Judgment summary
The Tax Appeals Tribunal heard an appeal by Pamwhite Limited against the Commissioner of Domestic Taxes concerning a default VAT assessment. The Appellant argued that the assessment was based on erroneous ETR entries caused by a staff data-entry error, while the Respondent maintained that the Appellant failed to file VAT returns and did not provide sufficient documentation to support its objection.
The Tribunal identified two issues for determination: whether the appeal was properly before it, and whether the Appellant had discharged its burden of proving the Objection Decision incorrect. On reviewing the record, the Tribunal found no Notice of Appeal on file, as required under Section 13(1) of the TAT Act, and no application for extension of time under Section 13(3).
Having found the appeal incompetent for lack of a Notice of Appeal, the Tribunal did not determine the substantive question of whether the Appellant had discharged its burden of proof, treating that issue as moot. The appeal was struck out with each party bearing its own costs.
Background
Pamwhite Limited is a private limited company incorporated in Kenya, whose principal activity is Transport and Freight (para 1).
The Respondent reviewed the Appellant's tax affairs and concluded that the Appellant had failed to file VAT returns for December 2024 to April 2025 despite allegedly earning taxable income, issuing a default VAT assessment of Kshs. 26,712,561.52 on 5th May 2025 (para 3).
On 26th May 2025 the Appellant contended the assessments were based on erroneous and inflated ETR data, and lodged a Notice of objection on 4th June 2025 (para 4). The Respondent confirmed the assessments through its Objection Decision dated 23rd July 2025 (para 5). Dissatisfied, the Appellant filed the Appeal on 1st December 2025, pursuant to a Memorandum of Appeal dated 27th November 2025 (paras 6-7).
Core dispute
The Appellant contended that a data-entry error in its e-TIMS system in November 2024 caused staff to enter incorrect Kenya Shilling values on multiple ETR receipts, producing a total of Kshs. 79,290,671.00 that bore no relation to its actual fuel and lubricants sales, and that it had repeatedly sought correction from KRA without success (paras 9-19, 25).
The Appellant argued that KRA's self-assessment for November 2024 (Kshs. 9,977,066.54) and default assessments for December 2024 to April 2025 (Kshs. 26,712,561.52) ignored its actual sales and purchases data available in KRA's own auto-populated VAT return portal, and that the Objection Decision wrongly stated that the Appellant had failed to provide information and documentation (paras 12-14, 20-24).
The Respondent maintained that the Appellant failed to file VAT returns for the relevant periods despite earning taxable income, and failed to provide requested supporting documentation, including audited accounts, certified bank statements, sales and purchase invoices and ledgers, and VAT analyses, to substantiate its objection (paras 42-49, 68-71). The Respondent relied on Sections 29, 31, 56 and 59 of the Tax Procedures Act and Section 17 of the VAT Act in confirming the assessments (paras 48, 51, 61-63, 70).
Court findings
The Tribunal identified two issues for determination: whether the Appeal was properly before it, and whether the Appellant had discharged its burden of proving the Objection Decision incorrect (para 83).
On the first issue, the Tribunal found that it had not been presented with the Appellant's Notice of Appeal, which is required under Section 13(1) of the TAT Act to be filed within thirty days of receipt of the Commissioner's decision (paras 85-87). The Tribunal noted that this deadline would have fallen on or before 1st September 2025 (para 87).
The Tribunal found no Notice of Appeal on record and noted that the Appellant had not sought an extension of time under Section 13(3) of the TAT Act (paras 86, 88-89). The Tribunal referred to Eastleigh Mall Limited v Commissioner of Investigations & Enforcement [2023] KEHC 20000 (KLR) and W.E.C. Lines Ltd v The Commissioner of Domestic Taxes (TAT Case No. 247 of 2020) in emphasising that statutory timelines and procedures for tax appeals must be strictly followed (paras 90-91).
The Tribunal held that without a Notice of Appeal, there was no valid appeal before it, and found the Appeal incompetent and untenable in law (paras 92-93). The determination of the second issue, concerning the burden of proof, was accordingly rendered moot (para 93).
Outcome
The Tribunal found the Appeal incompetent and struck it out, with each party bearing its own costs (paras 94-95).
Major issues / areas of contention
- Whether the Appeal was properly before the Tribunal, given the absence of a Notice of Appeal on record.
- Whether the Appellant complied with the thirty-day timeline under Section 13(1) of the TAT Act, or sought an extension under Section 13(3).
- Whether the Appellant discharged its burden of proving the Objection Decision dated 23rd July 2025 was incorrect, an issue the Tribunal found moot given its finding on the first issue.
- Whether the VAT assessments were properly based on erroneous ETR entries, a substantive dispute not determined by the Tribunal.