Judgment summary
The Tribunal heard an appeal by Alihass Hardware Limited against an objection decision of the Commissioner of Micro & Small Tax Payers dated 29th May 2025, which confirmed assessments totalling Kshs. 42,003,682.67 for VAT and Corporation Tax, penalties and interest [4].
The appellant's memorandum of appeal and statement of facts were not on record [6, 23]. The Tribunal framed two issues, namely whether the appeal was valid and whether the Respondent erred in confirming the assessment [22].
The Tribunal found that, in the absence of a memorandum of appeal and statement of facts, there were no pleadings and the appeal was not properly constituted [29, 32]. It struck out the appeal and did not determine the second issue, which it found had been rendered moot [33, 34].
Background
The appellant is a company domiciled in Meru town, dealing in hardware, paints and glass in specialised stores [1].
The respondent conducted a compliance check on the status of the appellant's returns, covering the period 2021 to 2023, to check the correctness of the income declared for Value Added Tax (VAT) and Income Tax, and to verify withholding income tax (WHIT) and Pay as You Earn (PAYE) [3]. On 22nd May 2024, the respondent issued the appellant with a pre-assessment notice for the period 2021 to 2023 [3].
The appellant objected against the assessments, and the respondent issued an objection decision dated 29th May 2025 disallowing the objection and confirming the assessments amounting to Kshs. 13,945,437.22 for VAT and Kshs. 28,058,245.45 for Corporation Tax, totalling Kshs. 42,003,682.67, being principal tax, penalties and interests [4].
The appellant filed the appeal by a notice of appeal dated 8th July 2025 [5]. The memorandum of appeal and statement of facts were not on record [6].
Core dispute
The respondent stated that it noticed a variance between VAT sales and Income Tax turnover, in addition to over claimed salary expenses and unbanked cash, and that these variances were added back and charged tax [8].
The respondent averred that the assessment was issued on a non-agreed basis, that the appellant objected online but failed to provide grounds in line with Section 51(3) of the TPA, and that despite requests dated 28th April 2025 and a reminder dated 12th May 2025 to validate the objection and supply supporting documents, the appellant failed to respond, so the objection was considered invalidly lodged [10, 11, 12, 13].
Because the memorandum of appeal and statement of facts were not on record, the central question before the Tribunal became whether the appeal was valid [23].
Court findings
The Tribunal set out Section 13(2) of the TATA, which requires an appellant to submit, within fourteen days from the date of filing the notice of appeal, a memorandum of appeal, statements of facts, the appealable decision and such other documents as may be necessary [24]. It also cited Rule 3(2) of the Tax Appeals Tribunal (Procedure) Rules, 2015, which requires a memorandum of appeal, statement of facts and the tax decision [25].
The Tribunal referred to Genpely General Contractors Limited v Kenya Revenue Authority [2023] KETAT 880 (KLR) and Ngai v Commissioner of Domestic Taxes [2023] KETAT 542 (KLR), in which it struck out appeals where the appellant failed to file a statement of facts [26]. It also cited Speaker of National Assembly v Njenga Karume [2008] 1 KLR 425 on strict compliance with prescribed procedure [27].
The Tribunal held that the memorandum of appeal defines the scope of the appeal and anchors all other pleadings, and that without it the Tribunal is left without the essential document identifying what decision is challenged, on what grounds, and what relief is sought [28]. It found that in the absence of a memorandum of appeal and statement of facts there were no pleadings and the appeal was not properly constituted [29].
The Tribunal stated that its jurisdiction to determine an appeal on the merits is contingent upon the appeal being validly and properly constituted, and that failure to file a memorandum of appeal rendered the proceedings defective [30]. It found that the appellant failed to act diligently, rendering the appeal incompetent and worthy to be struck out [31, 32]. It did not consider the second issue, which had been rendered moot [33].
Outcome
The Tribunal found that the appeal was incompetent. It ordered that the appeal be struck out and that each party bear its own cost [34]. It so ordered [35].
Major issues / areas of contention
- Whether the appeal was valid.
- Whether the Respondent erred in confirming the assessment.