Judgment summary
Kicks Engineering Sale & Services Limited appealed against additional VAT assessments confirmed by the Commissioner of Domestic Taxes for the periods 2020 to 2022. The assessments arose from variances between the Appellant's declared sales and sales derived from withholding VAT data.
The Tribunal found that the Appellant failed to provide documentary evidence or a reconciliation to support its objection, and had not controverted the Respondent's assertion that it had conceded to under-declaring sales during discussions. The Tribunal held that the Respondent's assessments retained the presumption of correctness, which the Appellant had not displaced, and that 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.
The Appeal was dismissed, the objection decision dated 7th November 2023 was upheld, and each party was ordered to bear its own costs.
Background
The Appellant is a Kenyan private limited company primarily engaged in the engineering and construction business (para 1).
The Respondent, a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469, reviewed the Appellant's tax returns and found variances between declared sales and sales derived from withholding VAT data for the periods covering the years 2020 to 2022 (para 3). The Respondent issued additional assessments by charging the differences between reported and expected sales based on the withholding data (para 3).
The Appellant objected to the additional assessments on 11th September 2023 via iTax, and the Respondent issued objection rejection notices dated 7th November 2023 (para 4). The Appellant stated it was unaware of the objection decision until it visited the Respondent's Thika Station in or about December 2025 and was informed of pending liabilities (paras 13 to 15).
The Appellant filed its Appeal vide a Notice of Appeal dated 16th December 2025 and filed on 17th December 2025, after obtaining leave from the Tribunal to file out of time (para 5).
Core dispute
The Appellant argued that the Respondent erred in law and fact by amending its self-assessed returns for the Year 2020, December 2020, December 2021 and December 2022 periods via additional assessments, and that these assessments were made in bad faith and arbitrarily brought to charge unreconciled variances which had already been declared (para 6).
The Appellant also contended it was not accorded input tax or expenses wholly and exclusively used in generating VAT output or business income as provided under Section 17 of the Value Added Tax Act and Section 15/16 of the Income Tax Act, and that the objection rejection notices contravened Section 51 and Section 56 of the Tax Procedures Act (para 6).
The Respondent maintained that the additional assessments were issued lawfully based on credible third-party withholding VAT data, that the Appellant had admitted to under-declaring sales during discussions, and that the Appellant's input VAT claim was time-barred under Section 17 of the VAT Act (paras 21 to 25). The Respondent relied on Section 56(1) of the Tax Procedures Act, placing the burden of proof on the taxpayer, and cited Mulheim v Commissioner of Taxation (2013) FCAFC in support (paras 27 to 28).
Court findings
The Tribunal framed the sole issue for determination as whether the Respondent was justified in confirming the additional VAT assessments (para 31).
The Tribunal found that the Appellant did not provide any documents in support of its claim, did not draw a reconciliation of the variances established by the Respondent, and did not controvert the Respondent's assertion that it had conceded to under-declaring sales during meetings (para 37).
The Tribunal held that the Respondent's assessments are presumptively correct until the taxpayer produces competent and relevant evidence to rebut that presumption, citing Kenya Revenue Authority v Man Diesel & Turbo SE, Kenya [2021] eKLR (para 38).
The Tribunal noted that Section 56(1) of the TPA and Section 30 of the TAT Act place the burden of proof squarely on the taxpayer to demonstrate that the Respondent's assessments are incorrect, erroneous or excessive, a burden to be discharged both at objection stage and at the Appeal stage (para 39).
The Tribunal observed that the Appellant was accorded an opportunity to support its claim but relied on mere averments without supporting documentation, and that the documents attached (the Objection Decision, Assessment Orders, Objection Acknowledgement receipts and Agency notice) could not aid the Appellant in proving the assessments were excessive or inaccurate (paras 40 to 41).
The Tribunal referenced Kenya Revenue Authority v Maluki Kitili Mwendwa and reaffirmed Kenya Revenue Authority v Man Diesel & Turbo SE, Kenya [2021] eKLR, concluding that the Appellant failed to demonstrate that the Commissioner's assessment or decision was incorrect (paras 41 to 42).
The Tribunal found that the Appellant did not discharge its burden under Section 56(1) of the TPA and Section 30 of the TAT Act, and that the presumption of correctness attaching to the Respondent's assessments remained undisturbed (para 43).
Outcome
The Tribunal found the Appeal devoid of merit and dismissed it (para 45(a)).
The Respondent's objection decision dated 7th November 2023 was upheld (para 45(b)).
Each party was ordered to bear its own costs (para 45(c)).
Major issues / areas of contention
- Whether the Respondent was justified in confirming the additional VAT assessments based on variances between declared sales and withholding VAT data.
- 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 to show the assessments were incorrect or excessive.
- Whether the Appellant was entitled to input tax or expense deductions under Section 17 of the VAT Act and Sections 15/16 of the Income Tax Act.
- Whether the Appellant's input VAT claim was time-barred under Section 17(2) of the VAT Act.
- Whether the objection rejection notices contravened Section 51 and Section 56 of the Tax Procedures Act.