Judgment summary
Westomax Investments Limited appealed against an Objection decision of the Commissioner of Domestic Taxes confirming additional Corporation tax, VAT and PAYE assessments. The Commissioner raised a preliminary objection contending that the appeal was fatally defective for non-compliance with the Tax Appeals Tribunal Act, in particular for failure to lodge the Memorandum of Appeal within the time allowed following an earlier grant of leave to appeal out of time.
The Tribunal considered whether the appeal was validly before it and found that it was not, because the Appellant had filed its appeal documents beyond the 30 day period set in the Tribunal's earlier order granting leave, and had not sought further leave. On that basis the Tribunal held it lacked jurisdiction and struck out the appeal without determining the substantive grounds concerning the assessments.
Background
The Appellant is a limited liability company incorporated in Kenya, whose principal business is civil works and construction, including road maintenance (para 1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469, mandated under Sections 5(1) and 5(2) of that Act to assess, collect and account for revenues (para 2).
The Respondent issued Corporation tax, VAT and PAYE additional assessments (para 3). The Appellant objected on 30th July 2023 (para 4). The Respondent issued an Objection decision on 27th September 2023 confirming the assessments (para 5). The Appellant, dissatisfied, filed its Notice of Appeal dated 18th September 2025 on the same date (para 6).
Core dispute
The Appellant's Memorandum of Appeal, dated and filed on 18th September 2025, raised grounds including mischaracterisation of bank credits as sales (contrary to Section 29 of the Tax Procedures Act, 2015), double counting of sales derived from withholding certificates (said to contravene Article 210(1) of the Constitution), erroneous classification of payments to individuals as professional fees subject to 5% withholding tax, unreasonable disallowance of 60% of expenses without reference to industry margins, and disregard of Tribunal precedent in Thika Road Baptist Church TAT No. 256 of 2021 on bank deposits not constituting sales (para 7).
The Appellant sought to have the Objection decision set aside, the additional VAT and income tax assessments for the tax periods 2017 to 2020 annulled, disallowed expenses permitted, and taxable profit recomputed based on actual income and documented costs (paras 16, 9 to 15).
The Respondent raised a preliminary objection that the appeal was fatally defective and incompetent for failure to comply with mandatory requirements of the Tax Appeals Tribunal Act and the Tax Appeals Tribunal (Procedure) Rules, specifically that the Appellant failed to lodge its Memorandum of Appeal within 14 days after leave was granted to file out of time (paras 18 to 22). The Respondent contended the Tribunal therefore lacked jurisdiction (para 21). On the merits, the Respondent maintained that the additional assessments were justified under Sections 24(2) and 31 of the Tax Procedures Act, and that the Appellant had not discharged its burden of proof under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act (paras 30 to 33).
Court findings
The Tribunal identified two issues for determination: whether there was a valid appeal on record, and whether the Respondent was justified in confirming the Corporation tax, VAT and PAYE assessments (para 35).
The Tribunal noted that the Appellant had filed Miscellaneous Application TATMISC/E109/2024 dated 17th October 2024 seeking leave to file its appeal out of time, which the Respondent did not oppose. By consent, the Tribunal on 24th October 2024 granted leave and ordered the Appellant to file and serve the Appeal papers within thirty days, that is, on or before 23rd November 2024 (paras 40 to 41).
The Tribunal found that the Appellant filed its notice of appeal and appeal documents on 18th September 2025, which was beyond the thirty days ordered and therefore out of time (para 41). The Tribunal further found that the Appellant did not apply for extended leave after the earlier order lapsed (para 42).
Citing Boss Freight Terminal Ltd Vs Commissioner of Domestic Taxes (2017) eKLR and Patrick Kiruja Kithinji Vs Victor Mugira Marete (2015) eKLR on time as a jurisdictional issue, and Owners of the Motor Vessel 'Lillian S' v Caltex Oil (Kenya) Ltd [1989] KLR on jurisdiction generally, the Tribunal held that in the absence of further leave, the appeal was incompetent and not validly before it (paras 43 to 45). Having so found, the Tribunal did not address the second issue on the merits of the assessments, treating it as moot (para 46).
Outcome
The Tribunal found the Appeal incompetent and struck it out. Each party was ordered to bear its own costs (paras 47 to 48).
Major issues / areas of contention
- Whether there was a valid appeal on record given the earlier grant of leave to file out of time.
- Whether the Appellant complied with the thirty day period fixed by the Tribunal's order of 24th October 2024 for filing appeal papers.
- Whether failure to seek further leave after the earlier leave lapsed deprived the Tribunal of jurisdiction.
- Whether the Respondent was justified in confirming the Corporation tax, VAT and PAYE additional assessments (left undetermined as moot).