Section 32

Erroneous refund of tax (TPA 2nd Sch Para 14)

(1) Where any tax has been refunded in error, the person to whom the refund has been erroneously made shall, on demand by the Commissioner, pay the amount erroneously refunded. 

(2) Where a demand has been made for any amount of tax under subsection (1), that amount shall be deemed to be due from the person liable to pay the tax on the date upon which the demand is served upon him and if payment is not made within thirty days of the date of service, an interest of two percent per month or part thereof of such unpaid amount shall forthwith be due and payable: Provided that the interest chargeable under this subsection shall not exceed one hundred percent of the tax originally due. 

(3) The Commissioner may, upon application by a person from whom any interest is due under subsection (2), grant remission of the whole or part of the interest due, if satisfied that such remission is justified, and shall make quarterly reports to the Cabinet Secretary of all the remissions granted
under this subsection: Provided that where the amount of interest exceeds one million five hundred thousand shillings, remission shall be subject to the prior written approval of the Cabinet Secretary. 

(4) Upon receipt of an application under subsection (3), the Commissioner shall, where the applicant has paid the principal tax in full, suspend the charging of the interest pending the determination of the application. 

(5) Where remission under subsection (3) is not granted, or is granted in respect of only part of the interest, the balance of the interest shall become due and payable within ninety days of the determination of the application. 

(6) Where the balance of the interest payable under subsection (5) remains unpaid after the expiry of the specified period, a surcharge at the rate of two percent per month or part thereof shall forthwith be due and payable.

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