https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/263

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E1012/2025 LIQUOR WAX & BEVERAGES LTD VS KENYA REVENUE AUTHORITY JUDGMENT # BACKGROUND 1. The Appellant is a private limited company duly incorporated in Kenya under the provisions of the Companies Act and has operations in Kenya engaged in the sale of alcoholic beverages. 2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws. Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 3. The Respondent alleged that the Appellant declared lower Free on Board (FOB) values in the import entry forms than those reflected in the corresponding commercial invoices. Consequently, the Respondent computed additional taxes arising from the alleged undervaluation and issued a tax demand amounting to Kshs 2,719,301. 4. The Appellant lodged a Notice on Objection on 24 th June, 2025. The Respondent having considered the objection, issued an Objection decision dated 14th July 2025 wherein it confirmed the assessment. 5. Dissatisfied by the Respondent’s decision, the Appellant filed this appeal vide the Notice of appeal on dated 24th August 2025 and filed on 25th August 2025. # THE APPEAL 1. The Appeal is premised on the Memorandum of Appeal dated 11 th September 2025 and field on 12th September 2025. The memorandum raised the following grounds of appeal: 1. That the Commissioner erred in fact and in law by subjecting additional duties to a consignment already audited and additional levies imposed hence resulting in double taxation. # THE APPELLANT’S CASE 1. In support of the appeal, the Appellant relied on its Statement of facts dated 11th September 2025 and field on 12 th September 2025 and written submissions dated 22nd April 2026 and filed on 2nd May 2026. 2. The Appellant stated that as a private company engaged in the sale of alcoholic beverages, some of which are sourced locally while others are imported and that it imported a consignment under customs entry number 22MBA003256138 and paid the relevant customs duties upon importation. 3. The Appellant stated that during the year 2024, the Respondent, through the Commissioner for Investigations and Enforcement Department, commenced an audit of its operations covering customs duties on the imported goods. 4. The Appellant stated that following the audit, the Commissioner issued assessments on the imports based on alleged variances between the number of litres reflected in the customs data and those recorded in the Excise Goods Management System (EGMS) and that it objected to the assessments by providing reconciliations, supporting documents, and engaging the Commissioner through various meetings and email correspondence. 5. The Appellant stated that on 1st October 2024, the Commissioner issued an assessment amounting to Kshs 26,105,563 covering import duty, excise duty, and Value Added Tax and that it objected to the assessments issued by the Commissioner. 1. The Appellant stated that an objection decision was subsequently issued by the Commissioner and that being dissatisfied with the objection decision, it lodged an appeal before the Tax Appeals Tribunal stating that additional duties were imposed on a consignment that had already been audited and assessed, thereby resulting in double taxation. 2. The Appellant stated that taxes upon importation were computed on the basis of the number of litres and that the Commissioner had already assessed the same consignment using the variance between the litres recorded in the EGMS and those contained in the customs data and that it had a legitimate expectation that taxes would not be reissued on the same consignment since such reassessment amounted to double taxation. 3. The Appellant stated that prior to importation, the supplier issued a revised invoice for the imported goods and that the quantities reflected in the customs data represented the actual quantities paid for and supplied by the foreign supplier. 4. Further the Appellant stated that it did not commit any offence in relation to the importation and that there was no loss of revenue to the Government and prayed that the appeal be allowed, that the Commissioner’s decision dated 14th July 2025 be set aside, and the costs of the appeal be in the cause. 5. The Appellant submitted that the dispute arose from a consignment imported in 2024 under Customs Entry No. 22MBA003256138, where the Respondent alleged that the Free on Board (FOB) values declared in the import entries were lower than those reflected in the commercial invoices. The Appellant further submitted that the Respondent consequently issued additional assessments amounting to Kshs 2,719,301, which it objected to, but the Respondent confirmed the assessments through an objection decision dated 14th July 2025, prompting the present appeal. 6. The Appellant submitted that the appeal was validly lodged before the Tribunal pursuant to Section 13 of the Tax Appeals Tribunal Act. It submitted that the amendments to the Tax Procedures Act excluded weekends and public holidays in computing timelines for filing appeals and objections. The Appellant contended that the Notice of Appeal was filed on 25th August 2025 within the statutory period and that the Memorandum of Appeal and Statement of Facts were subsequently filed on 12th September 2025 within the prescribed time. It therefore submitted that the Respondent’s contention regarding the validity of the appeal was misconceived. 1. The Appellant submitted that double taxation arises where the same income or transaction is subjected to tax more than once, thereby imposing multiple tax burdens on a single transaction. It submitted that the imported consignment had previously been audited by the Respondent and additional duties had already been assessed on the basis of adjustments to the quantities of litres imported. The Appellant argued that the subsequent assessment based on FOB values amounted to a second assessment on the same consignment and therefore resulted in double taxation. 2. The Appellant further submitted that although the earlier assessment was based on the number of litres and the subsequent assessment was based on FOB values, both approaches ultimately affected the customs value and tax base for the same transaction. It argued that whether the quantity or the FOB value was adjusted, the practical effect was an increase in the taxable value, thereby producing the same tax outcome. The Appellant therefore maintained that the additional assessment duplicated the tax burden already imposed on the imported consignment. 3. The Appellant submitted that the Respondent could only rely on an alternative valuation method if the earlier assessment based on quantity adjustments had first been withdrawn or vacated. It argued that maintaining both assessments concurrently was improper and contrary to the law. The Appellant further submitted that variations in commercial terms are common in international trade and that the differences between the commercial invoices and the import entry forms arose from revised invoices which had been supplied to the Respondent and accurately reflected the values declared at importation. 4. The Appellant consequently submitted that the Respondent’s objection decision confirming the tax demand of Kshs 2,719,301 was excessive, unjustified, and resulted in double taxation. It therefore urged the Tribunal to set aside the Respondent’s objection decision dated 14th July 2025 in its entirety. # Appellant’s Prayers 1. Appellant prays that: 2. This appeal be allowed and the Respondent’s decision dated 14th July 2025 be set aside. 1. The costs of the Appeal be in the cause. # THE RESPONDENT’S CASE 1. The Respondent’s case was premised on its Statement of facts dated 27th October 2025 and filed on even date and its written submissions dated on 24th April 2026 and filed on even date. 2. The Respondent stated that it analysed the Appellant’s imported consignment under the relevant customs entries and established that the original Import Declaration Forms (IDFs) reflected an FOB value of USD 46,682.46. It stated that although the two IDFs and their accompanying invoices bore identical FOB values, the Appellant subsequently lodged an import entry declaring an FOB value of USD 10,091.46, which was used to clear the consignment. 3. The Respondent stated that upon reviewing the imported consignment comprising various alcoholic beverages, it established that the FOB values of several items had been manipulated to reflect lower unit prices. It further stated that it compared the values appearing in the commercial invoices with those declared in the import entry and identified significant variances which resulted in an understatement of the customs value. 4. The Respondent stated that it computed the Cost, Insurance and Freight (CIF) values for the affected items using the applicable exchange rates, freight charges, and insurance costs. It further stated that the revised CIF values formed the basis for the computation of additional import duty, excise duty, VAT, Import Declaration Fee, and Railway Development Levy, resulting in additional taxes amounting to Kshs 2,719,309. 5. The Respondent stated that it issued a notice of assessment dated 26th May 2025 demanding payment of the additional taxes. It further stated that the Appellant objected to the assessment on the ground that the additional taxes amounted to double taxation, but upon review of the objection, the Respondent confirmed the assessments through an objection decision dated 14th July 2025. 6. The Respondent stated that the earlier investigations had focused on discrepancies between the volumes declared in the Integrated Customs Management System and those recorded in the Excise Goods Management System. It submitted that the current investigations concerned new information relating to the manipulation and undervaluation of FOB values and that the additional assessments arose from the understatement of customs values rather than quantity variances. 1. The Respondent stated that the Appellant presented falsified documents during importation contrary to Section 203 of the East African Community Customs Management Act, 2004. It further stated that Section 31 of the Tax Procedures Act empowered it to issue additional assessments where new information revealed that a taxpayer had been assessed less tax than was due. Consequently, the Respondent maintained that the objection decision dated 14th July 2025 was lawful. 2. The Respondent submitted that it analyzed a consignment imported by the Appellant under entry number 22TNIM400063430 and established discrepancies in the declared import values. 3. The Respondent submitted that investigations revealed the Appellant lodged two Import Declaration Forms (IDFs) for the same consignment, both reflecting an FOB value of USD 46,682.46, supported by corresponding invoices. 4. The Respondent submitted that despite the consistent IDF values, the Appellant declared a significantly lower FOB value of USD 10,091.46 in the import entry used for clearance of the goods and that the consignment contained various alcoholic beverages and that certain FOB values were deliberately manipulated to reflect lower unit prices. 5. The Respondent submitted that it recalculated the Customs Value (CIF) for the 25 items identified as undervalued based on its findings and that the recomputed CIF values formed the basis for additional taxes assessed against the Appellant. 6. The Respondent submitted that it issued a Notice of Assessment dated 26th May 2025 demanding additional principal taxes amounting to Kshs 2,719,309 and that the Appellant objected to the assessment on the basis that it amounted to double taxation on goods already audited and levied. 7. The Respondent submitted that the appeal was filed out of time and without leave of the Tribunal, rendering it procedurally defective and that the issues for determination were whether the objection decision dated 14th July 2025 was lawful and whether the appeal itself was valid. 8. The Respondent submitted that the additional duties were properly raised due to undervaluation of FOB values declared by the Appellant in the import entry and that analysis of the import documentation confirmed two IDFs with identical FOB values of USD 46,682.46, while the entry declared a lower value of USD 10,091.46. 1. The Respondent submitted that earlier investigations focused on discrepancies between volumes declared in ICMS and EGMS systems and that the current assessment was based on new evidence showing manipulation of FOB values to achieve lower customs duties. 2. The Respondent submitted that Sections 235 and 236 of the EACCMA empowered it to review declarations within five years of importation for compliance purposes and that import duty is payable at the rate applicable at the time of importation under Section 120(1) of the EACCMA and that under Section 122 of the EACCMA, customs value for ad valorem goods must be determined in accordance with the Fourth Schedule. 3. The Respondent submitted that customs valuation is based on transaction value as provided under the Fourth Schedule Part I Paragraph 2 of the EACCMA and that Section 135 of the EACCMA empowers it to recover short- levied taxes within five years. # The Respondent relied on Pharmaceutical Manufacturing (K) Co Ltd & 3 others v Commissioner General of KRA & 2 others (2017) eKLR to support its authority to demand underpaid taxes and impose penalties where applicable and further reliance on **SDV TRANSAMI KENYA LIMITED v Commissioner of Customs Services (2012) KEHC** to support the legality and validity of customs assessments. 1. The Respondent submitted that the short-levied taxes were lawfully demanded under Section 135(1) of the EACCMA and that it acted within its statutory mandate in raising additional duties arising from undervaluation of imported goods and that under Section 30 of the Tax Appeals Tribunal Act, the burden of proof lies on the Appellant to demonstrate that the assessment is excessive or incorrect. 2. The Respondent submitted that it exercised best judgment based on available information in arriving at the assessment and further reliance on # Saima Khalid v Commissioners for HMRC (TC/2017/02292) on the principles guiding best judgment assessments. 1. The Respondent submitted that Sections 230(1) and 231 of the EACCMA provide the statutory basis for appeals to the Tax Appeals Tribunal and that Section 12 of the Tax Appeals Tribunal Act requires payment of the prescribed filing fee for a valid appeal and that under Section 13 of the Tax Appeals Tribunal Act, appeals must be filed within 30 days of the decision unless extended by the Tribunal. 1. The Respondent submitted that the Appellant failed to seek leave for extension of time and therefore filed the appeal irregularly and further relied on # Boss Freight Terminal Ltd v Commissioner of Domestic Taxes (2017) to support strict compliance with appeal timelines. 1. The Respondent relied on the Supreme Court case of **Salat v Independent Electoral & Boundaries Commission & 7 others (2014) KESC 12 KLR** to support the position that late appeals filed without leave are incompetent and should be struck out and that failure to comply with statutory timelines deprives the Tribunal of jurisdiction to hear the appeal. # Respondent’s Prayers 1. Based on the above grounds, the Respondent prayed that: 2. The Respondent’s objection decision dated 14th July, 2025 demanding Principal taxes of Kshs 2,719,309 together with interest and penalties there on is proper in law and the same be affirmed. 3. The Appeal herein is unmerited and the same be dismissed with costs to the Respondent. 4. Whereas the Respondent submitted that that the Appellant failed to seek leave for extension of time and therefore filed the appeal irregularly, in effect the Respondent raised a preliminary objection against the appeal and the Respondent having raised a preliminary objection, in its pleadings, the Tribunal has to examine its merit before making further steps. 5. The Tribunal is guided by Sec 230 (2) of EACCMA which provides that; *“A person intending to lodge an appeal under this Section shall lodge the appeal within 45 days after being served with the decision and shall serve a copy of the appeal on the commissioner”* The Tribunal notes that the Appellant lodged its appeal on 25th August 2025 while the Respondent decision was issued on 14th July 2025. The Tribunal further notes that the appeal was lodged within 31 days well within the statutory timelines for lodging an appeal under Sec 230 of EACCMA. # ISSUES FOR DETERMINATION 1. The Tribunal has considered the parties’ pleadings and submissions, and has identified the following issues for determination: # Whether the additional duties were justified 1. **Whether the Appellant discharged its burden of proof** **ANALYSIS AND FINDINGS** 1. Having identified the issues for determination, the Tribunal proceeds to analyse the same as hereunder: - # Whether the additional duties were justified 1. The Appellant contended that the additional assessment issued by the Respondent amounted to double taxation since the imported consignment had previously been subjected to an audit and additional taxes had already been imposed based on discrepancies between the quantities recorded in the Integrated Customs Management System (ICMS) and those reflected in the Excise Goods Management System (EGMS). 2. The Appellant argued that the subsequent assessment founded on the alleged understatement of FOB values effectively subjected the same consignment to taxation twice. 3. The Tribunal notes that the earlier investigations undertaken by the Respondent concerned differences in the quantities of imported alcoholic products as captured in the customs and excise systems however the assessments arising were therefore premised upon quantity variances. Conversely, the impugned assessments arose from the discovery that the FOB values declared in the import entry used to clear the goods were substantially lower than those appearing in the corresponding Import Declaration Forms and commercial invoices. 4. The evidence cited by the Tribunal demonstrates that the Respondent identified two Import Declaration Forms bearing identical FOB values of USD 46,682.46, while the import entry used to clear the consignment reflected an FOB value of USD 10,091.46 and consequently recomputed the customs value and raised additional duties arising from the alleged undervaluation of the imported goods. 5. The Tribunal finds that the earlier assessment based on quantity discrepancies and the subsequent assessment based on undervaluation of FOB values addressed distinct aspects of customs compliance. While both assessments concerned the same consignment, they arose from different factual circumstances and different tax bases. One assessment related to the quantity of goods imported, whereas the other related to the customs value declared for those goods. 1. Section 31 of the Tax Procedures Act empowers the Commissioner to issue additional assessments where new information reveals that less tax has been assessed than is properly payable. Similarly, Sections 135, 235 and 236 of the East African Community Customs Management Act permit the Respondent to review declarations and recover short-levied taxes within the statutory period. 2. In Pharmaceutical Manufacturing (K) Ltd & 3 Others v Commissioner General of KRA & 2 Others the Court affirmed the Commissioner’s authority to demand taxes that have been underpaid once new information becomes available. Likewise, in SDV Transami Kenya Limited v Commissioner of Customs Services the Court recognized the Respondent’s statutory mandate to reassess customs declarations where inaccuracies are discovered. 3. The Tribunal therefore finds that the Appellant failed to demonstrate that the impugned assessment duplicated an earlier tax liability. The subsequent assessment was founded upon alleged undervaluation of customs values, which constituted a separate basis for taxation from the earlier quantity-based assessment. Consequently, the Tribunal finds that the additional assessments were justified. # Whether the Appellant discharged its burden of proof 1. The burden of proof in tax disputes is statutorily placed upon the taxpayer. Section 30 of the Tax Appeals Tribunal Act provides that the Appellant bears the burden of proving that a tax decision is excessive or incorrect. Similarly, Section 56(1) of the Tax Procedures Act stipulates that a tax decision shall remain valid unless the taxpayer demonstrates otherwise. 2. The Appellant maintained that the differences between the commercial invoices and the import entries arose from revised invoices issued by the supplier prior to importation. However, apart from making these assertions, the Appellant did not place before the Tribunal the alleged revised invoices, documentary correspondence from the supplier, proof of amendments to the transaction values, or any contemporaneous records demonstrating that the reduced FOB values were the actual transaction values. 3. Further, although the Appellant alleged that the assessments amounted to double taxation, it did not produce the earlier assessments, objection decisions, or computations demonstrating that the taxes previously imposed and the taxes currently demanded related to the same taxable base. 1. The Respondent, on the other hand, produced evidence showing that the Import Declaration Forms and accompanying commercial invoices reflected FOB values of USD 46,682.46 while the import entry declared an FOB value of USD 10,091.46. The Appellant did not sufficiently rebut these findings. 2. The Court in Tata Chemicals Magadi Limited v Commissioner of Domestic Taxes 476 of 2013, [2014] eKLR held that the burden rests upon the taxpayer to provide evidence demonstrating that the Commissioner’s assessment is incorrect. Similarly, in Kenya Revenue Authority v Man Diesel & Turbo SE, Kenya (2021) eKLR the Court emphasized that mere allegations are insufficient and that a taxpayer must adduce evidence to displace an assessment. 3. The Tribunal further finds guidance in Republic v Kenya Revenue Authority Ex Parte Bata Shoe Company (Kenya) Limited,**(2014) eKLR** where the Court observed that tax disputes must be resolved on the basis of verifiable records and documentary evidence. 1. The Appellant merely asserted that revised invoices existed and that the additional assessment amounted to double taxation without tendering sufficient documentary evidence to substantiate those allegations. The Tribunal therefore finds that the Appellant failed to discharge the statutory burden imposed under Section 30 of the Tax Appeals Tribunal Act and Section 56(1) of the Tax Procedures Act. 2. In the circumstances, the Tribunal finds and holds that the Appellant failed to discharge its burden. # FINAL DECISION 1. The upshot of the foregoing is that the Appeal lacks merit and the Tribunal proceeds to make the following Orders: 2. The Appeal be and is hereby dismissed. 3. The Objection Decision dated 14th July 2025 be and is hereby upheld. 4. Each party shall bear its own costs. 5. It is so ordered # DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY 2026 SIGNED BY/FOR: **★ TH E JUDICIAR Y O F KENY A ★** **HON. EUNICE NJERI NGANGA HON. SANKALE SPENCER OLOLCHIKE** **HON. BERNADETTE MUTHIRA GITARI** **HON. BILLY GRAHAM OKUMU MIJUNGU** Tax Appeals Tribunal Tribunal Date: 2026-07-03 13:36:05