KENYA – The Kenya Revenue Authority has accused the Eastleigh Mattresses (Eastmatt) supermarket of making false tax returns.

While responding to a suit filed by the retail chain seeking to stop the criminal prosecution of its directors for failing to produce employment records of its staff for inspection, KRA officer Justus Kiuvu said in court papers that Eastmatt had concealed its income to reduce its tax bill.

The retailer had moved to court seeking to stop the Labour secretary from calling for the repeat of an audit on its outlets, arguing that it had complied over the years whenever inspections are carried out.

However, Mr Kiuvu said the last inspection on April 13, revealed the tax under-statements and KRA even informed the retail chain, which instead objected to the tax demands.

He said the retailer acknowledged the validity of the taxes by lodging its objections.

“Our findings on the investigations revealed that the supermarket has been involved in un-declaration of chargeable income and making false returns which are offences under Section 110 of the Income Tax law,” he says.

He disclosed there were two pending criminal cases touching on the matter, while requesting that no reprieve orders should be issued against the commissioner of investigation, finance and enforcement, income tax commissioner and KRA also listed as the sued parties.

“There will be substantial loss to the government in terms of revenue if the sought for orders are issued to the directors of the Supermarket because this would lift the freezing of their accounts as well as allow them to benefit from their illegal activities,” added Mr Kiuvi.

Eastmatt had told court that an earlier inspection had been done on July 9 but the call for re-inspection was instigated by concerns raised by the Kenya Human Rights Commission and an undisclosed workers’ union.

Its directors claimed that the decision to have a repeat inspection that was meant to be conducted on August 5 based on the raised concerns was unlawful, harsh and unjustified, hence it needed to be stopped.

The retailer claimed it did not receive any communication from Labour officers concerning the repeat exercise and that if there were any there was a clear procedure of solving such labour-related complaints disputes.

Justice Weldon Korir directed the matter be heard on September 9 and 17.

August 24, 2015;