https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/111

Flora Food Governance Kenya Ltd v Commissioner of Domestic Taxes (Appeal E1254 of 2025) [2026] KETAT 111 (KLR) (2 June 2026) (Judgment) Neutral citation: [2026] KETAT 111 (KLR) Republic of Kenya In the Tax Appeal Tribunal Appeal E1254 of 2025 RM Mutuma, Chair, G Ogaga, T Vikiru & JM Malla, Members June 2, 2026 Between Flora Food Governance Kenya Limited Appellant and Commissioner of Domestic Taxes Respondent Judgment Background 1.The Appellant is a private limited company incorporated under the Companies Act, 2015. The Company’s principal activity is the sale of Blue Band margarine spreads, peanut butter, Flora margarine, Flora Cooking Oils and porridge. The products are sold through its subsidiary Company; Flora Food Sales And Distribution Kenya Limited for subsequent sale to customers in Kenya. Export sales are made through a related party Company, Flora Food Global Exports Company (GEC) incorporated in United Kingdom, for subsequent shipment to customers located outside Kenya. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 Laws of Kenya (KRA Act). Under Section 5 (1) of the Act, KRA is an agency of the Government for the collection and receipt of all revenue. For the performance of its function under Subsection (1), the Authority is mandated under Section 5(2) of the Act to administer and enforce all provisions of the written laws as set out in Parts I and II of the First Schedule to the KRA Act to assess, collect, and account for all revenues under those laws. 3.The Appellant lodged VAT refund claims for the periods of August 2023, November 2023 and December 2023 on 1st August 2025 in respect of excess input VAT resulting from making zero-rated supplies. 4.The Respondent issued to the Appellant VAT Claim Rejection Orders dated 23rd September 2025 for the period of November 2023 and 1st October 2025 for the period of December 2023, notifying the Appellant that it had rejected the VAT refund claims for the reason that the claims were time-barred as per the provisions of Section 17(5)(d) of the VAT Act as amended by the Finance Act, 2025. 5.The Appellant, being dissatisfied with the Respondent’s refund decisions, filed its Notice of Appeal dated 22nd October 2025 and filed on the same date. The Appeal 6.The Appeal is premised on the Memorandum of Appeal dated and filed on 5th November 2025 which raised the following grounds: -a.That the Respondent’s decision to reject the VAT refund claim was illegal and unreasonable as the Appellant validly lodged the VAT refund claim as per Section 17(5) (a) and 17 (5) (d) of the VAT Act, 2013 prior to the amendment of Section 17(5) (d) of the VAT Act by the Finance Act, 2025.b.That the Respondent erred in fact and law by retrospectively implementing Section 17(5)(d) of the VAT Act as amended by the Finance Act, 2025, and without clear transitional clause contrary to the principles of natural justice and Article 47 of the Constitution as well as the Fair Administrative Action Act, 2015.c.That the Respondent’s decision to reject the VAT refund claim on account of Section 17(5)(d) of the VAT Act as amended by the Finance Act, 2025 is unfair, irrational, biased and unreasonable, and a violation of the Appellant’s legitimate expectation contrary to Article 47 of the Constitution as well as the Fair Administrative Action Act, 2015. Appellant’s Case 7.The Appellant’s case is premised on the following documents:a.The Appellant’s Statement of Facts dated and filed 5th November 2025, and the documents attached thereto; andb.Its Written Submissions dated and filed on 2nd March 2026. 8.The Appellant stated that its primary business is the sale of Blue Band margarine spreads, peanut butter, Flora margarine, Flora Cooking Oils and porridge to its related parties Flora Food Sales and Distribution Kenya Limited for local consumption, and Flora Food GEC for consumption outside Kenya. That as it exports goods to Flora Food GEC located in United Kingdom, the supplies are zero-rated for VAT purposes in accordance with Paragraph 1 of Part A of the 2nd Schedule to the VAT Act, 2013. 9.The Appellant affirmed that it was registered for VAT obligation in May 2018 and makes both standard rated and zero-rated supplies. That as of October 2025, it had accumulated a VAT credit of Kshs. 1,344,943,290 on account of input VAT due to zero-rated supplies. 10.The Appellant referred to Section 17(5)(a) of the VAT Act which provides that where the input tax that may be deducted by a registered person exceeds the amount of output tax due for the period, the amount of the excess shall be refunded to the registered person provided such excess arises from making zero rated supplies. 11.It stated that in the periods August 2023, November 2023 and December 2023, it accumulated excess input tax amounting to Kshs. 5,186,063, Kshs. 12,586,935 and Kshs. 8,842,444 respectively. 12.The Appellant stated that Section 17(5)(d) of the VAT Act (as it was prior to the enactment of the Finance Act, 2025 on 1st July 2025) required taxpayers to apply for VAT refund claims of excess input tax arising from making zero rated supplies within twenty-four months from the date the tax became due and payable. That in this regard, the Appellant made VAT refund claim applications for August 2023, November 2023 and December 2023 on 1st August 2025 on iTax. 13.That the refund applications were rejected on itax with the earliest date being 23 September 2025, and the reason cited for rejection was indicated as “time barred refund applications’’ in line with Section 17(5)(d) of the VAT Act, 2025 as amended by the Finance Act, 2025. 14.That being dissatisfied with the Respondent’s decision to reject the VAT refund applications for the periods August 2023, November 2023 and December 2023, the Appellant lodged this Appeal. I. The Appellant is Entitled to a Refund Of Excess Vat in Accordance with Section 17 (5)(a) of the VAT Act 15.The Appellant submitted that the eligibility criteria for refunds is prescribed under Section 17(5)(a) of the VAT Act, 2013, which provides that a taxpayer who makes zero rated supplies and whose deductible input tax exceeded the output tax due for the period is entitled to apply for a refund of the excess input tax arising from making zero rated supplies. That the import of the provision therefore is that a taxpayer is entitled to apply for a VAT refund based on satisfaction of the following:a)The Company has excess input tax after deducting output tax due for the periodb)The excess input tax arises from making zero rated supplies 16.The Appellant stated that during the periods ended August 2023, November 2023 and December 2023 it had excess input tax after deducting output tax. That it thus satisfied the first requirement. 17.The Appellant further stated that it sells Blue Band products to its related party Flora Food GEC incorporated in United Kingdom for onward consumption by customers outside Kenya. It submitted that Paragraph 1 of Part A of the 2nd Schedule of the VAT Act, 2013 provides that exportation of goods is zero-rated for VAT purposes. That the Appellant thus provides zero rated supplies, hence satisfying the second requirement. II. The Respondent Erred in Law by Applying Section 17(5)(d) of the Vat Act As Amended by the Finance Act, 2025, Retrospectively. 18.The Appellant averred that the reason cited by the Respondent for the decision to reject the Appellant’s VAT refund applications for the periods August 2023, November 2023 and December 2023 was that it was made pursuant to the provisions of Section 17(5)(d) of the VAT Act, 2013 as amended by Finance Act, 2025 that rendered the Appellant’s VAT refund claims for the said periods time-barred. 19.The Appellant submitted that Section 17(5)(d) of the VAT Act, 2013 as amended by the Finance Act, 2025 requires taxpayers to lodge claims of excess input VAT within twelve months from the date the tax becomes due and payable. That the effective date of the provision was 1st July 2025. 20.That however, the Appellant is alive to the fact that prior to the Finance Act, 2025 amendment, Section 17(5)(d) of the VAT Act required that a claim for refund of excess tax be made within twenty-four months from the date the tax became due and payable. That nevertheless, no transitional clause was enacted to address the treatment of VAT refund claims on excess input tax accrued prior to the law taking effect, where the timelines for such claims was twenty-four months. 21.The Appellant submitted that notwithstanding the absence of a transitional clause, and the Finance Act, 2025 having expressly stated that the effective date of the amendment to Section 17(5)(d) of the VAT Act, 2013 is 1st July 2025, the amendment should apply progressively to excess input VAT claims accumulated after that effective date, being 1st July 2025. 22.The Appellant contended that prospective application of law is a long-established legal principle, which may be varied only where there is express intent to apply a law retrospectively (which intention was not made apparent in this case). That in the words of this Honourable Tribunal in NCBA Bank Kenya Plc Limited (Successor in Title of NIC Bank PLC) v. Commissioner of Legal Services & Board Coordination [2023] KETAT 556 (KLR): -““There exists a maxim on retrospectivity of laws which states that Nova Constitutio Futuris Formam Imponere Debet, Non Praeterit (A new law ought to be prospective and not retrospective, in operation). Courts have on a number of times expressed themselves on retrospectivity of new laws. In James v I.R.C [1977] STC 240 the plaintiff challenged the validity of Section 8 of the Finance Act of 1974 which increased the rate of surcharge retrospectively for the year of assessment 1972-73, in dismissing the case Slade J stated thus;-“… It is in my judgment that as the constitutional law of England stands today parliamentarians have the power to enact by-statute any fiscal law whether of a prospective or a retrospective nature and whether or not it may be thought by some persons to cause injustice to individual citizens and note. If the wording of the legislation is clear the court must give effect to it even though it may have or will have a retrospective effect.”” 23.The Appellant further relied on the Court of Appeal decision in Commissioner of Income Tax v. Pan African Paper Mills (E.A.) Limited [2018] eKLR, where the Honourable Justices in affirming the principle cited with approval, the holding of the Privy Council in Yew Bon Tew v. Kenderaan Bas Mara [1982] 3 All ER 833, stating that: -“Apart from the provisions of the interpretation statutes, there is at common law a prima facie rule of construction that a statute should not be interpreted retrospectively so as to impair an existing right or obligation unless that result is unavoidable on the language used. A statute is retrospective if it takes away or impairs a vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability, in regard to events already past. There is however said to be an exception in the case of a statute which is purely procedure, but only a right to prosecute or defend a suit according to the rules for the conduct of an action for the time being prescribed.” 24.That the same principle was upheld by the Court of Appeal in Madison Insurance Kenya Limited v Commissioner of Domestic Taxes [2025] KECA 4 (KLR) where it was held that amendments to the law should be interpreted so as not to take away rights actually vested at the time of their promulgation, in this case being the right to apply for a refund of excess input tax within twenty-four months of when that excess tax became due and payable. That the Honourable Justices stated as follows: -“36.To our mind, the general rule is that, in the absence of express provision to the contrary, statutes should be considered as affecting future matters only; and more especially that they should if possible be so interpreted as not to take away rights actually vested at the time of their promulgation. In Bellairs vs. Hodnett and Another, 1978 (1) SA 1109 A (at 1148 F – G), the Supreme Court of Appeal of South Africa, stated that, not only is there a presumption against retrospective application of legislation, but even where a statutory provision is expressly stated to be retrospective in its operation it is an accepted rule that, in the absence of contrary intention appearing from the statute, it is not treated as affecting completed transactions…” 25.The Appellant submitted that particularly in respect to refund matters, it relied on this Honorable Tribunal’s decision in Sterling and Wilson Renewable Energy Limited v. Commissioner of Legal Services and Board Co-ordination [2024] KETAT 941 (KLR) where the question on the applicability of Section 47 of the Tax Procedures Act as amended by Finance Act 2022 was considered. This Tribunal stated thus: -“51.The Appellant carried out the project in 2019 to 2021. The Finance Act 2022 was not in picture at the material time. Then why would the Appellant seek to benefit from a law that was not in force in first place? There is nothing under the new Section 47 of the Tax Procedures Act that indicates that the said section was meant to apply retrospectively to claims that were supposed to be lodged before the said section took effect. Then why would the Appellant attempt to rely on the said provision?”52.The Appellant made overpayments under the Section 47 before it was repealed by Finance Act 2022. Therefore, the Appellant’s claim falls under the said section.” 26.That prior to the enactment of the Finance Act, 2025, Section 17(5)(d) of the VAT Act stated that: -“Provided that any such excess shall be paid to the registered person by the Commissioner where –…d)The registered person lodges the claim for refund of the excess tax within twenty-four months from the date the tax becomes due and payable”. 27.That following the amendment, the provision now reads: -“Provided that any such excess shall be paid to the registered person by the Commissioner where –…d)The registered person lodges the claim for refund of the excess tax within twelve months from the date the tax becomes due and payable” 28.The Appellant averred that from a reading of the competing provisions, and guided by the authorities cited above: -a)The refund applications forming the subject of this appeal relate to excess input tax accumulated when the statutory timeline for VAT refund applications was twenty-four months.b)There is no apparent intention of applying Section 17(5)(d) of the VAT Act as amended to prior periods. The fact that those periods were subject to the twenty-four-month timelines was well within the knowledge of the drafters, and consequently, had their intention been that it be applied retrospectively, the same would have been explicitly stated. That in Kenya Revenue Authority v. Bharat General Agency [2023] KECA 630 (KLR), the Court of Appeal stated that: “as for non-criminal legislation, the general rule is that all statutes other than those which are merely declaratory or which relate only to matters of procedure or evidence are prima facie prospective, and retrospective effect is not to be given to them unless, by express words or necessary implication, it appears that this was the intention of the legislature”; andc)That even if the intention were there (which is denied), it would be unclear and ambiguous from a plain reading of the provision. That such ambiguity ought to be resolved in favour of the taxpayer as affirmed in a multitude of decisions including Cape Brandy Syndicate v. Inland Revenue Commissions (1921) 1 KB 64 and Mount Kenya Bottlers Ltd & 3 others v. Attorney General & 3 others [2019] KECA 500 (KLR). 29.That therefore, the Respondent’s decision to reject the Appellant’s VAT refund applications by applying Section 17(5)(d) of the VAT Act as amended by the Finance Act, 2025 retrospectively is illegal and grossly erroneous. That in Kenya Bankers Association v Attorney General & another; National Assembly (Interested Party) [2020] KEHC 10263 (KLR), Korir J. considered the retrospectivity of law, and affirmed that: -“54.My interpretation of Article 116(2) as read with the pronouncements of the Supreme Court and the Court of Appeal is that legislation which is passed by Parliament should be applied prospectively unless it is expressly stated within the document that the legislation should apply retrospectively.” III. The Respondent’s Decision to Reject the Appellant’s Vat Refund Application Is Unfair, Irrational, Biased and Unreasonable, and a Violation of Article 47 of the Constitution of Kenya 30.The Appellant submitted that Article 47 of the Constitution of Kenya states that “every person has the right to administrative action that is expeditious, efficient, lawful, reasonable, and procedurally fair.” 31.That the Respondent’s rejection of the VAT refund applications for August 2023, November 2023 and December 2023 constituted a violation of the Appellant’s right to fair administrative action as it was inefficient, irrational, contrary to an established legitimate expectation and grossly unfair. 32.That based on the prevailing law at the time of filing the return, the Finance Act, 2025 had not been enacted, the Appellant had twenty-four months within which to apply for a VAT Refund Claim. 33.That no transitional clause was provided for refund applications where more than 12 months but less than 24 months had lapsed since the amendment in the Finance Act, 2025. 34.That in the words of Lord Diplock, his Lordship in Council of Civil Service Unions and Others v. Minister for Civil Service, [1984] 3 All E.R. 935 expressed himself as follows: -“By "irrationality" I mean what can by now be succinctly referred to as "Wednesbury unreasonableness" (Associated Provincial Picture Houses Ltd, v. Wednesbury Corporation [1948] 1 K.B. 223). It applies to a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it.” 35.The Appellant argued that the decision of the Respondent to deny the Appellant the right to apply for a refund for August 2023, November 2023 and December 2023 despite the consideration that as at the time the return was being filed, the Appellant had twenty-four months within which to apply for a refund is undoubtedly irrational. 36.Regarding the principle of legitimate expectation, the Appellant relied on the Supreme Court decision in Kenya Revenue Authority v Export Trading Company Limited (Petition 20 of 2020) (2022) KESC 31 (KLR) (Civ) (17 June 2022), where the learned justices expounded on the doctrine of legitimate expectation as follows: -“A person could have a legitimate expectation of being treated in a certain way by an administrative authority even though he had no legal right in private law to receive such treatment. The expectation could arise either from a representation or promise made by authority, including an implied representation, or from consistent past practice. A legitimate expectation arose where a person responsible for taking a decision had induced in someone a reasonable expectation that he would receive or retain a benefit of advantage.” 37.The Appellant averred that a legitimate expectation arose in this case since at the time the excess inputs for August 2023, November 2023 and December 2023 were accumulated, Section 17(5)(d) of the VAT Act provided that a person had twenty-four months within which to apply for a refund, implying that the refund applications ought to have been lodged by 20th September 2025, 20th December 2025 and 20th January 2026 respectively. 38.It submitted that in the absence of a transitional clause or any other reasonable cause, it is irrational, utterly unfair and unconscionable for the Respondent to reject the Appellant’s refund applications citing that the applications made on 1st August 2025 were time-barred in line with Section 17(5)(d) of the VAT Act, 2013 as amended by the Finance Act, 2025. Appellant’s Prayers 39.The Appellant prayed for the following from the Tribunal:a.That the Appeal be allowed;b.That this Honourable Tribunal be pleased to declare the Respondent’s VAT Claim Rejection Orders issued on diverse dates from 23rd September 2025 for the periods August 2023, November 2023 and December 2023 on account of Section 17(5)(d) of the VAT Act as amended by the Finance Act, 2025 as unlawful, unfair, irrational and unreasonable contrary to the Appellant’s right to fair administrative action;c.That this Honourable Tribunal be pleased to declare that the Respondent’s enforcement of Section 17(5)(d) of the VAT Act, as amended by the Finance Act, 2025 retrospectively is illegal, unfair, unreasonable and violated the Appellant’s legitimate expectation contrary to Article 47 of the Constitution as well the Fair Administrative Action Act, 2015;d.This Honourable Tribunal be pleased to uphold the VAT refund applications lodged by the Appellant;e.That this Honourable Tribunal be pleased to set aside and annul the Respondent’s VAT refund Claim Rejection Orders and issue an order directing the Respondent to process the Appellant’s VAT refund claims;f.That in the alternative, this Tribunal be pleased to issue an order requiring the Respondent to accept and consider the Appellant’s VAT Refund Claim for the periods August 2023, November 2023 and December 2023;g.That this Honourable Tribunal be pleased to grant any other consequential order as deemed just and reasonable;h.That the costs of and incidental to this Appeal be awarded to the Appellant. Respondent’s Case 40.The Respondent’s case is premised on the following documents filed before the Tribunal:a.The Respondent’s Statement of Facts dated 1st December 2025 and filed on the same date; andb.Its Written Submissions dated 18th March 2026 and filed on 19th March 2026. 41.The Respondent stated that the Appellant lodged VAT refund claims for the periods August 2023, November 2023 and December 2023 on 1st August 2025. 42.The Respondent noted that Section 17(5)(d) of VAT Act, 2013 requires that such claims be lodged within 12 months from the time the tax fell due. 43.According to the Respondent, the refund claim was out of time; it therefore proceeded to reject the same on 29th September 2025. 44.That dissatisfied with the decision, the Appellant filed this Appeal. 45.The Respondent stated that the dispute herein relates to a VAT refund claimed out of time. That according to Section 17(5)(d) of the VAT Act 2013 (Revised 2025), VAT refund claims must be lodged within 12 months from the time the tax became due and payable. That the refund claims were submitted in 2025 which was beyond the statutory timeline, therefore, the refund claims by the Appellant were submitted beyond the statutory timeline. 46.The Respondent averred that all actions were taken in accordance with the provisions of the Tax Procedures Act, 2015, the VAT Act, and related regulations. 47.The Respondent submitted that it cannot apply the law retrogressively. It asserted that the amendment to Section 17(5)(d) of VAT Act, 2013 was effective 1st July 2025 as provided by Sections 1 and 34 of Finance Act, 2025. 48.The Respondent stated that Appellant made the application for refund on 1st August 2025, one month after the effective date of the amendment. 49.The Respondent affirmed that its action to reject the claim is neither irrational nor biased but is based on the law applicable as at date of rejection. 50.The Respondent relied on the case of Samuel Kamau Macharia & Another v KCB Bank Ltd & 2 Others [2012] eKLR where the Supreme Court stated that:“The general rule for non-criminal legislation is that all statutes other than those merely declaratory or related only to matters of procedure or evidence were prima facie prospective and retrospective effect was not to be given to them unless by express words or necessary implication it appeared that it was the intention of the legislature” 51.The Respondent submitted that Section 9 of the Interpretation and General Provisions Act, CAP 2 of the Laws of Kenya, states that a law can only be applied to an act that occurs after the law was adopted. 52.The Respondent maintained that it was guided by the law that was in place at the time when the Appellant filed for the VAT refunds. 53.The Respondent further submitted that the doctrine of functus officio suggests that once a statutory deadline has passed, the Commissioner lacks the discretionary power to waive the requirement as doing so will be ultra vires, therefore, the Commissioner lacked jurisdiction to entertain an out of time claim. 54.The Respondent’s further submission was that Parliament took appropriate preparatory steps including public participation prior to the enactment and operationalization of the amended VAT Act. 55.The Respondent relied on the doctrine of equity which states that equity favours the vigilant not the indolent. The Respondent submitted that the Appellant had time before the commencement of the amended Act to apply for a refund but failed to do so. 56.The Respondent further submitted that it does not make policy or legislative amendments but implements tax laws enacted by Parliament while adhering to judicial decisions. 57.The Respondent asserted that it followed the law in rejecting the refund claim by the Appellant. That it acted within the law and therefore cannot be faulted for rejecting a refund claim which was filed beyond the 12 months provided by law. 58.The Respondent argued that the Appellant is undeserving of the prayers sought due to the forestated reasons. Respondent’s Prayers 59.The Respondent prayed that the Tribunal:a.Dismisses the Appeal in its entirety;b.Upholds the VAT claim rejection orders dated 23rd September 2025; andc.Orders the Appellant to pay the costs of the Appeal. Issue for Determination 60.The Tribunal has considered the pleadings and the submissions made by the Parties, and considers the issue for determination as follows:Whether the Respondent was justified in rejecting the Appellant’s refund claims on the basis that they were time-barred. Analysis and Findings 61.Having identified the issue for determination, the Tribunal proceeds to analyse the same as hereunder. 62.Before proceeding to the substantive issue for determination, the Tribunal makes a preliminary observation regarding the scope of this Appeal. The Appellant stated in its Notice of Appeal and Memorandum of Appeal that the decisions it was appealing against were VAT refund claim rejections in respect of refund applications for the periods of August 2023, November 2023 and December 2023. However, upon examination of the record of appeal, the Tribunal notes that the Appellant only furnished it with the refund decisions for November 2023 and December 2023. 63.In lieu of the decision it purported to be a VAT refund rejection for the period of August 2023, the Appellant attached a unilateral email that it wrote to the Respondent on 4th November 2025 requesting that the Respondent issue a formal rejection notice for the August 2023 refund application. Since this email does not constitute a refund decision nor any other appealable decision, the Tribunal restricts its analysis, findings and final determination to the appealable decisions properly before it, being the VAT claim refund rejection orders dated 23rd September 2025 and 1st October 2025 for the refund claim periods of November 2023 and December 2023 respectively. 64.The Appellant disputed the Respondent’s rejection of its VAT refund applications lodged on 1st August 2025 for the periods of November 2023 and December 2023. The Appellant’s contention was that the Respondent erred in applying Section 17(5)(d) of the VAT Act as it read from 1st July 2025, the date of the operationalization of Section 34 of the Finance Act, 2025, which rendered the refund applications time-barred as the provision required that a registered person eligible for a refund lodges its claim for refund of the excess tax within twelve months from the date the tax becomes due and payable. 65.The Appellant’s position was that the refund applications were lodged within time and that the applicable timeline for lodging its VAT refund claims arising from making zero-rated supplies was within twenty-four months from the date the tax became due and payable as it read in the repealed Section 17(5)(d) of the VAT Act before 1st July 2025. 66.The crux of the dispute between the Parties turns on a single but consequential question – which version of Section 17(5)(d) of the VAT Act governed the Appellant’s refund applications filed on 1st August 2025? Was it the pre-amendment version prescribing a twenty-four-month window, or the version as amended by the Finance Act, 2025 prescribing a twelve-month window? 67.The Tribunal proceeds to resolve this question having regard to the legislative history of Section 17(5)(d), the pleadings and submissions of the Parties, and the applicable principles of statutory interpretation. 68.Prior to 1st July 2025, Section 17(5)(a) and (d) of the VAT Act read as follows: -“Where the amount of input tax that may be deducted by a registered person under subsection (1) in respect of a tax period exceeds the amount of output tax due for the period, the amount of the excess shall be carried forward as input tax deductible in the next tax period:Provided that any such excess shall be paid to the registered person by the Commissioner where—(a)such excess arises from making zero rated supplies;…(d)the registered person lodges the claim for the refund of the excess tax within twenty-four months from the date the tax becomes due and payable;” 69.From 1st July 2025, the Finance Act, 2025 amended Section 17(5)(d) of the VAT Act to read: -“17. (5)Where the amount of input tax that may be deducted by a registered person under subsection (1) in respect of a tax period exceeds the amount of output tax due for the period, the amount of the excess shall be carried forward as input tax deductible in the next tax period:Provided that any such excess shall be paid to the registered person by the Commissioner where—(a)such excess arises from making zero rated supplies;…(d)the registered person lodges the claim for refund of the excess tax within twelve months from the date the tax becomes due and payable;” 70.Section 34 of the Finance Act, 2025, which amended Section 17(5)(d) of the VAT Act took effect on 1st July 2025. The Appellant lodged its VAT refund applications for the periods of November 2023 and December 2023 on 1st August 2025, one month after the amended provision came into force. 71.While the Appellant has raised substantial and articulated arguments grounded in established principles of statutory interpretation, the Tribunal finds that the resolution of this dispute turns not on the principle of retrospectivity per se, but on the proper characterisation of what the amended Section 17(5)(d) of the VAT Act effected, and to what date it applied. 72.The Tribunal is guided by the principle of strict construction of fiscal statutes articulated by Mativo J. in Equity Group Holdings Limited v Commissioner of Domestic Taxes [2021] KEHC 25 (KLR), where it was held that: -“11.In construing fiscal statutes and in determining the liability of a subject to tax one had to have regard to the strict letter of the law. If the revenue satisfied the court that the case fell strictly within the provisions of the law, the subject could be taxed. If, on the other hand, the case was not covered within the four corners of the provisions of the taxing statute, no tax could be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter.” 73.The Tribunal notes that the interpretation of fiscal statutes applies with equal force to both the Commissioner and taxpayers. A taxpayer asserting an entitlement to a refund must bring themselves squarely within the four corners of the statute. 74.The Tribunal acknowledges the force of the Appellant’s retrospectivity arguments and the authorities cited. However, the Tribunal is persuaded that the Respondent did not apply the amended Section 17(5)(d) retrospectively in the manner asserted by the Appellant. Retrospective application, properly understood, would involve applying the amended twelve-month window to events that had already fully concluded before the amendment, for example, rejecting a refund claim that had already been validly filed and accepted under the twenty-four-month window prior to 1st July 2025. That is not this case. 75.What the Respondent did was apply the law as it stood on 1st August 2025, the date the Appellant chose to lodge its VAT refund applications for November 2023 and December 2023, to determine whether those applications were timely. On that date, the operative law expressly prescribed a twelve-month limitation period. The Appellant’s refund claims related to the periods of November 2023 and December 2023, in respect of which the twelve-month window had expired on 20th December 2024 and 20th January 2025 respectively, before the refund applications were lodged. The Respondent’s measurement of the timeliness of the refund applications against the law in force at the date of filing is, in the Tribunal’s view, a prospective rather than a retrospective application of the amended provision. 76.The Tribunal further notes that the Appellant’s preferred construction, that the applicable limitation period is the one in force at the time the excess input tax accrued, is not supported by the plain language of Section 17(5)(d), of the VAT Act which speaks only to when a claim for refund is to be lodged, not to when the underlying excess input tax arose. Importing a rule that freezes the limitation period at the point of accrual of the underlying excess tax would require the Tribunal to read words into the statute that Parliament did not enact. As this Tribunal has repeatedly affirmed, it is not within its mandate to expand the scope of a statutory provision beyond its express terms. 77.The Tribunal further observes that Parliament was fully aware of the legislative landscape when enacting the Finance Act, 2025. Parliament revisited Section 17(5)(d) of the VAT Act through the Finance Act, 2025 and chose to shorten the window of claiming VAT refunds from twenty-four to twelve months from when the tax became due and payable, and crucially, chose not to enact any transitional or savings provision to protect pending or accrued claims arising from earlier periods. 78.The Tribunal is of the considered view that transitional and savings provisions are substantive legislation which, had Parliament desired to, it would have expressed explicitly in the statute. The absence of such a provision is not an ambiguity that this Tribunal can resolve by judicial construction; it reflects a deliberate legislative silence that must be respected. 79.Whilst the Tribunal is alive to the equitable and constitutional concerns raised by the Appellant, including the doctrine of legitimate expectation and the right to fair administrative action under Article 47 of the Constitution, these considerations cannot displace a clear and unambiguous statutory provision. The right to a VAT refund under Section 17(5)(a) of the VAT Act is a statutory right, and the conditions under which it may be exercised, including the limitation period, are equally statutory. 80.The Appellant’s legitimate expectation must be assessed against the statutory framework as it stood at the time of lodgment of the refund, not as it stood at the time the excess input tax accrued. On 1st August 2025, the Appellant could not have had a legitimate expectation of being entitled to file a refund claim for November 2023 and December 2023 under a provision that had already been amended and was no longer in force. 81.In light of the foregoing, the Tribunal finds and holds that the Respondent was justified in rejecting the Appellant’s refund claims for November 2023 and December 2023 on the basis that they were time-barred as at 1st August 2025, the date on which they were lodged, pursuant to the amended Section 17(5)(d) of the VAT Act as read with Sections 1 and 34 of the Finance Act, 2025. Final Decision 82.The upshot of the above analysis is that the Tribunal finds that the Appeal is not merited. The Tribunal accordingly proceeds to issue the following Orders:a.The Appeal be and is hereby dismissed.b.The Respondent’s VAT Refund Claim Rejection Orders dated 23rd September 2025 for the refund claim for the period of November 2023 and 1st October 2025 for the refund claim for the period of December 2023 be and are hereby upheld.c.Each party to bear its own costs. 83.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 2ND DAY OF JUNE 2026.……………………………..….ROBERT M. MUTUMACHAIRMAN……………………………… ……..….……..……………..GLORIA A. OGAGAMEMBER……………………………… ……..….……..……………..DR. TIMOTHY B. VIKIRUMEMBER………………………………JIMMY M. MALLAMEMBER