https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/283

**REPUBLIC OF KENYA** **IN THE TAX APPEALS TRIBUNAL AT NAIROBI** **TAX APPEAL NO. E1370 OF 2025** **CHAIRMANIA EVENTS LIMITED………....…..………..APPELLANT** **VERSUS** **COMMISSIONER FOR INVESTIGATION AND ENFORCEMENT …….RESPONDENT** **JUDGMENT** **BACKGROUND** 1. The Appellant is a limited liability company incorporated in Kenya whose principal business activity is in the business of events organization and support. 2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws. Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 3. The Respondent carried out investigations into the affairs of the Appellant for the year 2024 and issued a tax assessment for VAT amounting to Kshs. 15,755,537 on 3rd July 2025. 4. The Appellant lodged an objection on 8th August 2025, on 13th August 2025 the Respondent declared the objection invalid and allowed the Appellant to file a valid objection which the Appellant did on 19th August 2025. 5. The Respondent issued an objection decision dated 16th October 2025 confirming the assessment. 6. Aggrieved by the Respondent’s decision, the Appellant filed a Notice of Appeal at the Tribunal on 14th November 2025. **THE APPEAL** 1. The Appellant in its Memorandum of Appeal dated 26th November 2025 and filed on 27th November 2025 has set out the following grounds of Appeal:- 2. That the Respondent erred in law and fact by unreasonably disallowing input Value Added Tax (VAT) claimed by the Appellant and thereby raising additional assessment for VAT amounting to Kshs. 15,755,537.00 on the basis of the disallowed invoices. 3. That the Respondent erred in law and in fact by disallowing the input VAT incurred and claimed by the Appellant in making of taxable supplies, in spite of the Appellant fully supporting the claim and furnishing the Respondent with valid tax invoices and other supporting documentation. 4. That the Respondent erred in law and in fact by assessing additional VAT on the Appellant based on erroneously disallowed invoices. 5. That the Respondent erred in law and in fact by disregarding all the explanations and documentation such as tax invoices, proof of payments, supplier ledger, payment vouchers and bank statements provided by the Appellant and proceeding to disallow input VAT borne and claimed by the Appellant. 6. That the Respondent acted illegally in disallowing input VAT claimed by the Appellant on the basis that the corresponding output VAT had not been matched while the Appellant does not have visibility of the suppliers' output tax declaration on iTax. 7. That the Respondent erred in law and in fact by disregarding the express provisions Section 17 of the VAT Act, 2013 and Paragraph 9 to the VAT Regulations, 2017 and disallowing the Appellants input VAT. 8. That the Respondent erred in law and in facts by issuing an Objection Decision after the lapse of the statutory prescribed period of sixty (60) days thereby contravening Section 51(11) of the Tax Procedures Act. **APPELLANT’S CASE** 1. The Appellant grounded its Appeal on its Statement of Facts dated 26th November 2025 and filed on 27th November 2025 and its written submissions dated 22nd May 2026 and filed on 2nd June 2026. 2. The Appellant averred that it is in the business of events organization and support. That during the period under assessment, it organized for numerous events and also provided support to its clients on planning and organization of events. 3. The Appellant averred that during the same period, it also hired and outsourced several equipment and services from Terrex Traders Limited in the planning and organizing of these events. That such outsourced equipment included tents, projectors, sound system, chairs, dais, video systems among other equipment. 4. The Appellant averred that the hired and outsourced equipment were all paid for as part of the Appellants expenses and tax invoices provided by Terrex Traders Limited. 5. The Appellant averred that it claimed the input VAT from those supplies it received from Terrex Traders Limited and supported the claim using valid tax invoices in compliance with the provisions of Section 17 of the VAT Act and the VAT Regulations in force at the time. That the input tax claimed was fully supported by valid tax invoices and copies of the tax invoices as well as other supporting documentation provided to the Respondent. 6. That in claiming the invoices and in support of its Objection and this appeal, the Appellant relied on provisions of Section 17 of the VAT Act, 2013 and Paragraph 9 to the VAT (Electronic Tax Invoices) Regulations, 2020. 7. The Appellant posited that it correctly claimed the input VAT as per the provisions of the VAT Act, 2013 since all the invoices claimed are proper invoices with Electronic Tax Register receipts as required in the above provision of the law. 8. The Appellant further averred that it submitted to the Respondent all necessary supporting documentation such as evidence of payment but the Respondent disregarded these explanations and documentation and proceeded to confirm the assessment. 9. The Appellant stated that in support of its Objection, it provided the following documents which were acknowledged by the Respondent in paragraph 3.10 of its Objection Decision: 1. Tax invoices and ETR receipts for the purchase made from Terrex Traders limited; 2. Proof of payments in the form of bank statements and payment receipts made to suppliers; 3. Supplier payment Ledgers; 4. Payment Vouchers; and 5. Proof of payment to customers. 10. The Appellant averred that in spite of these explanations and documentation; the Respondent went ahead to disallow the contested invoices without any justification. 11. The Appellant further posited that the explanations provided by the Respondent for the rejection of the input VAT are invalid and unreasonable. It invited the Tribunal to review the invoices provided to confirm that they are proper invoices. 12. The Appellant contended that disallowing the input VAT and recovering the tax therefrom would impose an unfair financial burden on its operations. 13. The Appellant postulated that the VAT Act is well aligned with the tax canon of equity. That the canon of equity is grounded on the basic premise that the collection of taxes should be equitable across taxpayers on different levels. In addition, taxpayers should bear no more tax than what other taxpayers in the same bracket bear, as prescribed from time to time by the legislature. 14. The Appellant posited that the charge of VAT heavily draws impetus on the input-output principle, and if the formulae is distorted, the taxpayer unfairly suffers a heavy pecuniary burden. That VAT is a consumption tax whose burden should be borne by the final consumer of the supplies. This is the basis of the input-output principle, which allows for the intermediaries in the supply chain to pass on the VAT burden to the final consumers. The Appellant asserted that it would be prejudicial if the pecuniary burden is borne by the intermediaries in the chain of supply. 15. The Appellant averred that it was imperative to note that no tax had been lost on the part of the Respondent. As posited in the foregoing, the effect of deduction of input VAT is to reduce the VAT cost burden of the Appellant to the extent of its value add in the supply chain. Therefore, without prejudice to the foregoing, even where the input tax deduction is time barred, it would be punitive and extremely mistaken to claim for tax from the Appellant where such tax would not have been due in the first place. That the Appellant has already paid the VAT for the months under assessment relating to its value addition in the supply chain as required by the law. 16. The Appellant averred that while it duly filed its objection dated 8th August 2025 on 12th August 2025, the Respondent did not issue an Objection Decision within the mandatory sixty (60) days as provided in Section 51(11) of the Tax Procedures Act. That instead, the Respondent issued its Objection Decision on 16th October 2025, four (4) days after the lapse of the aforementioned prescribed statutory period within which Objection Decisions ought to be issued under the law hence the objection should be deemed to have been allowed by dint of operation of the law. 17. The Appellant submitted that there is rich and consistent jurisprudence in our courts to support its position on the strict interpretation of tax statutes and the effect of Section 51(11) of the TPA in relation to tax disputes. The Appellant relied on the cases of: 1. **Republic v Kenya Revenue Authority Ex Parte M-Kopa Kenya Limited [2018] eKLR,** 2. **Eastleigh Mall Limited v Commissioner of Investigations & Enforcement (Income Tax Appeal E068 of 2020) [2023] KEHC 20000 (KLR)** 3. **Aquisana Limited v Commissioner of Domestic Taxes (Tax Appeal E186 of 2021) [2022] KEHC 15352 (eKLR)** 4. **Equity Group Holdings Limited v Commissioner of Domestic Taxes** 5. **Republic vs. Commissioner of Domestic Taxes Large Taxpayers Office Ex-Parte Barclays Bank of Kenya L TD [2012] eKLR** 18. The Appellant submitted that it availed requisite documents to the Respondent and that the Respondent did not deny having received the documentation or challenge the authenticity of the documentation provided, meaning that the ETR receipts are genuine and the evidence of payment reflects what was paid by the Appellant to its suppliers, including Terrex Traders Limited. That the Appellant ought not concern itself with what third parties have filed in their returns or reported to the Respondent provided the Appellant has the necessary legitimate documents to support its transactions. The Appellant cited the case of **Commissioner of Domestic Taxes v Trical and Hard Limited (Tax Appeal E146 of 2020) [2022] KEHC 9927 (KLR) (Commercial and Tax)** where Justice Majanja held that: *“The burden of proof in tax matters is not stationary but is like a pendulum swinging between the taxpayer and taxman at different points but more times than not swings towards the taxpayer. The uniqueness of our tax system in placing the evidential burden of proof on the tax payer is neither a mistake nor is it unconstitutional. The evidential burden of proof rests with the taxpayer to disprove the Commissioner and that once competent and relevant evidence is produced, then this burden now shifts to the Commissioner. I have emphasized and underlined ‘competence’ and ‘relevance’ because it is only evidence that meets these two tests that demolishes presumption of correctness and swings the burden to the Commissioner.”* 1. The Appellant submitted that the acts of the Respondent of disallowing the input VAT and recovering the tax therefrom would unfairly impose unfair financial burden on its operations. That it is trite law that the tax system should be fair and no citizen ought to bear an unfair and an unequal tax burden. To further buttress its submissions, the Appellant relied on **Keroche Industries Limited V Kenya Revenue Authority & 5 Others [2007] Eklr** where the court held: *“It is not a question of impression or perception of what is owed, instead it is what if anything, is owed under the relevant law and whether its assessment and recovery is permitted by the applicable law. If rightly due, the huge amount notwithstanding the court must uphold the right of recovery regardless of its consequence to the applicant and if not due under the law it must not hesitate to disallow it and must disallow it to among other things to uphold both the law the integrity of the rule of law.”* 1. The Appellant submitted that the Respondent did not do any further investigations to arrive at the conclusion that the Supplier did not sell its goods to the Appellant and has not produced a scintilla of evidence to this effect. The Appellant submitted that it is trite law that mere averments are not evidence and he who alleges must proof. It relied on the finding by Justice Mativo’s in **Kenya Revenue Authority v Man Diesel & Turbo Se, Kenya [2021] eKLR** where the learned judge held: *“The shifting of the burden of proof in tax disputes flows from the presumption of correctness which attaches to the Commissioner's assessments or determinations of deficiency.[10] The commissioner's determinations of tax deficiencies are presumptively correct. Although the presumption created by the above provisions is not evidence in itself, the presumption remains until the taxpayer produces competent and relevant evidence to support his position.[11] If the taxpayer comes forward with such evidence, the presumption vanishes and the case must be decided upon the evidence presented, with the burden of proof on the taxpayer. The Supreme Court of Canada in J****ohnston v Minister of National Revenue [18]*** *decided that the onus is on the taxpayer to “demolish the basic fact on which the taxation rested.” Also, the Supreme Court of Canada provided guidance on this issue in* ***Hickman Motors Ltd. v Canada [19]*** *that the onus is met when a Taxpayer makes out at least a prima facie case. Prima facie is another legal term that literally means “on its face.” To prove a case “on its face” you must provide evidence that, unless rebutted, would prove your position. According to the said decision, a prima facie case is made when the taxpayer can produce unchallenged and uncontradicted evidence. Once the taxpayer has made out a prima facie case to prove the facts, the onus then shifts to the Revenue Authority to rebut the prima facie case. If the Revenue Authority cannot provide any evidence to prove their position, the taxpayer will succeed.”* 1. The Appellant submitted that it discharged its burden of proof by providing the various invoices and documents required to claim input VAT in accordance with Section 17 of the VAT Act and financial statements of the period under review and evidence of the filed VAT returns for the period under review. The Appellant submitted that its evidence was unchallenged and uncontradicted. That the burden of proof shifted to the Respondent to prove its allegations. The Appellant cited the case of **George v Federal Commissioner of Taxation, {1952} HCA 21** *“the burden lies upon the taxpayer of establishing affirmatively that the amount of taxable income for which he has been assessed exceeds the actual taxable income which he has derived during the year of income” and that “…in order to carry that burden he must necessarily exclude by his proof all sources of income except those which he admits. His case must be that he did not derive from any source taxable income to the amount of the assessment.”* 1. The Appellant submitted that the amount assessed as derived income by the Respondent is erroneous given the factual and substantive proof and arguments by the Appellant that illustrate that the taxable income assessed exceeds the actual taxable income derived during the period under review. The Appellant relied on **Pinnie Agency Limited v Commissioner Legal Services & Board Co-ordination Department (Civil Appeal E833 of 2023) [2024] KETAT 1602 (KLR)** where the Tribunal held that: *“The Tribunal thus finds and holds that the Appellant has proved on a balance of probability that it was involved in trade and that the evidence required of it to claim input tax under Section 17(2) and (3) of the VAT Act being invoices and receipts were supplied to the Respondent and the Tribunal. It is for this reason that the Tribunal has arrived at the conclusion that the Respondent erred in disallowing the Appellant VAT input tax claims for purchases from SL when the Appellant had complied with requirements of the law under Section 17(2) and (3) of the VAT Act”* 1. In the foregoing case, the Tribunal further went on to hold that: *“Having held that the Respondent was in error to disallow the Appellant’s VAT claims which were based on the invoices and ETR receipts. The Tribunal has held the position that there was trade between the Appellant, SL and other traders. The fact that the Respondent has not disputed that the purchases by the Appellant were made in the course of trade, and the fact that the trade between SL and the Appellant has not been disputed implied that the said purchases were made wholly and exclusively in the production of income.”* 1. The Appellant submitted that in accordance to section 108 and 109 of the Evidence Act it discharged its burden of proof on the erroneous assessment of VAT that the failure by the Respondent to consider material facts produced by the Appellant have greatly prejudiced the Appellant with the excessive and erroneous tax assessment. The Appellant stated that in **Republic v Commissioner of Domestic Taxes Large Tax Paver's Office Ex Parte Barclays Bank of Kenya Ltd[2012] eklr** the court held that: *“for the proposition that the decision to tax must have a legal basis and that section 56(1) does not empower the appellant to make speculative assessments (citing Johnson v Scott (Inspector of Taxes) nor was it the intention of the legislature to put the taxpayer in a position where he would be required to produce any documents that the taxman requires.* ***(Citing Peter Bonde Nielson v Commissioner of Domestic Tax [2016] eklr).”*** 1. That in K**enya Revenue Authority v Man Diesel & Turbo Se, Kenya [2021] eKLR** the court in its analysis of the appeal from the Tribunal held that: *“the TAT was persuaded by the Respondent’s evidence. It was persuaded that the Respondent discharged the burden of proof. But more important, in auditing a taxpayer the Commissioner is required to properly consider the documentation provided and to understand the information. It is not sufficient for the Commissioner to merely request information and then disregard it and to issue an assessment as it sees fit. Where the Commissioner issues an assessment based on the taxpayer's accounts and records but has misconstrued those records then it will be sufficient for the taxpayer to explain the nature of the Commissioner’s misconception, point out the flaws in the analysis and to explain how those records and accounts should be properly understood.”* 1. The Appellant submitted that as held in ***Keroche Industries Limited V Kenya Revenue Authority & 5 Others [2007] Eklr*** (**Supra)** this Tribunal should not hesitate to disallow the Respondent from recovering the unfair, unlawful, excessive and unjust tax assessments from the Appellant. **Appellant’s Prayer** 1. The Appellant prayed the Tribunal for the following orders and reliefs; 1. Allow this Appeal 2. Annuls the Respondent’s objection decision dated 16th October, 2025 based on the grounds above, as well as the evidence contained in the Statement of Facts attached; and 3. Awards costs of this appeal to the Appellant. **RESPONDENT’S CASE** 1. The Respondent set out its response to the Appellant‘s case vide its Statement of Facts dated 10th February 2026 and filed on 18th March 2026 together with documents attached thereto, and, submissions dated 10th February 2026 and filled on 12th June 2026. 2. The Respondent averred that the disallowance of input VAT was lawful and in accordance with Section 17 of the VAT Act, that input VAT is deductible only where it arises from an actual taxable supply and is supported by valid documentation and proof of an underlying commercial transaction. That in the present case, the Appellant’s claim was based on invoices issued by Terrex Traders Limited, a supplier established during investigation to be a missing trader. The invoices and ETR receipts provided could not be authenticated and the Appellant failed to demonstrate that the alleged purchases actually occurred. 3. The Respondent averred that the bank statements and payment records submitted did not demonstrate any payments made to Terrex Traders Limited. That in the absence of proof of settlement and delivery of goods or services, the Respondent correctly concluded that no taxable supply had occurred. 4. The Respondent averred that under Section 17 of the VAT Act, entitlement to input VAT arises only where a taxpayer demonstrates that the input tax was incurred on an actual taxable supply and is supported by the documentation prescribed under Section 17(3). That the burden of proving such entitlement rests with the Appellant. 5. The Respondent stated that it was not in dispute that the Appellant satisfied the preliminary statutory conditions for claiming input VAT, namely registration for VAT, making taxable supplies, charging VAT, and claiming input tax within the prescribed timelines. That the Commissioner was therefore required to verify whether the documentation furnished by the Appellant sufficiently demonstrated the existence of an underlying commercial transaction giving rise to the claimed input VAT. 6. The Respondent averred that upon review, it established that the invoices submitted by the Appellant could not be authenticated as genuine invoices issued by the alleged supplier, Terrex Traders Limited, which had been identified at the investigation stage as a missing trader. That in addition, the ETR receipts provided could not be verified on iTax, and in several instances were not accompanied by corresponding tax invoices. 7. The Respondent submitted that further analysis of the Appellant’s bank statements revealed no evidence of payments made to Terrex Traders Limited in respect of the purported purchases. That the Appellant also failed to provide supplier statements and delivery notes to corroborate the alleged transactions. 8. The Respondent maintained that in the absence of authenticated invoices, verifiable ETR receipts, proof of payment, supplier statements, and delivery notes, the Appellant failed to demonstrate the existence of an underlying taxable supply. That consequently, the Appellant did not discharge the burden of proof required to sustain the input VAT claim. 9. The Respondent asserted that the Objection Decision was issued within the statutory timelines prescribed under Section 51(11) of the TPA. That the Appellant lodged the objection on 19th August 2025. Pursuant to Section 51(11) of the Tax Procedures Act, the Respondent is required to make an objection decision within sixty (60) days from the date of receipt of a valid objection. The Respondent stated that the Objection Decision was issued on 16th October 2025, which falls within 60 days from 19th August 2025. Accordingly, the Objection Decision was issued within the statutory period, and no deemed allowance arose under Section 51(11) of the TPA. 10. The Respondent submitted that it is mandated under Section 31 of the TPA to issue additional assessment against the Appellant to ensure that the Appellant’s returns reflected the true tax position of the Appellant. That Section 31 provides thus; *“Subject to this section, the Commissioner may amend an assessment (referred to in this section as the “original assessment") by making alterations or additions, from the available information and to the best of the Commissioner's judgement, to the original assessment of a taxpayer for a reporting period to ensure that—* *(c) in any other case, the taxpayer is liable for the correct amount of tax payable in respect of the reporting period to which the original assessment relates.”* 1. The Respondent submitted that upon receipt of the additional assessment, the burden of proof shifted to the Appellant to disprove the Respondent’s position. The Respondent relied on Section 56(1) of the Tax Procedures Act which provides as follows; *“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”* 1. The Respondent cited the case of **Grace Njeri Githua V Commissioner Of Investigations & Enforcment (Tat No. 102 Of 2018),** where the Tribunal emphasized the fact that the burden is on the Appellant to prove the assessment was wrong by stating thus: *“In this Appeal, the Appellant has not provided the Tribunal with enough evidence to show that the net income the Respondent has based the tax assessment was not income or is subject to further cost deduction in arriving at a net profit.* *It is trite law that the burden of proof is on the taxpayer to show that the tax so assessed is not due from her”* 1. The Respondent relied on the case of **Mulherin vs Commissioner of Taxation [2013] FCAFC 115**, where the Federal Court of Australia held that in tax disputes, the tax payer must satisfy the burden of proof to successfully challenge income tax assessments. That the onus is on the taxpayer in proving that assessment was excessive by adducing positive evidence which demonstrates the taxable income on which tax ought to have been levied. 2. The Respondent relied on Section 31(2) of the Tax Procedures Act,2015 which states that: *“(2) A taxpayer who has made a self-assessment may apply to the Commissioner, within the period specified in subsection (4)(b)(i), to make an amendment to the taxpayer's self-assessment.”* 1. The Respondent averred that it rejected the Appellant’s objection as guided by Section 51 (3) of the Tax Procedures Act. The Respondent relied on the case of **TAT No. 55 of 2018 Boleyn International Limited vs Commissioner of Domestic Taxes**, where it was held: *“…on 8th March 2018, the Appellant lodged an objection with the Respondent. However, the said objection did not reiterate the grounds of objection, the corrections required to be made and the reasons for the amendments. Neither did the Appellant provide the relevant documents in support of its alleged objection. Therefore, there was no conceivable way the Respondent would have considered the Appellant’s objection as the same did not place itself within the parameters of Section 51 (3) of the Tax Procedures Act”* 1. The Respondent quoted the case of **TAT No. 70 of 2017 Afya Xray Centre Limited vs Commissioner of Domestic Taxes** in which it was held that: *“From then foregoing chain of events, it is our understanding that the Appellant failed in its duty in providing these documents, in order that a comprehensive audit of its affairs be done. Accordingly, the Respondent can hardly be faulted for raising the assessment in accordance with the availed documents. Moreover, the Appellant had an opportunity to counter the Respondent’s finding after the preliminary finding and after the confirmation of the assessment. Both are instances, where the Appellant could have produced its books of accounts to counter the Respondent’s assessment after all the Appellant by law bears the burden of proof…….”* 1. The Respondent pointed out that Section 56 (1) of the Tax Procedure Act provides that in any proceedings that relate to tax Decisions, Objections and Appeals, the burden shall be on the taxpayer to prove that a tax decision is incorrect. 2. That Section 30 the Tax Appeals Tribunal Act provides that; *“In a proceeding before the Tribunal, the appellant has the burden of proving-* *where an appeal relates to an assessment, that the assessment is excessive; or* *in any other case, that the tax decision should not have been made or should have been made differently.”* 1. The Respondent relied on the High Court in the case of **Ushindi Limited v Commissioner of Investigation and Enforcement Kenya Revenue Authority [2020] eKLR** where it was stated that; *“The burden of proof was on the Appellant to raise the specific items and/or aspects of the tax assessment that were manifest errors, wrongfully imposed or not liable to be paid as tax.”* 1. That further in the case **of Digital Box Limited versus Commissioner of Investigations and Enforcement [2020]** the Tribunal held that: *“The question of burden of proof in taxation matters is provided for under the Tax Procedures Act as well as the Tax Appeals Tribunal Act. Section 56(1) of the Tax Procedures Act states that: “In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.” Section 30 of the Tax Appeals Tribunal Act similarly provides that: “In a proceeding before the Tribunal, the Appellant has the burden of proving— (a) Where an appeal relates to an assessment, that the Assessment is excessive; or (b) in any other case, that the Tax Decision should not have been made or should have been made differently.” In this case, the Appellant is the one seized of the desire to prove that the Respondent used extraneous information in arriving at its assessment. Thus, according to the provisions of the Evidence Act, the Tax Procedures Act and the Tax Appeals Tribunal Act, the burden of proof falls upon the Appellant.… The Tribunal is of the view that the Appellant did not discharge its burden of proof in showing that the Respondent used extraneous considerations and documents other than those prescribed by the law. The averments made by the Appellant did not amount to evidence.”* 1. The Respondent submitted that the burden is on the Appellant to prove that the Respondent erred in making the additional assessment. In doing so, the Appellant must adduce evidence in form of information and/or documents. 2. The Respondent submitted further that in the case of **Republic V KRA: Proto Energy Limited (2022) eKLR** the Court stated as follows; *“The most significant justification for placing the burden of proof on the tax payer is the practical consideration that the Commissioner cannot sustain the burden because he does not possess the needed evidence. Under the system of self-reporting tax liability, the taxpayer possesses the evidence relevant to the determination of tax liability. It is simply fair to place the burden of persuasion on the taxpayer, given that he knows the facts relating to his liability, because the commissioner must rely on circumstantial evidence, most of it coming from the taxpayer and the taxpayer's records. The taxpayer must present a minimum amount of information necessary to support his position. This safety valve seems to place the burden of production on the taxpayer without relieving the Commissioner of the overall burden of proof. The tax payer’s evidence must meet this minimum threshold.”* 1. The Respondent maintained that the Appellant merely pleaded that the assessment was erroneous and should not be allowed without providing documents in support. The respondent relied on the case of **Alfred Kioko Muteti V Timothy Miheso & Another (2015) eKLR** where it was held that; *“A party can only discharge its burden upon adducing evidence. ……..Merely making pleadings is not enough”* **Respondent’s Prayer** 1. The Respondent’s prayer was for orders that the Tribunal: 1. Upholds the Respondent’s Objection Decision dated 16th October 2025 as proper and in conformity with the provisions of the Law 2. Dismisses this Appeal with costs to the Respondent. **ISSUES FOR DETERMINATION** 1. The Tribunal having considered the filings and submissions by the parties is of the view that the Appeal herein distils into the following issues for determination, namely;- 1. **Whether the Respondent’s Objection Decision was time barred** 2. **Whether the Respondent erred by rejecting the Appellant’s input VAT claims and raising Additional VAT Assessments** **ANALYSIS AND FINDINGS** 1. Having identified the issues that fall for its determination, the Tribunal proceeded to analyze them as hereunder. **i. Whether the Respondent’s Objection Decision was time barred** 1. It was the Appellant’s contention that the Respondent issued the objection decision out of the mandatory 60-day statutory timeline provided in Section 51(11) of the TPA, hence its notice of objection ought to be deemed allowed by operation of the law. 2. The Appellant argued that while the Respondent received its notice of objection dated 8th August 2025 on 12th August 2025, the Respondent did not issue an Objection Decision within 60 days. That instead, the Respondent issued its Objection Decision on 16th October 2025, four (4) days after the lapse of the aforementioned prescribed statutory period therefore the decision was time barred. 3. The Respondent countered that it issued the Objection Decision within statutory timelines prescribed under Section 51(11) of the TPA. That whereas the Appellant lodged the objection on 12th August 2025, the Respondent invalidated the said notice of objection for failure to meet the requirements of Section 51(3) of the TPA and communicated the same to the Appellant vide a letter dated 13th August 2025, the Appellant thereafter requested for extension of time to lodge a Late Objection through a letter dated 15th August 2025 which was approved on 18th August 2025. The Appellant then filed a late objection on 19th August 2025, therein providing grounds of objection together with supporting documents. That this was the valid objection upon which the impugned objection decision was anchored. 4. The Tribunal analysed the record of Appeal and established that indeed the Appellant’s valid notice of objection was lodged on 19th August 2025 and not 12th August 2025. A count of time from the 19th August 2025 in accordance with Section 77 of the TPA on the due date for submission of objection shows that the objection decision issued on 16th October 2025 was issued on the 44th day well within the Statutory timeline prescribed by Section 51(11) of the TPA. 5. The Tribunal therefore finds that the Appellants averment that the Respondent’s decision was time barred and that its notice of objection ought to have been deemed allowed by operation of the law is unfounded and cannot be sustained. **ii. Whether the Respondent erred by rejecting the Appellant’s input VAT claims and raising Additional VAT Assessments** 1. The Tribunal noted that the disallowed input VAT giving rise to the dispute herein was from supplies received by the Appellant from one of its suppliers Terrex Traders Limited. 2. The Appellant averred that it claimed the input VAT from the said supplier alongside those supplies it received from other suppliers and that it supported all its input tax claims using valid tax invoices in compliance with the provisions of Section 17 of the VAT Act and the VAT Regulations in force at the time. 3. The Appellant asserted that the input tax claimed was fully supported by valid tax invoices and copies of the tax invoices as well as other supporting documentation provided to the Respondent and that in support of its objection and this appeal, it relied on provisions of Section 17 of the VAT Act, 2013 and Paragraph 9 to the VAT (Electronic Tax Invoices) Regulations, 2020. That it correctly claimed the input VAT as per the provisions of the VAT Act, 2013 since all the invoices claimed are proper invoices with Electronic Tax Register receipts as required in the above provision of the law. 4. The Respondent acknowledged that the Appellant satisfied the preliminary statutory conditions for claiming input VAT, namely registration for VAT, making taxable supplies, charging VAT, and claiming input tax within the prescribed timelines. However, it contended that upon verification of the documents adduced, it established that the invoices submitted by the Appellant could not be authenticated as genuine invoices issued by the alleged supplier, Terrex Traders Limited, which had been identified at the investigation stage as a missing trader. That in addition, the ETR receipts provided could not be verified on iTax, and in several instances were not accompanied by corresponding tax invoices. 5. The Respondent contended further that an analysis of the Appellant’s bank statements revealed no evidence of payments made to Terrex Traders Limited in respect of the purported purchases and that the Appellant also failed to provide supplier statements and delivery notes to corroborate the alleged transactions. That in the absence of authenticated invoices, verifiable ETR receipts, proof of payment, supplier statements, and delivery notes, the Appellant failed to demonstrate the existence of an underlying taxable supply. That consequently, the Appellant did not discharge the burden of proof required to sustain the input VAT claim. 6. The Tribunal observed that while the Respondent acknowledged receipt of relevant supporting documentation required for claim of input tax in accordance with Section 17 of the VAT act, it maintained that the documents were doubtful and that the Appellant needed to prove the existence of an underlying transaction. 7. The Tribunal perused the pleadings and noted that the Appellant provided the following documents in support of its claim for input tax: 1. Tax invoices and ETR receipts for the purchase made from Terrex Traders limited; 2. Proof of payments in the form of bank statements and payment receipts made to suppliers; 3. Supplier payment Ledgers; 4. Payment Vouchers; and 5. Proof of payment to customers. 8. It was the Appellant’s contention that it ought not concern itself with what third parties have filed in their returns or reported to the Respondent provided that it has the necessary legitimate documents to support its transactions. 9. At the heart of the dispute is the interpretation and application of S**ection 17** of the VAT Act, the plain and unambiguous language of **Section 17** (1), (2) and (3) of the VAT Act is clear that the only conditions provided for a taxpayer to qualify for deduction input VAT are: 10. That the input tax was incurred on a taxable supply made to or on importation made by a taxpayer at the end of the tax period, 11. That the input tax is deducted by a registered person on taxable supplies made by him, 12. That the registered supplier has declared the sales invoice in a return, 13. That the input tax is to be allowable for deduction within six months after the end of the tax period in which the supply or importation occurred, and 14. That the taxpayer shall have the relevant documentation, 15. The Appellant in this case complied with all these 4 requirements when it submitted documents to the Respondent, indeed the Respondent acknowledged that the Appellant has satisfied the statutory requirements for claim of input tax. 16. It is settled law that the burden of proof in tax cases is not stationary, it swings like a pendulum between the taxpayer and the taxman. The initial burden rests on the taxpayer with a presumption of correctness attaching to the Commissioner’s assessment, however upon adduction of evidence by the taxpayer the burden swings to the Respondent to disprove the Appellant’s assertions. 17. In the instant case, once the Appellant provided the documents required of it by Section 17 of the VAT Act for the claim of input tax, the burden shifted to the Respondent to dismantle the Appellant’s evidence with precision, however the Respondent failed to discharge this burden. The Respondent had the option of investigating the documents provided by the Appellant to assure itself of their authenticity but it did not do so. 18. The shifting burden of proof in tax cases was elucidated in the case of **Commissioner of Domestic Taxes v Trical and Hard Limited (Tax Appeal E146 of 2020) {2022] KEHC 9927 (KLR) {Commercial and Tax)** wherein Justice Majanja held: - *"The burden of proof in tax matters is not stationary but is like a pendulum swinging between the taxpayer and taxman at different points but more times than not swings towards the taxpayer. The uniqueness of our tax system in placing the evidential burden of proof on the tax payer is neither a mistake nor is it unconstitutional. The evidential burden of proof rests with the taxpayer to disprove the Commissioner and that once competent and relevant evidence is produced, then this burden now shifts to the Commissioner. I have emphasized and underlined 'competence' and 'relevance' because it is only evidence that meets these two tests that demolishes presumption of correctness and swings the burden to the Commissioner. "* 1. Section 17 of the VAT does not place a burden on the Appellant to confirm whether its suppliers actually filed their returns or documents as directed by the Respondent. It was thus improper for the Respondent to place a burden on the Appellant to provide information which is not envisaged in the law as a condition precedent for allowing the Appellant’s input tax claim. Section 17 of the VAT Act has not placed such a burden on the taxpayer. 2. If the taxpayer has complied with the applicable law, then the information obtained from third parties should not be used to forcefully bring the Appellant within the tax dragnet because there is never an intendment or equity presumption about tax. A taxpayer should only be taxed based on the textual reading of the applicable statute, and nothing more, as was held in the case of **Cape Brandy Syndicate vs. Inland Revenue Commissioner [1921] 1 KB where** the court held: ***“****In a taxing Act one has to look merely at what is clearly stated. There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used”* 1. In as much as the Respondent has every right to analyse and take into account data obtained from third parties in the course of undertaking its duties, the Tribunal holds the view that the data obtained from such an exercise should be subjected to further investigation and or corroboration with evidence from other sources of information and not be applied in a *carte blanche* manner to disenfranchise a taxpayer. 2. The Respondent, a tax authority clothed with the mandate to collect taxes and having investigative capacity, also being the custodian of taxpayers’ data cannot reasonably turn to an individual taxpayer who has no view of third-party data and or control over the said third party and require it to verify the authenticity of transactions beyond submission of documents required of it in line with the applicable laws. 3. Consequently, the Respondent’s decision to disallow the Appellant’s input VAT claim and to also raise additional assessment against it on the premise that no supplier confirmation was availed to verify the accuracy of the transaction was not a requirement under Section 17 of the VAT Act. 4. The Tribunal’s position that the Appellant was entitled to claim input VAT arising from these transactions upon meeting the prescribed legal requirements was affirmed in ***Commissioner of Domestic Taxes v Ramco Printing Works Limited (Income Tax Appeal E108 of 2020) [2022] KEHC 16062 (KLR) (Commercial and Tax) (24 November 2022) (Judgment)***, where it was held as thus:- *“In its impugned judgment, the TAT noted that the Respondent duly provided the requisite documents and held that the Respondent had established that it conducted business with one Zulma Trading and was therefore within its right to claim the input VAT in respect of Zulma Trading on account of the documentation provided.* *My finding is that the TAT made the correct finding that the Respondent was entitled to claim input VAT upon satisfying itself that the Respondent had established its case to the required standards.”* 1. For the above reasons, the Tribunal finds and holds that the Respondent erred in disallowing the Appellant’s input VAT claims and also raising additional VAT assessments against the Appellant. **FINAL DECISION** 1. The upshot of the above is that the Appeal is merited and succeeds. The Tribunal will therefore proceed to make the final orders as follows: 1. The Appeal be and is hereby allowed 2. The Respondent’s objection decision dated 16th October 2025 be and is hereby set aside. 3. Each party to bear its own cost. 2. It is so ordered. **DATED AND DELIVERED AT NAIROBI THIS 14TH DAY OF AUGUST 2026.** **……………………………..….** **ROBERT M. MUTUMA** **CHAIRMAN** **……………………………… ……..….……..……………..** **DR. TIMOTHY B. VIKIRU GLORIA A. OGAGA MEMBER MEMBER** **………………………………** **JIMMY M. MALLA** **MEMBER**