Judgment summary
The Tribunal considered an appeal against an Objection decision dated 5th August 2025 confirming VAT additional assessments issued for the periods January 2023, June 2023, August 2023, September 2023 and March 2024, totalling Kshs. 33,200,000 [3, 5, 43, 64].
The Tribunal framed the issue as whether the Respondent was justified in confirming the VAT additional assessments [62].
The Tribunal found that the assessments were neither unexplained nor arbitrary, that the input tax argument under Section 17 was misconceived, and that the Appellant failed to produce records to support its claim of dormancy [72, 73, 75]. It held that the Appellant did not discharge its burden of proof under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act, and dismissed the appeal [79, 80, 81].
Background
The Appellant is a private limited liability company [1]. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 Laws of Kenya [2].
The Respondent issued the Appellant with VAT additional assessments for the periods January 2023, June 2023, August 2023 and September 2023 on 7th May 2024, and for the period of March 2024 on 9th May 2024 [3]. The assessments totalled Kshs. 33,200,000, comprising principal tax [43].
The Respondent stated that it established the Appellant had made supplies to the County Government of Garissa and raised invoices in the relevant months, and that the Appellant failed to declare those supplies [42, 43].
The Appellant filed late objections against the assessments on 3rd June 2025, which the Respondent accepted on 17th June 2025 [4, 44]. The Respondent requested supporting documents on 17th June 2025 and again on 28th July 2025, but the Appellant did not provide them [45, 70].
The Respondent issued an Objection decision on 5th August 2025 confirming the assessments [5, 46]. The Appellant filed its Notice of Appeal dated 25th September 2025 on 26th September 2025, having been granted leave by the Tribunal to appeal out of time [6].
Core dispute
The Appellant disputed the assessments on three limbs: that they were excessive because the Appellant had been dormant for a period of time; that they were issued contrary to Section 17 of the VAT Act by disregarding input tax; and that they were arbitrary, issued without explanation, and in violation of the right to fair administrative action under Article 47 of the Constitution [7, 65].
The Respondent contended that the Appellant failed to declare supplies made to the County Government of Garissa, and that the Appellant failed to provide the requested documentation, thereby failing to discharge its burden of proof under Section 56(1) of the Tax Procedures Act [42, 48, 52].
Court findings
The Tribunal held that the appeal was against an Objection decision confirming tax assessments, so the burden lay on the Appellant to demonstrate that the assessments were excessive or incorrect under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act [66].
On the third limb, the Tribunal found that the basis of the assessment had been explained by the Respondent, namely undeclared supplies to the County Government of Garissa evidenced by withholding tax certificates, and that the Appellant's own pleadings showed it understood the basis. The Tribunal found the assessments were neither unexplained nor arbitrary [72].
On the second limb, the Tribunal found the Section 17 contention misconceived because the assessments arose from undeclared output VAT, not from any disallowance of input tax. It noted that Section 17(2) and (3) permit an input tax deduction only where the taxpayer holds the prescribed documentation and the supplier has declared the corresponding sales, and that the Appellant produced none of that documentation. This limb failed [73].
On the first limb, the Tribunal found that the Appellant produced only its Objection acknowledgment and the Objection decision, neither of which is a substantive transactional record. The Appellant did not produce the documents requested on 17th June 2025 and 28th July 2025, nor records required under Sections 17 and 43 of the VAT Act and Section 23 of the Tax Procedures Act [74, 75].
The Tribunal found that no evidential burden could shift to the Respondent in the absence of the prima facie material the Appellant claimed to have provided [76]. It held that mere averment does not discharge the statutory burden of proof, relying on CMC Aviation Ltd v Cruisair Ltd (1) [1978] KLR 103 [77, 78].
The Tribunal concluded that the Appellant failed to discharge the burden placed on it and that the Respondent was justified in confirming the additional assessments [79, 80].
Outcome
The Tribunal found the appeal unmeritorious and dismissed it. The Objection decision dated 5th August 2025 was upheld. Each party was ordered to bear its own costs [81].
Major issues / areas of contention
- Whether the Respondent was justified in confirming the VAT additional assessments.
- Whether the assessments were excessive, arbitrary and without basis.
- Whether the Respondent violated Section 17 of the VAT Act by disregarding input tax.
- Whether the Appellant discharged its burden of proof under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act.
- Whether there was a violation of Article 47 of the Constitution.