High Court suspends excise duty stamp on soft drinks, bottled water : The Standard

High Court has suspended the implementation of the Sh1.50 excise levy on bottled water and soda manufactured or imported into Kenya that was to begin on Tuesday next week. The amount is the price for the duty stamp that would be affixed to every excisable product as proof of payment of tax. According to a public notice released by Kenya Revenue Authority (KRA) last week, all licensed manufacturers, importers, distributors and retailers must ensure all drinks have the stamp affixed after November 13. KRA said in the circular that only licensed manufacturers and importers of excisable goods in accordance to Section 15 of the Excise Duty Act 2015 can obtain excise stamps.

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The directive noted that no product manufactured after the deadline will be allowed in the market without stamps until January 31, 2020. "Any products manufactured or imported ... shall be seized and offenders prosecuted, on or after November 13, 2019 found not bearing an excise stamp," read the notice. But High Court Judge Justice James Makau gave an injunction against KRA until the case filed by Kenya Association of Manufacturers (KAM), importers, distributors and retailers of bottled water, soda and cosmetics is determined.

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Justice Makau will rule on the matter on November 21. Eleven firms had sued the National Treasury Cabinet Secretary, KRA and the Attorney General challenging the introduction of a new tax against the constitutional requirement. The first phase of the contract, the track-and-trace system covering tobacco, spirits and wine went live on October 1, 2013. In 2015, KRA extended coverage to include soft drinks, juices, bottled water and cosmetics.

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Kenya Association of Suppliers Chief Executive Officer Ismael Kibet yesterday said the honourable thing KRA should do is to wait until the court pronounced itself on the matter. "We hope and believe that as an agency of government, they will respect the court order and await for the final ruling of the case," Mr Kibet said. He said an estimated 30 million bottles of soft beverages and bottled water are produced daily. "The manufacturers will have to pass the cost to consumers for the Sh1.50 levy and an additional cost for the new lines because KRA refused to shoulder the burden,” Kibet said. In July last year, National Assembly Speaker Justin Muturi ruled that effecting the new system without regulations being tabled and approved by the House is null and void.

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"If something that has force of law is being implemented without passing through this House, then it is null and void,” said the Speaker.

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