https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/278

**REPUBLIC OF KENYA** **IN THE TAX APPEALS TRIBUNAL AT NAIROBI** **TAX APPEAL NO. E1247 OF 2025** **HARLEY BERRY LIMITED…………………………………………………………APPELLANT** **-VERSUS-** **COMMISSIONER OF DOMESTIC TAXES………………………………..…...RESPONDENT** **JUDGMENT** # **BACKGROUND** 1. The Appellant is a private limited liability company incorporated in Kenya under the Companies Act. The Appellant is a registered taxpayer. 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 issued the Appellant with additional assessment of Kshs. 317,909,009.00 for VAT for the years 2022, 2023 and 2024 on 26th March 2025. 4. The Appellant lodged its notice of objection dated 27th May 2025. 5. The Respondent issued an objection decision dated 25th July 2025 confirming the assessment in its entirety. 6. The Appellant aggrieved by the decision of the Respondent lodged the instant appeal *vide* a notice of Appeal dated 26th September 2025 and filed on 28th September 2025. # **THE APPEAL** 1. The Appeal is premised on the Memorandum of Appeal dated and filed on 4th November 2025 which raised the following ground: - 1. The Appellant wasn’t given enough time to provide support documentation – as communicated previously with the Independent Review of objections team, the taxpayer ought to have been given some ample time to dig into the archives and extract the support documentation in support of the inputs that ought to have been claimed for VAT. # **APPELLANT’S CASE** 1. The Appellant’s case is premised on: 1. Its Statement of Facts dated 4th October 2025 and filed on 4th November 2025 and the documents attached thereto. 2. Its Written Submissions dated 26th May 2026 and filed on 27th May 2026. 2. The Appellant averred that the Respondent issued tax findings and additional assessments dated notice dated 26th March 2025 wherein it raised the additional assessments. 3. The Appellant stated that it objected to the additional assessments through a letter dated 27th May 2025 and engaged the Independent Review of Objections (IRO) team where support on the objections was provided. 4. That the Appellant and the Respondent had various meetings where the Appellant had the opportunity to explain the support provided. That due to timelines constraints, the Respondent went ahead and issued the objection decision dated 25th July 2025 and issued the confirmation assessments, fully rejecting the objections on 10th June 2025. 5. The Appellant averred that being aggrieved by the decision, it lodged a Notice of Appeal to the Tax Appeals Tribunal on 26th Sep 2025. 6. The Appellant submitted that the assessments raised did not factor in the inputs incurred by the Appellant in the respective months. 7. The Appellant submitted that it had difficulties in tracing the manual copies of the documents and still believes that the inputs which can be traced in the iTax and ETIMS system for the months under review ought to have been allowed. 8. The Appellant submitted that from its analysis, the valid inputs which ought to be allowed are tabulated as follows: | | | | | --- | --- | --- | | **Assessed Month** | **Inputs Available on iTax** | **WHT not considered** | | January 2022 | | 862,050 | | May 2022 | | 940,600 | | June 2022 | | 402,736 | | July 2022 | 14,675,168.32 | 204,052 | | October 2023 | | 4,997,205 | | November 2023 | | 14,674,740 | | December 2023 | 69,234,285.84 | 10,930,663 | | January 2024 | 862,068.97 | 4,039,080 | | February 2024 | | 19,486,101 | | March 2024 | | | | | | | 1. That in addition, there are additional manual receipts that the Appellant has been pursuing from the archives and requesting the copies from the suppliers which hasn’t been successful to date. 2. The Appellant submitted that it wasn’t sure if it would receive the manual inputs since the suppliers had delayed in remitting the same, it requested to be allowed an average of 40% of the turnover. 3. The Appellant maintained that it had availed the support documentations to the Respondent and as such her appeal should be considered. # **Appellant’s Prayers** 1. The Appellant prayer to the Tribunal was that: - # It has sufficiently given pointers as to the inputs that need to be considered as the support documentation needed to support the application and settle the matter. # The records be reconciled, the reconciled tax vacated and the due amount adjusted. # **RESPONDENT’S CASE** 1. The Respondent’s case is premised on the following documents before the Tribunal: 2. Its Statement of Facts dated 27th November, 2025 and filed on 28th November 2025 and the documents attached thereto; and 3. Its Written Submissions dated 23rd May 2025 and filed on 25th May 2025. 4. The Respondent averred that it noted that the Appellant filed nil returns for the period January, 2022 to July, 2022 despite having hanging withholding credits. That during a meeting with the Respondent, the Appellant was advised to file the pending returns wherein the Appellant filed the same on 20th November, 2023. That upon review of the filed returns, the Respondent noted that the Appellant did not declare the sales attributable to the withholding VAT certificates. Consequently, the Respondent brought to tax the undeclared income. 5. The Respondent averred that on 27th August, 2024 the Appellant made payment of Ksh.1,000,000 towards the findings of the Respondent. 6. The Respondent averred that it observed that the Appellant claimed input VAT for the period 2022 to 2024 from suppliers who were nil filers, non-filers, some did not declare the corresponding sales and non-registered VAT suppliers by the time the Appellant claimed input from them. 7. The Respondent also noted that for some suppliers, for instance Coolextreme International Limited and Ndume Chainlinks Limited the Appellant claimed more input VAT than the total sales declared by them. 8. The Respondent contended that despite the Appellant's claims that it had all the relevant supporting documents, it failed to provide any supporting documents to confirm the assertions as indicated in its objection letter. 9. The Respondent posited that the Appellant disregarded Section 23(b) of the Tax Procedures Act 2015 which provides thus; *“A person shall-* *(b) maintain any document required under a tax law so as to enable the person's tax liability to be readily ascertained*;” 1. The Respondent asserted that the onus was on the Appellant to ensure that it submit documents that are clear, complete, and address the specific points of contention. That the Respondent cannot be held accountable for a failure to revise the assessment if the Appellant's documentation were inadequate, failed to rebut the findings or the documents were not provided at all. 2. The Respondent averred that the determination of the Appellant's tax liability depends on submission of necessary records by the Appellant for the Commissioner's review and appreciation. 3. The Respondent relied on Section 54A (1) of the Income Tax Act which requires that any person carrying on a business shall keep records of all receipts and expenses, goods purchased and sold and accounts, books, deeds, contracts and vouchers which in the opinion of the Commissioner, are adequate for the purpose of computing tax. 4. The Respondent further noted that by the time the Appellant was filing returns for the periods, it was past the allowed period of claiming input of six months which had already lapsed. That consequently, no input could be allowed by then. That Section 17 of VAT Act stipulates that: *"Input tax shall be allowable for a deduction within six months after the end of the tax period in which the supply or importation occurred."* 1. The Respondent also noted that the Appellant’s objection offended Section 51(3) (c) of the TPA which expressly states; *“ 3. A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) lf-* *a) the notice of objection states precisely the grounds of objection, the amendments required to be made to correct the decision, and the reasons for the amendments; and* *b) in relation to an objection to an assessment, the taxpayer has paid the entire amount of tax due under the assessment that is not in dispute.* *c) All the relevant documents relating to the objection have been submitted.”* 1. The Respondent averred that the Appellant did not satisfy the above criteria for the Respondent to render a meritious decision in the circumstance. 2. The Respondent asserted that whereas Section 24 of the Tax Procedure Act, 2015 allows a taxpayer to submit tax returns in the approved form and manner prescribed by the Respondent, the Respondent is not bound by the information provided therein and can assess for additional taxes based on any other available information and to the best of the Commissioner's judgement. 3. The Respondent stated that pursuant to Section 56 of the TPA and 30 of the Tax Appeals Tribunal Act, the burden of proof lies on the Appellant to demonstrate that it has discharged its tax liability. The Respondent maintained that this burden was never discharged as no satisfactory documentary evidence was availed to the Respondent to enable it render a meritious decision in the circumstances. 4. The Respondent relied on the provisions of section 109 of the Evidence which provides thus: *"The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person."* 1. The Respondent contended that the Appellant's assertions that it was not given ample time to provide documentation was incorrect and misleading. That on the contrary, the Appellant was accorded ample time to provide documentations but failed to do so. 2. The Respondent submitted that it has the power to assess any taxpayer's tax liability by virtue of Section 24(2) of the TPA which provides 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.”* 1. That further, the Appellant was assessed in accordance with Section. 31(1) of the TPA which 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-* * 1. *……* 2. *in the case of an excess amount of input tax under the Value Added Tax Act, 2013 (No. 35 of 2013), the taxpayer is assessed in respect of the correct amount of the excess input tax carried forward for the reporting period; or* 3. *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.”* 1. The Respondent relied on the case of **The Commissioner For Her Majesty's Revenue And Customs Tc/2017/02292 Saima Khalid Appeliant Vs The Commissioners For Her Majesty's Respondent Revenue & Customs** where the Tribunal set out the requirements for a decision to be to the best of HMRC's judgment. The Respondent submitted that it exercised its best judgement given the limited information that was made available to it, it stated that it subjected the information to the provisions of VAT Act and TPA. 2. The Respondent contended that the Appellant failed to provide explanations for the disparities flagged by the Respondent. That whereas the Appellant decried that it was denied a chance to review the substance of the case, on the contrary, the Respondent considered all the documents adduced by the Appellant. That the Appellant was granted ample time to avail documentation in support of its objection. 3. The Respondent relied on T**AT Appeal No. 538 Of 2021 Greenroad Kenya Limited vs Commissioner Of Domestic Taxes**, where the Tribunal held that:- *52. The Tribunal's considered view is that the failure by the Appellant to avail the documents requested granted the Respondent the power to use its best judgement as provided for under Section 31(1) of Tax Procedures Act.* 1. The Respondent further relied on the case of **Nick Kikalos and Helen Kikalos v. United States of America, No. 2:98 CV 618. 313 F. supp. 2d 876 (2003)** wherein it was held that: *"Courts routinely accord deference to the Commissioner in the reconstruction of a taxpayer's income noting that 'the Commissioner may use any reasonable method of calculation where the taxpayer fails to produce or maintain adequate records from which actual income may be ascertained. Other Circuits have stated that the "court must accept the Commissioner's method of reconstructing income so long as it is rationally based in the ordinary case, the determination of taxable income by the Commissioner is presumptively correct.......* 1. That in **Digital Box Ltd Vs Commissioner Of Investigation & Enforcement (2019) EKLR**, the Tribunal held that in both instances, the Respondent is allowed to use any information that is available to it and use the best of his or her judgment in making the assessment. The TPA in granting the Respondent powers to assess taxpayers does not specify the methods that may be used, instead the law provides that the best judgment must be exercised. 2. The Respondent submitted that Section 56(1) of the TPA provides; *“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”* 1. The Respondent further relied on Section 23(1) of the TPA, which provides that; 2. *A person shall-* 1. *Maintain any document required under a tax law, in either of the official languages;* 2. *Maintain any document required under a tax law so as to enable the person's tax liability to be readily ascertained; and* 3. *subject to subsection (3), retain the document for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law.”* 3. The Respondent asserted it granted the Appellant more than sufficient time to produce documents that would address the issues raised in the assessment but it failed to do so. 4. The Respondent further relied on Section 59(1) of the same Act which requires the Appellant to produce supporting documents for examination. It states that; 5. *For the purposes of obtaining full information in respect of the tax liability of any person or class of persons, or for any other purposes relating to a tax law, the Commissioner or an authorized officer may require any person, by notice in writing, to--* 1. *Produce for examination, at such time and place as may be specified in the notice, any documents (including in electronic format) that are in the person's custody or under the person's control relating to the tax liability of any person;* 2. *Furnish information relating to the tax liability of any person in the manner and by the time as specified in the notice;* 6. The Respondent submitted that it was the duty and responsibility of the Appellant to keep documents and to provide the same upon request for verification by the Respondent as provided for in Section 59(1) of the TPA, that failure to provide the Commissioner with complete records as requested, crippled the Appellant's Objection. 7. The Respondent asserted that the Appellant failed to prove that the Commissioner's tax decision was in any way inconsistent, based on extraneous factors, excessive or incorrect hence the same should be upheld. **Respondent’s Prayers** 1. The Respondent prays that the Tribunal: # That the objection decision dated 25th July, 2025 be upheld. # That this Appeal be dismissed with costs to the Respondent as the same lacks merit. # **ISSUE FOR DETERMINATION** 1. The Tribunal has considered the facts of the matter and the submissions made by the parties, and considers the issue for determination as follows: ***Whether Respondent erred in confirming the taxes assessed upon the Appellant.*** # **ANALYSIS AND FINDINGS** 1. Having identified the issue that falls for its determination, the Tribunal proceeds to analyse it as hereunder. 2. It was the Appellants contention that the Respondent confirmed the additional assessments due to timeline constraints before the Appellant could produce documents required from suppliers. The Appellant submitted that the assessments raised did not factor in the inputs incurred by the Appellant in the respective months. 3. The Appellant provided a tabulated analysis of what the valid inputs which ought to be allowed were. It was the Appellant’s submission that owing to the delay in receiving the manual inputs it was not sure if it would receive the same in time and hence requested to be allowed an average of 40% of the turnover. 4. The Respondent contended that the Appellant failed to provide documents to demonstrate that the inputs in question were incurred in generation of income. That the Appellant was granted ample time to avail documentation in support of its objection but it failed to do so. The Respondent stated that in some instances, suppliers such as Coolextreme International Limited and Ndume Chainlinks Limited, the Appellant claimed more input than the total sales declared by the suppliers hence the inputs presented by the Appellant were questionable. 5. The Respondent asserted that it exercised its best judgement given the limited information that was made available to it, it stated that it subjected the information to the provisions of VAT Act and TPA and that the same was insufficient to warrant adjustments. 6. It is trite law that in tax matters, the taxpayer has a duty in law to discharge the burden of proof. Section 56 (1) of the TPA provides that: *‘In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.’’* 1. Further, Section 30 of the TATA postulates as follows: *“In a proceeding before the Tribunal, the appellant has the burden of proving—* *(a) Where an appeal relates to an assessment, that the assessment is excessive; or* *(b) In any other case, that the tax decision should not have been made or should have been made differently.”* 1. The High Court In the case of**Commissioner of Domestic Taxes v Block International Limited [2024] KEHC 8889 (KLR)** stated as follows: *‘‘To this end, I agree with the appellant that pursuant to the provisions of Section 30 of the Tax Appeals Tribunal Act and Section 56(1) of the Tax Procedures Act, the respondent bears the burden of proving that a tax assessment and/or decision is incorrect.’’* 1. Further, the High Court in **Darwine Wholesalers Limited v Commissioner of Investigations and Enforcement (Income Tax Appeal E051 of 2021) [2023] KEHC 23537 (KLR)** held as follows: *“Under section 59 of the TPA and section 43 of the VAT Act the Commissioner is expressly empowered to ask for additional information to ascertain the tax chargeable. This legal position is in consonance with section 107 and 112 of the Evidence in that the balance of proof lies with the party with the knowledge of facts. Further section 30 of the Tax Appeals Tribunal Act (TATA) and section 56 of the TPA imposes the burden of proof on the tax payer to prove that an assessment was wrong or that it was excessive.”* 1. To discharge the burden of proof, the taxpayer has a duty to keep records very well and produce them when called upon to do so. Section 23 of the TPA is instructive. It provides as follows: ***“23. Record-keeping*** *(1) A person shall—* *(a) maintain any document required under a tax law, in either of the official languages;* ***(b) maintain any document required under a tax law so as to enable the person's tax liability to be readily ascertained; and*** *(c) subject to subsection (3), retain the document for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law.”* 1. The assessment in issue related to VAT. In this regard, Section 43 of the VATA mandates the taxpayer to keep documents. It provides as follows: ***“43. Keeping of records*** *(1) A person shall, for the purposes of this Act, keep in the course of his business, a full and true written record, whether in electronic form or otherwise, in English or Kiswahili of every transaction he makes and the record shall be kept for a period of five years from the date of the last entry made therein*.” 1. The Tribunal observed that the Appellant was afforded ample time to provide documents to support its position that the disallowed input expenses in question were directly related to the taxable supplies made by the Appellant and were therefore, allowable under Sections 17 and 19 of the VATA. To claim credit for input tax against output tax, section 17 of the VATA provides some of the documents that the taxpayer must adduce. In particular, section 17(3) of the VATA provides as follows: *“(3) The documentation for the purposes of subsection (2) shall be—* *(a) an original tax invoice issued for the supply or a certified copy;* *(b) a customs entry duly certified by the proper officer and a receipt for the payment of tax;* *(c) a customs receipt and a certificate signed by the proper officer stating the amount of tax paid, in the case of goods purchased from a customs auction; and* *(d) a credit note in the case of input tax deducted under section 16(2);* *(e) a debit note in the case of input tax deducted under section 16(5); or* *(f) in the case of a participant in the Open Tender System for the importation of petroleum products that have been cleared through a non-bonded facility, the custom entry showing the name and PIN of the winner of the tender and the name of the other oil marketing company participating in the tender:* *Provided that the input tax that may have been incurred by an oil marketing company participating in the Open Tender System before the coming into force of this provision shall be claimed within twelve months after this provision comes into force*…” 1. The question then is whether the Appellant adduced documents to justify its claims. The Tribunal noted that the Respondent requested the Appellant for disallowed invoices, supplier confirmations and bank statements. The Tribunal perused the Appellant’s pleadings and noted that the Appellant only filed the following documents: a) The Appellant’s notice of objection with no supporting documents b) The Respondent’s objection decision 1. The highlighted documents cannot demonstrate that input tax was claimable neither do they demonstrate that the Respondent erred in confirming the assessment. The Appellant did not file a single document listed under section 17(3) of the VATA. 2. It should be recalled that Section 13(2)(d) of the TATA mandates the taxpayer to adduced documents to enable the Tribunal make an informed decision. It provides that: *“(2) The appellant shall, within fourteen days from the date of filing the notice of appeal, submit enough copies, as may be advised by the Tribunal, of—* *(d) such other documents as may be necessary to enable the Tribunal to make a decision on the appeal.”* 1. The Tribunal finds that the Appellant failed to file documents to demonstrate that the Respondent erred in confirming the assessment. The Appellant failed to discharge its burden of proof. 2. Consequently, the Tribunal finds and holds that the Appellant failed to demonstrate that the Respondent erred in confirming the assessment. **FINAL DECISION** 1. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is lacks merit and consequently makes the following orders; - 2. The Appeal be and is hereby dismissed. 3. The objection decision dated 25th July 2025 be and is hereby upheld. 4. Each party to bear its own costs. 5. It is so ordered. **DATED AND DELIVERED AT NAIROBI THIS 14TH DAY OF AUGUST 2026.** **……………………………..….** **ROBERT M. MUTUMA** **CHAIRMAN** **……………………………… ……..….……..……………..** **DR. TIMOTHY B. VIKIRU GLORIA A. OGAGA MEMBER MEMBER** **………………………………** **JIMMY M. MALLA** **MEMBER**