Dominion Petroleum Vs KRA

The High Court made a decision on the case pitting KRA and Dominion Petroleum on 19/11/2021 .Among the issues in question was KRA's assessment of reverse VAT amounting to KES 714m relating to imported services.

Dominion had been exempted from VAT , according to a letter written by the treasury to KRA. However the Ministry of Energy was required to write directly to KRA in respect of any specific procurement of services to the oil exploration firms for the processing of the VAT exemption on services.

The Ministry of energy failed to gazette the exemption as required. As such KRA assessed Dominion on the basis that it did not obtain exemption.

KRA argued that in as much Dominion qualified for VAT exemption, the same was only applicable and conditional upon notification by the Ministry of Energy. Every time a listed firm wanted to procure a service that qualified, it was mandated to run it by the Ministry of Energy so that it could alert KRA to process the VAT exemption for that service.

In its ruling the High Court observed that;

That non-performance of administrative procedures by the various government agencies should not be used to deny Dominion the exemption that was granted and communicated to it in writing.

The letter dated 24th May 2011 by the Treasury also created a legitimate expectation on the part of Dominion that VAT on imported services would be exempt

KRA assessment was therefore unfair

As such Dominion won the issue at hand.

#taxes