[2024] KETAT 626 (KLR)

Kibe v Commissioner of Domestic Taxes (Tax Appeal 997 of 2022) [2024] KETAT 626 (KLR) (Civ) (5 April 2024) (Judgment)

Neutral citation: [2024] KETAT 626 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Civil

Tax Appeal 997 of 2022

CA Muga, Chair, BK Terer, D.K Ngala, GA Kashindi & SS Ololchike, Members

April 5, 2024

Between

David Njoroge Kibe

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Judgment

Background 1. The Appellant is a sole proprietor and his main principal business activity is supply of goods.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of the laws of Kenya. 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 Parts 1 & 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 carried out a returns review and during the process, it performed an analysis of purchases claimed by purchasers and sales declared by suppliers were ran on the KRA iTax system for the period 1st June 2021 to 30 June 2021.

4. In addition, information from the iTax data base on non-filers showed that the Appellant provided services to various customers but failed to declare the business income for period 15th June 2021 to 30 June 2021.

5. During the said review, it was discovered that there were inconsistencies between the returns filed by the Appellant's suppliers and invoices claimed by the Appellant for the period 1st June 2021 to 30th June 2021.

6. Further to the review, compliance check was conducted by examining the records and audited accounts of the taxpayer to establish the correctness of his declarations for the period 1st June 2021 to 30th June 2021. Further to the review, the Appellant was informed on the inconsistency of the VAT3 returns invoices for the Appellant to resolve the same, however, the Appellant failed to resolve the said inconsistencies within the stipulated timeframe.

7. As a result, the Respondent based on the existing inconsistencies raised additional assessments on 27th April 2022 for VAT for period 15th June 2021 to 30th June 2021 totalling to Kshs. 356,572. 50. The Appellant lodged an objection on 27th June 2021 on iTax, which was duly acknowledged by the Respondent.

8. In the light of the above, the Respondent issued a demand for documents in line with the objection lodged through email for delivery notes, purchase invoices, delivery notes, supplier statements and bank statements. The Appellant however failed to provide the relevant supporting documents of records and invoices for the period 1st June 2021 to 30th June 2021 in support of his objection. The Appellant’s VAT was therefore estimated, as this was the only reasonable basis of assessing the VAT tax and objection decision dated 31st August 2022 issued confirming the said assessment.

9. Being aggrieved by the Respondent’s decision, the Appellant filed an Appeal at this Tribunal vide a Notice of Appeal on 9th September 2022.

The Appeal 10. The Appellant premised his Appeal on the grounds as set out in his Memorandum of Appeal dated 12th September 2022 and filed on 14th September 2022 as here under:a.The Respondent did not validate the objection to the tax decision contrary to the Tax Regulations 2015. The Respondent relied on Tax Regulation 2015 to reject the objections of the Appellant on the basis of late filing of objections. The matters in the objection were substantial and to arrive at the right decision, it would have been prudent for the Respondent to evaluate the objections application receipt order, KRA202211662815. This omission of not allowing the objection redress out of time whereas the assessment was raised without the inclusivity of the Appellant. The Appellant realized the assessments had been raised later on, and due to the incapacitation to raise an objection at that time, he was not able to object on time. The Respondent for fair practice and reasonability would allow the objection redress out of time to avoid a situation of tax injustice leading to excessive collection of tax.b.The Respondent failed to validate the copies of the input tax invoices attached to the objection. The Respondent invalidated the invoices on the basis of failure to prove actual payment made. This was contrary to Value Added Tax Act No. 35 of 2013 (hereinafter ‘VAT Act’) which applies the accrual basis of admitting purchases invoices. The cash basis of disapproving genuine tax invoices was an oversight by the Respondent.c.The Respondent assumed that the declared inputs are disallowable whereas the Appellant is allowed to claim VAT for goods purchased just as he declares and pays VAT for the same goods when sold. VAT Act makes it mandatory for such claims.d.The Respondent unlawfully disallowed invoices that were properly captured from VAT registered taxpayer

The Appellant’s Case 11. The Appellant set down his case in his Statement of Facts dated 12th September 2022 and filed on 14th September 2022 together with written submissions dated 18th March 2023 and filed on 21st March 2023 premised on the following grounds;i.Tax decisions have to be objective to be validated as per the Tax Procedure Act No. 29 of 2015 (hereinafter ‘TPA’). The additional assessment arrived at was not validated leading to excessive additional taxes of Kshs. 330,911. 04. The rejection of the Appellant’s objection due to lapse of time of objection was arbitrarily wrong as it was made during the time of the pandemic which had hit the country.ii.The Respondent failed to validate the copies of the input tax invoices attached to the objection on the basis of failure to prove actual payment made which is contrary to VAT Act which applies the accrual basis of admitting purchase.iii.The Respondent assumed that the declared inputs are disallowable whereas the Appellant was allowed to claim VAT for goods purchased just as he declares and pays VAT for the same goods when sold.iv.The invoices disallowed were genuinely captured from VAT registered taxpayers and there was no proof contrary leading to disallowing the invoices.

12. The Appellant submitted that for tax decisions to be objective have to be validated as per the TPA, the additional assessment arrived at was not validated leading to excessive taxes of Kshs.330,911. 00. The rejection of the Appellant’s objection due to lapse of time of objection on system generated VAA inconsistencies raised during the pandemic period without any proper engagement amounts to excessive tax collection. The additional taxes raised when the tax input invoices are evidently availed to the Respondent goes against the VAT Act and TPA.

13. The Appellant also submitted that the Respondent failed to validate the copies of the input tax invoices availed to them on the premises of there was no actual proof of payment by the Respondent. According to the Appellant, VAT Act bases tax invoices on accrual concept not payments supplies basis, it would be absurd to admit only cash paid supplies as the point of claiming Vat inputs is clearly stipulated in the VAT Act. The VAT Act has made it clear a tax invoice is evident enough to be a genuine document to be used while filing the periodical returns. The Appellant also relied on Part III of the VAT Act to support his Appeal.

Appellant’s Prayers 14. The Appellant prayed that the Tribunal do set aside the additional assessment raised by the Respondent.

The Respondent’s Case 14. The Respondent’s case is premised on its Statement of Facts dated 14th October 2022 and filed on even date and written submissions dated 7th March 2023.

15. In response to ground (i) of Memorandum of Appeal and ground 1 of Statement of Facts the Respondent averred that the assessments were correctly issued and conform to the VAT Act. The Appellant did not provide any evidence that would have altered the assessment. The TPA places the onus of proof in tax objections on the taxpayer who in this case failed to avail evidence that would support a contrary assessment or that would have guided the Respondent at arriving to a different objection decision. The Section provides as follows:“56(1) In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”

16. In further response to ground (i) of the Memorandum of Appeal the Respondent asserted that the Appellant lodged the objection on 27th June,2021 on Itax, the same was received and acknowledged however the same was treated as invalidly lodged as it did not have grounds of objection. The Respondent submitted that the TPA empowers it to notify a party where an objection as lodged is invalid and the Appellant was notified and requested to provide documents. However, the Appellant failed to provide documents as requested. The Respondent stated that the Appellant failed to comply with the provisions of Section 51 of TPA in relation to filing notice of objection.

17. In response to ground (ii) of the Memorandum of Appeal, and ground 3 of Statement of Facts the Respondent insisted that the Appellant filed all necessary returns and paid what he had assessed himself to be payable. The Respondent averred that the Appellant was uncooperative in the provision of relevant records and failed to respond to request of documents hence no relevant documents or records were provided to support the objection by the Appellant. As a result, the assessments were made based on the only available information based on the best judgement by the Respondent. The TPA empowers it or require production of such documents vide issuance of notice as deemed necessary in determination of tax liability. The sSection provides as follows:“59. (1)For the purpose of obtaining full information in respect of the income of a person or class of persons, the Commissioner may, by notice in writing, require, in the case of the income of a person, that person or any other person, and in the case of a class of persons, any person — (a) to produce for examination by the Commissioner at the time and place specified in the notice, any accounts, books of account, and other documents which the Commissioner may consider necessary; and the Commissioner may inspect such accounts, books of accounts or other documents and may take copies of any entries therein.”

18. In further response to ground (ii) of the Memorandum of Appeal the Respondent averred that an in-depth examination of the records established that there were inconsistencies in the returns filed by suppliers and the invoices claimed by the Appellant and this indicated a variance as per the VAT returns filed and income tax returns filed. Further to that, the Appellant provided no explanation requested on the variance hence the same was disallowed and additional assessments carried out.

19. In further response to ground (ii) of the Memorandum of Appeal, the Respondent averred that the Appellant was selected for a returns review following a variance from the analysis of his returns in VAT tax, which were compared. The Respondent disallowed the direct purchase amount in the Appellant’s income tax return and instead relied on the invoice value as used in the determination of VAT payable as the true direct purchase cost. The Respondent insisted that the objection decision provided a precise and clear breakdown of the workings used to reach at the assessments.

20. In response to ground (iii) of the Memorandum of Appeal and ground (ii) and 4 of Statement of Facts the Respondent averred that the assessment was issued based on the information provided and in light of the inconsistencies within the Appellant’s VAT ledgers. The TPA empowers it to make alterations or additions to original assessments from available information for a reporting period based on the best judgment. The Section provides as follows:“31. Amendment of assessments

(1)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; or(c)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.”

21. In further response to ground (iii) of the Memorandum of Appeal the Respondent averred that the Appellant failed to provide the documents requested in support of his objection hence the input VAT was disallowed. The Respondent insisted that the VAT Act empowers the Respondent to disallow such input VAT where the necessary documents are not provided. The Section provides as follows:“17. Credit for input tax against output tax(1)Subject to the provisions of this section and the regulations, input tax on a taxable supply to, or importation made by, a registered person may, at the end of the tax period in which the supply or importation occurred, be deducted by the registered person, subject to the exceptions provided under this section, from the tax payable by the person on supplies by him in that tax period, but only to the extent that the supply or importation was acquired to make taxable supplies.(2)If, at the time when a deduction for input tax would otherwise be allowable under subsection (1), the person does not hold the documentation referred to in subsection (3), the deduction for input tax shall not be allowed until the first tax period in which the person holds such documentation. Provided that the input tax shall be allowable for a deduction within six months after the end of the tax period in which the supply or importation occurred.5. Charge to tax(1)A tax, to be known as value added tax, shall be charged in accordance with the provisions of this Act on—(a)a taxable supply made by a registered person in Kenya;(b)the importation of taxable goods; and(c)a supply of imported taxable services.”

22. In further response to ground (iii) of the Memorandum of Appeal the Respondent averred that a review of the Appellant’s records was carried out due to inconsistencies in the returns of the VAT 3. The Respondent insisted that not all income earned by the Appellant was declared and hence the variances were brought to charge. The TPA empowers it to carry out assessment based on the information available.

23. In further response to ground (iii) of the Memorandum of Appeal, the Respondent asserted that an examination of the Appellant’s records established that the Appellant earned income from supply of goods in the period under audit, however, these incomes were not declared for tax purposes for the year earned. The Respondent asserted that the Appellant carried on business in contravention of the TPA which requires such documents be maintained and for purposes of taxation. The Section provides as follows:“42. Tax invoice(1)Subject to subsection (2), a registered person who makes a taxable supply shall, at the time of the supply furnish the purchaser with the tax invoice containing the prescribed details for the supply.”43. Keeping of records(a)Every registered person shall, for the purposes of this Act, keep in the course of his business, a full and true written record, whether in electronic form or otherwise, in English or Kiswahili of every transaction he makes and the record shall be kept in Kenya for a period of five years from the date of the last entry made therein.93. Failure to maintain documents(i)A person commits an offence if the person fails to keep, retain or maintain a document that may be required to be kept, retained or maintained in accordance with a tax law without reasonable excuse during a reporting period.”

24. In response to ground 13 of Statement of Facts. The Respondent denied that the Appellant had paid all its tax due and reiterated that because of his under-declaration, the Appellant is in debt of Kshs. 350,765. 70.

25. The Respondent averred that the Appellant is undeserving of the prayers sought due to the foretasted reasons.

26. The Respondent filed written submissions on 8th March 2023 wherein the Respondent identified three issues for determination:i.Whether the Respondent failed to validate the Objection contrary to Tax Appeal Act 2015 and allow the objection out if time;ii.Whether the Respondent failed to validate copies of the input tax invoices attached to the objection, contrary to VAT Act; andiii.Whether the Respondent assumed the declared inputs are disallowable yet the Appellant is allowed to claim VAT for goods purchased as per VAT Act.

27. The Respondent submitted that the assessments were correctly issued and conform to the VAT Act. The Appellant did not provide any evidence that would have altered the assessment. The TPA places the onus of proof in tax objections on the taxpayer who in this case failed to avail evidence that would support a contrary assessment or that would have guided the Respondent at arriving to a different objection decision.

28. In further response the Respondent asserted that the Appellant lodged the objection on 27th June 2021 on i-Tax, the same was received and acknowledged however the same was treated as invalidly lodged as it did not have grounds of objection. The Respondent submitted that the TPA empowers the Respondent to notify a party where an objection as lodged is invalid and the Appellant was notified and requested to provide documents. However, the Appellant failed to provide documents as requested. According to the Respondent, this was contrary to Section 51 of the TPA.

29. The Respondent relied on the judgment of this Tribunal in TAT No. 70 of 2017 Afya Xray Centre Limited v Commissioner of Domestic Taxes in which it was held as follows:“From then foregoing chain of events, it is our understanding that the Appellant failed in its duty in providing these documents, in order that a comprehensive audit of its affairs be done. Accordingly, the Respondent can hardly be faulted for raising the assessment in accordance with the availed documents. Moreover, the Appellant had an opportunity to counter the Respondent’s finding after the preliminary finding and after the confirmation of the assessment. Both are instances, where the Appellant could have produced its books of accounts to counter the Respondent’s assessment after all the Appellant by law bears the burden of proof...”

30. The Respondent insisted that the Appellant filed all necessary returns and paid what he had assessed himself to be payable. The Respondent averred that the Appellant was uncooperative in the provision of relevant records and failed to respond to request of documents hence no relevant documents or records were provided to support the objection by the Appellant. As a result, the assessments were made based on the only available information based on the best judgement by the Respondent. The TPA empowers it to require production of such documents vide issuance of notice as deemed necessary in determination of tax liability. The Respondent relied on Section 59 (1) of the TPA which provides as follows:“For the purpose of obtaining full information in respect of the income of a person or class Gf persons, the Commissioner may, by notice in writing, require in the case the income of a person, that person or any other person, and in the case of class of persons, any person —a.to produce for examination by the Commissioner at the time and place specified in the notice, any accounts, books of account, and other documents which the Commissioner may consider necessary; and the Commissioner may inspect such accounts, books of accounts or other documents and may take copies of any entries therein.”

31. The Respondent averred that an in-depth examination of the records established that there were inconsistencies in the returns filed by suppliers and the invoices claimed by the Appellant and this indicated a variance as per the VAT returns filed and income tax returns filed. Further to that, the Appellant provided no explanations requested on the variance hence the same was disallowed and additional assessments carried out.

32. The Respondent averred that the Appellant were selected for a returns review following a variance from the analysis of his returns in VAT tax, which were compared. The Respondent disallowed the direct purchase amount in the Appellant's income tax return and instead relied on the invoice value as used in the determination of VAT payable as the true direct purchase cost. The Respondent insisted that the objection decision provided a precise and clear breakdown of the workings used to reach at the assessments.

33. The Respondent averred that the assessment was issued based on the information provided and in light of the inconsistencies within the Appellant's VAT ledgers. The TPA empowers the Respondent to make alterations or additions to original assessments from available information for a reporting period based on the best judgment. In this regard, the Respondent relied upon Section 31 of the TPA.

34. The Respondent relied on cases of Digital Box Limited v Commissioner of domestic investigations and Enforcement [2020] wherein this Tribunal states as follows: “The question of burden of proof in taxation matters is provided for under the TPA as well as the Tax Appeals Tribunal Act No. 40 of 2013 (hereinafter ‘TAT’). Section 56(1) of the TPA provides as follows:“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”Section 30 of the TAT similarly provides as follows:“In a proceeding before the Tribunal, the Appellant has the burden of proving— (a) Where an appeal relates to an assessment, that the Assessment is excessive; or (b) in any other case, that the Tax Decision should not have been made or should have been made differently.”

35. The Respondent relied on the decision of Hon Korir J in Mohamed Ali t/a Top Model Apparels & 44 others v Kenya Revenue Authority [2020] eKLR which found that Section 31(4) of the TPA provides the circumstances under which the Commissioner may amend a taxpayer’s tax assessments.

36. The Respondent submitted that the Appellant failed to provide documents contrary to the provisions of Section 17 of the VAT Act.

37. The Respondent referred this Tribunal to the judgment in Osho Drappers Limited vs Commissioner of Domestic Taxes TAT 159 of 2018 where it was held as follows:-“58. ...The same position was held by the court in Metcash Trading Limited-vs- Commissioner for the South African Revenue Services and Another Case CT 3/2000, where it was held that: “but the burden of proving the Commissioner wrong rests on the vendor under Section 37. Because VAT is inherently a system of self-assessment based on the vendor’s own records, it is obvious that the incidence of this onus can have a decisive effect on the outcome of an objection or appeal. Unlike income tax, where assessments can elicit genuine differences of opinion about accounting practice, legal interpretations or the like, in the case of VAT assessment there must invariably have been an adverse credibility finding by the Commissioner; and by like token such a finding would usually have entailed a rejection of the truth of the vendor’s records, returns and averments relating thereto. Consequently, the discharge of the onus is a must formidable hurdle facing a VAT vendor who is aggrieved by an assessment: unless the Commissioner’s precipitating credibility finding can be shown to be wrong, the consequential assessment must stand.

38. Consequently, the Respondent submitted that, it was upon the Appellant to prove that it indeed purchased the supplies.

39. The Respondent further submitted that a review of the Appellant’s records was carried out due to inconsistencies in the returns of the VAT 3. The Respondent insisted that not all income earned by the Appellant was declared and hence the variances were brought to charge. The TPA empowers the Respondent to carry out assessment based on the information available.

40. The Respondent submitted that examination of the Appellant’s records established that the Appellant earned income from supply of goods in the period under audit, however, these incomes were not declared for tax purposes for the year earned. The Respondent asserted that the Appellant carried on business in contravention of the TPA which requires such documents be maintained and for purposes of taxation.

Respondent’s Prayers 41. The Respondent made the following prayers:a.That the Respondent’s objection decision be upheld.b.The outstanding tax arrears of Kshs. 350,765. 70 are due and payable by the Appellant.c.The confirmed assessments dated 27th April, 2022 were proper in law.d.That the Appeal herein be dismissed with cost to the Respondent.

Issues For Determination 42. The Tribunal having considered the parties’ pleadings, documents and submissions puts forth the following issues for determination:a.Whether the Appellant submitted all the relevant documents relating to the objection thereby discharging its burden of proof; andb.Whether the Respondent’s assessments and resultant objection decision dated 31st August, 2022 are justified.

Analysis And Findings 42. The Tribunal will proceed to analyse the issues as hereinunder:a.Whether the Appellant submitted all the relevant documents relating to the objection.

43. Section 51(3) (c) of the TPA provides as follows:‘‘A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if—a.....b.......c.all the relevant documents relating to the objection have been submitted.’’

44. The Tribunal notes the Appellant’s submissions that the Respondent failed to validate the copies of the input tax invoices availed to it on the premises of there was no actual proof of payment by the Appellant. According to the Appellant, VAT Act bases tax invoices on accrual concept not payments supplies basis, it would be absurd to admit only cash paid supplies as the point of claiming Vat inputs is clearly stipulated in the VAT Act. The Appellant argued that the VAT Act has made it clear that a tax invoice is evident enough to be a genuine document to be used while filing the periodical returns.

45. On the other hand, the Tribunal also notes the Respondent’s argument that the Appellant did not provide any evidence that would have altered the assessment. The Respondent also argued that the Appellant was uncooperative in the provision of relevant records and failed to respond to request of documents hence no relevant documents or records were provided to support the objection by the Appellant. As a result, the assessments were made based on the only available information based on the best judgement by the Respondent.

46. The Tribunal observes that the Respondent also stated that in-depth examination of the records established that there were inconsistencies in the returns filed by suppliers and the invoices claimed by the Appellant and this indicated a variance as per the VAT returns filed and income tax returns filed. Further to that, the Respondent maintained that the Appellant provided no explanations requested on the variance hence the same was disallowed and additional assessments carried out. Finally, the Respondent submitted that the VAT Act empowers the Respondent to disallow such input VAT where the necessary documents are not provided.

47. The Tribunal notes that the Appellant maintained that it provided documents in support of its case, the Respondent on the other hand argued that the documents that the Appellant provided were not enough to vary the assessments.

48. The Tribunal has reviewed all documents that the Appellant filed in support of this Appeal. The Tribunal notes that some of the invoices that the Appellant filed in support of the Appeal are blurred and unreadable to the naked eye. Nevertheless, the Appellant provided invoices from Di Larenza and Style Industries ltd.

49. The Tribunal notes that whereas the Appellant relied on Section 17 of the VAT Act to argue that it provided the requisite documents, the Respondent also relied on the same provision to argue that the Appellant failed to provide sufficient documents that would lead to changes in assessments.

50. Section 17 (1), (2) and (3) of the VAT Act provides as follows:“17. Credit for input tax against output tax(1)Subject to the provisions of this Act and the regulations, input tax on a taxable supply to, or importation made by, a registered person may, at the end of the tax period in which the supply or importation occurred, be deducted by the registered person in a return for the period, subject to the exceptions provided under this section, from the tax payable by the person on supplies by him in that tax period, but only to the extent that the supply or importation was acquired to make taxable supplies.2)If, at the time when a deduction for input tax would otherwise be allowable under subsection (1)—(a)the person does not hold the documentation referred to in subsection (3), or(b)the registered supplier has not declared the sales invoice in a return, the deduction for input tax shall not be allowed until the first tax period in which the person holds such documentation:Provided that the input tax shall be allowable for a deduction within six months after the end of the tax period in which the supply or importation occurred.(3)The documentation for the purposes of subsection (2) shall be—(a)an original tax invoice issued for the supply or a certified copy;(b)a customs entry duly certified by the proper officer and a receipt for the payment of tax;(c)a customs receipt and a certificate signed by the proper officer stating the amount of tax paid, in the case of goods purchased from a customs auction; and(d)a credit note in the case of input tax deducted under section 16(2);(e)a debit note in the case of input tax deducted under section 16(5); or(f)…’’

51. From the above provisions of Section 17(3)(a) of VAT Act, the Appellant was required to provide an original tax invoice issued for the supply or a certified copy of the invoice. The invoices on record are not certified therefore, the Appellant is in breach of the said provision.

52. For one to claim input VAT, there must be purchase of taxable supply as provided for under Section 17(1) of the VAT Act. Then, how does a taxpayer demonstrate that there was a taxable supply? A taxpayer is supposed to provide evidence of actual purchase. An invoice on its own is not evidence of purchase. Consequently, documents such as bank statements, receipts confirming payments, purchase schedules, or any other document evidence actual purchase are supposed to be provided. Apart from providing original or certified invoices, a taxpayer is supposed to provide evidence showing that there was actual purchase.

53. This Tribunal in Osho Drappers Limited vs Commissioner of Domestic Taxes TAT 159 of 2018 held that a tax payer for to claim input VAT, the taxpayer has to demonstrate by providing documentary evidence indicating that there was actual purchase of taxable supply. In the instant appeal, the Appellant provided copies of invoices but they are not certified. In addition, the Appellant did not provide evidence confirming actual purchase of taxable supply.

54. Section 56 (1) of the TPA places the onus of proof in tax objections on the taxpayer. It provides as follows:“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”

55. The Tribunal places reliance on the case of Primarosa Flowers Limited v Commissioner of Domestic Taxes [2019] eKLR the Court referred to the case of Mulherin v Commissioner of Taxation [2013] FCAFC 115 in which it was held as follows:-“The onus is on the taxpayer in proving that assessment was excessive by adducing positive evidence which demonstrates the taxable income on which tax ought to have been levied.’’ Similarly, the Court of Appeal of England & Wales in Norman v Golder 26 T.C. 293 held that, ‘‘…the onus of stating the grounds of the appeal was upon the Appellant and that we regarded the assessment as correct unless and until it was demonstrated to us by the Appellant to be incorrect.”

56. Under the circumstances, the Appellant failed to submit relevant documents under Section 51(3)(c) of the TPA. In addition, the Appellant failed to provide proper documents under Section 17(3) of the VAT Act. Having failed to comply with the foregoing provisions of the law, this Tribunal finds that the Appellant has failed to discharged the burden of proof under Section 56(1) of the TPA.

57. Consequently, the Tribunal finds and holds that the Appellant failed to submit all the relevant documents relating to the objection and did not therefore ischarge its burden of proof.(b)Whether the Respondent’s assessments and resultant Objection Decision are justified

58. Since the Tribunal has established that the Appellant failed to submit relevant documents under Section 51(3)(c) of the TPA and that the Appellant failed to provide proper documents under Section 17(3) of the VAT Act, the only outcome under this issue is that the Tribunal find and holds that the Respondent’s assessments and resultant objection decision are justified.

Final Decision 59. The upshot to the foregoing is that the Appeal lacks merit and the Tribunal consequently, makes the following Orders:a.The Appeal is hereby dismissed;b.The Objection decision dated 31st August 2022 is hereby upheld; andc.Each party to bear its own costs.

60. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 5TH DAY OF APRIL, 2024CHRISTINE A. MUGA - CHAIPERSONBONIFACE K. TERER - MEMBERDELILAH K NGALA - MEMBERGEORGE KASHINDI - MEMBERSPENCER S. OLOLCHIKE - MEMBER