Judgment summary
The Tax Appeal Tribunal considered an appeal by Nuel Holding Ltd against the Commissioner of Legal Services' Objection Decision confirming an additional VAT assessment.
The Tribunal examined documentary evidence including a purchase order, a payment voucher and an invoice, and applied the statutory time of supply rules under the VAT Act. It found that the Appellant had not discharged its burden of proof to show that the assessed transaction had already been taxed, and dismissed the appeal.
Background
The Appellant is a limited liability company incorporated in Kenya and registered as a taxpayer (paragraph 1). The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act, mandated with collection and administration of tax revenue (paragraph 2).
The Respondent issued the Appellant with an assessment for VAT on 14th March 2024 (paragraph 3). The Appellant filed its objection on iTax on 30th July 2025 (paragraph 4). On 8th October 2025, the Respondent confirmed the additional VAT assessments and issued its Objection Decision (paragraph 5). The Appellant, aggrieved by this decision, lodged the appeal (paragraph 6).
Core dispute
In its Memorandum of Appeal dated 7th November 2025, the Appellant argued that the Respondent erred in law by not considering that the return was filed in April 2023, and erred in fact by failing to acknowledge a medical report supporting the late filing of returns (paragraph 7). The Appellant contended the demand for VAT and income tax had no basis in fact or law and that the assessment was arbitrary and unjust (paragraph 9). It did not file submissions in support of its appeal (paragraph 10).
The Respondent maintained that documents provided by the Appellant, namely LPO No. 18654 dated 28/06/2021 issued by the Office of the President, and invoice No. 52 issued on 18/11/2022, confirmed the transaction was payment for a supply, and that there were no transactions recorded in November 2022 apart from this (paragraph 13). The Respondent relied on Section 12 of the VAT Act on the declaration timing, Section 51 of the Tax Procedures Act on issuing objection decisions, Section 5 of the VAT Act on charging VAT, Section 56 of the Tax Procedures Act on the burden of proof, Section 29 of the TPA on its assessment, and Section 23 of the TPA on document provision (paragraph 15).
The issue for determination was whether the Respondent's Objection Decision was justified (paragraph 18). The Appellant argued it had no transactions in November 2022 so no VAT should have arisen (paragraph 19), while the Respondent pointed to a payment voucher dated 15th November 2022 as the basis for charging VAT (paragraph 20).
Court findings
The Tribunal found that the documents on record confirmed no supply or service was offered by the Appellant in November 2022, that the last transaction was a purchase order dated 23rd September 2022 for Kshs 52,040,000, and that a payment voucher for that same amount was processed and approved for payment on 15th November 2022 (paragraph 21).
The Tribunal set out the VAT Act provisions on time of supply, being the earlier of the date goods are delivered or services performed, the date a supervisory certificate is issued, the date an invoice is issued, or the date payment is received in whole or in part (paragraph 22). It held that VAT can therefore be charged when payment for a supply is received (paragraph 23).
The Tribunal noted that the burden of proof lies with the Appellant under Section 12 of the TAT Act (paragraph 24), and held that it was incumbent on the Appellant to prove it had already paid VAT on Purchase Order No. 24331 dated 23rd September 2022 for Kshs 52,040,000, to avoid double taxation (paragraph 25). The Appellant's failure to discharge this burden meant the Respondent acted within its legal mandate to assess and collect VAT on the supply at the time of receipt of payment in November 2022, as evidenced by the payment voucher dated 15th November 2022 (paragraph 26).
The Tribunal referred to Mugo v Commissioner of Domestic Taxes (TAT E918 of 2024) KETAT 374 (KLR), which held that failure to adduce positive documents to demonstrate that the Respondent's decision was incorrect meant the Respondent's decision was justified, and the Appellant failed to discharge its burden of proof contrary to Section 30 of the Tax Appeals Tribunal Act, 2013 and Section 56(1) of the Tax Procedures Act (paragraph 27). The Tribunal held that the Respondent was justified in disallowing the Appellant's objection as set out in its Objection Decision dated 8th October 2025 (paragraph 28).
Outcome
The Tribunal held that the Appeal lacked merit and dismissed it. The Respondent's Objection Decision dated 8th October 2025 was upheld. Each party was ordered to bear its own costs (paragraph 29).
Major issues / areas of contention
- Whether the Respondent's Objection Decision confirming the additional VAT assessment was justified.
- Whether VAT was properly chargeable on a transaction where payment was received in November 2022, applying the statutory time of supply rules under the VAT Act.
- Whether the Appellant discharged its burden of proof under Section 12 of the TAT Act and Section 56 of the Tax Procedures Act to show the tax decision was incorrect.