Judgment summary
The Tribunal considered an appeal by Harley Berry Limited against a VAT assessment confirmed by the Commissioner of Domestic Taxes. The Appellant argued it had not been given enough time to source supporting documentation for input tax claims from its archives and suppliers.
The Respondent maintained that the Appellant had been given ample time but failed to produce invoices, supplier confirmations or bank statements to substantiate its claims, and that some suppliers had declared sales lower than the input VAT claimed against them.
The Tribunal found that the Appellant did not file any of the documents required under section 17(3) of the VAT Act and 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. The appeal was dismissed and the objection decision upheld, with each party bearing its own costs.
Background
Harley Berry Limited is a private limited liability company incorporated in Kenya and a registered taxpayer (para 1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, responsible for tax collection and enforcement (para 2).
The Respondent issued the Appellant with an additional VAT assessment of Kshs. 317,909,009.00 for the years 2022, 2023 and 2024 on 26th March 2025 (para 3). The Appellant lodged a notice of objection dated 27th May 2025 (para 4), and the Respondent issued an objection decision dated 25th July 2025 confirming the assessment in its entirety (para 5). Aggrieved, the Appellant lodged a notice of appeal dated 26th September 2025, filed on 28th September 2025 (para 6).
Core dispute
The Appellant contended that it was not given enough time to provide supporting documentation for input VAT claims, having faced delays in obtaining manual receipts from suppliers and in archive retrieval (para 7, 16). It submitted a tabulated analysis of inputs available on iTax and requested that an average of 40% of turnover be allowed given uncertainty over receiving manual inputs (paras 15, 17).
The Respondent contended that the Appellant claimed input VAT from suppliers who were nil filers, non-filers, or unregistered for VAT at the time of the claim, and that for some suppliers, including Coolextreme International Limited and Ndume Chainlinks Limited, the Appellant claimed more input VAT than the total sales those suppliers declared (paras 23, 24). The Respondent maintained that the Appellant failed to provide any supporting documents despite being given ample time, and that the burden of proof lay on the Appellant under Section 56 of the TPA and Section 30 of the TATA (paras 25, 34, 36).
The issue for determination was whether the Respondent erred in confirming the taxes assessed upon the Appellant (para 51).
Court findings
The Tribunal held that the taxpayer bears the burden of proof under Section 56(1) of the TPA and Section 30 of the TATA to demonstrate that a tax decision is incorrect (paras 57, 58), citing Commissioner of Domestic Taxes v Block International Limited [2024] KEHC 8889 (KLR) and Darwine Wholesalers Limited v Commissioner of Investigations and Enforcement (Income Tax Appeal E051 of 2021) [2023] KEHC 23537 (KLR) (paras 59, 60).
The Tribunal noted that to discharge this burden, a taxpayer must keep records as required under Section 23 of the TPA and Section 43 of the VAT Act (paras 61, 62). It further noted that Section 17(3) of the VATA specifies the documentation required to claim input tax, including original tax invoices, customs entries, credit notes and debit notes (para 63).
The Tribunal found that the Appellant only filed its notice of objection (without supporting documents) and the Respondent's objection decision, and did not file a single document listed under section 17(3) of the VATA (paras 64, 65). It held that this failed to demonstrate that input tax was claimable or that the Respondent erred in confirming the assessment (para 65), and that the Appellant had not complied with Section 13(2)(d) of the TATA requiring submission of documents necessary for the Tribunal to make a decision (para 66).
The Tribunal concluded that the Appellant failed to discharge its burden of proof and failed to demonstrate that the Respondent erred in confirming the assessment (paras 67, 68).
Outcome
The Tribunal held that the Appeal lacked merit and dismissed it. The objection decision dated 25th July 2025 was upheld. Each party was ordered to bear its own costs (para 69).
Major issues / areas of contention
- Whether the Respondent erred in confirming the additional VAT assessment of Kshs. 317,909,009.00 for 2022 to 2024.
- Whether the Appellant was given sufficient time to produce supporting documentation for its input VAT claims.
- 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 the input VAT claims met the documentary requirements under Section 17(3) of the VAT Act.
- Whether claims of input VAT from nil filers, non-filers and unregistered suppliers were valid.