[2023] KETAT 879 (KLR)

Kenya Cuttings Limited v Commissioner of Domestic Taxes (Tax Appeal 956 of 2022) [2023] KETAT 879 (KLR) (Civ) (24 November 2023) (Judgment)

Neutral citation: [2023] KETAT 879 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Civil

Tax Appeal 956 of 2022

Grace Mukuha, Chair, E Komolo, Jephthah Njagi, T Vikiru & G Ogaga, Members

November 24, 2023

Between

Kenya Cuttings Limited

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Judgment

Background 1. The Appellant is a limited liability company duly incorporated in Kenya. The Appellant’s principal business activity is to produce ornamental plant cuttings for export to the Netherlands.

2. The Respondent is a principal officer appointed under and in accordance with Section 13 of the Kenya Revenue Authority Act, and is charged with the responsibility of among others, assessment, collection, accounting and the general administration of tax revenue on behalf of the Government of Kenya.

3. The Appellant had accumulated excess input tax owing to making exported supplies taxable at the rate of zero per cent and lodged various VAT refund claims with the Respondent for the tax period of October 2020 and between January 2021 and July 2021 amounting to Kshs. 33,393,907. 00.

4. The Respondent rejected the Appellant’s refund application vide rejection notifications dated 21st July 2022, 22nd July 2022 and 25th July 2022.

5. Dissatisfied with the Respondent’s rejection, the Appellant lodged this Appeal by filing its Notice of Appeal dated 19th August 2022.

The Appeal 6. The Appeal is premised on the Amended Memorandum of Appeal dated and filed on 28th April 2023 raising the following grounds: -a.That the Respondent erred in law and in fact by finding that the Appellant had incurred the input VAT, subject of the refund claims, as an agent of its non-resident customers;b.That the Respondent erred in law and in fact by rejecting the Appellant's VAT refund application on the assertion that it was reimbursed for costs including input VAT incurred in providing services to its non-resident customers;c.That the Respondent erred in law and fact by rejecting the Appellant's refund application on the assertion that the Appellant carries out research and development and that these services are chargeable to VAT at the standard rate of 16%;d.That the Appellant's VAT refunds claims which arose from excess input tax incurred in making exported supplies taxable at zero percent are merited in law and payable.

The Appellant’s Case 7. The Appellant’s case was premised on the here below stated documents:i.The Statement of Facts dated 2nd September 2022 and the Supplementary Statement of Facts dated 28th April 2023. ii.The evidence of the Appellant’s witness, Joyce Kamau, as per her witness statement filed on 16th June 2023 and oral evidence given in the Tribunal on 6th September 2023iii.The Written Submissions dated 26th September 2023 and filed on 27th September 2023.

8. The Appellant averred that it is a producer appointed by Syngenta Seeds B.V ('Syngenta B.V), a non-resident company incorporated in the Netherlands, as a non-exclusive producer of unrooted and rooted cuttings of flower varieties.

9. That the unrooted cuttings that the Appellant produces are flower plant materials of the various varieties from which rooted cuttings are grown.

10. That the production process involves the Appellant buying materials for production of the flower varieties from Syngenta B.V. and that the materials remain in the ownership of Syngenta B.V since it is the intellectual property of Syngenta B.V.

11. That the Appellant multiplies the materials received from Syngenta B.V to produce rooted plants from which it harvests unrooted cuttings for shipment to Syngenta B.V or re-roots them and exports them to Syngenta B.V as rooted cuttings.

12. That it is not in dispute that the Appellant exports the rooted and unrooted cuttings.

13. That the Appellant had accumulated excess input tax owing to making of exported supplies taxable at the rate of zero percent and in accordance with the provisions of Section 17 (5) of the VAT Act, 2013, lodged various VAT refund claims with KRA for the tax period October 2020 and between January 2021 and July 2021 amounting to Kshs. 33,393,907. 00

14. That at the time the Appellant lodged the refund application, Paragraph 1 of the Second Schedule to the VAT Act, 2013 provided that the "The exportation of goods or taxable services" was zero-rated.

15. That the Respondent rejected the Appellant's refund claims on the basis that the input VAT in question was incurred by the Appellant in its capacity as an agent as opposed to a principal and therefore, the Appellant being an agent did not qualify for the VAT refund.

16. The Appellant refuted the above assertion of its relationship with Syngenta B.V and stated that its business model is one of an independent contractor'and that it was appointed by Syngenta B.V as a producer of unrooted and rooted cuttings of flower varieties through a Production and Sale Agreement, (copy of the agreement is attached to the Statement of Facts).

17. That to ensure compliance with the agreement the Appellant is required to buy production material, i.e., the tissue material from Syngenta B.V and ensure the production of the cuttings is as according to the standards set by Syngenta B.V

18. That the Appellant produces the cuttings and undertakes to sell all cutting products produced exclusively to Syngenta B.V in accordance with the agreement and is also solely responsible for ensuring the quality of the cutting products.

19. That the Appellant submitted that under the ‘Toll agreement’, the remuneration for production of rooted and unrooted cuttings is calculated as the sum of costs incurred in production. That this is contrary to the assertions by the Respondent that the expenses it incurs are for the furtherance of its business and thus part of its 'cost of sales'. That the Appellant incurs each of the expenses on its own behalf to ensure compliance with the tolling agreement and in accordance with the provisions of Section 13 (1) of the VAT Act, 2013.

20. The Appellant averred that considering the foregoing provisions of Section 13 of the VAT Act, 2013 and that it is related to Syngenta B.V, the remuneration for its services is calculated on an arm's-length basis in compliance with Section 13(1)(b) above as well as in compliance with the Income Tax Transfer Pricing Rules, 2006.

21. The Appellant submitted that under the provision of Section 13(5) all costs incurred in making a supply including incidental costs qualify to be included in the value of the supply for VAT purposes.

22. That the Respondent alleged that because of the remuneration method used by the Appellant (cost plus markup), the Appellant is thus an agent of Syngenta B V. That to the Respondent, the costs incurred by the Appellant are incurred on behalf of Syngenta BV as an agent and should be excluded from the value of the supply as provided in Section 13(5) of VAT Act, 2013.

23. The Appellant refuted the assertion that it incurred expenses on behalf of its non resident affiliates and submitted that a cost-plus model of remuneration is simply one of the Transfer Pricing methods used in determining the consideration between two related entities at arm’s length. That the existence of a cost-plus model of remuneration on its own is not indicative of a principal agency relationship, but a method of determining the open market value consideration to be paid to the Appellant.

24. The Appellant on the question of how to determine the existence of an Agency/Principal relationship relied on the cases of Kennedy v De Trafford [1897JA. A.C. 180 and Garnac Grain Co.Inc. -vs- H.M. Faure & Fair Dough Ltd and Bunge Corporation (1967]2 AII E.R. 353.

25. The Appellant submitted that the relationship between itself and Syngenta B.V. does not qualify as a principal-agent relationship in accordance with the foregoing authorities. That a key characteristic of the agency relationship is that the agent has power to bind the principal should it enter into contracts with third parties as an agent which is not the case herein. That the tolling agreement does not grant the Appellant any power to bind Syngenta in agreements with third parties.

26. That the Production and Sale agreement further buttressed that the relationship between the Appellant and Syngenta B.V is that of independent contractors. That the Appellant enters into contractual relationships with its suppliers on its own behalf and that there are no obligations and liabilities created between the third-party suppliers and Syngenta B.V.

27. The Appellant submitted that according to the Respondent since the Appellant is an agent of Syngenta B.V. all expenses incurred as inputs belong to Syngenta B.V., not the Appellant. That as per the Respondent's assertion, it is only the principal who may deduct input VAT incurred on supplies made to an agent on behalf of its principal. That to support the foregoing position, the Respondent relied on the decision made by the Tribunal on the Cofftea case.

28. The Appellant submitted that the Cofftea case does not apply in the present case for several reasons and the main one being that there is no agency relationship between the Appellant and Syngenta B.V.

29. The Appellant also submitted that under the proviso in Section 13 (5) of the VAT Act, 2013, the only expenses disallowable are disbursements incurred by an agent on behalf of a third party and not recharges. That the terms 'disbursements' and 'recharges' do not mean one and the same thing and the Respondent erred in equating recharges of costs to disbursements. That recharges for costs represent compensation for supply of services irrespective of whether they are itemised separately or form part of an inclusive overall fee.

30. The Appellant added that recharges consist of costs that the business incurs while supplying goods or services to customers. That the Appellant bought goods and services for its own use in furtherance of its business which is the production of rooted and unrooted cuttings to the requisite standards. That the costs incurred by the Appellant when supplying services to Syngenta B.V. are not therefore disbursements as described in Section 13(5) of the VAT Act, 2013.

31. The Appellant submitted that it was provided with goods and services in the course of furtherance of a business carried on by it and it paid consideration. That the fact that the Appellant recharges expenses or costs incurred does not preclude it from being entitled to a VAT refund under Section 17(1) as read with Section 17(5) of the VAT Act, 2013.

32. That from the invoices attached, the input VAT charged to the Appellant was not passed on to Syngenta B.V. in computing the cost-plus mark-up consideration as this was deductible input tax in accordance with the provisions of Section 17 of the VAT Act, 2013.

33. The Appellant averred that the Respondent also rejected the Appellant’s refund application on the basis that the company carries out research and development services in Kenya which are chargeable to VAT at 16%. That on the contrary the Appellant is in the business of producing and exporting cutting productions and that its activities are clearly set out in the Production and Sale agreement attached to the Statement of Facts.

34. The Appellant invited the Tribunal to take judicial notice of the fact that Section 42 of the Finance Act, 2022 amended Section 47 of the TPA by repealing it and replacing it with Section 47 (13) of the TPA which reads as follows:-“(13) A person aggrieved by a decision of the Commissioner under this section may appeal to the Tribunal within thirty days after being notified of the decision."

35. That pursuant to Section 1 of the Finance Act, 2022, the new Section 47 came into force on 1st July 2022.

36. That the Respondent erroneously rejected the Appellant's VAT refund application vide rejection notifications dated 21st July 2022, 22nd July 2022 and 25th July 2022. That by the time the Appellant received the rejections, Section 47(13) of the TPA had come into force and required the Appellant being aggrieved with the Respondent's rejections to appeal directly to the Tribunal within thirty (30) days.

37. That pursuant to Section 47(13), the Appellant herein filed the Notice of Appeal on 19th August 2022 and subsequently filed its Memorandum of Appeal and Statement of Facts.

38. That the Respondent in Paragraph 6 of its Statement of Facts dated 4th October 2022 alleged that:-“The claims were rejected by the Respondent on 21st July 2022, 22nd July 2022 and 25th July 2022 upon review of the Agreement between the parties and consideration of the applicable law. The said Agreement was provided by the Appellant during the objection and is what formed its relationship with Syngenta Seeds B.V.."

39. That the claim in the Respondent's paragraph above that "...the said Agreement was provided by the Appellant during the objection..." is false and is an attempt by the Respondent to mislead the Tribunal.

40. That as there was a change in law requiring the Appellant to appeal to the Tribunal directly under Section 47(13) of the TPA, there was no objection stage that would ordinarily have offered the Appellant an opportunity to provide the documents before the Tribunal to the Respondent as part of its notice of objection. That the Respondent cannot claim or insinuate that the Appellant did not provide the applicable agreement for the review during the "objection".

41. That prior to rejecting the Appellant's claim the Respondent had every opportunity to request the Appellant to provide it with documents pursuant to Section 47(4) of the TPA and Section 59 of the TPA. That the Tribunal should note that the Respondent initiated an audit and requested for documents after it had rejected the refunds, which the Appellant herein provided.

42. The Appellant submitted that nothing bars the Tribunal as a court of first instance from reviewing all the documents on record including the Production and Sale Agreement annexed to the Appellant's Statement of Facts and to support its submissions the Appellant relied on the cases of TAT Appeal 572 of 2021 Incentro Africa Limited v Commissioner of Domestic Taxes and TAT Appeal No. 304 of 2019- Pevans East Africa Ltd vs Commissioner of Domestic Taxes.

43. The Appellant added that there was no objection stage as alleged by the Respondent and the Appellant having appealed pursuant to Section 47(13) of the TPA, was obliged to present all material necessary before the Tribunal to prove that the Respondent had erred in fact and in law in rejecting its refunds. That all such material properly produced before this Tribunal should be considered.

44. That ‘without prejudice’ to the above, the Respondent acknowledged and agreed that the Appellant was entitled to a refund for the export of rooted and unrooted cuttings under the Toll Production Agreement and the Production and Sale Agreement.

45. That the Respondent in its letter of 15th February 2023 approved a refund amount of Kshs. 5,568,152. 00 relating to the period January 2014 to March 2014. That during that period the Toll Production Agreement was in force (1st January 2008 to 31st December 2018).

46. That the Respondent's letter of 15th February 2023 is not the first time that the Respondent had approved the Appellant's refund during the pendency of the Toll Production Agreement. That vide a letter dated 4th January 2016 the Respondent approved a VAT refund of Kshs. 6,634,423. 00 relating to the period October to December 2014 which was later paid out in November 2016. That the Respondent also paid a VAT refund amounting to Kshs. 7,463,099. 00 in 2017.

47. That as per the Respondent's letter dated 15th February 2023, the Respondent determined VAT refunds amounting to Kshs. 109,932,449. 00 for various periods between January 2021 to June 2022 were due and payable to the Appellant. That during this period the Production and Sale Agreement was in force (1st January 2019 to present).

48. The Appellant submitted that regardless of the agreement that was in force, the Respondent has determined in writing and by action that the Appellant is entitled to a VAT refund under Section 17(5) of the VAT Act, 2013. That in so doing, the Respondent must have come to the conclusion that the Appellant incurred the relevant expenses in the furtherance of its business pursuant to the law, was engaged in the making of zero rated taxable supplies over the tax periods in question and the expenses were not disbursements incurred by an agent on behalf of a third party which are disallowable by dint of Section 13 (5) of the VAT Act.

49. The Appellant asserted that from the foregoing the audit findings effectively contradicted the Respondent’s grounds for rejecting the VAT refund claims. That the Respondent is therefore unfairly prejudiced given that the Appellant lacks the ability to plan the businesses with some measure of regularity certainty and confidence in the administration of tax laws contrary to the principles of natural justice codified in the Constitution of Kenya and the Fair Administrative Actions Act,2015.

50. The Appellant in buttressing its case has relied on many authorities including Local Production Kenya Ltd vs Commissioner of Domestic Taxes [2019] Eklr, Commissioner of Customs and Excise v Redrow Group Plc [1999] UKHL 4 and Commissioner of Domestic Taxes- v Microsoft East Africa Ltd (Income Tax Appeal E212 of 2021) amongst others.

Appellant’s prayers. 51. The Appellant prayed to the Tribunal to find that:-a.The Appeal be allowedb.The Respondent erred in law by finding that the Appellant had incurred the Input VAT, subject of the refund claims, as an agent of its non-resident customersc.The Respondent erred in law and fact by rejecting the Appellant’s refund application on the assertion that it was reimbursed for costs incurred in providing services to its non-resident customersd.The Respondent erred in law and in fact by rejecting the Appellant’s refund claims on the assertion that the Appellant provides research and development services in Kenya.e.The VAT refund claims amounting to ksh.33,393,907. 00 relating to the period October 2020 and January 2021 to July 2021 are due and payablef.Costs of the Appeal be awarded to the Appellant

The Respondent’s Case 52. The Respondent premised its case on the following documents: -a.The Respondent’s Statement of Facts dated and filed on 4th October 2022. b.The Respondent’s Written Submissions dated and filed on 26th September 2023.

53. The Respondent averred that vide a Toll Production Agreement dated 24th April 2009, the Appellant was appointed by Syngenta Seeds B.V, a company based in Netherlands to produce unrooted cuttings on behalf of and in the name of Syngenta B.V.

54. That upon performing the services envisaged under the Agreement, the Appellant lodged various VAT refund claims with the Respondent for the tax period October 2020 and for January 2021 to July 2021 amounting to Kshs. 33,393,907. 00. That the basis of the refund claims was on the alleged input VAT incurred by the appellant as a result of the purchases made from Syngenta Seeds B.V.

55. That the claims were rejected by the Respondent on 21st July 2022, 22nd July 2022 and 25th July 2022 upon review of the Agreement between the parties and consideration of the applicable law. That the Agreement was provided by the Appellant during the objection and is what formed its relationship with Syngenta Seeds BV. That the Appellant did not provide to the Appellant any other Agreement other than the Toll Production Agreement dated 24th April, 2019.

56. In response to the grounds of the Appeal, Respondent reiterated that no refund is due to the Appellant because upon review of the Agreement, it was established that the input VAT in question was incurred by the Appellant in its capacity as an agent as opposed to a principal. That all sales and inputs belonged to Sygenta Netherlands and not the Appellant and accordingly, the Appellant being an agent cannot claim to have incurred input VAT and consequently make an application for VAT refund.

57. The Respondent averred that the costs incurred by the Appellant are borne on behalf of the principal and the same should be excluded from determining the value of the supply as provided by the provision to Section 13(5) of the VAT Act, 2013.

58. The Respondent also reiterated that the services offered by the Appellant are those of propagation, research and development services which are performed in Kenya and are chargeable to VAT at 16%. That no VAT refund accrues in the circumstances.

59. That the Appellant argued that the refunds are due as they were not reimbursement for costs/ input VAT incurred in providing services to its non- resident customers. That in support of its Appeal, the Appellant adduced a Production and Sale Agreement dated 1st January 2019 executed between itself and Syngenta Seeds B.V.

60. That this is not the same agreement that was provided to the Respondent when the Appellant submitted its application for refund. That this position was confirmed by the Appellant’s witness Joyce Kamau during cross examination. That what the Appellant provided to the Respondent was the Toll Production Agreement marked as KRA-l in the Respondent’s Statement of Facts.

61. The Respondent submitted that it is on the basis of this Toll Production Agreement that it reviewed and formed the basis of its decisions to reject the refund claims as evidenced by various credit adjustment vouchers. That this position has also been reiterated at paragraph 6 of the Respondent's Statement of Facts and the Appellant has not controverted it.

62. That after the Appeal was filed, the Appellant, vide a Notice of Motion application dated 29th March 2023 sought to amend its Memorandum of Appeal and Statement of Facts and adduced new and further evidence in support of its Appeal. That the application was allowed and gave birth to an Amended Memorandum of Appeal filed on 24th April 2023. That one of the documents that the Appellant introduced vide its Amended Memorandum of Appeal is the Respondent's letter dated 15th February 2023 (contained at page 117-119 of the Record of Appeal). In the said letter, the Respondent had found upon subsequent audit and review of the Appellant’s refund claims for some periods were merited. That some of the periods allowed were part of the present Appeal. That in arriving at its decision, the Respondent took into consideration the Production and Sale Agreement dated 1st January 2019 executed between the Appellant and Syngenta Seeds BV (Agreement marked as KCL-2 of the Appellant's bundle of documents).

63. That some of the periods allowed, which formed the basis of the Appellant's Appeal, relates to refund claims for January 2021 to July 2021 and only refunds for the period October 2020 as per the Appellant’s prayers in its Amended Memorandum of Appeal was not allowed.

64. That the upshot of the foregoing is that there is no viable appeal before the Tribunal with respect to refund for the periods January 2021 to July 2021 and further, no positive order can be made by the Tribunal in the circumstances. The Respondent submitted that the Appellant ought to have withdrawn its appeal with respect to refund for the periods January 2021 to July 2021 and administratively pursue its refund which have been allowed by the Respondent vide its own letter dated 15th February 2023.

65. That in arriving at its position in rejecting refund application for this period, the Respondent was guided by the terms of the Toll Production Agreement marked as KRA-1 of the Respondent's Statement of Facts which was adduced by the Appellant at the point of making its refunds application. That at the point of filing the Appeal, the Appellant adduced a completely different agreement (Sales and Production Agreement) that did not form the basis of the Respondent's decision. That the terms of the Toll Production Agreement were in complete variance with the those contained in the Sales and Production Agreement.

66. That the Respondent's decision is based on the information placed before it, which in this case was the Toll Production Agreement, and that the Respondent was justified to reject the refund application. That the terms of the Toll Production Agreement revealed that the Appellant was a mere agent of the principal Syngenta Seeds B.V and input VAT refunds could not be claimed by the Appellant who was a mere agent of the principal and which were reimbursed costs for the services rendered on behalf of Syngenta Seeds BV. That this position is further corroborated in Clauses 3 and 4 of the Toll agreement.

67. The Appellant further submitted that even if the refunds are now due because of the unrelated and different terms of the agreement entered into by parties (Sales and Production Agreement), then the appeal cannot be automatically allowed on the strength of the new agreement as per the Appellant's pleadings and prayers. That the Appellants' prayers in its pleadings are thus erroneous for two reasons.

68. That firstly the Appellant's action to provide completely new documents and grounds different from what was provided at the appoint of refund application goes contrary to Section 56(3) of the Tax Procedures Act which states thus:“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”.

69. That information or documents that were submitted to the Respondent and which informed its decision subject to Appeal must be similar to the ones adduced during the Appeal, unless leave is granted by the Tribunal to adduce new information as this is the only way that the Respondent's decision can be interrogated or faulted in any case.

70. That since no leave was sought and granted from the Tribunal to enable the Appellant adduce the purported Sales and Production Agreement that was not produced at the point of lodging its refund application (that is, objection pursuant to introduction of Section 47(13) of the TPA by the Finance Act, 2022) precipitating into the appealable decision herein, the impugned sales and production agreement is improperly before the Tribunal and cannot be interrogated by the Tribunal. That the Tribunal can only interrogate the Respondent's decision based on the Appellant's Toll Production Agreement that was provided to the Respondent.

71. That secondly and without prejudice to the above, the effect of the production of the new agreement is that the dispute has to be referred back to Respondent to enable it review the new agreement and make a decision on the same. That an appeal cannot automatically be allowed as prayed by the Appellant on the strength of the new agreement as doing so would be tantamount to the Tribunal usurping the role of the Respondent by sitting on and validating an application for refund. That the role is only reserved to the Respondent.

Respondent’s prayers 72. The Respondent prayed that the Tribunal:-i.Finds that there is no viable appeal before it with respect to refund decisions for the periods January 2021 to July 2021. ii.Finds that the Respondent was right to reject the refund application for the period October 2020. iii.Without prejudice to prayer (ii) above, in view of further documents adduced at the appeal stage, refer the dispute back to the Respondent to- consider the new information and make a decision as the case may be.iv.Consequently find that the Appeal lacks merit and accordingly dismiss it with costs.

Issue for Determination 73. The Tribunal, having reviewed the pleadings, evidence and written submissions of both parties identified the following as the issue for determination.

Whether the Respondent erred in rejecting the Appellant’s application for VAT refunds Analysis and Findings 74. The genesis of the dispute before the Tribunal is the refusal by the Respondent to grant the Appellant the VAT refunds for the period October 2020 and January to July 2021 amounting to ksh.33,393,907. 00. The Respondent rejected the applications on 21st July 2022,22nd July 2022 and 25th July 2022 whereupon the Appellant initiated the Appeal process by filing its Notice of Appeal on 19th August 2022.

75. On 29th March 2023 the Appellant filed an application before the Tribunal seeking to amend its Memorandum of Appeal, filed a Supplementary Statement of Facts and further documents to support its Appeal. The application was allowed by the consent of the parties whereupon the Appellant proceeded to file the documents in issue.

76. The Supplementary Statement of Facts covered other developments, in relation to the Appeal, made by the parties in the period between 5th December 2022 and 15th February 2022.

77. The developments included a VAT refund audit process carried out by the Respondent which resulted in the allowance of the Appellant’s claims covering the period January to July 2021. The aforesaid claims were part of the Appeal herein. The upshot of the foregoing was that the remaining unresolved tax refund claim covered only the period of October 2020 and the parties are in agreement on this.

78. On the remaining unresolved dispute, the Respondent argued that the reason why the refund amount was not allowed was because the document in support of the same had not been provided to the Commissioner as and at the time the refund application(s) were made and that therefore the decision to disallow the refund application did not take them into consideration. That the Commissioner made the ‘right decision’ based on the information presented then.

79. The Respondent further argued in its submissions that the production of the document as at the point of Appeal is irregular whereas the Appellant argues that the Tribunal being a court of first instance is not barred from reviewing all the documents on record. The Appellant also argued that the introduction of the provision of Section 47 (13) TPA did not provide for the objection process in these particular matters and the Appellant did not therefore have the chance to produce the document.

80. The document in issue between the parties is the Production and Sale Agreement between the Appellant and Syngenta B.V dated 1st January 2019. The parties are in agreement that the same should be considered for a proper decision to be made in the matter.

81. The Tribunal has also considered the Respondent’s submissions and particularly paragraph 23 of the same where the Respondent stated that “the refunds are now due because of the agreement entered into by the parties (Sale and Production Agreement) ..”

82. It is also not in dispute that the agreement was not considered by the Commissioner when the decision to reject the application for refunds was made. The Respondent has also indicated that it is willing to revise it and apply its mind to it.

83. The Tribunal taking into consideration all the foregoing determines that the ‘remaining dispute’ be referred back to the Commissioner to consider the Production and Sale Agreement in issue and make a decision accordingly.

84. The Tribunal has also noted that most of the refund claims made by the Appellant have now been resolved upon the Respondent requesting for supporting documents from the Appellant during the pendency of the Appeal. The Respondent was in a position to include the October 2020 claim in the refund claim review process too but chose not to. This would have fully determined the matter and saved judicial time in the circumstances. Consequently, the Tribunal can only conclude that the Respondent erred in rejecting the Appellant’s application for the refund claims.

Final Decision 85. From the analysis above, the Tribunal holds that this Appeal partly succeeds and consequently makes the following Orders:-a.The Appeal be and is hereby allowed.b.The orders of rejection issued on 21st July 2022, 22nd July 2022 and 25th July 2022 are hereby set aside.c.The refund claims for the period between January 2021 to July 2021 are hereby allowed.d.The matter is referred back to the Commissioner to review the Production and Sale Agreement dated 1st January 2019 and make a decision on the refund claim for October 2020 within Thirty (30) days of the date of delivery of this Judgment.e.Each party to bear its own costs.

86. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 24TH DAY OF NOVEMBER, 2023GRACE MUKUHA - CHAIRPERSONDR. ERICK KOMOLO - MEMBERJEPHTHAH NJAGI - MEMBERTIMOTHY VIKIRU - MEMBERGLORIA OGAGA - MEMBER