Judgment summary
The Appellant, Chairmania Events Limited, is a company involved in events organisation and support. The Respondent investigated the Appellant's affairs for 2024 and issued a VAT assessment of Kshs. 15,755,537 on 3rd July 2025, arising from disallowed input VAT claimed on supplies from Terrex Traders Limited.
The Appellant objected and, after procedural steps, filed a valid objection on 19th August 2025. The Respondent issued an objection decision on 16th October 2025 confirming the assessment. The Appellant appealed, arguing the objection decision was time-barred and that it had properly supported its input VAT claim with tax invoices, ETR receipts, bank statements, payment vouchers and supplier ledgers.
The Respondent contended that Terrex Traders Limited was identified as a missing trader, that invoices and ETR receipts could not be authenticated or verified on iTax, and that bank statements showed no payments to the supplier, so no underlying taxable supply was proven.
The Tribunal found the objection decision was issued on the 44th day from the valid objection date of 19th August 2025, within the 60-day statutory period under Section 51(11) of the Tax Procedures Act, so the time-bar argument failed.
On the input VAT issue, the Tribunal held that the Appellant had met the statutory conditions under Section 17 of the VAT Act by providing the required documentation, and the burden then shifted to the Respondent, which failed to discharge it. The Tribunal held that Section 17 does not require a taxpayer to verify whether its suppliers filed their own returns, and that the Respondent could not rely on third-party data without further investigation or corroboration.
Background
The Appellant is a limited liability company incorporated in Kenya engaged in events organisation and support (para 1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469, with functions under Sections 5(1) and 5(2) of that Act (para 2).
The Respondent investigated the Appellant's affairs for the year 2024 and issued a VAT assessment of Kshs. 15,755,537 on 3rd July 2025 (para 3). The Appellant lodged an objection on 8th August 2025; on 13th August 2025 the Respondent declared it invalid and allowed a valid objection, which the Appellant filed on 19th August 2025 (para 4). The Respondent issued an objection decision dated 16th October 2025 confirming the assessment (para 5). The Appellant filed a Notice of Appeal at the Tribunal on 14th November 2025 (para 6).
Core dispute
The dispute concerned whether the Respondent's objection decision was issued outside the 60-day statutory timeline under Section 51(11) of the Tax Procedures Act, and whether the Respondent erred in disallowing the Appellant's input VAT claims on supplies from Terrex Traders Limited and raising additional VAT assessments (para 59).
The Appellant argued it had complied with Section 17 of the VAT Act and Paragraph 9 of the VAT (Electronic Tax Invoices) Regulations, 2020, by providing valid tax invoices, ETR receipts, proof of payment, supplier ledgers, payment vouchers and other documentation, and that it should not be liable for third parties' failure to report their own transactions.
The Respondent argued Terrex Traders Limited was identified during investigation as a missing trader, that the invoices and ETR receipts could not be authenticated or verified on iTax, and that bank statements showed no payments to the supplier, so no underlying taxable supply had occurred, meaning the Appellant had not discharged its burden of proof under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act.
Court findings
On the time-bar issue, the Tribunal found that the Appellant's valid notice of objection was lodged on 19th August 2025, not 12th August 2025. Counting time under Section 77 of the TPA, the objection decision issued on 16th October 2025 was issued on the 44th day, within the 60-day statutory timeline under Section 51(11) of the TPA (para 64). The Tribunal therefore held that the Appellant's contention that the decision was time-barred and deemed allowed by operation of law was unfounded (para 65).
On the input VAT issue, the Tribunal set out the conditions under Section 17(1), (2) and (3) of the VAT Act for deducting input VAT, including that the input tax was incurred on a taxable supply, that it was deducted by a registered person on taxable supplies made to him, that the supplier declared the sales invoice in a return, that the deduction is claimed within six months, and that the taxpayer holds the relevant documentation (para 74). The Tribunal found the Appellant complied with these requirements and that the Respondent acknowledged the Appellant had satisfied the statutory requirements (para 75).
The Tribunal held that the burden of proof in tax matters is not stationary but swings between the taxpayer and the Commissioner, and that once the Appellant produced competent and relevant evidence, the burden shifted to the Respondent, which failed to discharge it by investigating the documents to confirm or dismantle their authenticity (paras 76-77).
The Tribunal found that Section 17 of the VAT Act does not place a burden on the Appellant to confirm whether its suppliers filed their own returns, and it was improper for the Respondent to impose such a requirement as a condition for allowing the input tax claim (para 79). The Tribunal held that information from third parties should not be applied in a carte blanche manner to disenfranchise a taxpayer without further investigation or corroboration (para 81). The Tribunal concluded that the Respondent erred in disallowing the Appellant's input VAT claims and raising additional VAT assessments (para 85).
Outcome
The Tribunal found the Appeal merited and allowed it. The Respondent's objection decision dated 16th October 2025 was set aside. Each party was ordered to bear its own costs (para 86).
Major issues / areas of contention
- Whether the Respondent's objection decision dated 16th October 2025 was issued outside the 60-day statutory timeline under Section 51(11) of the Tax Procedures Act.
- Whether the Respondent erred by rejecting the Appellant's input VAT claims on supplies from Terrex Traders Limited and raising additional VAT assessments.
- Whether the burden of proof under Section 17 of the VAT Act required the Appellant to verify or confirm its supplier's own tax filings.
- Whether the Respondent could rely on third-party data, without further investigation or corroboration, to disallow the Appellant's input VAT claim.