Judgment summary
The Tribunal considered an appeal by Almasi Bottlers Limited against an objection decision of the Commissioner of Domestic Taxes confirming an additional excise duty assessment following a physical stock verification exercise at the Appellant's Nyeri and Eldoret premises for March 2025 (para 3).
The assessment notice was dated 7th May 2025, the Appellant objected on 17th June 2025, and the Respondent issued its objection decision on 15th August 2025 confirming the assessment (paras 3-5).
The parties had signed a Partial Consent dated 5th March 2026 pursuant to an ADR Agreement dated 6th February 2026, settling certain elements of the dispute, including the Appellant's concession to a total excise duty liability of Kshs. 4,683,506 in respect of certain items, while referring the excise tax of Kshs. 25,148,500 relating to 3,923,323 litres arising from inflationary adjustments to the Tribunal for full hearing and determination (paras 52-53).
The Tribunal held that the Respondent's additional assessment did not disregard or disobey the High Court's stay orders, since Legal Notice No. 217 of 2021 became valid and operational again on 26th August 2024, before the assessment was issued on 7th May 2025 (paras 56-60).
On limitation, the Tribunal held that assessments and document demands for periods beyond five years, namely for years before March 2020, were statute-barred and unlawful under Section 31(4)(b)(ii) and Section 23 of the Tax Procedures Act, as fraud, wilful neglect, or tax evasion had not been pleaded or proved (paras 61-69).
On the justification for the additional excise duty within the permissible period, the Tribunal found that the Appellant had not discharged its burden of proof under Section 30 of the Tax Appeals Tribunal Act and Section 56(1) of the Tax Procedures Act, as it failed to show that it had provided the Respondent with sufficient supporting documents, and documents attached before the Tribunal that were never tabled before the Commissioner were disregarded (paras 76-81).
Background
The Appellant, a limited liability company incorporated under the Companies Act, No. 17 of 2025, is an affiliate of the Coca-Cola Group of Companies and is engaged in the production and bottling of beverages (para 1).
The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act, responsible for assessing, collecting, and accounting for tax revenues (para 2).
A physical stock verification exercise conducted by the Respondent at the Appellant's Nyeri and Eldoret premises for March 2025 led to an assessment notice dated 7th May 2025 (para 3). The Appellant objected on 17th June 2025, and the Respondent confirmed the assessment via an objection decision dated 15th August 2025 (paras 4-5). The Appellant then lodged its Notice of Appeal dated 24th September 2024 (para 6).
Core dispute
The dispute concerned whether the Respondent's additional excise duty assessment disregarded status quo orders of the High Court staying implementation of Legal Notice No. 217 of 2021, whether the assessment was time-barred in relation to accidental breakages and DEFCO sales for 2018 and 2019, and whether the additional excise duty of Kshs. 25,148,500 relating to 3,923,323 litres arising from inflationary adjustment was justified (paras 7, 53-54).
The Appellant argued that status quo orders issued by the High Court from 19th November 2021 rendered Legal Notice No. 217 of 2021 inoperative, creating a legitimate expectation that prevented reassessment on that basis, and that it had manually adjusted its declared production volumes to reflect the correct duty payable under the old rates (paras 9-23, 30-33).
The Respondent contended that the substantive ruling of 26th August 2024 in Pubs, Entertainment and Restaurants Association of Kenya & 2 others v National Assembly & 5 others settled the legal position, validating Legal Notice No. 217 of 2021, and that the Appellant's manual adjustment of production volumes had created the variance in dispute rather than reflecting genuine compliance (paras 34-41). The Respondent further argued that the Appellant had not discharged its burden of proof under Section 56(1) of the Tax Procedures Act to show the assessment of Kshs. 25,148,500 (later stated as Kshs. 34,207,180 in the prayer) was incorrect (paras 42-50).
Court findings
The Tribunal found that Legal Notice No. 217 of 2021 was suspended between 19th November 2021 and 25th August 2024 by various decisions, but that this suspension was set aside on 26th August 2024 in Pubs, Entertainment and Restaurants Association of Kenya & 2 others v National Assembly & 5 others; Kenya Association of Manufacturers (Interested Party) [2024] KEHC 10396 (KLR) (paras 56-58).
Since the Respondent's assessment was issued on 7th May 2025, after the stay orders had been lifted, the Tribunal held that the Respondent did not disregard or disobey the High Court's stay orders (paras 59-60).
On limitation, the Tribunal held that under Section 31(4)(b)(ii) and Section 23 of the Tax Procedures Act, assessments and record demands can only go back five years, and computed that lawful assessment could only run backwards to March 2020. Assessments or records demanded for 2018 and 2019 were found to be unlawful and statute-barred, as fraud, wilful neglect, or tax evasion had not been pleaded or proved (paras 61-69).
On the justification for the additional excise duty within the permissible period, the Tribunal found that the Appellant had not provided evidence that it supplied the Respondent with sufficient documents to support its position, and that documents submitted to the Tribunal but never tabled before the Commissioner would be disregarded. The Tribunal held that the Appellant failed to discharge its burden of proof under Section 30 of the Tax Appeals Tribunal Act and Section 56(1) of the Tax Procedures Act (paras 76-81).
Outcome
The Tribunal held that the appeal was partially merited and partially allowed it (para 91).
The Respondent's Objection Decision dated 15th August 2025 was varied: assessments related to and dependent on documents or records for the years March 2020 going backwards were set aside, while assessments related to documents for the period from March 2020 to April 2025 were upheld (para 91(b)).
The Respondent was directed to issue a fresh objection decision aligned to these orders within 30 days from the date of the judgment, and each party was ordered to bear its own costs (para 91(c)-(d)).
Major issues / areas of contention
- Whether the Respondent's additional assessment disregarded or disobeyed stay orders and rulings issued by the High Court concerning Legal Notice No. 217 of 2021.
- Whether the Respondent's assessments, including those relating to accidental breakages and DEFCO sales for 2018 and 2019, were time-barred under Section 31(4) and Section 23 of the Tax Procedures Act.
- Whether the Respondent's additional excise duty assessment relating to the inflationary adjustment discrepancy of 3,923,323 litres was justified.
- Whether the Appellant discharged its burden of proof under Section 30 of the Tax Appeals Tribunal Act and Section 56(1) of the Tax Procedures Act.