Judgment summary
The Appellant, a registered taxpayer supplying stationery and farm produce, appealed against a VAT objection decision issued by the Respondent. The Respondent had assessed additional VAT of Kshs 336,923.00 for the period 2023 to 2025, later confirmed at Kshs 377,937.00 inclusive of penalty and interest following an objection.
The Appellant raised several grounds, including alleged double taxation on two invoices, wrongful inclusion of zero-rated sales of green grams and beans, wrongful taxation of exempt supplies to UNESCO, mischaracterisation of a payment timing issue, and taxation of a capital redemption from an investment fund.
The Tribunal found that in each instance the Appellant failed to adduce documentary evidence, such as self-assessment VAT returns, invoices, exemption certificates, or bank statements, to substantiate her claims. The Tribunal held that the burden of proof under Section 56(1) of the Tax Procedures Act rested on the Appellant, who had not discharged it. The appeal was dismissed and the Objection Decision upheld, with each party bearing its own costs.
Background
The Appellant is a registered taxpayer whose principal activity is the supply of stationery and farm produce (1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469, tasked with assessment, collection and receipt of revenue (2).
The Respondent reviewed the Appellant's VAT returns and, by letter dated 21st May 2025, issued assessments demanding tax of Kshs 336,923.00 for the period 2023 to 2025 (3). The Appellant objected by Notice of Objection dated 18th June 2025 (4). The Respondent issued its Objection Decision on 14th August 2025, confirming tax of Kshs 377,937.00 inclusive of penalty and interest (5).
Having been granted leave by the Tribunal on 25th November 2025, the Appellant filed her Notice of Appeal dated 10th September 2025, deemed filed on 24th September 2025 (6), followed by her Memorandum of Appeal dated and filed on 9th December 2025 (7).
Core dispute
The Appellant contended that the Respondent erred in upholding additional VAT on two invoices already declared in earlier VAT returns, leading to double taxation contrary to Section 8 of the VAT Act, 2013 and Article 210(1) of the Constitution (7a). She also argued that sales of green grams and beans worth Kshs 319,200.00 were zero-rated under the First Schedule, Part A of the VAT Act (7b), and that supplies to UNESCO worth Kshs 1,114,500.00 were VAT-exempt under Section 8(2) of the VAT Act and the First Schedule, Part II, Paragraph 7 (7c).
She further asserted that Kshs 319,000.00 declared in December 2023 but paid in June 2024 was wrongly treated as undeclared sales contrary to Section 43 of the VAT Act (7d), and that Kshs 1,000,000.00 deposited from ICEA LION Money Market Investment was a non-taxable capital redemption (7e). She also alleged that the Respondent failed to comply with Section 51(9) of the Tax Procedures Act by rejecting her objection without properly evaluating the evidence, and violated Articles 47 and 210 of the Constitution (7f, 7g).
The Respondent maintained that the Appellant failed to adduce any documentary evidence, such as the relevant invoices, VAT self-assessment returns, exemption certificates, or bank statements, to substantiate any of her allegations, and that she therefore failed to discharge her burden of proof under Section 56(1) of the Tax Procedures Act, Section 30 of the Tax Appeals Tribunal Act, and Section 107 of the Evidence Act (17-26).
Court findings
The Tribunal identified a single issue for determination: whether the demanded tax was due and payable (46).
On the alleged double taxation of invoices worth Kshs 534,459.00 and Kshs 603,780.00, the Tribunal noted that the Appellant failed to adduce documentary evidence such as the self-assessment VAT returns for the relevant months to support her claim that these had already been declared (48, 52).
On the claim regarding zero-rated sales of green grams and beans and exempt supplies to UNESCO, the Tribunal found that the Appellant did not produce the alleged invoices or exemption certificates to prove the nature of the supplies (49, 50, 52).
On the Kshs 1,000,000.00 said to be a capital redemption, the Tribunal noted that although the Appellant produced an ICEA LION Money Market statement, she did not produce a corresponding bank statement showing deposit of the alleged redemption (51, 52).
The Tribunal held that Section 23(1) of the Tax Procedures Act and Section 43 of the VAT Act require a taxpayer to keep and maintain records for at least five years to enable determination of tax liability (53, 54). It found that the Appellant made mere averments without substantiating them with evidence (55), relying on Kenya Power and Lighting Co Ltd vs Rasul Nzembe Mwadzaya (2020) eKLR that unsupported allegations remain mere allegations (56).
The Tribunal applied Section 56(1) of the Tax Procedures Act, which places the burden of proof on the taxpayer (57), and relied on Commissioner of Domestic Taxes vs Trical and Limited (Tax Appeal E146 of 2020) on the shifting of the evidential burden only upon production of competent and relevant evidence (59). The Tribunal concluded that the Appellant's failure to provide documentary evidence meant the Respondent could not be faulted for demanding the tax as it did (60), and held that the demanded tax was due and payable (61).
Outcome
The Tribunal found that the appeal lacked merit and dismissed it (62a). The Respondent's Objection Decision dated 14th August 2025 was upheld (62b). Each party was ordered to bear its own costs (62c).
Major issues / areas of contention
- Whether additional VAT assessed on two invoices amounted to double taxation because the invoices had already been declared in earlier VAT returns.
- Whether sales of green grams and beans worth Kshs 319,200.00 were zero-rated under the VAT Act.
- Whether supplies to UNESCO worth Kshs 1,114,500.00 were VAT-exempt.
- Whether Kshs 319,000.00 declared in December 2023 but paid in June 2024 was wrongly treated as undeclared sales.
- Whether Kshs 1,000,000.00 deposited from an ICEA LION Money Market Investment was a non-taxable capital redemption.
- Whether the Respondent complied with Section 51(9) of the Tax Procedures Act in rejecting the objection.
- Whether the Respondent violated Articles 47 and 210 of the Constitution.
- Which party bore the burden of proof and whether that burden was discharged.