Judgment summary
Sealand Company Limited appealed against a decision by the Commissioner of Legal & Board Services declining to grant leave to lodge a late objection to Income Tax and VAT assessments. The Tribunal held that it lacked jurisdiction to hear an appeal against a decision made under section 51(7) of the Tax Procedures Act, since such a decision is not an appealable tax decision. The appeal was struck out as incompetent, with each party bearing its own costs.
The Tribunal restricted its analysis to the decision contained in the letter dated 23rd December 2025, noting that the Notice of Appeal was directed at that decision rather than the earlier objection decision dated 24th August 2023.
Background
The Appellant is a resident limited liability company registered in Kericho, engaged in contractual and general supplies services (paragraph 1). The Respondent is a principal officer appointed under section 13 of the Kenya Revenue Authority Act, Cap 469, responsible for administering and enforcing tax laws for the collection of revenue (paragraph 2).
The Appellant was assessed for Income Tax Company for the years 2019, 2020, 2021, 2022, amounting to Kshs. 1,418,511.88, and for Value Added Tax for the months of February 2022 and December 2022, amounting to Kshs. 440,452.29. The assessments were raised on 26th May 2021, 30th June 2022, 24th March 2023 and 29th January 2024 (paragraph 3).
The Appellant lodged a late objection against the Income Tax Company assessments for 2019, 2020 and 2021 on 27th June 2023, and the Respondent granted leave to object out of time by letter dated 10th July 2023 (paragraph 4). The Respondent then issued an objection decision dated 24th August 2023 confirming those assessments (paragraph 5).
The Appellant later lodged late objection applications to the Income Tax Company assessment for 2022 and VAT for February 2022 and December 2022 on 13th December 2025. By letter dated 23rd December 2025, the Respondent declined to grant leave to object out of time, on the basis that the Appellant failed to meet the requirements of section 51(7) of the Tax Procedures Act 2015 Cap 469B (paragraph 6). The Appellant, dissatisfied, filed a notice of appeal dated 12th January 2026 (paragraph 7).
Core dispute
The Appellant sought to appeal against the Respondent's decision contained in letters dated 23rd December 2025 and 24th August 2023, arguing that the Respondent had contravened section 15 of the Income Tax Act Cap 470 by disregarding expenditure incurred in generating sales revenue, had ignored documentary evidence and explanations, and had failed to demonstrate the basis for subjecting purported sales to VAT at 16% despite full declaration in VAT returns (paragraph 8).
The Respondent maintained that the assessments were lawful, that the Appellant had failed to reconcile variances between VAT and income tax turnover, and had failed to provide audited financial statements, tax computations, bank statements and ledgers despite requests, so that the Respondent could not verify or allow the claimed deductions (paragraphs 23 to 32).
The Tribunal, however, confined its determination to a single issue: whether it had jurisdiction to hear and determine the decision issued through the letter dated 23rd December 2025 (paragraph 39).
Court findings
The Tribunal noted that a taxpayer has thirty days from notification of an assessment to lodge an objection under section 51(2) of the TPA, and may apply for an extension under section 51(6) (paragraphs 41 to 42). Section 51(7) sets out the conditions the Commissioner considers in deciding whether to allow such an extension (paragraph 43).
The Tribunal found that it does not have jurisdiction to entertain decisions made under section 51(7) of the TPA, as these are not appealable decisions (paragraph 44). It relied on Commissioner of Investigations & Enforcement v Vyas t/a Rocon Enterprises (Income Tax Appeal E144 of 2021) [2022] KEHC 16027 (KLR), where the High Court held that such decisions are subject to judicial review proceedings rather than appeal to the Tribunal (paragraph 45).
The Tribunal further held that section 51(1) of the TPA operates as a condition precedent, requiring a taxpayer to first lodge an objection before invoking the Tribunal's jurisdiction (paragraph 46). Since the Appellant failed to obtain leave to object out of time, it did not validly object to the Income Tax assessment for 2022 or the VAT assessments for February 2022 and December 2022, meaning no appeal could be filed in relation to those assessments (paragraph 47).
The Tribunal also found that the Appellant's argument regarding the basis for the 16% VAT assessment could not be considered, since the failure to object rendered the VAT issue moot (paragraph 48). Accordingly, the Tribunal held that it lacked jurisdiction to hear and determine the decision contained in the letter dated 23rd December 2025 (paragraph 49).
Outcome
The Tribunal held that the Appeal was incompetent and struck it out. Each party was ordered to bear its own costs (paragraph 50). The order was made on 30th June 2026 (paragraph 51).
Major issues / areas of contention
- Whether the Tribunal had jurisdiction to hear an appeal against a decision made under section 51(7) of the Tax Procedures Act declining leave to lodge a late objection.
- Whether section 51(1) of the TPA operates as a condition precedent requiring an objection before an appeal can be brought before the Tribunal.
- Whether the Appellant's failure to obtain leave to object out of time barred it from appealing the Income Tax 2022 and VAT assessments for February 2022 and December 2022.
- Whether the VAT issue concerning the basis of the 16% assessment could be considered given the failure to validly object.