Judgment summary
The Tribunal heard an appeal by Erastus Wandeto Mathenge, a person living with disability, against a decision of the Commissioner of Customs and Border Control declining him a tax exemption on an imported motor vehicle. The Respondent had refused the exemption on the basis that the source of the purchase funds suggested the vehicle was imported on behalf of a third party.
The Tribunal declined jurisdiction over the Appellant's claims founded on Article 47 of the Constitution and the Fair Administrative Action Act, finding these to be matters for the High Court. On the substantive tax question, the Tribunal found that the Appellant had proved his disability and satisfied the published requirements for exemption, and allowed the appeal.
Background
The Appellant is a resident individual and registered taxpayer who is a person living with disability, registered with the National Council for Persons with Disabilities (NCPWD) (para 1). The Respondent is appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 (para 2).
The Appellant imported a used motor vehicle, a Volvo XC90 of chassis number YV1LFL1MCL1613430, and applied for tax exemption on importation as a person living with disability, supported by a letter of recommendation from the NCPWD dated 17th March 2026 (para 3).
Following a physical interview on 26th March 2026, the Respondent declined the application by letter dated 23rd April 2026, citing the Appellant's failure to present a CR13 for Ceptcoin Global, six months' bank statements for Ceptcoin Global, and documentation relating to an alleged land sale to Mr. Edwin Maina Kimani (para 4).
The Appellant lodged an objection dated 5th May 2026, accompanied by a sworn affidavit explaining that he had raised funds through borrowing, savings and assistance from family, friends and well-wishers (para 5). The Respondent upheld its decision in a Review Decision dated 29th May 2026, noting that the Appellant received Kshs. 3,300,000.00 from Edwin Maina Kimani between 16th and 19th January 2026 and wired Kshs. 3,255,827.00 to Respect Motors Company Ltd on 20th January 2026, concluding this suggested abuse of exemption privileges through proxy importing (para 6). The Appellant then filed this appeal (para 7).
Core dispute
The Appeal was premised on the grounds that the Respondent misdirected itself by declining the exemption despite the Appellant having submitted all documents required by the Regulations, and by seeking to know the source of funds used to acquire the vehicle when the only requirement was provision of bank statements showing payment (para 8).
The Appellant argued he had satisfied every published requirement, including bank statements from Diamond Trust Bank showing payment for the vehicle, and that receiving financial assistance should not disqualify him provided the vehicle was invoiced, imported and registered in his name for his personal use (paras 10-12). He contended the decision rested on an unfounded assumption that he imported the vehicle on behalf of Mr. Edwin Maina Kimani without affording him a fair hearing, and denied any association with Ceptcoin Global (paras 13-16).
The Respondent maintained that exemptions must be strictly applied for and are exceptions to the general rule of taxation, anchoring its position on the Fifth Schedule, Part A, Item 8(a) to the EACCMA, the Second Schedule, Part A, Item 4 to the EDA, the First Schedule, Part I, Section A, Item 39 to the VAT Act, and Section 56(4) of the PWDA (paras 22-23, 28). It argued that the proximity of the receipt of Kshs. 3,300,000.00 from Mr. Kimani to the payment of Kshs. 3,255,827.00 to Respect Motors Company Ltd cast doubt on the Appellant's true ownership of the vehicle, and that the burden lay on the Appellant to strictly satisfy statutory requirements (paras 26-28).
The issues for determination were whether the Tribunal had jurisdiction over grievances founded on Article 47 of the Constitution and the FAAA, and whether the Appellant was entitled to exemption from import duty, excise duty and VAT on the imported vehicle (para 31).
Court findings
On jurisdiction, the Tribunal held that it is a creature of statute established under Section 3 of the Tax Appeals Tribunal Act, Cap 469A, with a mandate confined to appeals arising under the tax laws, and that enforcement of the Bill of Rights, including Article 47 and the FAAA, is the preserve of the High Court under Articles 22, 23 and 165(3)(b) of the Constitution and Section 7(1) of the FAAA. It accordingly declined jurisdiction over those limbs of the Appeal (paras 34-36).
On the substantive issue, the Tribunal found it undisputed that the Appellant is a person living with disability, registered with the NCPWD under Registration No. NCPWD/P/768405, with a Ministry of Health assessment confirming permanent hearing impairment, and that the Respondent did not contest this evidence (para 41).
The Tribunal found that neither the decline letter of 23rd April 2026 nor the Review Decision of 29th May 2026 rested on any deficiency in the Appellant's disability or the design of the vehicle, but was founded wholly on the source of the purchase funds and an inference of proxy importing (para 43). It held that neither the exempting provisions nor the Respondent's published checklist conditioned exemption on proof of the ultimate provenance of purchase funds, only on proof that payment was made by the applicant, which the Appellant's bank statements demonstrated (paras 44-45).
The Tribunal held that suspicion is not proof, and that a receipt of funds shortly before a purchase is as consistent with a loan or gift as with proxy ownership (para 46). It found the Appellant had discharged his burden under Section 30 of the TAT Act and Section 56(1) of the Tax Procedures Act, shifting the evidential burden to the Respondent, which tendered nothing beyond the bank entries and did not summon or seek clarification from Mr. Edwin Maina Kimani (paras 47-48). It further found no evidence that the decline was based on the vehicle's design (paras 49-50).
Outcome
The Tribunal held that the Appellant, having proved his disability, his registration with the NCPWD and satisfaction of the published requirements, and having demonstrated payment for and ownership of the motor vehicle, was entitled to exemption from import duty, excise duty and Value Added Tax on the imported motor vehicle (para 51).
The Appeal was allowed. The Respondent's Decision dated 29th May 2026 was set aside. The Respondent was ordered to process the Appellant's application for tax exemption on the Volvo XC90 of chassis number YV1LFL1MCL1613430 in accordance with the law within sixty (60) days of the Judgment. Each party was ordered to bear its own costs (para 52).
Major issues / areas of contention
- Whether the Tribunal has jurisdiction to determine grievances founded on Article 47 of the Constitution and the Fair Administrative Action Act.
- Whether the Appellant was entitled to exemption from import duty, excise duty and Value Added Tax on the imported motor vehicle.
- Whether the source of funds used to purchase the vehicle could defeat an otherwise valid exemption claim for a person living with disability.
- Whether the Respondent could demand documentation relating to a third party (Ceptcoin Global) and an alleged land sale with no demonstrated nexus to the Appellant.
- Where the burden of proof lay once the Appellant produced documentary and sworn evidence supporting his exemption claim.