It is a major win for the Kenya Revenue Authority (KRA) after the High Court allowed it to dispose of 73 bags of uncustomized milk powder known as Hilwa.
This is after Justice Hezbon Nyaga set aside Molo Chief Magistrate's B. Kipyegon decision that had compelled the government to return the confiscated uncustomized powder milk worth over Ksh100 million to businessman Mallon Asoka Hussein.
Hussein had been nabbed by a multi-agency team while in possession of the uncustomed milk powder and charged on July 18, 2023, for violating the provisions of the East African Community Customs Management Act, 2004.
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On September 20, 2023, the magistrate court directed the release of the 73 bags of uncustomized skimmed milk powder to the owner Hussein after changing his plea and pleading guilty to the offence of being in possession offence of uncustomized goods and was convicted and sentenced to six months imprisonment or pay a fine of Ksh50,000.
Aggrieved by the decision, the taxman sought a review of the orders at the High Court on the directive to have the milk released back to Hussein.
In the revision application, KRA cited the unlawfulness and impropriety of the orders as they had the effect of releasing uncustomed goods to the offender on their own admission to non-payment of taxes.
KRA further highlighted the health risk posed to Kenyans following the conditions imposed by KEBS on the disposal of the milk powder in a controlled environment, a condition which was incapable of being enforced.
"That goods, being perishable, their nature is likely to deteriorate, hence pose danger to the public," KRA informed Justice Nyaga.
The taxman had also argued that it would be unconscionable to allow Hussein to benefit from his own crime by having the condemned goods released to him without payment of the requisite duties thus giving him an unfair market advantage over tax-compliant payers.
While overturning the magistrate court's decision, the judge concurred with KRA that upon conviction, the Trial Court ought to have ordered that the uncustomed milk powder be forfeited and or released to KRA for disposal as per the law.
"Hussein having been convicted, then provisions of Section 215 of the act were to be applied. It was improper for the trial court to then order that the"thing" being the subject of the case, the skimmed milk powder be returned to the owner. This was a thing for which no taxes in the form of customs duty had been paid," the judge noted.
Justice Nyaga faulted the trial court for ordering the milk to be released back to the owner without the consideration of payment of any duty thus making Hussein a beneficiary of his crime.
"I am therefore satisfied that the order of the trial court issued on September 26, 2023, was improper and l hereby set it aside. It is substituted with an order that the good in question shall be released to KRA for appropriate disposal under the law," the judge ordered.
After the decision, the commissioner of tax thanked the Judiciary for helping KRA and together with other government agencies in their work to curb illicit trade in the country.
KRA encouraged taxpayers to pay taxes for fair market competition and avoid such punitive measures as forfeiture of goods by the commissioner.
"KRA remains committed to building taxpayers' trust through facilitation to foster compliance and make the taxpaying experience better," the commissioner of tax stated.
