https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/254

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E1173/2025 EXTRAMILE COMPANY LIMITED VS KENYA REVENUE AUTHORITY JUDGMENT # BACKGROUND 1. The Appellant is a registered taxpayer dealing in sugar and cereals. 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. Following a compliance check for the years 2020 to 2023, the Respondent issued the Appellant with additional tax assessments amounting to Ksh 207,028,556.00 on 17th July 2025. The additional taxes were in relation to Corporation income tax (CIT), Value Added Tax (VAT), Pay-As-You-Earn (PAYE) and withholding tax (WHT). 4. The Appellant objected against the assessments on 13th August 2025. 5. The Respondent’s Objection Decision dated 3 rd October 2025 confirmed the additional taxes as previously assessed. 6. Aggrieved by the Respondent’s Objection Decision, the Appellant lodged its Notice of Appeal dated and filed on 9th October 2025 # THE APPEAL 1. The Appellant’s case was founded upon its Memorandum of Appeal filed on 23rd October 2025 wherein the Appellant raised the following grounds: 1. That the Respondent erred in law and fact by using incorrect import data, selling prices for sugar and purchase price for cereals, in the determination of expected sales – stocks at NCPB prices. 2. That the Respondent erred in law and fact by including local sugar purc hases in determination of expected sales – stocks at NCPB prices 3. That the Respondent erred in law and fact in its decision to bring to charge related party balance payable amounting to Ksh 37,446,312.00 in the year 2023. 4. That the Respondent erred in law and fact by apportioning input VAT contrary to the provisions of Section 17(6) of the VAT Act 2013 (Revised 2024). * 1. That the Respondent erred in law and fact by not allowing the respondent to amend erroneous returns and recognize non- vatable sales and claim all the associated costs, as contemplated under Section 15 of the Income Tax Act (ITA). # THE APPELLANT’S CASE 1. The Appellant’s case was anchored upon; 2. Its Statement of Facts filed on 23 rd October 2025 together with documents attached thereto; and 3. Written submissions dated and filed on 26th May 2026. 4. According to the Appellant, it conducts the business of importing sugar and cereals from the East African market for sell at its own selling price as determined by market dynamics. That its cereals which include Maize, Sorghum and/or Millet are all exempt from VAT under Chapter 10 of the East African Customs Community Common External Tariff (EAC CET) as read with paragraph 25 of the First schedule of the VAT Act, 2013. Additionally, that all its sugar is imported and does not buy sugar for sale from the local market. 5. As per the Appellant, prior to year 2022, it did not operate a bank account but transacted business through the bank accounts of a related company, Daybreak Supplies Limited and one of its directors, Jayne Wangui Nyawira. That similarly, in the year 2023, its imports were paid for by another related company, Alphastone Limited. 6. It was the Appellant’s case that its input VAT deduction was only attributable to taxable supplies and no input tax was directly attributable to any other use as shown by returns which captured actual import data supported by proof of payments. 7. The Appellant asserted that it objected against the Respondent’s entire assessment save for withholding tax amounting to Ksh 25,835.00. 8. According to the Appellant, it paid all taxes lawfully payable, held numerous meetings and correspondences yet the Respondent proceeded to wrongly assess for Corporation Tax and VAT. 9. That even though it provided a financing agreement together with the ledger for related party balance amounting to Ksh 37,446,312.00 for the year ended 31st December 2023, the Appellant was not supplied with import data used to arrive at the corporate tax as required by Section 49 of the TPA and only sighted the same on 1st October 2025 which was a few days to the end of the period allowed for consideration of the objection. That this was the main complaint the Appellant had against the Respondent. 1. That the basis for additional VAT assessment was an adjustment for VAT element on underdeclared sales with disallowed VAT. That the underdeclared sales emanated from Respondent’s use of wrong import data, sugar selling prices and cereals purchase prices. 2. The Appellant stated that its freelancer Accountant upon realizing that he had filed incorrect VAT returns after omitting non-vatable sales attempted to amend them but by that time a review of records had already commenced. That this was not considered by the Respondent in its assessment whereas the Appellant’s input deduction was only attributable to taxable supplies. Thus, the Respondent erred by disallowing apportioned VAT. 3. As per the Appellant, the Respondent adopted a wrong banking transaction analysis as the basis of additional income tax for its Director, Ms. Jane Wangui Nyawira, where bank statements were analysed, taking into effect the net balance of debits and credits and then comparing them to income declared in her Income tax return yet she is a director of other companies besides the Appellant and also trades in her own name. # The Appellant’s Prayers 1. The Appellant prayed that; 2. The Appeal be allowed. 3. The Respondent’s Objection Decision dated 3 rd October 2025 be set aside. 4. The assessed Corporation tax of Ksh 128,028,814.00, Director Income tax of Ksh 1,388,350.00 and VAT of Ksh 77,585,557.00 inclusive of interest and penalties is vacated in its entirety. 5. The costs of and incidental to this appeal be awarded to the Appellant. 6. Any other orders that the Tribunal may deem fit in favour of the Appellant. # THE RESPONDENT’S CASE 1. The Respondent replied to the Appeal through its: 1. Statement of Facts dated 24 th November 2025 and filed on 25 th November 2025; and 2. Written submissions dated and filed on 25th May 2026. 2. According to the Respondent, upon conducting a verification exercise it established variances in Appellant’s return which it then proceeded to levy taxes on. 3. That in order to ascertain the correctness of the income declared by the Appellant as per the audited financial statements, the Respondent carried out a stock analysis and banking analysis test where customs records were used to calculate the quantity of goods imported (in kilograms) and then an average market prices (as published by NCPB) was used to compute expected revenue. For local sugar purchases, expected sales were computed using the ratio of the expected sales value of imported sugar to its import value. 4. This was then compared to Appellant’s bank deposits with operational expenses to estimate sales made in cash but not deposited in the bank. Further, bank deposits were reviewed and adjusted for unbanked cash and debtor balances to determine the derived income. The Respondent then compared Appellant’s declared sales to the expected sales from stock and banking analysis. 5. That despite the Appellant disclosing a related party payable to Alphastone Ltd, amounting of Ksh 37,446,312.00 for the year 2023, it availed a related party agreement that lacked a detailed breakdown, supporting invoices, and customs entry numbers the amount was thus disallowed in the income tax computation. 6. The Respondent asserted that all import entries were registered under the Appellant as the consignee and despite being requested to provide related party ledgers, agreements, supporting invoices, and customs entries to support related party transactions, the Appellant failed to so. 7. That a customs comparison of imports declared in the income tax returns against the import values from data revealed significant discrepancies and that in spite of Appellant’s returns amendment capturing import values, the same were understated in the income tax returns for the years 2020 to 2022 that however, in year 2023, the imports had been overclaimed by Ksh 35,289,177.00 which was adjusted under related party transaction. 1. The Respondent stated that it reviewed the financial statements provided and established that the Appellant categorized sales into two: vatable and non-vatable (exempt). That however, a review of the VAT returns filed by the Appellant only indicated declared vatable sales, with exempt sales omitted, despite their disclosure in the financial statements. The Respondent proceeded to apportion the input VAT as provided for under Section 17(6) of the VAT Act with the underdeclared income brought to charge at the standard rate. 2. That the Appellant failed to provide sales ledgers, purchases ledgers and the inputs analysis to support their grounds of objection specifically, the Appellant was requested to avail invoices for Vidifas Investments and Jaweki Investments but failed to do so. 3. That upon reviewing the Appellant’s Director (Jane Wangui Nyawira) transactions, it was noted that income drawn by her in the year 2023 was neither declared by the company in the PAYE returns nor charged PAYE. The Director had not also filed income tax her returns for the year 2023. Income tax was computed and the amounts were charged as PAYE to the company as the Appellant failed to avail the Director's drawings reconciliation, supporting evidence for the reconciling items’ Certified Bank Statements and the Director's current account 4. That despite claiming professional fees in relation to accounting and auditing in the tax return and paying for legal services, the Appellant failed to withholding tax pursuant to Section 35 of the ITA as a result these amounts were brought to charge for tax purposes. 5. It was the Respondent’s case that in spite of providing the Appellant with Customs import data for their PIN to substantiate the alleged errors, the Appellant neither explained nor provided an alternate import data. Equally, that pursuant to Section 59(1) of the TPA, the Appellant was requested but failed to provide the following documents to support their reconciliation; 6. Financial statements; 7. Detailed sales ledgers; 8. Sales invoices, 9. Purchases ledgers and invoices; 10. Stock reconciliations; 11. Bank reconciliations; 12. Related party ledgers; 13. Related party agreements; customs entries for the related party transactions. 14. That instead, the Appellant only availed sales and purchases summaries, documents the Respondent considered the before coming up with the assessments as the Appellant failed to any evidence showing or demonstrating that the assessment is erroneous or excessive despite being given several opportunities to support its position thus, its objection failed the requirements provided for under Section 51(3) of the TPA. That this was why the Respondent as provided for under Section 24 of the TPA proceeded to assess the Appellant’s tax liability using information available to the him. 15. The Respondent held that all actions were in accordance with statutory provisions of the law it was the Appellant who failed in discharging its burden as provided for under Section 56(1) of the TPA in spite of being granted the opportunity to respond to the findings and object to the assessment in line with due process. 16. The Respondent submitted on the following three issues for determination; 17. Whether the Appeal is competently before the Tribunal; 18. Whether the assessments raised were proper in law; and 19. Whether the Appellant has discharged its burden of proof. 20. According to the Respondent, the Appeal herein is incompetent as it flaunts the clear and strict requirements of Rules 4(a) and 5(1) of the Tax Appeals Tribunal (Procedures) Rules, 2015. This is because the Appellant’s Memorandum of Appeal and the Statement of Facts are undated and unsigned thus have no validity in law and ought to be struck out. That this was a position affirmed by the High Court in the case of **George Kirimi Ringera v Board of Trustee Diocese of Meru Iruma Parish & 2 Others [2020] eKLR** and by the Tribunal in the case of **Jarika County Lodge Limited vs Commissioner of Domestic Taxes, Nairobi TAT Appeal No.1529 of 2022.** 1. That the Appellant’s failure to sign and date its pleadings is not a procedural technicality but a violation of express statutory provisions and thus cannot be cured under Article 15 9(2)(d) of the Constitution of Kenya, 2010. 2. The Respondent asserted that its mandate to determine tax liability is derived from Section 24(2), 31(1) and 59 of the TPA which removes any doubt as to the Respondent’s powers to audit a self-assessment or a declaration where the Appellant failed to make complete and/or accurate declarations. 3. That in this instance, the following anomalies were noted in Appellant’s returns which formed the basis for amending the returns; 4. The Appellant categorized sales into vatable and non-vatable but only declared vatable sales, omitting the exempt sales; 5. The Appellant neither charged nor declared PAYE in relation to income drawn by its director in 2023. 6. The Director failed to file income tax return for the year of income 2023. 7. Whereas the Appellant’s bank statements indicated payment for legal services which are professional fees subject to withholding tax pursuant to section 35 of the Income Tax Act, the Appellant failed to remit Withholding tax for the same. 8. While the Appellant disclosed a related party payable to Alphastone Ltd amounting to Kshs.37,446,312, it failed to provide related party ledgers, agreements, supporting invoices and custom entries for the related party transactions despite being requested. 1. Customs comparisons of imports declared in the income tax returns against the import values from data revealed significant discrepan cies and despite amending the same the Appellant understated the income tax returns for the years 2020 to 2022 while overclaiming Ksh.35,289,177.00 which were already adjusted under related party transaction. 2. That emanating from this is that the Respondent’s additional assessments were well within the purview of Section 31 of the TPA, thus valid since the Appellant was afforded an opportunity to mount its defense but failed to and could not fault the Respondent for raising the additional assessments. 3. It was the Respondent’s case that Section 56 of the TPA and Section 30 of the TAT Act require a taxpayer to discharge its onerous burden of proof by availing relevant and sufficient documentation that would rebut the Respondent’s assessment. That at objection stage, the Respondent requested but was nit availed the following documents; 4. Detailed sales ledgers; 5. Sales invoices; 6. Purchase ledgers and invoices; 7. Stock reconciliations; 8. Bank reconciliations; 9. Related party ledgers; and 10. Related Party agreements; customs entries for the related party transactions. 11. That the Appellant only provided sales and purchases summaries which were insufficient and incapable of causing the presumption of correctness enjoyed by the Respondent to vanish. Additionally, that despite citing time constraints as the cause, the Appellant failed to request for additional time to furnish the additional documentation. 1. In buttressing its position, the Respondent relied on the case of # Republic v Kenya Revenue Authority; Proto Energy Limited (Ex- Parte) (Judicial Review Application E023 of 2021 [2022] KEHC 5(KLR) 1. That having failed to provide the requested documents, the Appellant’s assertions remained averments that failed to dislodge its burden of proof as couched under Section 56(1) of the TPA and Section 30 of the TAT Act. Therefore, the assessments were proper and ought to be upheld. # The Respondent’s Prayers 1. The Respondent prayed that the Tribunal; 1. Dismisses the appeal in its entirety. 2. Upholds the additional assessments as confirmed in the Objection Decision. 3. Orders the Appellant to pay costs of the appeal. # PRELIMINARY OBJECTION 1. Before proceeding, the Tribunal will address the Respondent’s Preliminary Objection which was raised in relation to the unsigned and undated Appellant’s pleadings. 2. The Tribunal has perused and has indeed confirmed that the Appellant’s pleadings are not only unsigned but undated. 3. The Tribunal will seek guidance in this regard from the holding of the case of # Shah v County Government of Trans Nzoia & Another (Environment & Land Case 11 of 2019)[2025]KEELC 1028 (KLR) (5 March 2025)(Ruling) where Dr Nyagaka J held that; *“Thus, the importance of signing the document cannot be gainsaid. A signature appended a mark, thump print of any other impressions by a person on a document gives the ‘ownership’ of the contents thereof to a person who thereby becomes the maker of the document. Therefore, unless it is a document expressly stated by law or provided by law as exempt or excluded from the requirement of a signature of the person, party or maker, it must be signed by the party purporting to be the maker to make it authentic and ‘attaching’ to the maker thereof. Failure to do than, even if the unsigned document is filed in court, it is of no consequence.”* 1. The Tribunal observes that a signature on a document serves the purpose of authenticating and validating the contents thereof, thus a critical element that ties a legal document to a specific party or their appointed representative. 1. It is the finding of the Tribunal that the Appellant herein lacks the *locus standi* to advance or defend its claims based on the unsigned pleadings thus, *void ab initio.* 2. The High Court in **Regina Kavenya Mutuku & 3 Others vs United Insurance company Limited (Civil case No. 1994 of 2000)** held as follows; *“…be that as it may, I am in agreement with the submission that an unsigned pleading cannot be valid in law. To my mind, it is the signature of the appropriate person on a pleading which authenticates the same. An unauthenticated document is not a pleading of anybody.”* 1. Consequently, the Tribunal in aligning with the jurisprudence cited above finds that the unsigned pleadings leave no other recourse other than striking out of the Appeal # FINAL DECISION 1. The upshot of the foregoing is that the Appeal is incompetent and the Tribunal proceeds to make the following Orders: 2. The Appeal be and is hereby struck out. 3. Each party to bear its own costs. 4. It is so ordered. # DATED AND DELIVERED AT NAIROBI ON THIS 17TH DAY OF JULY, 2026 SIGNED BY/FOR: **★ TH E JUDICIAR Y O F KENY A ★** **HON. EUNICE NJERI NGANGA HON. BONIFACE KIBIY TERER HON. SANKALE SPENCER OLOLCHIKE** **HON. BILLY GRAHAM OKUMU MIJUNGU** Tax Appeals Tribunal Tribunal Date: 2026-07-17 14:27:23