Judgment summary
The Appellant, a manufacturer of industrial gases, medical glasses and plastic products, was issued additional Income Tax and VAT assessments amounting to Kshs. 52,044,107 for the period 2020 to 2023, dated 28th May 2025 (paragraph 3). The Appellant applied on 30th September 2025 for an extension of time to lodge a notice of objection, which the Respondent rejected on 14th October 2025 (paragraphs 4 and 5).
The Appellant appealed to the Tribunal, arguing that the assessments were based on excessive estimated income, were issued before it had filed its returns, ignored cost of sales and operating expenses, and that the company was in fact operating at a loss (paragraph 7).
The Respondent maintained that the assessments arose from variances between VAT and Income Tax declarations and undeclared income, and that the objection was invalid for being lodged outside the 30-day statutory period and for lack of supporting documentation (paragraphs 29 to 44).
The Tribunal first considered whether it had jurisdiction, then whether the Respondent was justified in declining the extension of time. It found that it had jurisdiction because the decision effectively invalidated the notice of objection, but held that the Respondent was justified in declining the extension of time because the Appellant had not shown reasonable cause or a causal link between its stated reason and the delay, nor had it supplied supporting documentation (paragraphs 57 to 70). The appeal was accordingly struck out.
Background
The Appellant is a company incorporated in Kenya whose principal business is the manufacture and sale of industrial gases, medical glasses and plastic products (paragraph 1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469, mandated under Section 5 of that Act to assess, collect and account for revenue (paragraph 2).
On 28th May 2025, the Respondent issued additional Income Tax and VAT assessments totalling Kshs. 52,044,107 for the period 2020 to 2023 (paragraph 3). On 30th September 2025, the Appellant applied for an extension of time to lodge a notice of objection (paragraph 4). On 14th October 2025, the Respondent issued an Objection Decision rejecting the late objection application (paragraph 5). The Appellant, aggrieved, lodged a Notice of Appeal dated 24th October 2025 (paragraph 6).
Core dispute
The Appellant argued that the assessments were based on excessive estimated income not reflecting actual company revenues, were issued before annual returns were filed for the years 2021 to 2023, were based on VAT3-declared income without considering purchases forming part of cost of sales, disregarded operating expenses incurred wholly and exclusively in production of income, and did not reflect that the company was operating at a loss (paragraph 7, paragraphs 13 to 24).
The Respondent contended that the assessments were based on undeclared sales identified from variances between VAT and Income Tax returns, double-claimed VAT inputs, unaccounted advance tax, PAYE variances and undeclared income linked to a related company, Turbo Highway (paragraphs 29 and 30). The Respondent asserted that the Appellant's objection, lodged on 30th September 2025, was late by about four months and that the Appellant failed to provide reasons or documents to justify an extension of time or to substantiate its objection, contrary to Sections 51(3), 51(6) and 51(7) of the Tax Procedures Act (paragraphs 32 to 39).
A threshold dispute also arose as to whether the Respondent's decision of 14th October 2025 rejecting the late objection application was an Appealable decision, with the Respondent arguing that the proper remedy was judicial review rather than an appeal to the Tribunal (paragraphs 44 to 46).
Court findings
On the question of jurisdiction, the Tribunal found that the Respondent's decision of 14th October 2025 did not merely decline an extension of time but also declared the Appellant's objection invalid for non-compliance with Sections 51(3) and 51(7) of the Tax Procedures Act. Relying on the Court of Appeal decision in Geo Chem Middle East v Commissioner for Domestic Taxes [2026] KECA 1531 (KLR) and the Tribunal's own decision in Pirmohammed Enterprises Limited v Commissioner of Legal Services & Board Coordination [2026] KETAT 279 (KLR), the Tribunal held that a decision invalidating a notice of objection is an Appealable decision, and it therefore had jurisdiction to hear the Appeal (paragraphs 51 to 57).
On whether the Respondent was justified in declining the extension of time, the Tribunal found that the Appellant's stated reason, that it had not prepared its financial statements, was unsubstantiated and contradicted by the fact that audited financial statements for 2021, 2022 and 2023 already existed prior to the assessments and the late objection (paragraphs 61 to 63). The Tribunal held that the Appellant had failed to demonstrate a causal nexus between the reason advanced and the delay, as required under Section 51(7)(a) and (b) of the Tax Procedures Act, and had also failed to provide supporting documents for its objection under Section 51(3) (paragraphs 64 to 70).
Having found that the Respondent was justified in declining the extension of time, the Tribunal held that the remaining issue on burden of proof under Section 56(1) of the Tax Procedures Act was rendered moot and did not require determination (paragraph 71).
Outcome
The Tribunal held that the Appeal was unmerited and untenable in law. It ordered that the Appeal be struck out, with no order as to costs (paragraphs 72 to 74).
Major issues / areas of contention
- Whether the Respondent's decision dated 14th October 2025, rejecting the Appellant's late objection application, was an Appealable decision.
- Whether the Respondent was justified in declining to grant the Appellant's application for extension of time to lodge a notice of objection.
- Whether the Appellant discharged its burden of proof under Section 56(1) of the Tax Procedures Act, 2015, and Section 30 of the Tax Appeals Tribunal Act (not determined, rendered moot).