Judgment summary
The Appellant, a company selling alcoholic beverages, appealed against a Kenya Revenue Authority objection decision dated 14th July 2025 which confirmed an additional tax demand of Kshs 2,719,301 arising from alleged undervaluation of Free on Board (FOB) values on an imported consignment.
The Appellant argued the assessment amounted to double taxation because the same consignment had previously been audited and assessed based on quantity variances between the Integrated Customs Management System and the Excise Goods Management System.
The Tribunal found that the earlier quantity-based assessment and the later FOB value-based assessment concerned distinct factual bases, and dismissed the appeal, upholding the objection decision.
Background
The Appellant is a private limited company incorporated in Kenya, engaged in the sale of alcoholic beverages, some sourced locally and others imported (paras 1, 8).
The Respondent alleged that the Appellant declared lower FOB values in import entry forms than those reflected in the corresponding commercial invoices, and computed additional taxes arising from the alleged undervaluation, issuing a tax demand of Kshs 2,719,301 (para 3).
The Appellant lodged a Notice of Objection on 24th June 2025. The Respondent issued an Objection decision dated 14th July 2025 confirming the assessment (para 4).
Dissatisfied, the Appellant filed a Notice of Appeal dated 24th August 2025 and filed on 25th August 2025 (para 5), followed by a Memorandum of Appeal dated 11th September 2025 and filed on 12th September 2025 (para 6).
Core dispute
The Appellant contended that the additional assessment issued by the Respondent duplicated an earlier assessment on the same consignment, which had been based on variances between litres recorded in the Excise Goods Management System and customs data, thereby amounting to double taxation (paras 10-13, 18-19).
The Appellant argued that revised invoices from the supplier accurately reflected the values declared at importation, and that no revenue loss or offence had occurred (paras 14-15).
The Respondent maintained that the current assessment arose from new information concerning manipulation and undervaluation of FOB values, a different basis from the earlier quantity-based assessment, and that it lawfully raised additional duties under Section 31 of the Tax Procedures Act and Sections 135, 235 and 236 of the EACCMA (paras 26-29, 36-39).
The Respondent also raised a preliminary objection that the appeal was filed out of time and without leave, rendering it procedurally defective (paras 35, 44-45).
Court findings
The Tribunal first considered the Respondent's preliminary objection on timeliness, and found, applying Section 230(2) of the EACCMA which requires an appeal to be lodged within 45 days, that the appeal lodged on 25th August 2025 against a decision issued on 14th July 2025 was lodged within 31 days, well within the statutory timeline (paras 47-48).
On the substantive issue, the Tribunal found that the earlier assessment based on quantity discrepancies between ICMS and EGMS, and the subsequent assessment based on undervaluation of FOB values, addressed distinct aspects of customs compliance arising from different factual circumstances and different tax bases, even though both concerned the same consignment (paras 53-55).
The Tribunal noted that the Respondent identified two Import Declaration Forms bearing identical FOB values of USD 46,682.46, while the import entry used to clear the consignment reflected an FOB value of USD 10,091.46 (paras 54, 62).
The Tribunal held that Section 31 of the Tax Procedures Act and Sections 135, 235 and 236 of the EACCMA empowered the Respondent to issue additional assessments and recover short-levied taxes where new information came to light, and found that the Appellant failed to demonstrate that the impugned assessment duplicated an earlier tax liability (paras 56-58).
On burden of proof, the Tribunal held that under Section 30 of the Tax Appeals Tribunal Act and Section 56(1) of the Tax Procedures Act, the burden lay on the Appellant to show the assessment was excessive or incorrect. The Appellant did not produce the alleged revised invoices, supplier correspondence, proof of amendments to transaction values, or the earlier assessments and objection decisions to substantiate its double taxation claim (paras 59-62, 65).
The Tribunal concluded that the Appellant merely asserted its claims without sufficient documentary evidence, and therefore failed to discharge its statutory burden of proof (paras 65-66).
Outcome
The Tribunal held that the Appeal lacked merit and dismissed it. The Objection Decision dated 14th July 2025 was upheld. Each party was ordered to bear its own costs (para 67).
Major issues / areas of contention
- Whether the additional customs duties assessed on undervalued FOB values were justified or amounted to double taxation of the same consignment
- Whether the Appellant discharged its statutory burden of proof to show the assessment was excessive or incorrect
- Whether the appeal was validly and timeously lodged under Section 230(2) of the EACCMA, raised as a preliminary objection by the Respondent