[2025] KETAT 64 (KLR)

Gachui v Commissioner of Domestic Taxes (Tax Appeal E814 of 2023) [2025] KETAT 64 (KLR) (31 January 2025) (Judgment)

Neutral citation: [2025] KETAT 64 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E814 of 2023

RM Mutuma, Chair, T Vikiru, Jephthah Njagi, M Makau & D.K Ngala, Members

January 31, 2025

Between

Susan Nungari Gachui

Appellant

and

Commissioner of Domestic Taxes

Respondent

Judgment

Background 1. The Appellant is a Kenyan entrepreneur and a registered taxpayer dealing in residential houses that earn her rental income.

2. The Respondent is a principal officer appointed pursuant to Section 13 of the Kenya Revenue Authority Act (KRA), Act No. 2 of 1995, and KRA is empowered to enforce and administer provisions of written laws set out in Section 5 as read together with the First Schedule of the KRA Act.

3. The Respondent issued Agency Notices dated 8th September 2023 to the Appellant’s bankers to remit into the Respondent’s Account the sum of Kshs. 73,108,365. 00 being taxes due and payable by the Appellant.

4. The Respondent issued a Notification for Restraint over Property L.R. No. 209/8553/165 which the Appellant received on 25th October 2023 for unpaid taxes of Kshs. 73,108,365. 00.

5. Upon inquiring from the Respondent, the Appellant was informed of Legacy Assessments for the periods 2007 to 2012 giving rise to a total of Kshs. 39,312,695. 00.

6. The Appellant also discovered amended assessments in her iTax account for the years 2016 and 2017 amounting to Kshs. 21,310,015. 00.

7. The Appellant, being dissatisfied with the Respondent’s Notification of Restraint of Property received on 25th October 2023 lodged this Appeal at the Tribunal vide it Notice of Appeal dated and filed on 17th November 2023.

The Appeal 8. The Appeal is premised on the following grounds as stated in the Appellant’s Memorandum of Appeal dated and filed on 17th November 2023;a.That the Respondent erred in fact and law by assessing taxes on income that was never received by the Appellant and not consisting of gains or profits of the Appellant contrary to Section 3 (2) as read with Section 6 of the ITA;b.That the Respondent erred in fact and law by bringing to charge income exempted under the Rental amnesty as provided for by Section 123 C (since repealed) of the ITA;c.That the Respondent erred in law and fact by assessing rental income tax, contrary to Section 123 C (now repealed) of the ITA and its communication to the public that such income was exempt under law and thus being in breach of the principle of legitimate expectation;d.That the Respondent erred in fact and law by not considering and reducing allowable expenditure while calculating taxes on the rental income contrary to Section 123 C (3) of the Income Tax Act;e.That the Respondent violated the Appellant’s constitutional right to fair administrative action by acting arbitrarily and issuing the Notification of Restraint of Property, going as far back as sixteen years;f.That the Respondent erred in law and fact by assessing rental income at a rate of 30% instead of the monthly rental income tax rate of 10% contrary to Section 6A of the ITA which became effective on 1st January 2016;g.That the Respondent erred in law and fact by bringing to charge an unreasonable and unjustified amount of rental income as opposed to the Appellant’s actual income; and,h.That the Respondent violated the Appellant’s Constitutional right to fair administrative action by not disclosing the reasons for its tax demands and increasing the Appellant’s revenue for the 2016 and 2017 year of income.

The Appellant’s Case 9. The Appellant’s case is premised on the following documents before the Tribunal;a.Statement of Facts dated and filed on 17th November 2023 together with the documents attached thereto; and,b.Written submissions dated 4th September 2024 and filed on 5th September 2024.

10. The Appellant averred that the Respondent informed her of Legacy Assessments for the periods 2007 to 2012 giving rise to a total of Kshs. 39,312,695. 00, a period which the Appellant had no income and all the rental income being generated was being received and accounted for by her late husband.

11. The Appellant averred that prior to the Confirmation of Grant executed by the High Court of Kenya on 23rd September 2016, she did not own any property nor receive any rent.

12. The Appellant averred that based on Section 3 and 6 of the Income Tax Act or in any other tax law, there is no provision which provides that for a taxpayer to be taxed on rental income that she did not receive.

13. The Appellant submitted that Section 3 of the ITA provides that:“(1)Subject to, and in accordance with, this Act, a tax to be known as income tax shall be charged for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.(2)Subject to this Act, income upon which tax is chargeable under this Act is income in respect of -(a)gains or profits from -(i)a business, for whatever period of time carried on.”

14. Further, the Appellant submitted that Section 6 of the Income Tax Act provides that;“For the purposes of section 3 (2) (a) (iii), ‘gains or profits’ includes royalty, rent, premium or similar consideration received for the use or occupation of property.”

15. The Appellant submitted that it is trite law that any demand for tax has to be made on the basis of an express statutory provision, the Appellant relied on the case of Vestey vs. Inland Revenue Commissioners (1979) 3 All ER at 984, where this position was set out categorically as follows;“Taxes are imposed on subjects by parliament. A citizen cannot be taxed unless he is designated in clear terms by a taxing Act as a taxpayer and the amount of his liability is clearly defined.”

16. The Appellant further relied on the case of Keroche Industries Limited vs. Kenya Revenue Authority & 5 Others [2007] 2 KLR 240 where Justice Nyamu held that;“…taxation can only be done on clear words and cannot be on intendment. Linked to this is that a penalty must be imposed in clear words. Finally even where the inclination of the legislature is not clear or where there are two or more possible meanings, the inclination of the court should be against a construction or interpretation which imposes a burden, tax or duty on the subject...Nothing summarizes the above position better than Brooms Legal Maxims: 'a remedial statute therefore shall be construed so as to include cases which are within the mischief which the statute was intended to remedy; whilst, on the other hand, where the intention of the Legislature is doubtful, the inclination of the court will always be against that construction which imposes a burden, tax or duty or the subject.”

17. The Appellant averred that she did not receive any rent prior to 23rd September 2016, it is therefore unclear why the Respondent expects her to account and pay tax on income not earned.

18. The Appellant submitted that Section 123 C of the ITA (since repealed), stipulated as follows;“(1)Subject to subsection (2) but notwithstanding any other provisions of this Act, the Commissioner shall, with effect from the 1st July, 2015, refrain from assessing or recovering -(a)taxes, penalties or interest thereon in respect of any period before and during the 2013 year of income -(b)penalties or interest thereon in respect of the 2014 and 2015 years of income - where -(i)the income is in respect of gains or profits for the use or occupation of immovable property earned by a person, and(ii)the returns or amended returns for the 2014 and 2015 years of income are submitted and the tax paid on or before the 30th June, 2016. (2)This section shall not apply in respect of any tax where the person who should have paid the tax -(a)has been assessed in respect of the tax or any matter relating to the tax, or(b)is under audit or investigation in respect of the undisclosed income or any matter relating to the undisclosed income.(3)Where a person has no documentation to support expenditure, such person shall be allowed a deduction of forty percent of the gross rent, premium or similar consideration for the use or occupation of immovable property.”

19. The Appellant submitted that the Respondent acted illegally in charging tax on exempt rental income contrary to the provisions of Section 123 C of the Income Tax Act (ITA).

20. The Appellant averred that Section 123 C of the ITA provided that landlords were exempt from taxes, penalties and interest for period before and during the 2013 year of income, yet the Respondent proceeded to illegally charge tax on undeclared rental income in respect of these periods.

21. The Appellant further submitted that pursuant to the enactment of Section 123 C of the ITA, the Respondent informed the members of the public that it had extended amnesty to taxpayers on undeclared rental income for the period of 2013 and prior.

22. The Appellant averred that relying on Section 123 C of the ITA and in order to take advantage of the amnesty she declared rental income for the applicable period of the investigation.

23. The Appellant relied on the case of The Cape Brandy Syndicate vs. The Commissioner of Inland Revenue (1) (1930) 12 TC 358 where the court expressed as follows:“In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied' and 'subsequent legislation, if it proceeded on an erroneous construction of previous legislation, cannot alter the previous legislation.”

24. The Appellant averred that the rationale behind this doctrine is that levying of tax is burdensome and tax should only be imposed if the language of the statute unequivocally says so.

25. The Appellant relied on the case of Mount Kenya Bottlers & 3 Others vs. The Attorney General & 3 Others [2019] eKLR, where the Court of Appeal held:“There should be no room for presumption or assumption in this case. As stated earlier, nothing is to be read in or implied in tax law and a strict constructionist interpretation must be adopted.”

26. The Appellant further averred that it is a principle of fairness that legitimate expectation ought not to be thwarted and that the Constitutional principle of the rule law calls for predictability and certainty in Government dealings with the public including by adhering to statutory provisions. That having complied with the requirements set out under Section 123 C of the ITA there was a legitimate expectation on the part of the Appellant that the amnesty extended therein would apply to her.

27. The Appellant averred that the Respondent acted unfairly by letting the Appellant believe in the existence of exemption from taxes under Section 123 C, of the Act which belief was buttressed by the Respondent’s extension of amnesty only to arbitrarily demand additional taxes for the period covered under the provisions.

28. The Appellant relied on the case of Communications Commission of Kenya & 5 others vs. Royal Media Services Limited & 5 others [2014] eKLR, the Supreme Court of Kenya explained the concept of legitimate expectation as follows;“Legitimate expectation would arise when a body, by representation or by past practice, has aroused an expectation that is within its power to fulfil. Therefore, for an expectation to be legitimate, it must be founded upon a promise or practice by a public authority that is expected to fulfil the expectation.”

29. The Appellant submitted that the Supreme Court went on to hold that legitimate expectation arises where the following conditions are met;i.there must be an express, clear and unambiguous promise given by a public authority;ii.the expectation itself must be reasonable;iii.the representation must be one which it was competent and lawful for the decision-maker to make; and,iv.there cannot be a legitimate expectation against clear provisions of the law or the Constitution.

30. To buttress her averments with regard to legitimate expectation, the Appellant relied on the cases of;a.Keroche Industries Limited vs. Kenya Revenue Authority & 5 Others [2007] eKLR;b.Vivo Energy Kenya Limited vs. Commissioner of Customs & Border Control;c.Kenya Revenue Authority & another [2020] eKLR; and,d.Kenya Revenue Authority & 2 others vs. Darasa Investments Limited [2018] eKLR.

31. The Appellant submitted that Section 123 C (3) (since repealed) of the ITA. stipulated as follows;“(3)Where a person has no documentation to support expenditure, such person shall be allowed a deduction of forty percent of the gross rent, premium or similar consideration for the use or occupation of immovable property.”

32. The Appellant averred that notwithstanding the erroneous and unlawful assessments, in any case the Respondent ought to have reduced allowable expenditure amounting to 40% from the purported taxable income for all the years prior to 2015 before issuing its assessments. That the reduction of the allowable expenditure ought to have been done whether the Appellant provided any documentation or not.

33. The Appellant averred that the Respondent failed to act expeditiously, efficiently, reasonably and in a manner that is procedurally fair by taking enforcement action after sixteen years from 2007.

34. The Appellant averred that the Respondent was precluded from the lapse of five years from bringing a tax claim against the Appellant. That considering some of the periods relating to this Appeal precede the coming into force of the Tax Procedures Act.

35. The Appellant averred that the Respondent is precluded by the law from seeking to collect taxes after the lapse of 7 years. That this is provided in Section 79 (1) of the Income Tax Act, 2012, which stated that;“an assessment may be made under this Act at any time prior to the expiry of seven years after the year of income to which the assessment relates.”

36. The Appellant relied on the case of Republic vs. Commissioner of Domestic Taxes Ex-Parte Affiliated Business Contacts Ltd [2015] eKLR, where the court precluded the Respondent from demanding taxes after 11 years.

37. The Appellant averred that the Respondent has acted irrationally and contrary to the kind of efficiency and expediency envisaged under Article 47 (1) of the Constitution.

38. The Appellant averred that the failure by the Respondent to provide an assessment of tax monies claimed prior to issuance of the Agency Notice denied the Appellant the right to object to the amount claimed. The Appellant places relied on the cases of;a.Geothermal Development Company Limited vs. Attorney General & 3 others [2013] eKLR;b.Export Trading Company Limited (ETC) vs. Kenya Revenue Authority (KRA) (Petition No. 20 of 2020 (E021 of 2020); and,c.TAT No.501 Of 2019 Bachu Chahaganlal Shah vs. Commissioner Domestic Taxes.

39. The Appellant averred that Section 6A of the Income Tax Act which was introduced by the Finance Act 2015 (effective 1st January 2016) provided that (in relation to the relevant period);“Notwithstanding any other provision of this Act, a tax to be known as residential rental income tax shall be payable with effect from the 1st January, 2016 by any resident person from income which is accrued in or derived from Kenya for the use or occupation of residential property, and which does not ten million shillings during any year of income.”

40. The Appellant submitted that to give effect to this change relating to simplified tax on residential rental income, the Finance Act 2015 provided for a rate of 10% of the gross rental receipts, and therefore the rate of monthly residential rental income tax for the 2016 to 2017 period was 10%.

41. The Appellant averred that during this period and in prior periods filed monthly rental income tax returns and was in certain months issued with penalties based on monthly rental income tax.

42. The Appellant thus submitted that any demand of taxes due made by the Appellant for the period 2016 to 2017 should have been calculated at the rate of 10% and not 30% as was used by the Respondent in its calculations.

43. The Appellant averred that for the years 2016 and 2017, the Respondent increased the Appellant’s annual rental income of the Appellant to Kshs. 36,000,000. 00 and Kshs. 36,600,000. 00 respectively without providing a basis for the increment.

44. The Appellant relied on the High Court case in Sceneries Limited vs. National LandCommission [2017] eKLR, Misc. Constitutional Application No. 1 of 2016 which emphasized that the right to be informed involves provision of sufficient information, at least that which the administrative body relied upon in making the decision.

45. The Appellant further relied on the case of Okiya Omtatah Okoiti vs. Communication Authority of Kenya & 8 others [2018] eKLR, where the Kenyan High Court held that failure to give the reasons for an administrative decision creates a rebuttable presumption that the action was taken without good reason.

Appellant’s Prayers 46. The Appellant prayed the Tribunal that;a.This Appeal be allowed;b.That pending the hearing and determination of this Appeal, this Honourable Tribunal be pleased to order for the suspension, and/or stay the enforcement and implementation of the Notification of Restraint of Property and Agency Notices for the sum of Kshs. 73,108,365. 00. c.That pending the hearing and determination of this Appeal, this Honourable Tribunal be pleased to order for the lifting, suspension, and/or stay of the enforcement and implementation of the Notification of Restraint of Property and Agency Notices for the sum of Kshs. 73,108,365. 00. d.That the Honourable Tribunal be pleased to restrain the Respondent, their agents, employees, assignees from demanding or issuing further agency notices in relation to the amounts in issue, being Kshs. 73,108,365. 00 as demanded in the Notification of Restraint of Property and Agency Notices, pending the hearing and determination of this Appeal herein.e.The Respondent’s Notification of Restraint of Property received on 25th October 2023 and Agency Notices be set aside in its entirety;f.The costs of and incidental to this Appeal be awarded to the Appellant; and,g.Any other orders that the Tribunal may deem fit

The Respondent’s Case 47. Vide the ruling delivered on 9th August 2024, the Respondent was not granted leave to file its Statement of Facts, however it was allowed to file its submissions which were dated 23rd September, 2023 and filed on even date. The Respondent’s case shall be considered on the basis of its submissions.

48. The Respondent submitted that the Appellant misapprehended the issue at hand and that the instant Appeal is in reference to the Respondent’s rejection of her application for extension to extend time to lodge an objection Application dated 21st July 2021.

49. The Respondent averred that Section 51 (2) of the Tax Procedures Act 2021, provides that;“(2)A taxpayer who disputes a tax decision may lodge a notice of objection to the decision, in writing, with the Commissioner within thirty days of being notified of the decision.”

50. The Respondent submitted that the 30 days period provided for the Appellant to lodge an Objection to the additional assessments lapsed on 21st August 2021 and that at the expiry of the 30th day, the Appellant had not lodged an Objection as provided for under Section 51 (6) of the Tax Procedures Act 2021, which provides as follows;“A taxpayer may apply in writing to the Commissioner for an extension of time to lodge a notice of objection.”

51. The Respondent submitted further that, on 29th June 2021, the Appellant made a late objection application as provided for under Section 51 (6) of the TPA above.

52. The Respondent posited that the Appellant having failed to give a reasonable explanation for failing to lodge its objection within time, the Respondent cannot be faulted for rejecting the Appellant’s Objection as per the dictates of Section 51 (7) of the TPA; which provides;“The Commissioner may allow an application for the extension of time to file a notice of objection if—a.the taxpayer was prevented from lodging the notice of objection within the period specified in subsection (2) because of an absence from Kenya, sickness or other reasonable cause; andb.the taxpayer did not unreasonably delay in lodging the notice of objection.”

53. The Respondent submitted that the decision that the Appellant has sought to challenge, dated 25th October 2023 is a notification of restraint of property, and is the Respondent’s right of execution as envisaged under Section 40 (5) of the Tax Procedures Act.

54. The Respondent averred that it relies on Section 52 (1) of the Tax Procedures Act, which states as follows with regard to filing of appeals before the Tribunal;“A person who is dissatisfied with an appealable decision may appeal the decision to the Tribunal in accordance with the provisions of the Tax Appeals Tribunal Act.”

55. The Respondent averred that the Appellant ought to lodge an Appeal before the Tribunal only when there is an appealable decision.

56. The Respondent submitted that Section 3 (1) of the TPA provides as follows with regard to an appealable decision;“Appealable decision means an objection decision and any other decision made under a tax law other than –a.tax decision; orb.a decision made in the cause of making a tax decision;”

57. The Respondent averred that the Appellant ought to have sought leave of the Tribunal to lodge an appeal out of time to challenge the invalidation decision as per the dictates of Section 13 (6) of TAT Act.

58. The Respondent submitted that it was at liberty to make assessments based on information available to it in accordance to Section 24 (2) of the Tax Procedures Act, which states that;“The Commissioner shall not be bound by a tax return or information provided by, or on behalf of a taxpayer and the Commissioner may assess a taxpayer’s tax liability using any information available to the Commissioner.”

59. The Respondent submitted that Section 31 of the Tax Procedures Act empowers the Respondent to make alterations or additions to original assessments from available information for a reporting period based on the Commissioner’s best judgement. This section provides;“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—a.In the case of a deficit carried forward the Income Tax Act (Cap 470), the taxpayer is assessed in respect of the correct amount of the deficit carried forward for the reporting period;b.In the case of an excess amount of input tax under the Value Added Tax Act, 2013 Value Added Tax Act, 2013 (No 35 of 2013), the tax payer is assessed in respect of the correct amount of the excess input tax carried forward for the reporting period; orc.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.”

60. The Respondent submitted that it relied on its own best judgement based on information available to it in compliance with Section 31 of the Tax Procedures Act while raising the additional Income assessment. The Court in Commissioner of Domestic Taxes vs. Altech Stream (EA) Limited [2021] eKLR stated that Section 31 (1) of the Tax Procedures Act allows the Commissioner to make an assessment based on such information as may be available and to the best of his judgement.

61. The Respondent submitted that Section 56 (1) of the Tax Procedures Act places the burden on the taxpayer to proof that a tax decision is incorrect;“In any proceedings under this Part, the burden shall be on the Appellant to prove that a tax decision is incorrect.”

62. The Respondent submitted that Section 30 of the Tax Appeals Tribunal Act provides that when appealing to the Tribunal;“the Appellant have the burden of proving that where an appeal relates to an assessment, that the assessment is excessive or in any other case, the tax decision should not have been made or should have been made differently.”

63. The Respondent relied on the case of Ushindi Exporters Limited vs. Commissioner of Investigation and Enforcement (Tax Appeals Tribunal No 7 of 2015) wherein the Tribunal held that;“The burden of proving that the tax assessment is excessive or should have been made differently never shifts to the Respondent and is placed squarely on the Appellant as Section 30 (a) and (b) of the Tax Appeals Tribunal Act states,a.Where an appeal related to an assessment, that the assessment is excessive; orb.In any other case, that the tax decision should not have been made or should have been made differently;By purporting to shift the burden of proving that the tax assessment against it was incorrect or should have been different the Appellant failed in discharging the burden, placed upon it by law.”

64. The Respondent averred that the Appellant did not discharge its burden of proving that the assessment was erroneous and the Respondent was right in confirming the assessment.

Respondent’s Prayers 65. The Respondent prayed that the Tribunal;a.Upholds the Respondent’s decision dated 21st July 2021 as proper and in conformity with the law; and,b.That this Appeal be dismissed with costs to the Respondent as the same is devoid any merit.

Issues for Determination 66. The Tribunal having carefully considered the parties’ pleadings, documentation and Submissions finds that this matter distils into two issues that call for its determination as follows:i.Whether the Tribunal has jurisdiction to determine this Appeal.ii.Whether the Respondent was justified in issuing a Notification of Restraint over the Appellant’s Property and demanding taxes amounting to Kshs. 73,108,365. 00

Analysis and Findings 67. The Tribunal having identified the issues for determination, it shall proceed to analyze the same as herein under;

i. Whether the Tribunal has jurisdiction to determine this Appeal. 68. The dispute at hand arose when the Appellant received the Notification of Restraint over property No. 209/8553/165 for unpaid taxes amounting to Kshs. 73,108,365. 00 pursuant to Section 40 (1) of the TPA.

69. In her pleadings, the Appellant makes reference to various erroneous assessments raised by the Respondent in the run up to the issuance of the Notification of Restraint over property and Agency notices.

70. The Appellant does not demonstrate whether it objected to the said assessments as required by law but rather contends that the Respondent violated her right to fair administrative action by acting arbitrarily while issuing the Notification of Restraint over property going back as far as sixteen years.

71. As much as the Respondent did not file its pleadings in Response to the Appeal, it stated in its submissions that the Appellant had misapprehended the issue by lodging an Appeal against an enforcement measure rather than the purported erroneous assessments.

72. The Respondent submitted that the decision that the Appellant has sought to challenge, dated 25th October 2023 is a notification of restraint of property, and is the Respondent’s right of execution as envisaged under Section 40 (5) of the Tax Procedures Act.

73. Section 40 of the TPA states as follows with regard to Security on property for unpaid tax:“1)Where a taxpayer, being the owner of property in Kenya, fails to pay a tax by the due date, the Commissioner may notify the Registrar in writing that the property, to the extent of the taxpayer’s interest in the property, shall be the subject of a security for the unpaid tax specified in the notification:Provided that the Commissioner shall, within seven days from the date of the notification to the Registrar, by notice in writing inform the taxpayer and any other person who may have an interest in the property about the notification.2)Where the Registrar has been notified by the Commissioner under subsection (1), the Registrar shall, without levying or charging a fee, register the Commissioner's notification as if it were an instrument of restraint on the disposal, mortgage on, or charge, as the case may be, the property specified in the notification.3)A registration under subsection (2) shall, subject to any prior restraint on disposal, mortgage or charge, operate as a legal restraint on the disposal, mortgage, or charge on, the property to secure the amount of the unpaid tax, and any prior restraint shall supersede the Commissioner’s notification.4)The Commissioner shall, upon the payment of the whole of the amount of unpaid tax secured under this section, direct the Registrar in writing to cancel the notification made under subsection (2), and the Registrar shall, without levying or charging a fee, record the cancellation of the notification and the notification shall cease to apply.5)Where the taxpayer fails to pay the tax liability described in the notification under subsection (1) within two months after receipt of the notification, the Commissioner or authorised officer may, at the cost of the taxpayer, dispose of the property that is the subject of the restraint on disposal, mortgage or charge, by public auction or private treaty, or as provided for under the relevant Act for the recovery of the tax:Provided that where a plan has been agreed between the taxpayer and the Commissioner, the liability shall be settled within the agreed payment plan before the notification by the Commissioner is lifted.6)Subject to section 34, where the property is subject to a prior restraint, that prior restraint shall have priority if the property is disposed of under subsection.7)For the purpose of this section—property” means land or building, aircraft, ship, motor vehicle, or any other property which the Commissioner may deem sufficient to serve as security for unpaid taxes;Registrar” includes—a.the Land Registrar defined in section 3 of this Act;………………………(e)any other person who the Commissioner is satisfied has authority to hold property sufficient to serve as security for unpaid taxes;relevant Act” includes the Kenya Maritime Authority Act, 2006 (No. 5 of 2006), Merchant Shipping Act, 2009 (No. 4 of 2009), Civil Aviation Act, 2013 (No. 21 of 2013), Land Registration Act, 2012 (No. 6 of 2012), Land Act 2012 (No. 3 of 2012), National Transport and Safety Act, 2012 (No. 33 of 2012), or any other Act that provides for the registration of property.”

74. The Tribunal notes that the Respondent in issuing the Notice for restraint on property was exercising its powers under the foregoing Section of the TPA.

75. The Respondent submitted that the dispute at had does not emanate from an appealable decision envisaged in Section 52 of the TPA and therefore the Tribunal has no jurisdiction to hear and determine this matter.

76. Section 52 (1) of the TPA states as follows with regard to filing of appeals before the Tribunal;“A person who is dissatisfied with an appealable decision may appeal the decision to the Tribunal in accordance with the provisions of the Tax Appeals Tribunal Act.”

77. The Import of the above Section of the TPA is that an Appeal can only be made to the Tribunal against an ‘appealable decision’. Both an appealable and tax decision are defined in Section 3 of the TPA which provides as follows;“an appealable decision” means an objection decision and any other decision made under a tax law other than—a.a tax decision; orb.a decision made in the course of making a tax decision;”“tax decision” means—a.an assessment;b.a determination under section 17(2) of the amount of tax payable or that will become payable by a taxpayer;c.a determination of the amount that a tax representative, appointed person, director or controlling member is liable for under section 15, section 17 and section 18d.a decision on an application by a self-assessment taxpayer under section 31(2);e.a refund decision;f.a decision under section 48 requiring repayment of a refund; or(b) a demand for a penalty;”

78. Section 12 of the Tax Appeals Tribunal Act, No. 40 of 2013 provides as follows with regard to Appeals to the Tribunal;“12. A person who disputes the decision of the Commissioner on any matter arising under the provisions of any tax law may, subject to the provisions of the relevant tax law, upon giving notice in writing to the Commissioner, appeal to the Tribunal, provided that such person shall before appealing, pay a non-refundable fee of twenty thousand shillings.”

79. The Notice of Appeal filed by the Appellant indicates clearly that the Appeal before the Tribunal is an Appeal against the Notification of Restraint over the Appellant’s Property for unpaid taxes. Such a notification does not amount to a tax decision but rather a communication from the Respondent on enforcement measures as provided for in Section 40 of the TPA states (Supra).

80. The Tribunal therefore finds that the Notice of Restraint over property for unpaid taxes issued to the Appellant is not an appealable decision and hence does not fall within the Tribunal’s Jurisdiction.

81. The Tribunal is guided by its decision in TAT Misc 185 of 2022 EMV Investments Limited vs. Commissioner of Domestic Taxes where it held that;“With no appealable decision disclosed the Tribunal lacks the jurisdiction to grant any leave for the Applicant to pursue a non-existent right to appeal.”

82. The Tribunal therefore concludes that there is no appealable decision in this case, the result is that it is seized of the jurisdiction to entertain the Appeal and shall down its tools.

83. As such, having found that it lacks jurisdiction to entertain this Appeal, the Tribunal will not delve into the second issue for determination as the same has been rendered moot.

84. Consequently, the Appellant’s Appeal is incompetent and untenable in law.

Final Decision 85. The upshot of the foregoing is that the Appeal incompetent and the Tribunal accordingly proceeds to make the following Orders:a.The Appeal be and is hereby struck out; and,b.Each party to bear its own costs.

86. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 31ST DAY OF JANUARY 2025. ROBERT M. MUTUMA - CHAIRMANDR. TIMOTHY B. VIKIRU - MEMBERJEPHTHAH NJAGI - MEMBERMUTISO MAKAU - MEMBERDELILAH K. NGALA - MEMBER