bond of Sh5 million pending the determination of the case.