[2025] KETAT 110 (KLR)

Havi t/a Havi and Company Advocates v Commissioner-General Kenya Revenue Authority (Tax Appeal E345 of 2024) [2025] KETAT 110 (KLR) (Commercial and Tax) (12 February 2025) (Judgment)

Neutral citation: [2025] KETAT 110 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Tax Appeal E345 of 2024

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

February 12, 2025

Between

Nelson Andayi Havi t/a Havi and Company Advocates

Appellant

and

Commissioner-General Kenya Revenue Authority

Respondent

Judgment

Background 1. The Appellant is a registered taxpayer trading under the name Havi and Company Advocates.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws (hereinafter “the Act”). 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 investigated the Appellant’s tax affairs with a view to establishing the tax liability of the Appellant and in the process demanded tax arrears and issued Agency Notices on the Appellant’s Bank accounts on various dates between 2021 and 2023.

4. The Appellant was aggrieved by the Respondent’s action of revising his tax returns. On 6th September, 2023 the Appellant applied for a Tax Compliance Certificate (hereinafter “TCC”). The Respondent proceeded to issue a further assessment of Kshs. 74,020,520. 49 on 15th January, 2024.

5. The Appellant, being aggrieved by the Respondent’s demand on 28th August, 2023, the adjustments made to his returns on 6th September, 2023, the additional assessments made on 26th September 2023 lodged a Notice of Appeal dated 25thMarch, 2024. The same was deemed as having been filed on even date following a Ruling by the Tribunal delivered on 4th April, 2024.

The Appeal 6. The Appeal was predicated on the following grounds as outlined in the Memorandum of Appeal dated 25th March 2024 and deemed as having been filed on even date by a Ruling of the Tribunal delivered on 4th April, 2024:

7. With regard to the decision given on the 28th day of August, 2023i.The Respondent erred in demanding income tax of Kshs 445,134. 00, penalty and interest thereon totaling Kshs 1,050,960. 88 without taking into account the payment of Kshs 436,687. 60 on 19th May, 2021 and 20th May, 2021. ii.The Respondent erred in demanding VAT of Kshs 10,039,339. 87, penalty and interest thereon totaling Kshs 16,031,007. 75 without considering the objection lodged with the Respondent by the Appellant on 4th April, 2021 for Kshs 8,406,568. 00. iii.The Respondent erred in demanding Kshs 10,484,473. 87, penalty and interest thereon totaling Kshs 17,081,968. 63 without taking into account responses made by the Appellant on 21st May, 2021; 3rd February, 2022; 18th February, 2022; 12th May, 2022; and 19th July, 2022. iv.The Respondent erred in demanding Kshs 10,484,473. 87, penalty and interest thereon totaling Kshs 17,081,968. 63 when the same was inconsistent with the demand for Kshs 8,965,204. 20 previously made on 13th February, 2023.

8. With regard to the decision given on the 29th day of August, 2023. i.The Respondent erred in issuing the Agency Notices dated 29th August, 2023 in respect to the Appellant and directed to: NCBA Bank Kenya PLC; Standard Chartered Bank (K) Limited; Co-operative Bank of Kenya; Absa Bank Kenya PLC; Kenya Commercial Bank; CFC Stanbic Bank Limited; I and M Bank Limited; and Equity Bank Limited without hearing the Appellant on the demand for Kshs 17,081,968. 63 made on 28th August, 2023. ii.The Respondent erred in issuing the Agency Notices dated 29th August, 2023 in respect to the Appellant and directed to: NCBA Bank Kenya PLC; Standard Chartered Bank (K) Limited; Co-operative Bank of Kenya; Absa Bank Kenya PLC; Kenya Commercial Bank; CFC Stanbic Bank Limited; I&M Bank Limited; and Equity Bank Limited in respect of tax that was not due and payable by the Appellant.

9. With regard to the decision given on the 6th day of September, 2023. i.The Respondent erred in unilaterally adjusting the taxable income due from the Appellant for 2018 from Kshs 2,473,602. 88 to Kshs 28,927,218. 88 and fixing tax on the same at Kshs 7,908,985. 16 without notice to or hearing the Appellant.ii.The Respondent erred in unilaterally adjusting the taxable income due from the Appellant for 2019 from Kshs 3,031,774. 64 to Kshs 36,384,392. 64 and fixing tax on the same at Kshs 10,282,675. 00 without notice to or hearing the Appellant.iii.The Respondent erred in unilaterally adjusting the taxable income due from the Appellant for 2020 as adjusted from Kshs 1,108,981. 00 to Kshs 42,468,775. 00 and fixing tax on the same for Kshs 10,508,192. 00 without notice to or hearing the Appellant.

10. With regard to the decision given on the 27th day of September, 2023. i.The Respondent erred in issuing an assessment order for VAT of Kshs 2,898,829. 76 without notice to or hearing the Appellant.ii.The Respondent erred in issuing an assessment order for income tax of Kshs 14,269,128. 24 without notice to or hearing the Appellant.iii.The Respondent erred in issuing an assessment order for income tax of Kshs 15,008,677. 50 without notice to or hearing the Appellant.iv.The Respondent erred in issuing an assessment order for income tax of Kshs 12,839,655. 77 without notice to or hearing the Appellant.v.The Respondent erred in issuing an assessment order for VAT of Kshs 7,954,844. 57 without notice to or hearing the Appellant.vi.The Respondent erred in issuing an assessment order for VAT of Kshs 4,276,972. 35 without notice to or hearing the Appellant.vii.The Respondent erred in issuing an assessment order for VAT of Kshs 4,200,301. 12 without notice to or hearing the Appellant.viii.The Respondent erred in issuing an assessment order for VAT of Kshs 12,572,111. 18 without notice to or hearing the Appellant.

11. With regard to the decision given on the 26th day of October, 2023. The Respondent erred in rejecting the Appellant's application for a TCC on account of a tax liability of Kshs 41,194,998. 00 when the same was not due and payable by the Appellant.

Appellant’s Case 12. The Appellant’s statement of facts dated 25th March, 2024 were deemed to have been filed on the same day in the Ruling delivered by the Tribunal on 4th April, 2024.

13. The Appellant stated that on 28th August, 2023 the Respondent demanded tax arrears from him in the sum of Kshs 17,081,968. 63 comprising income tax of Kshs 1,050,960. 88 for the period January, 2015 to December, 2020 and VAT of Kshs 16,031,007. 75 for the period April, 2016 to July, 2023.

14. The Appellant stated that on 29th August, 2023, the Respondent issued agency notices in respect to him, directed to NCBA Bank Kenya PLC; Standard Chartered Bank (K) Limited; Co-operative Bank of Kenya; Absa Bank Kenya PLC; Kenya Commercial Bank; CFC Stanbic Bank Limited; I&M Bank Limited; and Equity Bank Limited for the collection of the sum of Kshs 17,081,968. 63 from bank accounts that he operated.

15. That the Respondent had in spite of his detailed response to its demand dated 28th August, 2023 and the agency notices issued on 29th August, 2023 refused and/ or failed to withdraw and revoke the agency notices and as a result, the Appellant’s accounts operated with NCBA bank were seized and he could not operate the same until after the suspension of the Agency Notices on 6th September, 2023.

16. The Appellant’s view was that the actions of the Respondent were not lawful because on 3rd February, 2021 a demand for Kshs 12,900,959. 40 were made by the Respondent to the Appellant. The sum comprised income tax of Kshs 1,131,589. 37, PAYE of Kshs 37,357. 41 and VAT of Kshs 11,732,012. 62.

17. The Appellant stated that he substantively responded to the demand on 21st May, 2021. In the response dated 21st May, 2021 the sum of Kshs 11,732,012. 63 on account of VAT was objected to for the following reasons:a.Evidence of payment of the following amounts was given to the Respondent: April, 2016 - Kshs 96,080. 93; July, 2019 - Kshs 84,472. 33; and February, 2020 - Kshs 33,247. 37. The payments totaled Kshs 213,800. 63;b.Evidence of payment of VAT of Kshs 45,678. 03 due on the fees of Kshs 580,480. 15 was given to the Respondent. So too, was evidence of payment of Kshs 84,441. 00 assessed by the Respondent;c.Evidence of payment of the following sums claimed on account of VAT for the years 2016, 2017 and 2018 was given to the Respondent: December, 2016 - Kshs 2,084,845. 39; December, 2017 - Kshs 2,376,484. 80; and December, 2018 - Kshs 2,397,876. 16; andd.An explanation for the Respondent's erroneous assessment of Kshs 1,313,558. 71 on account of VAT in respect of the fees of Kshs 8,209,741. 94 received from a client was given to the Respondent.

18. The Appellant asserted that the four explanations enumerated above exhaustively dealt with the erroneous assessment of VAT in the sum of Kshs 11,732,012. 62 in the Respondent's demand of 3rd February, 2021. In the response dated 21stMay, 2021 by the Appellant, the amounts of Kshs 679,908. 00 and Kshs 15,669. 60 on account of income tax were admitted. As regards the same, evidence of payment of part thereof in the sums of Kshs 421,018. 00 and Kshs 15,669. 60 respectively, totaling Kshs 436,687. 60 were given to the Respondent. The sum of Kshs 37,357. 41 representing PAYE was also settled.

19. On 6th April, 2021 the Appellant stated that he lodged an objection in terms of Section 51 of the Tax Procedures Act , CAP 469B of the Laws of Kenya (hereinafter “TPA”) as regards the erroneous assessment on VAT by the Respondent. The objections related to Kshs 1,501,682. 24; Kshs 45,678. 80; Kshs 2,397,876. 16; Kshs 2,376,484. 80; and Kshs 2,084,845. 92. The total sum objected to was Kshs 8,406,568. 00.

20. The Appellant stated that the Respondent did not reply to his objection to the erroneous assessment of VAT in time or at all, as required by Section 51 (8) to (11) of the TPA. In the circumstances, his objection to the erroneous assessment of VAT in the total sum of Kshs 8,406,568. 00 was deemed to have been allowed.

21. The Appellant averred that on 2nd February, 2022, the Respondent gave him a notice of tax investigations in total disregard of the matters set out in preceding paragraphs. The Appellant asserted that the Respondent stated as follows in its notice:“The preliminary findings indicate that you have not declared all the taxable income for the years 2016 to 2021 and unpaid tax. Take notice that tax amount which remains unpaid continue to accrue penalties and interest until payment is made in full.”

22. The Appellant also stated that on 2nd February, 2022, the Respondent simultaneously invited him for a meeting on 8th February, 2022 “to discuss your tax matters in accordance with Section 51(1)(c) of the Tax Procedure Act 2015 ....".

23. The Appellant replied to the Respondent's two letters dated 2nd February, 2022 on 3rd February, 2022. In the response dated 3rd February, 2022 the Appellant requested the Respondent to provide the following:i.The preliminary findings of the non-declaration of all taxable income for the years 2016 to 2021 and the claimed unpaid tax for the said period; andii.Details of the claimed anomalies and irregularities referred to in its letters.

24. The Appellant stated that on 4th February, 2022 the Respondent replied to his letter and the information he requested was not given or alluded to by the Respondent but that instead, the Respondent stated that as follows:“In your letter you sought clarification on the unpaid taxes and the anomalies alluded to in our notice of tax investigations. Please note that the Commissioner established that there are variances in income declared in your VAT and Income Tax returns for the period under review which points to possible under-declaration of income.You are therefore required to shed light on the variances to enable the Commissioner make a determination on your tax compliance status.”

25. The Appellant stated that a meeting was held at the Respondent's offices on 8th February, 2022 pursuant to the invitation on 2nd February, 2022 and from that meeting it transpired that there was no particular issue requiring clarification from the Appellant. At the Appellant’s insistence, the Respondent undertook to write and indicate the information required if any.

26. The Appellant averred that instead of the Respondent writing to him on the matters discussed during the meeting of 8th February, 2022 the Respondent wrote to several of his clients on 9th February, 2022 inquiring into details of payment of fees.

27. The Appellant stated that the Respondent simultaneously wrote to him on 9th February, 2022 indicating seven documents required namely the general ledger; detailed trial balances; financial statements; staff numbers; wages and salaries schedule/journals; direct costs and expenditure schedules/journals; bank statements in respect of his office and clients’ accounts as well as his income and disbursement analysis.

28. The Appellant replied to the Respondent's letter of 9th February, 2022 on 18th February, 2022 wherein he lamented on what was evidently "harassment in the guise of tax collection or investigations”. The Appellant stated that the matters raised in his letter of 18th February, 2022 were never addressed by the Respondent but that instead, on 22nd April, 2022, the Respondent wrote to him demanding claimed tax arrears in the total sum of Kshs 92,384,015. 00.

29. The amount demanded of Kshs. 92,384,015. 00 comprised: income tax - Kshs 60,378,026. 00; VAT - Kshs 20,672,480. 00; outstanding taxes as per i-Tax ledger (VAT - Kshs 1,921,487. 00 and income tax - Kshs 721,678. 00); and additional VAT assessment outstanding in i-Tax - Kshs 8,690,344. 00. The Appellant responded to the demand for the claimed tax arrears of Kshs 92,384,015. 00 on 12th May, 2022.

30. The Appellant stated that what was significant in his response was the answer that part of the demanded sum being Kshs 8,690,344. 00 was erroneous following the objection to the same made by him on 4th June, 2021 and the Respondent's failure to respond as detailed in the preceding paragraphs. The Appellant sought an extension of time to address the rest of the matters raised in the Respondent's letter of 22nd April, 2022 which was granted by the Respondent’s letter dated 6th June, 2022.

31. On 19th July, 2022 the Appellant replied to the Respondent’s letter dated 22nd April, 2022 and since there was no response to his letter of 19th July, 2022, the Appellant’s view was that it was appropriate and legitimate for him to conclude that his letter, dated 19th July, 2022 adequately and sufficiently dealt with the tax investigations.

32. The Appellant further asserted that the Respondent's issuance of a TCC to him on 9th September, 2021 and 2nd November, 2022 lent credence to the premise that there were no outstanding taxes for the period under investigations that were commenced on 2nd February, 2022 and that further the demand for tax arrears amounting to Kshs. 92,384,015. 00 were without basis.

33. The Appellant averred that in total disregard for all the meetings, discussions and correspondence exchanged as set out above, on 13th February, 2023, the Respondent demanded from him, tax arrears of Kshs. 8,965,204. 20 analysed as follows; Kshs. 1,396,040. 55 in respect of VAT; Kshs. 7,387,790. 84 in respect of Income tax and Kshs. 181,372. 81 in respect of PAYE. The Appellant settled the PAYE demanded in full but averred that the demands in respect of VAT and income tax were erroneous.

34. The Appellant responded to the demand on 27th February, 2023 and the Respondent took no action thereafter. The Appellant was of the view that the demand of Kshs. 17,081,968. 63 by the Respondent vide its letter dated 28th August, 2023 was made in disregard of the Appellant’s pleas and explanations commencing on 3rd February, 2021 and ending on 27th February, 2023.

35. The Appellant further stated that within the said period that is between 3rd February, 2021 and 27th February, 2023, the Respondent made contradictory demands on him as set out below:a.Kshs 12,900,559. 40 on 3rd February, 2021;b.Kshs 92,384. 00 [sic] on 22nd April, 2022; andc.Kshs 8,965,204. 20 on 13th February, 2023.

36. The Appellant averred that there was no explanation on how the claim of outstanding income tax in the sum of Kshs 7,387,790. 84 on 13th February, 2023 changed to Kshs 1,050,960. 00 on 28th August, 2023 and VAT in the sum of Kshs 1,396,040. 55 on 13th February, 2023 changed to Kshs 17,081,968. 00 on 28th August, 2023.

37. According to the Appellant’s deduction of the Payment Registration for VAT on the i-Tax portal was that the VAT in the sum of Kshs 17,081,968. 00 represents the sum of Kshs 8,406,568. 00 objected to on 4th June, 2021 together with interest and penalties. The further view of the Appellant was that the following entries on the i-Tax portal amounting in the sum total to Kshs. 14,462,875. 00 were erroneous and ought to be removed and rectified:i.April, 2016 - Kshs 180,633. 00;ii.December, 2016 - Kshs 3,856,964. 00. iii.March, 2017 -Kshs 37,155. 00. iv.December, 2017 - Kshs 4,111,319. 00. v.December, 2018 – Kshs. 3,860,581. 00. vi.July 2019 - Kshs 147,874. 00. vii.October 2019 - Ksh 10,000. 00. viii.January, 2020 - Kshs 67,604. 00. ix.February, 2020 - Kshs 51,764. 00. x.March, 2020-Kshs 1,927,796. 00. xi.April, 2020 - Kshs 10,000. 00. xii.June, 2021-Kshs 201,185. 00.

38. The Appellant stated that it was apparent to him by the contradictory demands made by the Respondent upon him that any officer of the Respondent assigned this matter would ignore all that had been done before and would proceed as though fresh investigations had to be made without reference to previous settlements. In any event, the Appellant averred, the Respondent's demand to him of Kshs 17,081,968. 63 in the letter dated 28th August, 2023 and the agency notices issued in respect to him pursuant thereto on 29th August, 2023, were erroneous and illegal for the reasons he had set out in the preceding paragraphs.

39. On 31st August, 2023, the Appellant replied to the Respondent's demand made on 28th August, 2023, and requested the revocation of the agency notice on the basis of information provided to the Respondent in his response. The Respondent's failure to act upon and respond to his request necessitated the Appellant filing the case Judicial Review Application No E129 of 2023, Nelson Andayi Havi v Kenya Revenue Authority on 4th September, 2023.

40. The Appellant stated that on 6th September, 2023; the Respondent wrote to NCBA Bank Kenya PLC notifying it that the Respondent had suspended the agency notice issued to it on 28th August, 2023. On 2nd October, 2023, the Respondent issued similar suspension notifications to Standard Chartered Bank (K) Limited; Co-operative Bank of Kenya; Absa Bank Kenya PLC; Kenya Commercial Bank; CFC Stanbic Bank Limited; I&M Bank Limited; and Equity Bank Limited.

41. The Appellant stated that the case Judicial Review Application No E129 of 2023 came up for hearing on the question of exemption from the obligation to exhaust the objection and appellate remedies on 4th December, 2023. At the time of filing of the claim in Judicial Review Application No E129 of 2023, the amount indicated as due from the Appellant in the i-Tax portal on account of income tax was Kshs 1,050,000. 00: analysed as Kshs 209,278. 00 in respect of the period January, 2015 to December, 2015; Kshs 100,750. 00 in respect of the period January, 2016 to December, 2016; Kshs 29,548. 00 for the period January, 2017 to December, 2017; Kshs 466,695. 00 for the period January, 2019 to December, 2019; and Kshs 244,692. 00 for the period January, 2020 to December, 2020.

42. The Appellant stated that prior to the above, contradictory demands on account of income tax claimed from him were made commencing 3rd February, 2021 ending on 28th August, 2023: Kshs 1,131,589. 37 on 3rd February, 2021; Kshs 60,378,026. 00 on 22nd April, 2022; Kshs 7,387,790. 84 on 13th February, 2023; and Kshs 1,050,960. 88 on 28th August, 2023. The demands were responded to on the basis of income tax self-assessment returns filed by him for the period of the demands.

43. The Appellant stated that in respect of the 2018 year of income his net taxable income was Kshs 2,473,602. 88 for which the tax due was Ksh 339,465. 00; In respect of the year 2019, his net taxable income was Kshs 3,031,774. 64 for which the tax due was Kshs 697,908. 00; and in respect of his 2020 year of income his net taxable income was Kshs 1,108,981. 00 for which the tax due was Kshs 168,244. 00.

44. On 27th September, 2023, the Appellant noted activity by the Respondent unilaterally revising the returns for the above-noted period on his i-Tax portal in what was indicated to be an additional assessment made on 6th September, 2023. The returns for 2018, 2019 and 2020 overwritten with the additional assessment. The taxable income for 2018 was adjusted from Kshs 2,473,602. 88 to Kshs 28,927,218. 88 and tax on the same fixed at Kshs 7,908,985. 16. The taxable income for 2019 was adjusted from Kshs 3,031,774. 64 to Kshs 36,384,392. 64 and tax on the same fixed at Kshs 10,282,675. 00. The taxable income for 2020 was adjusted from Kshs 1,108,981. 00 to Kshs 42,468,775. 00 and tax on the same fixed at Kshs 10,508,192. 00. Penalties and interest were then saddled on the three figures unilaterally introduced with the result that a sum of Kshs 41,194,998. 00 is indicated as due and outstanding from him on account of income tax.

45. The view of the Appellant was that the actions on his i-Tax portal on 6th September, 2023 did not amount to a tax decision or a valid tax decision on assessment by the Respondent in respect of which action may be taken by him in response, in terms of PART VII of the TPA.

46. On 3rd October, 2023, the Appellant wrote to the Respondent requesting a reversal of the entries made on his i-Tax portal subsequent to the actions taken on 6th September, 2023. The Appellant also requested that he be furnished with the reasons that informed the actions taken by the Respondent together with relevant documents relating to the actions. The Respondent did not act upon or respond to the request made by the Appellant on 3rd October, 2023 in time or at all.

47. On 29th September, 2023 the Respondent proposed an out of Court settlement of Judicial Review Application No E 129 of 2023 and the Appellant replied on 4th October, 2023 requesting the Respondent to undertake a reconciliation of his account on the basis of documents that the Appellant had forwarded to it on 21st August, 2023. The Appellant averred that the said letter was not acted upon nor responded to.

48. On 1st November, 2023, the Appellant stated that he made an application for a TCC which was rejected on account of the impugned additional assessment for income tax, and the impugned assessment for value added tax, both assessments were the subject matter of Judicial Review Application No E129 of 2023.

49. On 2nd November, 2023, the Appellant wrote to the Respondent requesting action on his letter dated 3rd October, 2023. The Respondent was also requested to enable the issuance of a TCC from his i-Tax portal. The Respondent then refused and/ or failed to act upon or respond to the request made by him on 2nd November, 2023 in time or at all.

50. The Appellant stated that the Respondent's actions and decisions in respect to the additional assessment for income tax made by the Respondent on 6th September, 2023, on his i-Tax portal, and the Respondent's refusal to issue him with a TCC necessitated his filing of Judicial Review Application No E 185 of 2023, Nelson Andayi Havi vs Kenya Revenue Authority.

51. The Appellant stated further that during the pendency of Judicial Review Application No E 129 of 2023 and Judicial Review Application No E 185 of 2023 the Respondent revised his tax liability to Kshs 2,618,853. 00 and asked that he pays the same to enable the issuance of a TCC.

52. On 15th January, 2024 the Respondent forwarded to the Appellant additional assessments in the total sum of Kshs 74,020,520. 49 and he decided to await the outcome of Judicial Review Application No E129 of 2023 and Judicial Review Application No E185 of 2023 before addressing the actions of the Respondent evidenced in its electronic mail on 15th January, 2024.

53. The Appellant in the meantime stated that he paid part of the sum of Kshs 2,618,853. 00 and was issued with a TCC valid up to and until 11th March, 2025. Judicial Review Application No E 129 of 2023 and Judicial Review Application No E 185 of 2023 were determined in a ruling delivered on 25th March, 2024 directing that the Appellant’s dispute with the Respondent be pursued by way of an appeal to the Tribunal.

54. The Appellant stated that he is not liable to the Respondent for unpaid tax in the manner demanded on 28th August, 2023, the unilateral adjustments on his returns made on 6th September, 2023 or the additional assessments made on 26th September, 2023 but communicated to him on 15th January, 2024.

55. The Appellant’s made the following prayers to the Tribunal:a.That the Appeal be hereby allowed.b.That the decision of the Respondent given at Nairobi on the 28th day of August, 2023 for the demand of Kshs 17,081,968. 63 from the Appellant be set aside.c.That the agency notices dated 29th August, 2023 from Respondent in respect to Appellant and directed to: NCBA Bank Kenya PLC; Standard Chartered Bank(K) Limited; Co-operative Bank of Kenya; Absa Bank Kenya PLC; Kenya Commercial Bank; CFC Stanbic Bank Limited; l&M Bank Limited; and Equity Bank Limited be set side.d.That the additional assessment made by the Respondent on the 6th day of September, 2023 in respect to the Appellant, in the total sum of Kshs 41,194,998. 00 be set aside.e.That the additional assessment orders made by the Respondent on the 27th day of September, 2023 in respect to him in the total sum of Kshs 74,020,520. 49 be set aside.

The Respondent’s Case 56. The Respondent replied to the Appeal through its statement of facts dated 22nd February 2024 and filed on 23rd February 2024.

57. The Respondent stated that it investigated the Appellants tax affairs for failure to correctly declare income tax and VAT. From its investigations, it established that the Appellant was registered as a VAT withholding agent but was not withholding and remitting VAT as required under Section 42A of the TPA.

58. The Respondent sought and considered information and documents that included the verification of the Appellant’s i-Tax ledger vis- a-vis the VAT returns to find out whether the withholding VAT was held correctly and remitted in accordance to the law. Upon verification of the Appellant’s i-Tax ledger vis- a-vis the VAT returns it was noted that the Appellant was not withholding and remitting VAT as required by Law.

59. The Respondent undertook a review of the Appellant’s tax affairs with regard to VAT and income tax this in comparison to the undeclared withholding certificates and self-assessments which were in the Appellant’s Ledger.

60. The Respondent established that the Appellant’s declaration pursuant to his income tax returns compared against withholding certificates, turnovers and VAT returns had variances. The variances were then summarized and taxes due computed. The Respondent cited the following provisions of Section 3 of the TPA:“reporting period" means-a.for the income tax, the year of income or, when section 27 of the Income Tax Act applies, the accounting period of the taxpayer;b.for withholding tax under the Income Tax Act, the period for which the deduction of tax relates;c.for Value Added Tax-- (i) for a registered person, each calendar month; or (ii) for an importer, the time of the import; (iii) for withholding tax under the Value Added Tax Act, the time for payment for the taxable supplies;”

61. The Respondent stated that it also undertook verification of the undeclared withholding certificates and established there was a variance between the Appellants declarations and gross turnover and then proceeded to analyse the variance noted with a view of establishing the Appellant’s tax liability.

62. The Respondent cited the following provisions of Section 31 of the TPA stating that it was pursuant to the cited provisions that it proceeded to raise assessments:“31. Amendment of assessments1. 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 under 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 (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; 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. 2. A taxpayer who has made a self-assessment may apply to the Commissioner, within the period specified in subsection (4)(b)(i), to make an amendment to the taxpayer's self-assessment.

3. Where an application has been made under subsection (2), the Commissioner may-a.amend the self-assessment; orb.refuse the application, and the Commissioner shall notify the taxpayer in writing of the decision within thirty days of receiving the application. 4. The Commissioner may amend an assessment-a.in the case of gross or wilful neglect, evasion, or fraud by, or on behalf of, the taxpayer, at any time; orb.in any other case, within five years of-i.for a self-assessment, the date that the self-assessment taxpayer submitted the self-assessment return to which the self-assessment relates; orii.for any other assessment, the date the Commissioner notified the taxpayer of the assessment.

5. Despite subsection (4)(b) (i) the Commissioner shall make an amended assessment on an application of a self-assessment taxpayer under subsection (2) if the application was submitted within the time specified in subsection (4)(b)(i).

6. Where an assessment has been amended, the Commissioner may further amend the original assessment-a.five years after-i.for a self-assessment, the date the taxpayer submitted the self-assessment return to which the self-assessment relates; orii.for any other assessment, the date the Commissioner served notice of the original assessment on the taxpayer; orb.one year after the Commissioner served notice of the amended assessment on the taxpayer, whichever is the later.”

63. The Respondent averred that the Appellant was informed of the noted variance and invited to provide explanations for it but failed to do so. The Respondent therefore cannot be held liable for the failure of the Appellant to explain the variance. The Respondent stated that pursuant to Section 108 of the Evidence Act, CAP 80 of the Laws of Kenya (hereinafter “Evidence Act”) the Appellant, as the party that would suffer loss if the variance remained unexplained, bore the burden of proof by timely providing information that addressed the variance.

64. The Respondent stated that the Appellant failed to provide explanation within statutory timelines and it cannot therefore be held liable for the acts of commission or omission of the Appellant. The Respondent stated that the Appellant pursuant to Section 51 of the TPA had a right to object to the tax decision within thirty (30) days procedurally, however this right was not invoked as such the taxes crystallized and are ready for collection:“51. Objection to tax decision1. 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.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.3. A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if- (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.”

65. The Respondent issued demand notices to the Appellant having not made payments with regards to the self-assessments in his General Ledger nor the variances noted with regard to the withholding certificates. On or about the 28th August 2023, the Respondent in compliance with the Article 201 (b) (i) of Constitution of Kenya, 2010 (hereinafter “the Constitution) on the burden of taxation shall be shared fairly, demanded tax arrears of Kshs. 17,081,968. 63 comprising of income tax of Kshs 1,050,960. 88 for the period January 2015 to December 2020 and VAT of Kshs 16,031, 277. 75.

66. The Respondent stated that on 29th August 2023, it proceeded to issue agency notices to the Appellant’s bankers pursuant to Section 42 of the TPA as the tax liability had been outstanding for a period of time, which agency notices were lifted on diverse dates in September and October 2023 pursuant to an undertaking made in the case of NBI High Court Judicial Review No E185 of 2023 Nelson Andayi Havi Vs Kenya Revenue Authority.

C. Issues Raised by The Appellant and Responses by the Respondent 67. The Respondent stated the Appellant’s contention that the letter dated 9th February 2022, a notice pursuant to Section 59 of the TPA, was evidently "harassment in the guise of tax collection or investigation" and that it was the Appellant's further argument that he provided all the information required by the Respondent in his various letters, correspondence and meetings with the Respondent.

68. The Respondent stated the Appellant’s contention that the claimed outstanding income tax and VAT had no legal basis, as there was no explanation. The Respondent's position was that it was acting within the law when it requested for information pursuant to Section 59 of the TPA which it cited as follows:“Section 59. Production of records (1) 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 authorised officer may require any person, by notice in writing, to- (a) 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; (b) furnish information relation to the tax liability of any person in the manner and by the time as specified in the notice; or (c) attend , at the time and place specified in the notice, for the purpose of giving evidence in respect of any matter or transaction appearing to be relevant to the tax liability of any person.”

69. The Respondent stated that the burden of proof that its demand for tax is excessive lies with the Appellant which burden it failed to discharge. The Respondent cited the following provisions of the law:“Section 56. General provisions relating to objections and appeals (1) In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect. (2) An appeal to the High Court or to the Court of Appeal shall be on a question of law only. (3) In an appeal by a taxpayer to the Tribunal, High Court or Court of Appeal in relation to an appealable decision, the taxpayer shall rely only on the grounds stated in the objection to which the decision relates unless the Tribunal or Court allows the person to add new grounds.

70. The Respondent cited the high court case of Kenya Revenue Authority Vs Pearl Industries Limited HCITA No. Eo86 of 2020 wherein Justice Majanja observed the following:“In this case, the pendulum of proof swung three times; the first was upon the Respondent, which it did by providing the documents requested by the Commissioner; the second shifted the Commissioner, who after reviewing the documents challenged their authenticity and validity. This meant that the burden of proof finally swung back to the Respondent to prove that the Commissioner was wrong in its position and overall findings."

71. The Respondent averred that it is empowered under Sections 58 and 59 of the TPA to require the production of documents and information to enable it ascertain the tax liability of a person. The Respondent also stated that the Appellant held various meeting with it where the documents and information provided by the Appellant to help in reviewing the income tax and VAT assessment could not justify non-payment of tax. Further follow up meetings were held with the Appellant’s representatives but still the information provided was inadequate and did not support the Appellant’s assertions.

72. The Respondent in compliance with the provisions Article 47 and 50 of the Constitution and Section 4(1) and (2) Fair Administrative Actions Act, CAP 7L of the Laws of Kenya (hereinafter “FAAA”) gave the Appellant ample time to discuss the tax dispute and the findings and/or decision was communicated in writing. The Respondent stated that it gave the Appellant sufficient time to provide the relevant documents which the Appellant failed to provide together with the detailed reconciliation explaining the difference in the derived income compared with the VAT withholding certificates and the declaration in the tax return.

73. The Respondent stated that it relied on Section 51(3) (c), 58 and 59 of the TPA and Section 43(1) of the Value Added Tax Act, CAP 476 of Kenya’s Laws (hereinafter “VAT Act”) to reiterate that the Appellant failed to provide documentation to support his grounds for objection in instances where he objected and in the absence of clear and detailed reconciliation to explain and support the variances in the income tax return and VAT return, the Respondent’s finding on the assessment was accurate and proper.

74. The Respondent stated that the Appellant failed to reconcile the variance between the grossed-up amounts from the withholding certificates with what he declared for the assessed years of income. Using its best judgement, it raised the assessment by considering the variances. The Appellant did not provide documents to support the variances.

75. The Respondent averred that it was the duty of the Appellant to provide documents whenever required by the Respondent. Pursuant to Section 23(1) (a) of the TPA, the Appellant was required to keep documents or records in such a manner that its tax liability could readily be ascertained. Without production of documents, it was empowered to use alternative means to determine the taxes due.

76. The Respondent stated that it is not bound by the Appellant’s returns, information or self-­assessment pursuant to Section 24(2) of the TPA. The Respondent thereby re-emphasized the provisions of Section 17 of the TPA which allows it to carry out additional assessments with the documentation it has and use its best judgement to come up with tax payable, and therefore the Respondent rightly assessed the income tax payable based on the information that it had.

77. The Respondent stated that the process it undertook in reaching its decision to demand the outstanding taxes followed due process and the reasonable expectation of the Appellant was met as they were given a hearing before the adverse action was taken as well as reasons for the adverse administrative action.

78. The Respondent stated that "TCC" means a certificate issued by it if satisfied that the person has complied with the tax law in respect of filing returns and has paid all the tax due based on self-­ assessment or has arranged with the it to pay any tax due as provided in section 3 of the TPA.

79. The Respondent averred that the term "self-assessment" means an assessment made by a taxpayer or his representative as provided for under the following provisions of section 28 of the TPA:“28. Self-assessment (1) A taxpayer who has submitted a self-assessment return in the prescribed form for a reporting period shall be treated as having made an assessment of the amount of tax payable (including a nil amount) for the reporting period to which the return relates being the amount set out in the return."

80. The Respondent also cited the following provisions of Section 72 of the TPA:“72. Tax Compliance Certificate (1) Any person may apply to the Commissioner for a Tax Compliance Certificate.

2. The Commissioner may issue a Tax Compliance Certificate, which shall be valid for the period specified in the certificate, upon the applicant fulfilling conditions that the Commissioner may impose.

3. The Commissioner may revoke a Tax Compliance Certificate issued under sub-section (2) if the Commissioner finds that the person has failed to honour a demand for tax issued by the Commissioner or has violated the provisions of a tax law."

81. The Respondent stated that pursuant to section 28 of the TPA, the Appellant made self-assessments on diverse dates between April 2016 and November 2023 and has a valid and payable debt of Kshs 2,906,990. 08, where the debt is paid before lapse of amnesty period, the payable debt is Kshs. 2,618,849. 91. The Respondent was therefore acting within the law to demand for payment and/or a payment plan before it issued the TCC.

82. The Respondent cited the following provisions of Section 54 of the Income Tax Act , CAP 470 of the Laws of Kenya (hereinafter “ITA”):'“A 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."

83. The Respondent relied on Section 29 (1) of the TPA and maintained that the Appellant had not been declaring all the income and VAT in his returns and Section 30 of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) places the burden of proof on the taxpayer.

84. The Respondent stated that it had noted that the Appellant has an obligation to keep documents that enable their tax liability to be readily ascertained. The foregoing is enshrined under the following provisions of Section 23 of the TPA:“A person shall-d.Maintain any document required under tax law, in either of the official languages;e.Maintain any document required under a tax law so as to enable the person's tax liability to be readily ascertained;…..”

85. The Respondent stated that it was clear to it that the Appellant had not discharged the burden of proof as stipulated in Section 56(1) of the TPA and thus the Appeal was unmerited and should be dismissed with costs to the Respondent. The Respondent relied on the following cases on burden of proof: Leah Njeri Njiru v Commissioner of Investigations and Enforcement Kenya Revenue Authority & another [2021] eKLR.

Tumaini Distributors Company (K) Limited v Commissioner of Domestic Taxes [2020] eKLR.

Motex Knitwear Limited v Gopitex Knitwear Mills Limited Nairobi (Milimani) HCCC No 834 of 2002.

Trust Bank Limited v Paramount Universal Bank Limited & 2 others Nairobi (Milimani) HCCS No 1243 of 2001.

86. The Respondent maintained that in its decision, the Appellant was informed on the basis for which the assessment was issued and further, the Appellant was informed why/how the Respondent arrived at its decision and as such the decision is valid and issued according to the letter of the law.

87. The Respondent stated that its decision was proper and the same should be upheld and urged the Tribunal to consider the case of Daton Engineering Services Limited vs Commissioner of Domestic Taxes TAT No 1246 of 2022.

D. Responses to the Orders Sought by The Appellant 88. The Respondent stated that in regard to its decision given on 28th August, 2023, demanding Kshs. 17,081,968. 68 it noted the following:i.The Appellant did not object to the assessments giving rise to the tax liability in accordance with the TPA and as such the Respondent pursuant to the laws demanded the taxes which had crystallized and ready for collection.ii.That as demonstrated, the tax liability emanated from the variances noticed in the Appellants income tax and VAT return and the withholding certificates reviewed by the Respondent.

89. The Respondent stated the Agency Notices dated 29th August 2023 from it in respect to the Appellant and directed to the Appellants bankers were lifted pursuant to the directions in NBI High Court Judicial Review No. E185 of 2023 Nelson Andayi Havi Vs Kenya Revenue Authority and as such the prayer and the orders sought were not available.

90. With regard to the additional assessment made by the Respondent on the 6th of September, 2023 on the Appellant, amounting in total to the sum of Kshs. 41,194,998. 00 and the additional assessments it made on 27th September 2023 amounting in the sum total to Kshs. 74, 020,520. 49, the Respondent stated that the Appellant had an unpaid tax liability and that he had not objected to the assessments pursuant to the provisions of section 51 of the TPA. Instead, the Respondent stated, the Appellant was responding to the preliminary findings from its investigation and enforcement department whilst the subject additional assessment were solely to do with the variances noted in his filed income tax and VAT return and review of the withholding certificates.

91. On the issue that the Respondent was to be directed to issue the Appellant with TCC, the Respondent stated that it informed the Appellant on the provisions of Section 3 of the TPA in its response in the above-mentioned Judicial Review Application No. E185 OF 2023 before the High Court.

92. The Respondent stated that the “TCC” means a certificate issued by it if satisfied that the person has complied with the tax law in respect of filing returns and has paid all the tax due based on self-­ assessment or has arranged with the Respondent to pay any tax due as provided in section 3 of the TPA. The Respondent stated that the Appellant, pursuant to the provisions of the law made the necessary payments hence the TCC was issued as evidenced by the Appellant’s bundle of documents and paragraph 76 of his statement of facts and as such the orders sought by the Appellant were not available.

93. The Respondent made the following prayers to the Tribunal:i.That the Respondent’s decisions and actions to demand the outstanding tax liability and the additional assessments raised were properly issued as provided under law.ii.That the Tribunal dismiss this Appeal with costs to the Respondent as the same was without merit.

Parties’ Written Submissions 94. The Appellant’s written submissions dated 5th November, 2024 were filed on 6th November, 2024 were adopted by the Tribunal on 13th November, 2024 as were the Respondent’s written submissions dated 2nd October, 2024 and filed on 22nd October, 2024. During the hearing the Respondent admitted that it served the Appellant with its submissions late, that is on 2nd November, 2024 out of the time as directed by the Tribunal. This was in the view of the Tribunal, a valid reason for the adoption of Appellant’s late submissions.

95. The Tribunal notes that some part of the submissions were a reiteration of the Appellant’s statement of facts and the same will not be rehashed. In his submissions, the Appellant submitted that he disputed the 4 decisions of the Respondent dated 28th August, 2023, 29th August, 2023, 6th September, 2023 and 27th September, 2023 on the basis that there were erroneous tax demands.

96. On the issue of the tax demands the Appellant submitted that having objected on 6th April, 2021 and the Respondent having not issued its objection decision, was indicative of the fact that the Respondent's failure to make a decision on his objections within sixty days put an end to the demand. The Appellant cited the following holding in the case of Republic v Kenya Revenue Authority Ex Parte M-Kopa Kenya Limited (2018] eKLR:“106. In my view since there is no format for making an objection, what is required is the substance rather than the form. What the law frowns at is an objection that is framed in such an ambiguous manner as not to be certain whether the tax payer is seeking further particulars or indulgence to enable it pay the taxes demanded. In this case the applicant had clearly made what was in substance an objection as envisioned under section 51 of the Tax procedures Act, 2015. Accordingly, the Respondent was required to make a decision in respect thereof within sixty (60) days under section 51(11) of the said Act. As the Respondent defaulted in making a termination thereon within the prescribed time, the said objection was deemed to have been allowed.”

97. The Appellant also buttressed his position through the following determination in the case Vivo Energy Kenya Limited v Commissioner of Customs & Border Control, Kenya Revenue Authority & another [2020] eKLR :“31. The provisions of the TPA are clear that where the Commissioner fails to make a decision on an objection within sixty days, the objection shall be allowed. This means that the objection dated 8th November, 2016 in which the Applicant sought for the revision of the Commissioner's decision to demand the excise duty amounting to Kshs 127,183,364/= was allowed by operation of the law by dint of Section 51(11) of the TPA. Therefore the 1st Respondent should not have continued to demand the payment of the excise duty through the letters dated 23rd, November, 2016, 3rd, February, 2017, 3rd, October 2019, 24th, October 2019, and 7th, November 2019. All those demands amounted to nothing in law. “

98. The Appellant further cited the following decision in Global Investment Bata Bank Limited v Commissioner of Domestic Taxes, Tax Appeal No E 119 of 2023:“56. The net effect of the Respondent's failure to comply with the provisions of Section 51 (4) of the Tax Procedures Act was that the Appellant's objection was deemed .valid and that the Respondent was. placed under obligation by law to issue and Objection decision within sixty days.”

99. The Appellant submitted his contention that the Respondent violated the rules of natural justice by issuing agency notices and making unilateral adjustments to tax assessments without notice or hearing thereby curtailing his right to fair administrative action and a fair hearing under articles 47 and 50 of the Constitution. The Appellant cited the following holding in the case of Republic v Commissioner General, Kenya Revenue Authority Ex-Parte Martin M. Mugi [2018] eKLR:“36. As to whether the Respondent breached the rules of natural justice when issuing the impugned agency notices, I must find in the affirmative, as while it did provide evidence of a demand notice issued to the Applicant dated 11th July 2012, and a reminder dated 23rd August 2012 for payment of the tax of Kshs 3,331,278/= , it also annexed a response to the demand notices by the Applicant's Accountant dated 3rd September 2012 wherein the Applicant denied owing the tax demanded and seeking amendment of its record to reflect payments he had made.

37. There was thus evidence of communication by the Applicant with the Respondent before 3rd October 2012, seeking clarification as regards the amount of tax that was demanded. While it is indicated that the Respondent received the letter dated 3rd September 2012 on 9th October 2012, it still proceeded with the agency notices with respect to the demanded amount of tax while knowing that the amount was disputed, and not giving the Applicant the opportunity to prove the payments he alleged to have made.”

100. The Appellant avowed that the Respondent unilaterally revised his taxable income for the years, 2018; 2019 and 2020 without notice or hearing resulting in significantly higher tax assessments. The Appellant in this instance cited the following decision in the case Republic v Kenya Revenue Authority Ex Parte Universal Corporation Ltd [2016] eKLR :“182. In my view however, the final decision does not rest upon the issue whether or not the Respondent was legally entitled to collect the taxes due or whether or not taxes were actually due. The decision rests on the process that was being adopted by the Respondent in the exercise of its statutory obligation. That in my view is not an issue for an appeal but one that falls squarely within the judicial review jurisdiction. According it is my view that the provisions of section 229 and 230 of EMCCA do not bar this Court from dealing with the issues raised herein.

183. Whereas this Court appreciates the role of the Respondent in the collection of taxes which is the mainstay of development in this Country, and that all those who are liable to pay taxes ought to do so no matter the amount as long as the same is lawful, in the exercise of its mandate the Respondent is expected to be guided by the national values and principles of governance in Article 10 of the Constitution one of which is integrity. In my view, efficiency in public finance is a component of integrity. A body entrusted with the collection of revenue ought not to be seen to be lethargic in the conduct of its affairs and whereas the law allows the Respondent a period within which to confirm its record, that period ought not to be taken as a derogation of Article 47 of the Constitution that requires that administrative action be carried out expeditiously. 184. Apart from that since in making its decision the Respondent was purportedly applying the law, it was constitutionally obliged pursuant to Article l0(l)(c) of the Constitution to comply with the national values and principles of governance and in my view this include fair administrative action as enshrined in Article 47 of the Constitution which provides as hereunder:...”

100. The Appellant submitted, with regard to the issuance of TCCs that the issuance of TCCs to him on 9th September, 2021 and 2nd November, 2022 supported his argument that there were no outstanding taxes thereby contradicting any subsequent tax demands. With regard to his submissions on the issue of TCCs, the Appellant relied on two decisions to support his legal arguments. The first was Republic v Kenya Revenue Authority & another Ex-Parte Tradewise Agencies [2013] eKLR where the court held as follows:“30. Whereas this Court cannot hold that the applicant was not obliged to pay any taxes, the 1st respondent was expected to notify the applicant of any discovery of new evidence which was likely to materially alter the applicant's tax compliance status and hear the applicant's side of the story before taking an action which was contrary to its earlier conduct.

31. By not affording the applicant an opportunity to explain its position after issuing the tax compliance certificates, it is my view and I so find that the 1st respondent was guilty of abuse of power.”

101. On the issue of TCC’S the Appellant in his submissions, cited the following holding in Republic v Kenya Revenue Authority Ex -parte Tom Odhiambo Ojienda SC t/ a Prof. Tom Ojienda & Associates [2018] eKLR to buttress his position::“74. In other words, Tax Compliance Certificate is a rebuttable evidence that a person is tax compliant and to my mind the burden of rebutting that presumption falls on the Tax Authority. In other words the issuance of a Tax Compliance Certificate creates a legitimate expectation on the part of the tax payer that the same will not be withdrawn without him being afforded an opportunity to address the intended decision to withdraw the same.”

102. The Appellant submitted that the Respondent failed to respond to his requests for reconciliation and explanation regarding the tax assessments and adjustments, further exemplifying a lack of adherence to fair administrative processes.

103. The Appellant in his submissions finalized by challenging the four decisions made by the Respondent. The grounds upon which the decisions were challenged, the Appellant, submitted, were substantiated with documented evidence. The Appellant submitted that the Respondent did not provide any single response to the facts underlying the Appeal. The Respondent, according to the Appellant, offered generalized arguments falsely accusing the Appellant of refusal and;/ or failure to pay taxes and to object or give explanations when asked yet the evidence proved otherwise. The Appellant avowed that the law he relied upon supported his appeal.

104. The Respondent identified a single issue for determination which was “Whether it erred in issuing the Appellant with Additional PAYE, VAT and income tax assessments for the periods 2016-2020 amounting to Kshs. 12,900,959. 40 on 3rd February, 2021, Kshs. 92,384,015. 00 on 22nd April, 2022 and Kshs. 8,965,204. 00 on 13th February, 2023. ”

105. he Tribunal will not reiterate the submissions of Respondent on the issue it identified for determination as the same are a re-hash of its statement of facts.

Issues For Determination 106. The Tribunal has carefully considered the parties’ pleadings, documentation adduced as evidence and both parties’ written submissions and has identified the following single issue for determination:Whether this Appeal is competent and properly before the Tribunal.

Analysis And Findings 107. The Tribunal having established the issue for determination will proceed to analyze it as follows:Whether this Appeal is competent and properly before the Tribunal.

108. This dispute arose when the Respondent completed its investigations of the Appellant's tax affairs , found discrepancies in VAT and income tax declarations and thereafter proceeded to raise tax assessments. The Appellant contended that the tax assessments were excessive and based on errors and argued that the Respondent did not consider all his relevant documents and explanations provided and as such the assessments were not legally justified.

109. The Tribunal notes that in a letter dated 3rd February, 2021 the Respondent demanded tax, from the Appellant amounting in the sum total to Kshs. 12,900,959. 40 which was inclusive of principal tax, penalties and interest in respect to PAYE, income tax and VAT. The period under review was that between 2016 and 2020. The Appellant objected to the demand formally on 6th April, 2021 and then again through his agent on 21st May, 2021. The Tribunal also notes that the Appellant’s tax agent in their said letter dated 21st May, 2021 referred to a letter dated 12th May, 2021 through which the Respondent extended the time for the Appellant to lodge his objection.

110. The Tribunal further notes that on 2nd February, 2022, the Appellant was issued with a ‘notice of tax investigations’ from the Respondent and this culminated into a demand vide a letter from the Respondent dated 22nd April, 2022. The Tribunal notes that again, the period under review was that between 2016 and 2020 and was in regard to income tax and VAT. The Tribunal further, notes that vide a letter dated 12th May, 2022, the Appellant sought an extension of time to object to the demand of 22nd April, 2022 and the same was granted by the Respondent on 6th June 2022 wherein the Respondent stated that the 60-day extension would be effective from 22nd April, 2022. The Appellant lodged his objection on 19th July, 2022.

111. The Tribunal notes that based on the chronology of the events and in compliance with the provisions of section 51(2) of the TPA, the Appellant had until 3rd March, 2021 to object to the tax decision by the Respondent issued through its letter dated 3rd February, 2021. The TPA as revised at 2021 provides as follows at Section 51 (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.”

112. The Appellant, did not object by 3rd March, 2021 but opted to object to the tax decision on 6th April, 2021, through the i-Tax system and then again on 21st May, 2021 through a letter from his tax agents who purported to have been granted an extension to object outside the statutory timelines on 12th May, 2021. The Tribunal notes that the Appellant did not adduce as evidence the said letter dated 12th May, 2021 allowing him to extend the time within which to lodge his objection.

113. Subsequently, the Appellant, in his letter dated 12th May, 2022 referred to formal objections dated 25th February, 2021 and 24th May, 2021. Neither letter nor formal objection on i-Tax was adduced as evidence by the Appellant. The Tribunal’s finding is therefore that the Appellant squandered his right as a taxpayer by failing to object within the requisite statutory timelines pursuant to section 51 (2) of the TPA.

114. The Tribunal notes the Appellant’s reference to the preliminary findings of the Respondent on 22nd April, 2022. The Appellant continuously refers to this letter as a tax decision and the Tribunal notes that indeed it was. The Tribunal notes that the Respondent gave the Appellant another opportunity to explain his position and produce documents to support his explanation. The view of the Tribunal following the sequence of events and in tandem with the provisions of TPA is that the Appellant ought to have lodged his objection to the tax decision of 22nd April, 2022 on or before 22nd May, 2022. Instead, the Appellant sought extension of time to file his objection through a letter dated 12th May, 2022 pursuant to the following provisions of section 51 (6) of the TPA:“A taxpayer may apply in writing to the Commissioner for an extension of time to lodge a notice of objection.”

115. The Tribunal notes that the TPA does not provide a timeline for the Respondent to reply to a request for extension of time. The Tribunal having reviewed the said letter dated 12th May, 2022, notes that it could not have been construed to be equivalent to an objection. Section 51(3) of the TPA is couched in mandatory terms and for a taxpayer to claim that he/she/it has lodged an objection, pursuant to Section 51 (3) of the TPA a taxpayer’s objection to a tax decision must meet the following threshold:i.It must be in writing;ii.It must state precisely the grounds of the objection;iii.It must state precisely the amendments required to correct the decision;iv.It must state precisely the reasons for the amendments;v.The taxpayer must pay the entire amount of tax that is not in dispute or has applied for extension of time to pay the tax not in dispute; andvi.All the relevant documents relating to the objection must have been submitted with the objection.

116. The Tribunal having reviewed the letter dated 12th May, 2022 from the Appellant to the Respondent notes that it was void of the six elements outlined in the preceding paragraph and cannot therefore be construed to be an objection. The Tribunal is of the further view that the Respondent was well within its rights when it replied and granted extension for the objection on 6th June, 2022 as the TPA does not stipulate the timelines within which the Respondent can grant an extension of time. The Tribunal notes that in the said letter dated 6th June, 2022, the extension was granted for 60 days with effect from 22nd April, 2022 and accordingly, the Appellant having been granted such an opportunity, ought to have objected on or before 22nd June, 2022. The Tribunal notes that the Appellant, yet again, squandered his rights as a taxpayer by objecting late on 19th July, 2022.

117. The Tribunal notes that from 2023, the Appellant began receiving other tax decisions dated 28th and 29th August, 2023; 6th and 27th September, 2023; and 26th October, 2023. The view of the Tribunal is that neither of the said decisions were appealable decisions. The interpretation of an “appealable decision” is outlined in Section 3 of the TPA which states thus:“"appealable decision” means an objection decision and any other decision made under a tax law other than—(a)a tax decision; or(b)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 18(d)a decision on an application by a self-assessment taxpayer under section 31(2);(e)deleted by Act No. 4 of 2023, s. 49 (a);(f)a decision under section 48 requiring repayment of a refund; or(g)a demand for a penalty;”

118. The Tribunal also proceeds to outline the following content of the subject matter of the tax decisions referred to by the Appellant in his grounds of Appeal: The letter dated 28th August, 2023 was titled “tax arrears” and in the said letter the Respondent demanded immediate settlement of the arrears.

The Letters dated 29th August, 2023, were 8 agency notices to all the banks where the Appellant held accounts. These agency notices were suspended and cannot therefore form a basis for the Appeal.

The decision of the Respondent as outlined in its letter dated 6th September, 2023 was in respect of an adjustment to the Appellant’s returns for the 2018, 2019 and 2020 years of income.

The decisions dated 27th September, 2023 were assessment orders.

The decision dated 26th October, 2023 was a rejection of the Appellant’s application to be issued with a TCC.

119. The Tribunal’s first finding is that the documents listed in the preceding comprise tax decisions by the Respondent. The Tribunal’s second finding is that the Appellant did not lodge any objection against any of the said tax decisions pursuant to the provisions of Section 51 (1) and (3) (a) –(c) of the TPA.

120. The Tribunal notes the following provisions of Section 13(2) of the TATA:“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—(a)a memorandum of appeal;(b)statements of facts; and(c)the appealable decision; and(d)such other documents as may be necessary to enable the Tribunal to make a decision on the appeal.”

121. The Tribunal notes that it did not sight an appealable decision and therefore the Appellant did not comply with Section 13 (2) of the TATA in filing the Appeal. The Tribunal is of the view that since the Appellant lodged his objections outside the statutorily mandated timelines in respect to the tax decisions of the Respondent issued in 2021 and 2022 or never lodged any objections against the tax decisions issued in 2023, this Appeal is not only incompetent but also improperly before the Tribunal.

122. The Tribunal has had occasion to delve into the issue of non-compliance with the statutory procedures with parties arguing that the Tribunal is too concerned with procedural technicalities and avoids or shies away from dealing with substantive issues. In the case of the Supreme Court Petition No. 5 of 2013, Raila Odinga versus Independent Electoral and Boundaries Commission and Others [2013] eKLR it was held as follows:“Our attention has repeatedly been drawn to the provisions of Article 159(2)(d) of the Constitution which obliges a court of law to administer justice without undue regard to procedural technicalities. The operative words are the ones we have rendered in bold. The Article simply means that a court of law should not pay undue attention to procedural requirements at the expense of substantive justice. It was never meant to oust the obligation of litigants to comply with procedural imperatives as they seek justice from courts of law. In the instant matter before us, we do not think that our insistence that parties adhere to the constitutionally decreed timelines amounts to paying undue regard to procedural technicalities. As a matter of fact, if the timelines amount to a procedural technicality it is a constitutionally mandated technicality.”

110. The Tribunal also notes the opinion of J Mativo [as he then was] in Equity Holdings Ltd vs Commissioner of Domestic Taxes Civil Appeal E069 and E025 of 2020(2021) KEHC 25(KLR) that express statutory edicts are not procedural technicalities and that further, Article 159 (2) (d) of the Constitution was not meant to oust express statutory provisions and to open a window for disregard of statutory requirements. It is the Tribunal’s firm view that the law is settled that statutory timelines are not a procedural technicality. Statutory timelines are set in mandatory terms and are express statutory edicts. The Appellant squandered his rights as a taxpayer to object pursuant to the provisions of the TPA. It is therefore, the Tribunal’s view that the Respondent cannot therefore be liable or be held liable for not making an objection decision since the Appellant did not object in certain instances and when he did, it was not within the statutorily mandated timelines.

111. The Tribunal cites the following holding of Justice Nyarangi in the case Owners of Motor Vessel “Lilian S” V Caltex Oil (K) Limited (1989) eKLR :‘Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law down tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction...’

112. The Tribunal downs its tools upon its finding that this Appeal is neither competent nor properly before it and as a consequence it is available for striking out.

Final Decision 123. The upshot of the foregoing is that the Appeal herein fails and accordingly the Tribunal proceeds to make the following Orders:a.The Appeal be and is hereby struck out.b.Each party to bear its own costs.

124. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 12TH DAY OF FEBRUARY, 2025. ………………………………….CHRISTINE A. MUGA - CHAIRPERSON…………………………BONIFACE K. TERER - MEMBER…………………………ELISHAH N. NJERU - MEMBER…………………………EUNICE N. NG’ANG’A - MEMBER…………………………OLOLCHIKE S. SPENCER- MEMBER