Judgment summary
Mountain View General Contractors Limited, a Kenyan road construction company, appealed against additional VAT assessments for September 2015 and January 2017 and income tax assessments for the years ending 31 December 2014 and 31 December 2016 (para 6). The assessments arose from a desk audit and returns verification exercise conducted by the Kenya Revenue Authority covering the tax years 2014 to 2018 (paras 3, 61).
The Appellant lodged its Notice of Objection on 17 July 2023, several years after the September 2015 assessment was issued on 7 September 2017 (paras 3, 4, 63). The Respondent treated the objection as filed out of time under Section 51 of the Tax Procedures Act, 2015, and required the Appellant to submit supporting documentation to justify the delay by 24 July 2023 (paras 19, 20, 64).
The Appellant did not provide the requested documentation, and the Respondent rejected the objection on 25 July 2023 on the basis that it was late and unsupported (paras 21, 65). The Appellant then filed a Notice of Appeal on 5 August 2025 (para 5).
The Tribunal considered whether it had jurisdiction to entertain the appeal and whether the rejection of the objection was justified (para 59). It held that the Respondent's decision was made under Section 51(7) of the Tax Procedures Act, which is not an appealable decision, and that since no valid objection had been lodged, no appeal could arise (paras 71 to 73, 77). The Tribunal struck out the appeal for want of jurisdiction, leaving the remaining issue moot, and ordered each party to bear its own costs (paras 79 to 81).
Background
The Appellant is a private limited company incorporated in Kenya, engaged in road construction works (para 1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469, mandated under Sections 5(1) and 5(2) of that Act to collect and administer tax revenue (para 2).
The Respondent conducted a desk audit of the Appellant's VAT returns for the years 2014, 2015, 2016, 2017 and 2018 (para 3). On 7 September 2017, the Respondent issued an additional VAT assessment for the tax period of September 2015, assessing total sales of Kshs. 6,811,477.08 inclusive of VAT, with a VAT amount of Kshs. 939,514.08 (para 3).
The Appellant lodged a Notice of Objection on 17 July 2023, and the Respondent issued an Objection Rejection dated 25 July 2023 (para 4). Dissatisfied, the Appellant filed the appeal by Notice of Appeal on 5 August 2025 (para 5).
Core dispute
The Appellant's grounds of appeal included that the Respondent failed to account for legitimate VAT deductible inputs such as cement, fuel and other construction materials, in breach of Section 17 of the Value Added Tax Act, 2013, and without requesting supporting documentation before issuing the September 2015 assessment (para 6(a) to 6(c)).
The Appellant also contended that the Respondent's conduct violated Article 47 of the Constitution of Kenya, 2010, on fair administrative action, and that a January 2017 VAT assessment of Kshs. 4,067,424 exceeded the declared return of Kshs. 1,525,284 without explanation, despite supporting bank statements from Equity Bank, Kitui Branch, Account Number 0720261340286 (para 6(d) to 6(g)).
On income tax for the years ending 31 December 2016 and 31 December 2014, the Appellant argued that the Respondent assessed tax on gross sales without allowing for business expenses such as cost of sales, wages, transport, insurance and interest, contrary to standard accounting principles (para 6(h) to 6(j)).
The Respondent's position was that a returns verification exercise revealed undeclared sales, resulting in an additional VAT assessment of Kshs. 682,827.20 (para 18). The Respondent maintained that the Appellant's objection was filed approximately two years late without an application for extension of time under Section 51 of the Tax Procedures Act, 2015, and that the Appellant failed to provide requested documentation justifying the delay, leading to rejection of the objection (paras 19 to 21). The Respondent argued that the rejection notice was not an appealable decision under Section 52 of the Tax Procedures Act and that the Tribunal lacked jurisdiction (paras 27 to 30).
Court findings
The Tribunal identified two issues for determination: whether it had jurisdiction to entertain the appeal, and whether the Respondent's rejection of the Appellant's objection application was justified (para 59).
The Tribunal noted that Section 51(2) of the Tax Procedures Act requires a taxpayer to lodge an objection within thirty days of being notified of a tax decision, and found that the Appellant had delayed in objecting to the assessment (paras 67, 68). It observed that Section 51(6) allows a taxpayer to apply for an extension of time, and Section 51(7) sets out the grounds the Commissioner must consider, namely absence from Kenya, sickness or other reasonable cause, and that the taxpayer did not unreasonably delay (paras 69, 70).
The Tribunal found that the Appellant had applied for leave to object out of time but that the Respondent rejected the application for want of supporting documentation (para 71). It held that it does not have jurisdiction to review decisions made under Section 51(7) of the Tax Procedures Act, citing Commissioner of Investigations & Enforcement v Vyas t/a Rocon Enterprises (Income Tax Appeal E144 of 2021) [2022] KEHC 16027 (KLR), which held that such decisions are not appealable (para 72).
The Tribunal reasoned that because the Respondent did not allow the Appellant to file an objection out of time, no valid objection to the assessment existed, and consequently no appeal could arise and the Tribunal's jurisdiction could not be invoked (para 73). It relied on Section 51(1) of the Tax Procedures Act and the doctrine of exhaustion of remedies, and cited Samwel Kamau & Another v Kenya Commercial Bank & Others and Owners of Motor Vessel "Lilian S" v Caltex Oil (K) Limited [1989] eKLR for the principle that jurisdiction is everything, and without it a tribunal must down its tools (paras 75 to 78).
Outcome
The Tribunal found that it lacked jurisdiction to determine the appeal and held that the appeal was ripe for striking out (para 79). As a result, the remaining issue regarding the merits of the assessments and objection rejection was rendered moot (para 80).
The Tribunal ordered that the appeal be struck out for being incompetent, and that each party bear its own costs (paras 81, 82).
Major issues / areas of contention
- Whether the Tribunal had jurisdiction to entertain an appeal following rejection of a late-filed objection under the Tax Procedures Act.
- Whether the Respondent's decision to reject the Appellant's objection application, made under Section 51(7) of the Tax Procedures Act, constituted an appealable decision.
- Whether the Appellant had exhausted the statutory objection procedure under Section 51(1) of the Tax Procedures Act before approaching the Tribunal.
- Whether the underlying merits of the VAT and income tax assessments, including deductibility of input VAT and business expenses, could be considered given the jurisdictional finding.