Judgment summary
This is a ruling on a Notice of Motion by Panafrican Centre for Strategic Dev. Ltd. seeking orders restraining the Commissioner Micro & Small Taxpayers from maintaining it on the VAT Special Table, pending the hearing of the application and the conclusion of an objection lodged under Section 51 of the Tax Procedures Act, 2015.
The Tribunal considered the Applicant's grounds, based on the Supporting Affidavit of Hudson Arcoustav Aluvanza, and the Respondent's opposition, based on the Replying Affidavit of Lilian Muigai.
The Tribunal found that the Applicant had established a prima facie case, held that the Respondent's continued enforcement action through the Special Table while the objection process was underway was unlawful, and allowed the application.
Background
The Applicant was placed on the VAT Special Table by the Respondent in October 2025 (para 2(i)).
On 20th May 2026, 9th June 2026, 10th June 2026, and 16th June 2026, the Respondent issued the Applicant with assessment orders for Corporation Tax and Value Added Tax for the tax periods 2022, 2023, 2024, and 2025, totaling Kenya Shillings Forty-Three Million Six Hundred and Sixty-Eight Thousand and Eighteen (KES 43,668,018) (para 2(xiii)).
On 16th June 2026, the Applicant lodged a Notice of Objection to the said assessments pursuant to Section 51(1) of the Tax Procedures Act, 2015 (para 2(xiv)).
Despite the Notice of Objection, the Respondent kept the Applicant on the VAT Special Table, subjecting it to enhanced compliance obligations based on assessments that remained contested and undetermined (para 2(xv)).
The Applicant filed a Notice of Motion dated 23rd June 2026, supported by the affidavit of Hudson Arcoustav Aluvanza, seeking urgent certification and orders restraining the Respondent from maintaining it on the VAT Special Table, and a permanent order directing removal from the Special Table and restoration of full VAT compliance functionality on the iTax portal (para 1).
Core dispute
The dispute concerned whether the Respondent could lawfully maintain the Applicant on the VAT Special Table while the Applicant's Notice of Objection to the underlying assessments, lodged under Section 51 of the Tax Procedures Act, 2015, remained undetermined.
The Applicant argued that the placement was an administrative action affecting its rights, made without notice or hearing, in violation of Article 47 of the Constitution, that the VAT Special Table has no express statutory basis, and that continued placement based on contested and undetermined assessments was premature and disproportionate (para 2).
The Respondent argued that the VAT Special Table was a legitimate administrative compliance tool developed to mitigate revenue loss, that it was entitled to onboard taxpayers involved in VAT fraud, missing trader schemes, and fictitious input tax claims, and that the Applicant's eTiMs purchase invoices reflected transactions lacking commercial substance (para 3).
Court findings
The Tribunal stated that it was not possible to determine the allegations of fraud and missing trader schemes at the preliminary stage, and limited its determination to whether the Applicant had presented a prima facie case justifying the orders sought (para 7).
Citing Ruling TAT Appeal No. 1191 of 2025, Labaita Lounge Limited vs Commissioner of Legal and Board Services, the Tribunal reiterated that placement on the VAT Special Table is tantamount to enforcement of taxes deemed due, and that the Tribunal has power to intervene under Section 18 of the Tax Appeals Tribunal Act, particularly where an appeal has been preferred (para 8).
The Tribunal found that the Special Table is an enforcement mechanism for tax deemed due, and questioned how an enforcement process could proceed regarding an assessment that is the subject of an ongoing objection (para 9-10).
The Tribunal held that Section 51 of the TPA requires the Respondent to allow the Applicant to object to the assessment and thereafter file its appeal before tax, if any, can be collected, and that the Respondent's action of enforcement before completion of due process was blatantly unlawful (paras 11-12).
This position was said to be confirmed in Ruling TAT Appeal No. 1191 of 2025, Labaita Lounge Limited v. Commissioner of Legal and Board Services, and Ruling TAT No. E-1030 of 2025, Miles Construction Limited v. Commissioner for Legal and Board Services (para 12).
The Tribunal referred to Section 18 of the TAT Act, which empowers it to stay or otherwise affect the operation or implementation of a decision under review where an appeal has been filed (para 13).
The Tribunal was further guided by Republic v Kenya Revenue Authority ex parte Lab International Kenya Limited [2011] eKLR and Republic v Commissioner of Domestic Taxes ex parte Sony Holdings Limited [2019] eKLR, which affirmed that administrative tax enforcement measures are subject to judicial and quasi-judicial scrutiny where they adversely affect taxpayers' rights or undermine statutory dispute resolution mechanisms, aligning with Article 47 of the Constitution and Section 4 of the Fair Administrative Action Act (para 14).
The Tribunal concluded that it had power to intervene where an objection process is underway and the Appellant has already been placed on the special table on the basis of a disputed assessment, and that the Respondent's action of placing the Applicant on the special table regarding assessments undergoing the dispute resolution process under Section 51 of the TPA was unlawful (paras 16-17).
The Tribunal held that the Applicant had proved a prima facie case deserving of the Tribunal's intervention and protection at the preliminary stage (para 18).
Outcome
The Tribunal allowed the Application.
The Respondent was directed to forthwith remove the Applicant from the VAT Special Table pending the conclusion of the objection and appeal process under Section 51 of the Tax Procedures Act.
The Respondent was directed to restore the Applicant's full VAT compliance functionality on the iTax portal within 14 days from the date of the Ruling.
No orders were made as to costs.
Major issues / areas of contention
- Whether the Tribunal could intervene at a preliminary stage regarding the Applicant's placement on the VAT Special Table
- Whether the Respondent could lawfully maintain the Applicant on the VAT Special Table while a Notice of Objection under Section 51 of the Tax Procedures Act, 2015 remained pending
- Whether the placement on the VAT Special Table amounted to unlawful enforcement action before completion of the statutory objection and appeal process
- Whether the Applicant had established a prima facie case justifying interim and permanent relief
- Whether the Respondent's action was consistent with Article 47 of the Constitution and the Fair Administrative Action Act