Gorgeous Trading Company Ltd v Kenya Revenue Authority (Tax Appeal E972 of 2025) [2026] KETAT 256 (KLR) (29 May 2026) (Judgment)

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E972/2025 GORGEOUS TRADING COMPANY LIMITED 1st Petitioner - Versus - Kenya Revenue Authority 1st Respondent JUDGMENT # BACKGROUND 1. The Appellant is a registered company and trades in the Motor vehicle Industry as the core business. 2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws. Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 3. The Respondent reviewed the Appellant's filed VAT and Income Tax returns for the tax period month of August, 2019 with the aim of establishing whether the Appellant was tax compliant for the tax period under review. The Respondent noted undeclared sales based on sales variances between the declared sales in the income tax returns and sales declared in the VAT returns. Consequently, on the 16th October, 2019 the Respondent raised additional VAT assessment for the tax period month of August, 2019 wherein the Respondent sought to recover Kshs 2,422,123.08. 1. The Appellant lodged a late objection to the additional VAT assessments on iTax on 20th July, 2020. The Respondent issued late objection rejection notice dated 5th March 2021 on the basis that the Appellant failed to provide the documentation supporting the late objection despite having been requested to do so. 2. The Appellant being aggrieved with the Respondent’s decision, lodged the Appeal herein vide a Notice of Appeal dated 5th September 2025. By consent of both parties, the Appellant was allowed to filed the appeal out of time. # THE APPEAL 1. The Appeal is premised on the memorandum of appeal dated 5th September 2025 and filed on the even date wherein the Appellant raised the grounds of appeal as hereunder: 1. That the order of the assessing officer is erroneous in fact and in law by introducing more sales for the Month of August 2019 by Kshs 14,847,759 and subjecting it to VAT at rate of 16% hence total VAT payable of Kshs 1,496,050.80 while from January 2019 up to August 2019 the sales declared in monthly VAT returns was actual hence no under declaration. 2. That the assessing officer erred in fact and in law by failing to consider the supporting documentation of invoices which were in support of the actual sales declared in monthly vat returns. 3. That the assessing officer erred in fact and in law, by issuing Late Objection Rejection Notice without considering, evaluating and objectively examining the information and documents filed by the Appellant with the monthly VAT returns of the tax period in question. 4. That the assessing officer erred in fact and in law by failing to use all the available information at its disposal before issuing Late Objection Rejection Notice hence confirmation of VAT assessment but instead selectively used information that would impose the biggest tax burden on the Appellant, instead of giving an objective assessment. * 1. That it is against this order of assessment this late appeal is being preferred with a request for alternate dispute resolution to solve the matter. # THE APPELLANT’S CASE 1. The Appellant case was premised on its Statement of facts dated 5 th September 2025 and filed on the even date. The Appellant did not file submissions as per the Tribunal directions during the hearing on the 1st April 2026. 2. The Appellant stated that it has VAT obligation filing for head office, Income Obligation and PAYE Obligation. 3. It stated that although it filed the all the VAT returns declaring the actual data for the year 2019, the assessor introduced more sales by Kshs 14,857,759.75 and subjected the Appellant to VAT additional assessment which was erroneous since the incremental sales was incorrect. 4. It asserted that on 20 th August 2019 the assessor issued a notice of intention to carry out audit verification and requested for some documents from the taxpayer which were immediately provided. According to the Appellant, the assessor immediately after submitting the documents posted the additional assessment without sharing the findings and giving the taxpayer fair chance to respond to all raised issues. 5. It averred that on 16th October 2019 the Respondent posted an Additional Assessment tax figure of Kshs.2,235,559 constituting principal of Kshs 1,274,831 and Interest of Kshs 960,727 for the period 01/08/2019-31-08-2019. 6. The Appellant responded to the additional Assessment orders vide an Objection letter dated 20th July 2020. It asserted that it thereafter raised an objection through its letter of 20th July 2020 which was received by the Respondent and acknowledged on the same date. 7. According to the Appellant, after reviewing the issues raised and supporting documents supplied by the Appellant, the Respondent rejected the objection on the ground of lateness vide a letter dated 5th March 2021 without issuing any decision. 8. The Appellant stated that it paid up and deposited an amount of Kshs. 20,000.00 in the account of Tax Appeals Tribunal for filling of this Appeal. 1. The Appellant averred that the assessment and objection were fundamentally flawed in law and in fact, as they penalised the Appellant. The Appellant maintained that it complied with its Vat Obligation under the Value Added Tax Act Cap 476(VATA) and related regulations. 2. The Appellant thus brought this appeal seeking to fully set-aside of the additional VAT assessment for the stated period and a declaration that the Appellant is not liable for any additional tax arising from that additional assessment. # Appellant’s Prayers 1. The Appellant prayed as follows: 2. That the Appeal be allowed; 3. That agency notice issued to Appellant bank accounts be lifted immediately; 4. That the Appellant be issued with TCC immediately for the purpose of renewing all the licenses in order to avoid imminent closure of the business in case of failure to renew business licenses; 5. That the Respondent be stopped from demanding the tax, interest and penalties in respect of any issues relating to this matter; and 6. That Appellant be awarded costs for this Appeal. # THE RESPONDENT’S CASE 1. The Respondent lodged its Statement of facts dated and filed on 1 st December 2025 and written submissions dated and filed on 24th March 2026. 2. The Respondent stated that Section 24 of the Tax Procedures Act Cap 469B(TPA) allows a tax payer to submit tax returns in the approved form and manner prescribed by the Respondent but the Respondent is not bound by the information provided therein and can assess for additional taxes based on any other available information. 3. The Respondent averred that the additional VAT assessment for the tax period month of August, 2019 were based on undeclared sales based on sales variances between the declared sales in the Income Tax Returns and sales declared in the VAT returns. 1. It stated that the Appellant lodged late objections to the additional VAT assessments on iTax on 20th July 2020 but failed to provide the supporting documents on the late objection despite having been requested to do so. 2. It averred that the Appellant's late objection applications were rejected for failure by the Appellant to provide the supporting documentation for the late objection. It therefore averred that the late objection rejection notice dated 5th March, 2021 was proper in law based on the additional information and best judgement. 3. The Respondent submitted that the additional VAT assessments are proper in law and that the Respondent's late objection rejection notices dated 5th March 2021 was proper in law. 4. The Respondent submitted that while the law requires that the Appellant provide documentation in support of the grounds for lateness, mere assertions of a ground and provision of supporting documentation is not enough to discharge the Appellant of the burden. It submitted that the Party must go further and demonstrate how the ground highlighted incapacitated the ability to file the objection within the stipulated statutory timelines. It cited the case of # Mutuvi v Commissioner of Domestic Taxes, Tax Appeal 370 of 2022) **[2023] KETAT 504 (KLR)** wherein the Tribunal stated that: *"58.The Tribunal noted from the above Section that the Appellant needed to demonstrate either or both grounds as set out under Section 51 (7) (a) and (b), the Appellant ought to have demonstrated to the Respondent how her residing and continued residing away from the Republic of Kenya for the period between the making of the decision and filing of the late objection impacted on her capacity to effectively attend to and address matters relating to her tax compliance and more particularly how that played out in the causation for the delay in timeous lodging of the notice of objection."* 1. It submitted that the provisions of Section 51(6) and (7) of the TPA are couched in mandatory terms and as such the procedure highlighted therein ought to be strictly adhered to. Consequently, no party can be excused from complying with the same. The Respondent cited the case of **Tangazo Letu** # Limited v The Commissioner of Investigations & Enforcement where this Tribunal stated that: *‘‘We find that the Procedural guidelines enshrined in the Tax Appeals* *Tribunal Act and the Tax Procedures Act, among other tax legislations, are not merely instructive but a guide in achieving substantive justice. These rules cannot be cast aside in the quest for achieving substantive justice, as they have deeper roots in the Constitution of Kenya, 2010 to safeguard due process. Accordingly, we are of the considered view that the Appeal herein is improperly before the Tribunal."* 1. The Respondent also asserted that the taxpayer has to provide grounds and evidence for filing an appeal out of time. To support this position, the Appellant cited the cases of **Kenya Power & Lighting co Ltd v Rassul** # Nzembe Mwandzaya [2020] eKLR; and Obama Enterprises Limited v Commissioner of Domestic Tax Appeal 667 of 2021. **Respondent’s prayers** 1. The Appellant urged this Tribunal to; 2. Uphold the late objection rejection notice dated 5th March, 2021; 3. Appeal be dismissed with costs to the Respondent as the same is without merit. # ISSUES FOR DETERMINATION 1. The Tribunal having considered the parties’ pleadings and submissions, puts forth the following issues for determination: # Whether the Tribunal has jurisdiction to determine the appeal; and * 1. **Whether the Respondent was justified in confirming the assessments.** **ANALYSIS AND FINDINGS** 1. Having identified the issues for determination, the Tribunal proceeds to analyse the same as hereunder; # Whether the Tribunal has jurisdiction to determine the application 1. The appeal is founded upon the late objection rejection notice dated 5th March 2021 wherein the Respondent rejected the Appellant’s application to file notice of objection out of time. The question then is whether the said decision is an appealable decision, if not, whether the Tribunal has jurisdiction to entertain the appeal. 2. The Respondent issued an assessment order dated 16th October 2019. The Appellant lodged an objection to the assessment which the Respondent acknowledged receipt vide objection application acknowledgment receipt dated 20th July 2020. 3. A Taxpayer has a statutory duty to object to the assessment within thirty days. In particular, Section 51(2) the TPA provides as follows: *(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****.* 1. Considering the timelines under Section 51(2) the TPA, it was obvious that the taxpayer delayed to object to the assessment. 2. Whereas Section 51(2) the TPA mandates the taxpayers to file an objection within 30 days of being notified of the assessment, the TPA also foresees scenarios where taxpayers may delay to file objection against the assessments. As a result, Section 51(6) of TPA provides: *A taxpayer may apply in writing to the Commissioner for an extension of time to lodge a notice of objection.* 1. When filing the application for extension of time under Section 51(6) of TPA, Section 51(7) of TPA provides the grounds that the taxpayer must prove for the application to be allowed. The Taxpayer only needs to prove any one of them. In this regard, Section 51(7) of the TPA provides as follows: 2. *The Commissioner shall consider and may allow an application under Subsection* [*(6)*](https://new.kenyalaw.org/akn/ke/act/2015/29/eng%402025-07-01) *if—* 1. *the taxpayer was prevented from lodging the notice of objection within the period specified in Subsection* [*(2)*](https://new.kenyalaw.org/akn/ke/act/2015/29/eng%402025-07-01) *because of an absence from Kenya, sickness or other reasonable cause; and* 2. *the taxpayer did not unreasonably delay in lodging the notice of* *objection*. 1. The Appellant made an application seeking leave from the Respondent to object to the assessment out of time but the Respondent rejected the application on the basis that the Appellant did not provide the supporting documentation. 2. This Tribunal does not have jurisdiction to look into the Respondent’s decisions made under Section 51(7) of the TPA. The High Court in # Commissioner of Investigations & Enforcement v Vyas t/a Rocon **Enterprises (Income Tax Appeal E144 of 2021) [2022] KEHC 16027 (KLR)** stated that the Tribunal does not have jurisdiction to entertain decisions under Section 51(7) of the TPA for the reason that the decision is not appealable decision. 1. Taking into account that the Respondent did not allow the Appellant to file an objection out of time, then, the Appellant did not object to the assessment. If an objection to assessment was not filed, this appeal cannot arise therefore, the jurisdiction of this Tribunal cannot be invoked successfully. 2. Section 51(1) of TPA sheds more light on this issue. It provides as follows: ***51. Objection to tax decision*** *(1) A taxpayer who wishes to dispute a tax decision* ***shall first lodge an objection*** *against that tax decision under this Section* ***before proceeding under any other written law****.* 1. Section 51(1) of the TPA speaks to the doctrine of exhaustion wherein the taxpayer has to exhaust the available remedies before approaching this Tribunal. It also speaks to what we have stated above that if an objection to assessment was not filed, an appeal cannot arise therefore, the jurisdiction of this Tribunal cannot be invoked successfully. 2. In the case of **Samwel Kamau & Another v Kenya Commercial Bank & Others [Application No. 2 of 2011] 92012 KESC (KLR)** the Supreme Court emphasised that a court’s jurisdiction flows from either the Constitution or legislation or both. 1. The jurisdiction of this Tribunal flows from the tax law statutes and where tax laws such as Section 51(1) of TPA provides that the Tribunal does not have jurisdiction where the taxpayer has not objected to the assessment, the Tribunal cannot proceed. 2. We recognise the findings of Nyarangi J in the *locus classicus* case of # Owners of Motor Vessel “Lilian S” v Caltex Oil (K) Limited [1989] eKLR where the Court observed that, jurisdiction is everything without it, a court must down its tools. Consequently, the Tribunal can only strike out the appeal. 1. We also recognise that the striking out of an appeal has been described as draconian option. In **Kivanga Estates Limited v National Bank of Kenya Limited [2017] KECA 591 (KLR), the Court of appeal stated as follows:** *It is not for nothing that the jurisdiction of the court to strike out pleadings has been described variously as draconian, drastic, discretionary, a guillotine process, summary and an order of last resort. It is a powerful jurisdiction, capable of bringing a suit to an end before it has even been heard on merit…* *Striking out a pleading, though draconian, the court will, in its discretion resort to it, where, for instance, the court is satisfied that the pleading has been brought in abuse of its process or where it is found to be scandalous, frivolous or vexatious.* 1. Taking into the foregoing, and the Tribunal having established that it does not have jurisdiction to determine the appeal, the appeal ought to be struck out. 2. Considering the foregoing findings, analysis is of the remaining issue is rendered moot. # FINAL DECISION 1. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is incompetent and makes the following orders: - 1. The Appeal be and is hereby struck out; and 2. Each party to bear its own cost. 2. It is so ordered. # DATED AND DELIVERED AT NAIROBI THIS 29TH DAY OF MAY 2026 SIGNED BY/FOR: **★ TH E JUDICIAR Y O F KENY A ★** **HON. ROBERT MUGAMBI MUTUMA (CHAIRPERSON) HON. EUNICE NJERI NGANGA HON. BONIFACE KIBIY TERER DOMINIC KIPKEMOI RONO HON. BILLY GRAHAM OKUMU MIJUNGU** Tax Appeals Tribunal Tribunal Date: 2026-05-29 14:34:49