On November 20, 2018, Mastermind Tobacco and the Kenya Revenue Authority (KRA) told the High Court that they were still negotiating a possible settlement of a Sh1.99 billion tax dispute, with both sides asking for more time to finalise a consent.
The cigarette maker, owned by business tycoon Wilfred Murungi, had gone to court after KRA sent auctioneers to recover the alleged arrears. Justice Pauline Nyamweya was informed that progress had been made in the talks, and the matter was fixed for mention on December 5, 2018.
Lawyer Macharia, appearing for Mastermind, told the court: “The negotiations are ongoing and we request to come back for a mention on December 5, 2018 to record a consent or report on progress and extension of the orders,” a position KRA’s counsel did not oppose.
The judge extended orders that barred KRA from seizing or auctioning the company’s assets while the discussions continued.
Mastermind, which manufactures the Supermatch brand of cigarettes, said it feared its business could be permanently destroyed if the auction process was allowed to proceed. The company said Leakey’s Auctioneers had already moved in and given it 10 days to clear the arrears or have its property sold by public auction.
In its court papers, Mastermind said it had challenged the demand at the Tax Tribunal and was seeking to suspend the tax claim pending the outcome of that appeal. The firm also argued that the tribunal could not properly hear the matter because it lacked quorum, saying only the chairman remained in office after the terms of other members expired in March.
Mastermind further accused KRA of denying it a chance to be heard. It said the demand notice was received on August 31, 2018, and that the attachment of its property was commissioned three weeks later after KRA had issued a notice of distress on September 19.
The dispute centres on KRA’s effort to recover the alleged tax arrears from the company, while Mastermind continues to press for court protection as the negotiations and tribunal appeal run in parallel.
