https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/84

Joyland Steel Limited Party name for citation v Kenya Revenue Authority (Tax Appeal E610 of 2025) [2026] KETAT 84 (KLR) (5 June 2026) (Judgment) Neutral citation: [2026] KETAT 84 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E610 of 2025 RO Oluoch, Chair, Cynthia B. Mayaka, E Komolo & AM Diriye, Members June 5, 2026 Between Joyland Steel Limited Appellant and Kenya Revenue Authority Respondent Judgment Background 1.The Appellant is a limited liability company incorporated in Kenya and engaged in the business of salvaging and selling scrap metal. 2.The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act. The Kenya Revenue Authority is an agency of the Government of Kenya mandated with the duty of collection and receipting of all tax revenue, and the administration and enforcement of all tax laws set out in parts 1 & 2 of the First Schedule to the Act, including assessing, collecting, and accounting for all tax revenues in accordance with those laws. 3.On 3 rd December, 2024, the Respondent issued the Appellant with assessment orders for corporation tax and VAT. 4.On 3rd January, 2025, the Appellant lodged its objection to the assessments. 5.On 24 th February, 2025, the Respondent confirmed the additional corporation tax and VAT assessments and issued its Objection Decision. 6.Aggrieved by the Respondent’s Objection Decision, the Appellant lodged this Appeal vide its Notice of Appeal dated 25th March, 2025. The Appeal 7.In its Memorandum of Appeal filed on 29th May, 2025, the Appellant raised the following grounds of appeal: -a.The assessing officer erred in law and in fact in the confirmation of additional assessment against the objections of the Appellant while the following facts were clear: -i.The additional assessments had been raised from data arising from banking deposits and credits without considering whether or not all the entries were business income related.ii.The additional assessments ignored analysis by the Appellant which clearly showed how the incomes and expenses had been calculated.iii.The officers in arriving at the total turnovers used non- company statements to add and arrive at the tallies for the total turnovers, not considering the separation of entity as provided by the Companies Act.iv.The assessing officer further mentioned that the purchases they established were higher than those declared in both out company income tax and VAT monthly filings of the same years.v.The assessing officer using the variances from the purchases that they had independently established calculated a mark-up estimate that was above market possibilities as well as that assumed the purchases were directly related to the business that the Appellant does.vi.The assessing officers did not place in consideration that scrap mental dealers at many times consolidate or aggregate purchases and buy from one source due to the quantity of cash discount advantage. The Appellant’s account has had a favorable rate always and, therefore, is purchasing on behalf of the other businesses using the same account.vii.The assessing officer did not establish why the Appellant would leave out this purchase from VAT claims despite the advantages that these purchases would provide the Appellant.viii.The assessing officer in arriving at the withholding VAT (WHVAT) used these purchases to establish the figures therein.ix.The Appellant had already engaged the Compliance Division and had begun to remit the WHVAT that was not in contention.b.The assessing officer erred in law and in fact by not considering information and explanation provided by the Appellant.c.The assessing officer erred in law and in fact by failing to put into further consideration documents and explanations provided in confirming actual documentation for the said period provided by the Appellant. Appellant’s Case 8.The Appellant’s case is based on its Statement of Facts dated 29th May, 2025, in which it averred that it was earlier engaged in the business of salvaging and selling scrap metals. 9.The Appellant further averred that it managed to secure bids with metal rolling companies to salvage reject production of roofing sheet and other metallic items. The companies include Accurate Steel Millers Limited; Corrugated Steel Millers Limited; Mabati Rolling Mills Limited and Apex Sheet Limited. 10.The Appellant stated that to secure the bids, it would be required to be the highest bidder upon which, once confirmed, it would make deposits through the Appellant’s bank account and secure the bids by the suppliers. 11.The Appellant contended that to secure many of the bids, it would partner or aggregate with other scrap dealers who would in turn make deposits through the Appellant’s bank account and secure the bids by the suppliers. 12.It is the Appellant’s case that in purchasing through these bids, it was able to enjoy a favorable price and could sell the reject products of roofing sheet and metal at a competitive price including VAT. 13.The Appellant submitted that there is a clear and present danger that unless the prayers sought are granted, the Respondent will continue to interfere with the Appellant’s business operations to its detriment, loss and damage, which cannot be compensated. 14.The Appellant filed its Written Submissions dated 27 th March, 2026 in support of its Appeal, and urging that its Appeal be allowed. Appellant’s Prayers 15.The Appellant prayed to the Tribunal for the following orders: -a)The Appeal be allowed.b)The Respondent’s Objection Decision dated 24 th February, 2025 be set aside.c)Any other orders that the Tribunal may deem fit. Respondent’s Case 16.The Respondent filed its Statement of Facts dated 25th August, 2025 and Written Submissions dated 26th March, 2026 in opposition to the Appeal. 17.In its Statement of Facts, the Respondent outlined all the Appellant’s Grounds of Appeal, and averred that in its review of the Appellant’s returns there were duplicate invoices identified, which were brought to charge. 18.It is the Respondent’s contention that the Appellant’s purchases as per VAT matches the purchases as per income tax returns. Therefore, the duplicate invoices were disallowed in both the VAT and the income tax returns. 19.The Respondent submitted that the duplicate invoices were sustained as assessed as the suppliers had declared the sales. 20.In conclusion, the Respondent asserted that the tax assessment issued was properly founded in fact and law, and that the Objection Decision was fair, reasonable, and made in accordance with statutory provisions. 21.In its Written Submissions, the Respondent urged the Tribunal to dismiss the Appeal as the Appellant had not discharged its burden of proof. Respondent’s Prayers 22.The Respondent prayed to the Tribunal for the following orders: -a)The Appeal be dismissed in its entirety.b)The Respondent’s Objection Decision dated 24th February, 2025 be upheld.c)Costs be awarded to the Respondent. Issues For Determination 23.The Tribunal having considered the parties' pleadings, submissions and documents filed before it is of the view that the issue that falls for its determination is whether the Respondent’s Objection Decision dated 24th February, 2025 is justified. Analysis And Determination 24.This Appeal is premised on the Respondent’s Objection Decision dated 24th February, 2025, which confirmed additional corporation tax, VAT and VAT withholding tax assessments of the Appellant of Kshs. 87,005,138.00. The Respondent primarily justified its assessments on the ground that the Appellant had not supported its objection by availing the documents requested. 25.In support of its Appeal, the Appellant majorly argued that the Respondent relied on bank analysis, and raised the additional assessments from data arising from banking deposits and credits without considering whether or not all the entries were business income related. In this regard, the Appellant described the nature of its business and submitted that there is a clear and present danger that unless the Tribunal intervenes, the Respondent will continue to interfere with its business. 26.The Tribunal has considered the rival submissions. It is not contested that in the process of reviewing the Appellant’s objection, the Respondent sought the following documents from the Appellant: -a)Audited Financial Statements (AFS).b)Detailed Income and Purchases Ledgers.c)Income Tax and VAT Computation and supporting transaction documents.d)A reconciliation of bank credits/deposits and declared income.e)A reconciliation of understated purchases.f.Wear and tear computations together with supporting transaction documents.g)Evidence in support of disallowed rent and rates expenses including copies of invoices, rent agreements and evidence of payment.h)Analysis of purchases made during the assessed period indicating the dates suppliers were paid, amount paid to the suppliers and mode od payment, amount of VAT withheld, and dates the VAT withheld were remitted.i)Bank statements. 27.It is equally not contested that the Appellant, in support of its objection, provided the following documents: -a)Audited Financial Statements (AFS) for the years 2021 to 2023.b)Company bank statements from ABSA Bank.c)Sales schedules.d)Purchases schedules. 28.The Tribunal is guided by the applicable law obligating parties in tax matters to produce relevant documents in reviewing assessments. In particular, Section 59 of the Tax Procedures Act (cap 469B) provides as follows regarding the Appellant’s duty to produce documents and records as may be sought by the Respondent: - 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 relating 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. 29.Besides, Section 56 (1) of the Tax Procedures Act (cap 469B) provides as follows regarding the Appellant’s burden of proof: -In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect. 30.Furthermore, Section 30 of the Tax Appeals Tribunal Act (cap 469A) provides as follows on the Appellant’s burden of proof: -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. 31.The Tribunal is also guided by its precedents on production of documents and the obligation of the parties to discharge their burdens of proof in tax matters. In Abyssinia Iron and Steel Ltd -vs- Commissioner of Customs and Border Control (TAT No. 435 of 2022), the Tribunal held as follows: -The bottom line is that once the Appellant has provided evidence that the Respondent's assessment was wrong, then the Respondent must push back and show that its assessment was not arbitrary, capricious, or imagined. The onus will then shift back to the Appellant once the Respondent has discharged its burden on a balance of convenience to discharge the prima facie case that has been presented by the Respondent. 32.The Tribunal, in Mugo -vs- Commissioner of Domestic Taxes (TAT E918 of 2024) KETAT 374 (KLR), also held as follows:As noted herein above, the Appellant failed to adduce positive documents to demonstrate that the Respondent’s decision was incorrect. Consequently, the Tribunal finds and holds that the Respondent’s decision was justified and the Appellant failed to discharge burden of proof contrary to Section 30 of the Tax Appeals Tribunal Act, 2013 (TATA) and Section 56(1) of the Tax Procedures Act, thus the Appeals is not successful.” 33.The Tribunal having considered the pleadings and records before it in this Appeal, it is apparent that the Appellant did not provide the relevant documents requested by the Respondent to support its objection and discharge its burden of proof in the first instance in accordance with the above statutory provisions. Thus, the Respondent was justified to disallow the Appellant’s objection as outlined in its Objection Decision dated 24th February, 2025. Disposition 34.The upshot of the foregoing analysis is that the Tribunal finds and holds that the Appeal lacks merit and proceeds to issue the following orders: -a.The Appeal be and is hereby dismissed.b.The Respondent’s Objection Decision dated 24th February, 2025 be and is hereby upheld.c.Each Party is to bear its own costs. 35.It is so ordered. DATED and DELIVERED at NAIROBI this 5th Day of June 2026Signed By/for:THE JUDICIARY OF KENYAHON. DR. RODNEY O.OLUOCHHON. CYNTHIA MAYAKAHON. DR. ERICK ONYANGO KOMOLOHON. ABDULLAHI DIRIYETax Appeals Tribunal