Judgment summary
The Tribunal heard an appeal by Savana Saw Mill Limited against an objection decision of the Commissioner of Domestic Taxes dated 19th September 2025, which confirmed additional assessments totalling Kshs 41,285,207 (para 5).
The assessments arose from a Risk Differential Framework audit covering Income Tax, VAT, PAYE and Withholding Tax for the period January 2019 to December 2024 (para 3).
The Tribunal found that the Appellant's Statement of Facts was sparse, did not address the specific assessments in substantive detail, and was not accompanied by documentary evidence in support of its case (paras 57, 61, 63).
The Tribunal held that the Appellant had failed to discharge its burden of proof under section 56(1) of the TPA and section 30 of the TATA, and dismissed the appeal (paras 64-66).
Background
Savana Saw Mill Limited is a private limited company whose principal activity is the manufacture of wood products (para 1).
The Appellant was selected for audit under the Risk Differential Framework to review Income Tax, VAT, PAYE and Withholding Tax for the period January 2019 to December 2024 (para 3).
Following the audit, the Respondent issued assessments on 13th June 2025 and a demand notice on 19th June 2025 (para 3).
The Appellant lodged a late objection against the additional assessments on 28th July 2025, which the Respondent reviewed and allowed on 11th August 2025 (para 4).
The Respondent subsequently confirmed the assessments by way of an objection decision dated 19th September 2025, demanding payment of Kshs 41,285,207 (para 5).
Dissatisfied, the Appellant lodged a notice of appeal dated 11th November 2025 and filed on 18th November 2025 (para 6).
Core dispute
The Appellant contended that the Respondent erred in fact and in law in assessing the tax payable, failed to consider the Appellant's nature of business, failed to consider the Appellant's allowable deductions incurred in generating income, and failed to accord the Appellant a fair hearing despite lodging an objection (para 7).
The Respondent maintained that the assessments were lawfully raised under Section 29 of the Tax Procedures Act, that the Appellant failed to discharge its burden of proof under Section 56(1) of the TPA, that the objection was lodged out of time and unsupported by documentation under Section 51 of the TPA, and that the Appellant was afforded a fair hearing throughout the audit and objection process (paras 29-36).
The main issue for determination was whether the Respondent erred in assessing and confirming corporation tax, Value Added Tax, VAT withholding tax, and PAYE (para 44).
Court findings
The Tribunal reiterated that under section 50(1)(a) of the TPA, a notice of assessment is conclusive evidence that the assessment is correct, and that section 56(1) of the TPA places the burden on the taxpayer to prove a tax decision is incorrect (paras 47-48).
The Tribunal referred to the taxpayer's statutory duty to maintain records under section 23(1)(b) of the TPA, section 54A of the ITA, and section 43 of the VAT Act, to enable tax liability to be ascertained (paras 49-51).
The Tribunal noted that this burden of proof continues through to the appeal stage under section 30 of the TATA, and that the Appellant must adduce supporting documents under section 13(2) of the TATA (paras 52-53).
The Tribunal found that the Appellant's Statement of Facts did not elaborate on the specific errors attributed to the Respondent and did not address, in substantive detail, the assessments relating to corporation tax, VAT, VAT withholding tax, or PAYE (para 57).
The Tribunal observed that the Appellant's Statement of Facts fell short of the requirements under Rule 5 of the Tax Appeals Tribunal (Procedure) Rules, 2015, and that the Appellant had not pleaded or supported its claim regarding allowable deductions under section 15(1) of the ITA (paras 58-60).
The Tribunal noted that the only documents filed by the Appellant were the objection application acknowledgment receipt dated 28/7/2025 and the objection decision dated 19th September 2025 (para 60).
The Tribunal concluded that it was unable to make meaningful findings on the assessments on the material placed before it, and held that the Appellant failed to discharge its burden of proof contrary to section 56(1) of the TPA and section 30 of the TATA (paras 63-64).
Outcome
The Tribunal found the appeal devoid of merit and dismissed it.
The assessments and the resultant objection decision dated 19th September 2025 were upheld.
Each party was ordered to bear its own costs (para 66).
Major issues / areas of contention
- Whether the Respondent erred in assessing and confirming corporation tax, Value Added Tax, VAT withholding tax, and PAYE.
- Whether the Appellant discharged its statutory burden of proof under section 56(1) of the TPA and section 30 of the TATA.
- Whether the Respondent failed to consider the Appellant's nature of business in making the assessments.
- Whether the Respondent failed to consider the Appellant's allowable deductions incurred in generating income.
- Whether the Respondent failed to accord the Appellant a fair hearing despite the lodging of an objection.
- Whether the Appellant's Statement of Facts and supporting documentation were sufficient to disclose a cause of action against the Respondent.