Judgment summary
The Tribunal considered an appeal by Haque & Sons Investment Limited against additional VAT and Income Tax assessments raised by the Commissioner of Legal Services & Board Co-ordination.
The Appellant, a company involved in the import and sale of motor vehicles, admitted that it had not claimed all purchases relevant to the cost of the vehicles sold, but stated that supporting documents were available and could be provided.
The Respondent maintained that it had made a best judgment assessment because the Appellant had not provided purchase documents, relying instead on the Appellant's self-declarations, which showed unexplained variances.
The Tribunal found that the Appellant did not attach any documentary evidence to the Tribunal to support its averments and had therefore failed to discharge the statutory burden of proof under section 56(1) of the TPA and section 30 of the TATA. The appeal was dismissed and the objection decision upheld.
Background
The Appellant is a company registered in Kenya under the Companies Act and registered for tax purposes (para 1).
The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469, with the Kenya Revenue Authority mandated under Sections 5(1) and 5(2) of that Act to collect and administer tax revenue (para 2).
On 1st September 2025, the Respondent issued the Appellant with VAT and Income Tax additional assessments totalling Kshs. 325,620,292.00 (para 3).
The Appellant objected to the assessment by a notice of objection dated 30th September 2025 (para 4).
The Respondent issued its Objection Decision on 26th November 2025, confirming the assessment (para 5).
The Appellant, aggrieved by the decision, lodged the appeal at the Tribunal on 10th December 2025 (para 6).
Core dispute
The Appellant raised a single ground of appeal, namely that all supporting documents proving its grounds were available (para 7). It contended that it had produced supporting documents but had not fully claimed all purchases when selling the motor vehicle units, and that it was ready to provide purchase documents to allow determination of the actual cost of the vehicles (paras 9 to 12).
The Respondent averred that motor vehicle customs value declaration is based on the Current Retail Selling Prices (CRSP) valuation method, and that customs values together with import taxes and levies could not represent the actual cost of the motor vehicles. It stated that the Appellant failed to provide purchase documents to help establish the actual cost (para 16).
The Respondent asserted that, pursuant to Sections 24(2), 29 and 31(1)(b) of the TPA, it was entitled to assess to the best of its judgment where the Appellant failed to provide complete or reliable records (para 17), and that the Appellant had not complied with Section 51(3) of the TPA requiring submission of documents supporting an objection (para 18).
The issue for the Tribunal's determination was whether the Respondent erred in confirming the assessment (para 27).
Court findings
The Tribunal noted that the Appellant admitted to having under-claimed purchases and had not provided purchase documents to enable ascertainment of the actual cost of the motor vehicles, while the Respondent stated it was constrained to rely on the Appellant's self-declarations and its best judgment (paras 30 to 31).
The Tribunal referred to Section 50(1)(a) of the TPA, which provides a rebuttable presumption that the Respondent's decision is conclusive and correct, placing the burden on the Appellant to prove the decision is incorrect (para 32).
The Tribunal cited Section 56(1) of the TPA, which places the burden of proof on the taxpayer, and Section 23(1)(b) of the TPA, Section 54A(1) of the ITA and Sections 43(1) and 43(2) of the VATA, which impose record-keeping obligations on taxpayers (paras 34 to 38).
The Tribunal referred to Saniken (K) Limited v Commissioner of Investigations and Enforcement [2023] KEHC 23536 (KLR) on the obligation to keep records for five years and produce them when required (para 39).
The Tribunal also relied on Section 51(3)(c) of the TPA and Section 13(2)(d) of the TATA regarding the taxpayer's duty to submit relevant documents when objecting and appealing, and Section 30 of the TATA on the appellant's burden of proving that an assessment is excessive or a tax decision should have been made differently (paras 40 to 42).
The Tribunal cited Kenya Revenue Authority v Maluki Kitili Mwendwa [2021] eKLR and Singapore Motors Limited v Commissioner of Domestic Taxes (Income Tax Appeal E039 of 2021) [2024] KEHC 2443 (KLR) confirming that the burden of proof rests on the taxpayer (paras 43 to 44).
The Tribunal found that the Appellant did not attach a single piece of evidence to support its averments, and cited Alfred Kioko Muteti v Timothy Miheso & Another (2015) eKLR for the principle that a party can only discharge its burden upon adducing evidence, and that merely making pleadings is not enough (para 45). It also cited Tumaini Distributors [K] Ltd v Commissioner of Domestic Taxes [2020] eKLR and Otieno Odongo & Partners v Commissioner of Domestic Taxes TAT No. 290 of 2019 (para 46).
The Tribunal concluded that the Appellant failed to discharge its burden of proof to demonstrate that the Respondent erred in confirming the assessments, and that the Appellant did not make sufficient effort as would be expected of a diligent taxpayer (paras 47 to 48).
Outcome
The Tribunal held that the appeal was not meritorious.
The appeal was dismissed.
The Respondent's Objection Decision was upheld.
Each party was ordered to bear its own costs (para 49).
Major issues / areas of contention
- Whether the Respondent erred in confirming the additional VAT and Income Tax assessment (para 27).