Judgment summary
The Tax Appeal Tribunal heard an appeal by Salu Chainlinks Ltd against the Kenya Revenue Authority's Objection Decision dated 5th May, 2025, which confirmed additional VAT assessments for December 2022, 2023 and 2024, and income tax assessments for 2022 and 2023 (paras 3, 5, 18).
The total additional income tax and VAT assessments confirmed amounted to Kshs. 22,199,309.32 (para 18).
The Tribunal found that the Appellant had not provided the documents requested by the Respondent during the objection review, including audited financial accounts, certified bank statements, detailed sales and purchase ledgers, reconciliation analysis of purchases, and stock analysis and valuation reports (paras 12, 20, 21).
Relying on Section 59 of the Tax Procedures Act (cap 469B), Section 56(1) of the Tax Procedures Act (cap 469B), and Section 30 of the Tax Appeals Tribunal Act (cap 469A), the Tribunal held that the Appellant had failed to discharge its burden of proof (paras 22-27).
The Tribunal dismissed the Appeal, upheld the Respondent's Objection Decision dated 5th May, 2025, and ordered each party to bear its own costs (para 28).
Background
The Appellant is a limited liability company incorporated in Kenya (para 1). The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act, mandated with collection and enforcement of tax laws (para 2).
On 30th January, 2025, the Respondent issued additional VAT assessments for December 2022, 2023 and 2024, and income tax assessments for 2022 and 2023 (para 3). On 7th March, 2025, the Appellant objected to these assessments (para 4). On 5th May, 2025, the Respondent issued its Objection Decision confirming the additional assessments (para 5).
On 9th July, 2025, the Appellant lodged this Appeal, with leave of the Tribunal, vide its Notice of Appeal dated 13th June 2025 (para 6).
Core dispute
The Appellant argued that the Respondent erred in computing both income and VAT from income derived from other sources, and that the assessments were erroneous, irrational and unreasonable (para 7). The Appellant's core submission was that the Respondent's demand dated 22nd February 2023 sought VAT that had already been declared and paid for in previous months, and it challenged the addition of interest and penalties on the principal amounts charged (para 8).
The Respondent maintained that upon reviewing the Appellant's operations, it found the Appellant had failed to account for its VAT tax liabilities for 2022 to 2024 (para 11). During the objection review, the Respondent requested audited financial accounts, certified bank statements, detailed sales and purchase ledgers, reconciliation analysis of purchases, and a stock analysis and valuation report (para 12), which the Appellant failed to provide (para 13).
The issue for determination was whether the Respondent's Objection Decision dated 5th May, 2025 was justified (para 17).
Court findings
The Tribunal noted it was not contested that the Respondent sought specific documents from the Appellant during the objection review, and it was equally not rebutted that the Appellant did not provide these documents (paras 20, 21).
The Tribunal cited Section 59 of the Tax Procedures Act (cap 469B) regarding the duty to produce documents and records, Section 56(1) of the Tax Procedures Act (cap 469B) placing the burden of proof on the taxpayer to prove a tax decision is incorrect, and Section 30 of the Tax Appeals Tribunal Act (cap 469A) placing the burden of proof on the appellant (paras 22-24).
The Tribunal referred to its own precedents, Abyssinia Iron and Steel Ltd -vs- Commissioner of Customs and Border Control (TAT No. 435 of 2022) and Mugo -vs- Commissioner of Domestic Taxes (TAT E918 of 2024) KETAT 374 (KLR), on the burden of proof and the obligation to produce documents (paras 25, 26).
The Tribunal found that the Appellant did not provide the relevant documents requested by the Respondent to support its objection and discharge its burden of proof, and held that the Respondent was justified in disallowing the Appellant's objection (para 27).
Outcome
The Tribunal held that the Appeal lacks merit and dismissed it. The Respondent's Objection Decision dated 5th May, 2025 was upheld, and each party was ordered to bear its own costs (para 28).
Major issues / areas of contention
- Whether the Respondent's Objection Decision dated 5th May, 2025 confirming additional VAT and income tax assessments was justified.
- Whether the Appellant discharged its burden of proof under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act.
- Whether the Appellant's failure to provide requested documents during the objection review justified the Respondent's confirmation of the assessments.