Thuo v Commissioner of Legal Services & Board Coodination (Tax Appeal E1056 of 2025) [2026] KETAT 92 (KLR) (26 June 2026) (Judgment)

Thuo v Commissioner of Legal Services & Board Coodination (Tax Appeal E1056 of 2025) [2026] KETAT 92 (KLR) (26 June 2026) (Judgment) Neutral citation: [2026] KETAT 92 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E1056 of 2025 RO Oluoch, Chair, AM Diriye & E Komolo, Members June 26, 2026 Between Esther Wangui Thuo Appellant and Commissioner Of Legal Services & Board Coodination Respondent Judgment Background 1.The Appellant is a registered taxpayer whose principal activity is the supply of stationery and farm produce. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469, Laws of Kenya. Under Section 5(1) of the said Act, the Respondent is an agency of the Government of Kenya tasked with the mandate of assessment, collection, and receipt of all its revenue. 3.The Respondent conducted a review of the Appellant’s Value Added Tax returns and vide a letter dated 21st May, 2025 issued Assessments demanding tax of Kshs 336,923.00 for the period 2023 to 2025. 4.The Appellant objected to the Respondent’s demand vide her Notice of Objection dated 18th June,2025. 5.The Respondent reviewed the Appellant’s objection and vide a letter dated 14th August, 2025 issued the Objection Decision confirming tax of Kshs 377,937.00 which was inclusive of penalty and interest. 6.Aggrieved by the Respondent’s decision and having been granted leave by the Tribunal on 25th November, 2025, the Appellant filed her Notice of Appeal dated 10th September, 2025 and deemed filed on 24th September, 2025. The Appeal 7.The Appeal is premised on the following grounds of appeal as stated in the Appellant’s Memorandum of Appeal dated and filed on 9th December, 2025 that:a.The Respondent erred in law and fact by upholding additional VAT on invoices No. 1821772800000000181 (Kshs 534,459) and No. 1821772800000000210 (Kshs 603,780) which were already declared in the months of September, 2024 and December, 2024 VAT returns, leading to double taxation contrary to Section 8 of the VAT Act, 2013 and Article 210(1) of the Constitution.b.The Respondent erred in including Kshs 319,200.00 from sales of green grams and beans, despite these being zero-rated under the First Schedule, Part A of the VAT Act 2013.c.The Respondent erred in including Kshs 1,114,500.00 supplied to UNESCO, a VAT-exempt entity, despite the existence of a valid exemption certificate, contrary to Section 8 (2) of the VAT Act and the First Schedule, Part II, Paragraph 7.d.The Respondent erred in treating Kshs 319,000.00 declared in December 2023 but paid in June 2024 as undeclared sales, contrary to Section 43 of the VAT Act, 2013.e.The Respondent erred in taxing Kshs 1,000,000.00 deposited from ICEA LION Money Market Investment, which was a capital redemption and not taxable under the VAT Act or the Income Tax Act.f.The Respondent failed to comply with Section 51(9) of the Tax Procedures Act 2015 by rejecting the Appellant’s objection without properly evaluating the evidence presented.g.The Respondent violated Section 47 and 210 of the Constitution by acting unreasonably, unfairly, and imposing tax not authorized by law. The Appellant’s Case 8.The Appellant’s case is premised on her Statement of Facts filed on 9th December, 2025.The Appellant, however, did not file her written submissions. As such, her case will be considered on the basis of her pleadings on record. 9.The Appellant averred that she was issued with an Additional VAT Assessment on 21st May, 2025 totalling Kshs 154,654.00, covering December 2022, December 2023, December 2024, and April 2025. 10.She stated that she lodged a Notice of Objection under Section 51 of the Tax Procedures Act on 18th June, 2025, raising the following grounds:a.Invoices worth 534,459.00(September 2024) and Kshs 603,780.00(December 2024) were already declared, and additional assessments were raised on them.b.Supplies worth Kshs 319,200.00(green grams and beans) were zero-rated under VAT Act.c.Supplies to UNESCO worth Kshs 1,114,500.00 were VAT exempt (supported by an exemption certificate)d.Kshs 319,00.00 declared in December 2023 but payment received in June 2024 were also subjected to additional assessments despite the fact that reconciliations were submitted for review.e.Kshs 1,000,000.00 deposit was liquidated from proprietors’ savings with ICEA LION Investment savings; hence, not a taxable business transaction.f.Director’s deposits (Kshs 5,472.00) wrongly treated as sales. 11.She stated that the Respondent issued an Objection Decision on 14th August 2025, rejecting her objection citing insufficient documentation and unreconciled figures. 12.The Appellant contended that the Respondent ignored valid evidence contrary to Section 51(9) of the Tax Procedures Act and also failed to apply the provisions of the VAT Act, and imposed tax not authorized by law contrary to Articles 47 and 210 of the Constitution. The Appellant’s Prayers 13.The Appellant prayed that:a.The appeal be allowed in its entirety;b.The Objection Decision dated 14th August 2025 be set aside.c.The additional VAT assessments totaling Kshs 154,654.21 be annulled;d.A declaration be issued that the Respondent violated Article 47 and 210 of the Constitution;e.Any further relief deemed just and fair be granted. The Respondent’s Case 14.The Respondent’s case is premised on its: -a.Statement of Facts dated 29th January 2026 and filed on 30th January 2026, together with the documentation attached thereto.b.Written submissions dated and filed on 4th May,2025. 15.The Respondent stated that it flagged the Appellant for review of the Value Added Tax Returns following a report that showed that the Appellant had made taxable supplies/sales in the Tax Periods December 2022, December 2023, December 2024 and April 2025 but failed to declare the same for tax purposes. 16.It stated that it engaged the Appellant in March 2025 and requested the Appellant to declare the said sales for purposes of VAT. However, the Appellant failed to respond. It stated further that it subsequently sent several reminders in April 2025.However, even then it received no response or reaction from the Appellant, which then led it to issue the assessments on 21st May 2025 demanding tax of Kshs 336,923.00. 17.In response to ground (a) of the Appellant’s grounds of Appeal, the Respondent asserted that there was no double taxation since the Respondent interrogated the Appellant’s VAT self-Assessment Tax Returns for September 2024 and December 2024 and noted that the Appellant neither declared Kshs 534,459. 00 (Invoice No 1821 7728000000000181) nor Kshs 603,780.00 (Invoice No. 18217 72800000000210) for purposes of VAT. 18.It argued that contrary to the Appellant’s allegations, there was no evidence to prove that the Appellant had declared those invoices. Further, that the Appellant has not adduced the VAT self-Assessment Tax Returns for September 2024 and December 2024 to prove the allegations, thus failing to discharge the burden of proof. 19.In response to ground (b) of the Appellant’s Memorandum of Appeal, the Respondent refuted the Appellant’s allegations and averred that there was no proof that Kshs 319,200.00 arose from a tax-exempt supply as the Appellant has not adduced the said tax invoice of Kshs 319,200.00 before the Tribunal to enable the Tribunal and the Respondent to determine the nature of the supply and whether the said supply is taxable or not. 20.The Respondent further refuted the Appellant’s allegation on the supply of green grams and beans, as the same are neither exempt under the First Schedule to the Value Added Tax Act, Cap 476 of the Laws of Kenya nor zero-rated under the Second Schedule of the said Act. AS such, the Respondent were justified to confirm the VAT assessment on the tax invoice of Kshs 319,200.00. 21.In rebuttal to ground (c) of the Appellant’s Memorandum of Appeal, the Respondent averred that it did not err in assessing VAT on the tax invoice of Kshs 1,114,500.00, as the Appellant failed to attach the alleged exemption certificate and, therefore, the Respondent was unable to determine the veracity of the Appellant’s allegations. Further that the Appellant has not adduced evidence before the Tribunal to show that the services or goods supplied in the said tax invoice constituted an exempt supply, therefore failing to discharge the burden of proof. 22.In response to ground (d) the Respondent averred that it did not err in assessing VAT on the Tax Invoice of Kshs 319,000.00, as the Appellant failed to provide evidence to support her allegations and has equally failed to discharge the burden of proof as required by law. 23.In response to ground (e), the Respondent averred that the Appellant failed to provide proof that Kshs 1,000,000.00 charged to VAT was a capital redemption. Further, that despite the Appellant producing the ICEA LION money market statement, she did not produce a corresponding bank account statement showing the deposit of the alleged capital redemption. 24.The Respondent averred further that the Appellant also failed to indicate the directors’ deposits and receipts from the money market fund in the bank statements. It therefore argued that the information availed by the Appellant was insufficient to disprove the assessment. 25.The Respondent averred that, contrary to the Appellant’s allegations at ground (f), the Appellant failed to highlight the evidence which the Respondent failed to consider. Further that the Appellant also failed to prove how the Respondent had violated Article 47 and 210 of the Constitution of Kenya 2010, and this also failed to prove what is unreasonable and unfair about, or unauthorized in, the Respondent’s Objection Decision of 14th August 2025. 26.The Respondent reiterated that the Appellant has not discharged its burden of proof as per Section 56(1) of the Tax Procedures Act, Section 30 of Tax Appeals Tribunal Act, and Section 107 of the Evidence Act. Therefore, its Objection Decision was valid in law. 27.In its Written submissions the Respondent submitted on three issues: a. Whether the Appellant declared Kshs 534,459 (Invoice 18217728000 00000181), Kshs 603,708.00 (Invoice 1821772800000000210) and Kshs 319,000.00 for the purposes of VAT. 28.The Respondent submitted that, contrary to the Appellant’s allegations, the Appellant failed to adduce any documentary evidence to support her allegations. It submitted further that, at the very least, the Appellant should have adduced the submitted self-assessment VAT returns for September 2024, December 2024, and December 2023, and the impugned invoices for the Tribunal and the Respondent to verify the Appellant’s assertions and make a determination on the same. 29.The Respondent submitted that the Appellant neither produced the impugned invoices at the objection and Appeal stage nor highlighted where the declarations for the VAT returns for September 2024, December 2024, and December 2023 were made. 30.The Respondent submitted that, without the impugned invoices and the Self-Assessment VAT Returns for September 2024, December 2023 and 2024, it was not possible to ascertain the veracity of the Appellant’s allegations. The Respondent maintained that it reviewed the Appellant’s VAT Returns for the period under review and noted that no such invoices were either declared or charged VAT. 31.The Respondent reiterated and submitted that there was no double taxation since the Appellant neither declared invoices of Kshs 534,495, Kshs 603,708.00 nor Kshs 319,000 for purposes of VAT, therefore failing to discharge the burden of proof. 32.The Respondent relied on the Tribunal’s observation in the case of Dianga vs Commissioner of Domestic Taxes (2023) KETAT 508(KLR) where it stated: -“ 75.Section 23 of the TPA requires a taxpayer to maintain any document required under a tax law so as to enable its tax liability to be readily ascertained. 76.The Tribunal notes that while the Appellant made averments in regard to the Appeal, she did not provide documents to support the averments. The Appellant made averments and failed to support them by providing supporting documents. 77.The Tribunal notes that Section 56(1) of the TPA provides that: -in any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect 78.This Section places the burden of proof in tax cases on the taxpayer. The Section is reinforced by section 30 of the TAT Act 81.The Tribunal finds that the Appellant did not discharge her burden of proof that the Respondents assessment of Income tax and VAT were wrong” b) Whether the Respondent charged VAT on zero-rated and exempt supplies 33.On the issue of the alleged zero-rated exempt supplies to UNESCO of Kshs 1,114,500.00, the Respondent submitted that the Appellant did not adduce the alleged tax invoice for the zero-rated supplies or any documentary evidence proving the nature of the alleged supply, whether the same qualified as a zero-rated supply under the Value-Added Act. It further submitted that the Appellant similarly failed to adduce the alleged exemption certificate for its alleged exempt supply and that no documentary proof was adduced to establish that the impugned transaction constituted an exempt supply for VAT purposes. 34.The Respondent submitted that whereas the Appellant adduced the purported contract for goods and related services, the same established the following:a.The purported impugned contract was between the United Nations Education Scientific and Cultural Organization and EZRA Stationers Enterprises. The Appellant did not demonstrate any nexus between Ezra Stationers Enterprise, the Contractor, and the Appellant.b.The purported impugned contract is not duly executed but partially signed, and that it is invalid and not legally binding. Therefore, it cannot corroborate the Appellant’s allegations, as the same is unreliable.c.The purported contract is also not dated. Thus, the Respondent can neither ascertain whether it is relevant nor relate to the period under review.d.Similarly, the purported contract is not accompanied by the tax invoices or proof of supply of VAT-exempt supplies. In view of this, it is not possible to ascertain whether the Appellant supplied goods or services which are exempt.e.The above chain of events proves that the Appellant either failed to keep proper records to support her allegations or the Appellant neither made exempt nor zero-rated supplies as alleged.f.Either way, the Appellant failed to comply with Sections 23(1) and 59(1) of the Tax Procedures Act Cap 469B and Section 43 of the Value Added Tax Act, Cap 476. 35.The Respondent relied on the Tribunal’s case of Juliematisse Kenya Limited vs Commissioner Legal Services and Board Coordination (2025) KETAT 402 (KLR) where the Tribunal held as follows, as per paragraph 56 of the judgement:“56The Tribunal notes that for the taxpayer to discharge the burden of proof under section 56(1) of TPA and Section 30 TAT, the Taxpayer must have kept records to aid in determining tax liability. Section 23(1) of the TPA mandates the taxpayer to keep records for at least five years to enable determination of tax liability…. 58.Litigants ought to furnish the Tribunal with documentary evidence to enable the Tribunal make an informed decision. This is true in light of Section 13(2) (d) of the TPA Act. 59.It was the Tribunal’s view that the foregoing provisions of laws and case laws aim to guide the taxpayer in discharging burden of proof. The question then was whether the Appellant complied with the foregoing provisions of law.” 36.The Respondent submitted that the Appellant failed to comply with the cited provisions, which require her to keep proper records and produce them upon demand in order for the Respondent or the Tribunal may ascertain her tax liability. The Respondent further relied on the case of Family Signature Limited vs Commissioner Investigations & Enforcement TAT No.25 of 2016. 37.The Respondent reiterated that the Appellant failed to discharge the burden of proof due to her failure to adduce sufficient documentary evidence to prove that the impugned transactions were exempt supplies or were otherwise not chargeable to VAT. It argued therefore that it cannot be faulted for confirming the Assessment dated 21st May, 2025. c)Whether the Respondent’s Objection Decision should be upheld 38.On the issue of the sum of Kshs 1,000,000.00, where the Appellant had alleged that the same was a capital redemption from ICEA LION Money Market Fund, the Respondent submitted that whereas the Appellant produced an ICEA LION Money Market statement, she did not produce a corresponding bank statement showing the deposits of the alleged capital redemption, or otherwise identify the said receipt in its bank records. 39.The Respondent submitted further that the Appellant also failed to indicate the directors’ deposits and receipts from the money market fund in the bank statement. It therefore argued that the information availed was insufficient to verify the allegation made and that whereas the Appellant adduced an Addendum to the Letter of offer dated 26th March, 2025, she failed to demonstrate the relevance of the said letter to the dispute at hand. 40.The Respondent asserted that it was incumbent upon the Appellant to explain the relevance of the said letter dated 26th March 2025 and that, without this information, the Appellant’s Statement of Facts falls short of the provisions of Section 13(2)(b) of the Tax Appeals Tribunal Act Cap 469A, as read with Rule 5 of the Tax Appeals Tribunal (Procedure) Rules. To buttress its argument, the Respondent relied on the case of Gedi Boss Trading and Transportation Limited vs Commissioner of Domestic Taxes, Nairobi TAT Appeal No. E661 of 2023. 41.The Respondent pointed out that the said letter from KCB dated 26th March 2025 referred to an overdraft facility and not ICEA LION Investment savings thus, the said letter did not address the Appellant’s allegations that what was charged VAT was a liquidation of savings. 42.The Respondent further pointed out the Appellant’s allegation that the Respondent failed to consider the evidence placed before it at the objection review stage, and submitted that these were mere averments of the Appellant, as she did not highlight the specific evidence which the Respondent failed to consider, or demonstrate how consideration of the said evidence would have led to a different decision. 43.On the issue of the Appellant’s assertion that the Respondent violated Articles 47 and 210 of the Constitution of Kenya, 2010, the Respondent submitted that the Appellant failed to demonstrate how the Respondent’s Assessment dated 21st May 2025 and the Objection Decision dated 14th August 2025 were rendered contrary to the provisions of the law. It argued that he who alleges a fact must prove, and in this case, the Appellant failed to prove its allegations to the required threshold. 44.The Respondent submitted that it engaged the Appellant in March 2025 and in April 2025, where it issued several reminders requesting that the Appellant to declare the said sales or account for the same for VAT purposes. However, the Appellant failed to respond and, as a consequence, it brought the impugned sales to charge and issued the Assessment dated 21st May 2025.To buttress its case, the Respondent relied on the following cases:a.Darwine Wholesalers Limited vs Commissioner of Investigations and Enforcement (2023) KEHC 23537(KLR)b.Rebecca Fashion (Kenya) Limited vs Commissioner Investigations & Enforcement (2025) KETAT 278 (KLR) The Respondent’s Prayers 45.The Respondent prayed that the Tribunal:a.Upholds the amended assessment of 21st May 2025 as confirmed in the objection Decision dated 14th August as valid and in conformity with the provisions of the Law; andb.Finds the appeal herein is incompetent, premature, without merit and dismisses it with costs to the Respondent. Issues For Determination 46.The Tribunal has considered the parties’ pleadings, documentation, and the Respondent’s submission, and is of the view that this Appeal raises one issue for determination: Whether the demanded tax is due and payable Analysis And Findings 47.The genesis of the dispute arose from the Respondent conducting a review of the Appellant’s VAT returns and establishing that the Appellant made taxable supplies/sales in the periods December 2022, December 2023, December 2024, and April 2025 but failed to declare the same for tax purposes. 48.One of the issues in contention was that the Appellant had stated that invoices worth 534,459.00 (September 2024) and Kshs 603,780.00(December 2024) were already declared and additional assessments were raised on them. On its part, the Respondent had submitted that the Appellant did not adduce any documentary evidence to support these allegations. Adding that, at the very least, the Appellant should have adduced the submitted self-assessment VAT returns for the months in question, which the Appellant failed to adduce. 49.The Appellant had also asserted that the Respondent had erred in including Kshs 319,200.00 from sales of green grams and beans, despite them being zero-rated. Further that the Respondent had also erred in including Kshs 1,114,500.00, which had been supplied to UNESCO, as this is a VAT-exempt entity and despite the existence of valid exemption certificates. 50.On its part, the Respondent had stated that the Appellant did not adduce the alleged tax invoice for the zero-rated supply or any documentary evidence to prove the nature of the supply, as to whether the same qualified as zero-rated under the VAT Act. The Respondent had also stated that the Appellant failed to adduce the exemption certificates it had alleged to possess for the supply to UNESCO. 51.The other bone of contention was that the Appellant faulted the Respondent in taxing Kshs 1,000,000.00 deposited from ICEA LION Money Market Investment, as this was a capital redemption not taxable under the VAT Act or Income Tax Act. On its part, the Respondent had stated that although the Appellant produced an ICEA LION Money Market Statement, it did not produce a corresponding bank statement showing the deposit of the alleged capital redemption or identifying the said receipt in its bank records. 52.The Tribunal notes that in all the three instances the Appellant failed to adduce any evidence to back its assertions, neither has she availed any such evidentiary proof before the Tribunal to help it make an informed decision. 53.Section 23(1) of the Tax Procedures Act mandates the taxpayer to keep records that can ascertain its tax position. It provides as follows:“Record-keepingi).A person shall: -a.Maintain any document required under a tax law, in either of the official languages: -b.Maintain any document required under persons tax liability to be readily ascertained; andc.Subject to subsection (3), retain the document for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law” 54.Section 43 (1)(2)(a)(b)(c) of the Value Added Tax Act further reinforces the need for a taxpayer to keep records. It provides as follows;“1).A person shall, for the purposes of this Act, keep in the course of his business, a full and true written record, whether in electronic form or otherwise, in English or Kiswahili of every transaction he makes and the record shall be kept for a period of five years from the date of the last entry made therein:2).The records to be kept under subsection (1) shall include;a)Copies of all tax invoices and simplified tax invoices issued in serial number order;b)Copies of all credit and debt notes issued in chronological order;c)Purchase invoices, copies of customs entries, receipts for the payment of customs duty or tax and credit and debt notes received to be filed chronologically either by date of receipt or under each supplier’s name” 55.As stated herein above, the Appellant just made mere averments without substantiating the same with evidence to the Respondent or the Tribunal during this Appeal. 56.The Tribunal relies on the case of Kenya Power and Lighting Co Ltd vs Rasul Nzembe Mwadzaya (2020) eKLR where the court stated.“Since no evidence was adduced in support of the defence case, the defence on the face of record therefore remained mere allegations.” 57.Section 56(1) the Tax Procedures that places the burden of proof on the taxpayer in tax matters. It provides as follows:“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect” 58.It is given that the Appellant is the custodian of the documents, and it is therefore incumbent up it to keep its records and avail them when required for tax purposes. In this instance, the Appellant did not avail any relevant documents to prove the Respondent’s assessment to be incorrect. 59.The Tribunal further relies on the case of Commissioner of Domestic Taxes vs Trical and Limited (Tax Appeal E146 of 2020(2022 where the learned judge noted;“It is clear that the evidential burden of proof rests with the taxpayer to disapprove the Commissioner and that once competent and relevant evidence is produced then this burden shifts to the Commissioner. I have emphasized and underlined ‘competence and relevance’ because it is only evidence that meets these two sets that demolishes presumption of correctness and swings the burden to the Commissioner. This means that even if one avails evidence but then it is found that the same is incompetent or irrelevant, then the burden continues to remain with the taxpayer.” 60.It is the Tribunal’s considered view that failure by the Appellant to provide documentary evidence to support her assertions meant that the Respondent could not be faulted for demanding the tax as it did. 61.In view of the foregoing, the Tribunal finds and holds that the demanded tax is due and payable. Final Decision 62.The upshot of the foregoing is that the appeal lacks merit and the Tribunal proceeds to issue the following orders:a.The Appeal be and is hereby dismissed.b.The Respondent’s Objection Decision dated 14th August 2025 be and is hereby upheldc.Each party to bear its own costs 63.Orders accordingly. DATED AND DELIVERED AT NAIROBI THIS 26TH DAY OF JUNE 2026DR. RODNEY ODHIAMBO OLUOCH - CHAIRMANABDULLAHI M. DIRIYE - MEMBERDR. ERICK K’OMOLO - MEMBER