https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/93

Nuel Holding Ltd v Commissioner of Legal Services (Tax Appeal E1273 of 2025) [2026] KETAT 93 (KLR) (Appeals) (26 June 2026) (Judgment) Neutral citation: [2026] KETAT 93 (KLR) Republic of Kenya In the Tax Appeal Tribunal Appeals Tax Appeal E1273 of 2025 RO Oluoch, Chair, Cynthia B. Mayaka, E Komolo & AM Diriye, Members June 26, 2026 Between Nuel Holding Ltd Appellant and Commissioner Of Legal Services Respondent Judgment Background 1.The Appellant is a limited liability company incorporated in Kenya and registered as a taxpayer in the country. 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.The Respondent issued the Appellant with an assessment for VAT on 14th March 2024. 4.The Appellant filed its objection on iTax on 30th July 2025. 5.On 8th October 2025, the Respondent confirmed the additional VAT assessments and issued its Objection Decision. 6.Aggrieved by the Respondent’s Objection Decision, the Appellant lodged this appeal. The Appeal 7.In its Memorandum of Appeal filed and dated on 7th November 2025, the Appellant raised the following grounds of appeal: -a.The Respondent erred in law by not considering that the return was filed in April 2023.b.That the Respondent erred in fact by failing to acknowledge the medical report supporting the late filing of the returns. Appellant’s Case 8.The Appellant’s case is based on its Statement of Facts dated 7th November 2025, in which it identified the following issues for determination.a.Whether the Respondent was right to ignore the return filed in April 2023.b.Whether the Respondent was right to ignore medical documents showing that the taxpayer was unwell, hence the late filing. 9.It was its position that the Respondent’s demand for VAT and income tax had no basis in fact or in law and that the entire assessment was arbitrary and unjust. 10.The Appellant did not file any submissions to support its appeal. Appellant’s Prayer 11.The Appellant’s prayed to the Tribunal for orders that it: -a.Allows this appeal;b.Annuls the Respondent’s confirmed assessment on the grounds above, as well as the information contained in the Statement of Facts; andc.Awards costs of the appeal to the Appellant. Respondent’s Case 12.The Respondent filed its Statement of Facts dated 5th January 2026 and its Written Submissions dated 21st April 2026 in opposition to the Appeal. 13.The Respondent averred that it considered the following documents provided by the Appellant in arriving at its decision:a.The LPO NO. 18654 dated 28/06/2021 was issued by the Office of the President.b.There were no transactions recorded in the month of November 2022.c.The invoice No. 52 issued on 18/11/2022. 14.That the documents provided confirmed that the transaction was payment for the supply. 15.The Respondent stated that:a.That Section 12 of the VAT Act required the declaration to be made in November 2022.b.Section 51 of the Tax Procedures Act allowed it to issue the objection decision, which was regular.c.Section 5 of the Value Added Tax Act allowed it to charge VAT on the supply.d.Section 56 of the Tax Procedure Act provided that the burden lay with the Appellant to prove that the tax decision was incorrect.e.Its assessment was done in accordance with Section 29 of TPA.f.The Appellant failed to provide documents as was expected of it under Section 23 of the TPA. 16.It supported its position with the following cases:a.Grace Njeri Githua v Commissioner of Investigation and Enforcement (TAT No. 102 OF 2018).b.Mulherin v Commissioner of Taxation (2013) FCAFC 115.c.TAT NO. 55 of 2018 Boley International Limited V Commissioner of Domestic Taxes.d.TAT NO. 70 of 2017 Afya Xray Centre Limited v Commissioner of Domestic Taxes.e.TAT No. 70 of 2017 Afya Xray Centre Limited v Commissioner of Domestic Taxes.f.Ushindi Limited v Commissioner of Investigation and Enforcement Kenya Authority (2020) eKLR.g.Digital Box Limited v Commissioner of Investigation and Enforcement (2020). Respondent’s Prayer 17.The Respondent prayed to the Tribunal that it:i.Upholds the decision dated 8th October 2025.ii.This appeal be dismissed with costs to the Respondent. Issues For Determination 18.The Tribunal having considered the parties' pleadings, submissions, and documents filed before it is of the view that the issue falling for its determination is whether the Respondent’s Objection Decision dated 24th February, 2025 is justified. Analysis And Determination 19.The Appellant contended that it did not have any transactions in the month of November 2022, and hence no VAT assessment should have arisen. 20.The Respondent argued that it was provided with a payment voucher dated 15th November 2022 and, hence, its decision to charge VAT. 21.The documents on record confirm that:a.No supply or service was offered by the Appellant in the month of November 2022.b.The last transaction was a purchase order dated 23rd September 2022 for Kshs 52,040,000.c.A payment voucher was processed for Kshs 52,040,000 and approved for payment on 15th November 2022. 22.The VAT Act provides as follows regarding the time of supply for goods and services:“(1)Subject to subsection (3), the time of supply, including a supply of imported services, shall be the earlier of—(a)the date on which the goods are delivered or services are performed;(b)the date a certificate is issued by an architect, surveyor, or any other person acting as a consultant in a supervisory capacity;(c)the date on which the invoice for the supply is issued; or(d)the date on which payment for the supply is received, in whole or in part. 23.The law is thus clear that VAT can be charged when goods are delivered, services are offered, an invoice is issued, or when payment for the supply is received. 24.The burden of proof in tax matters is also borne by the Appellant under Section 12 of the TAT Act, which provides that:“A person who disputes the decision of the Commissioner on any matter arising under the provisions of any tax law may, subject to the provisions of the relevant tax law, upon giving notice in writing to the Commissioner, appeal to the Tribunal” 25.It was thus incumbent on the Appellant to prove that it had paid VAT on its Purchase Order No. 24331 dated 23rd September 2022 for Kshs 52,040,000. This evidence of payment would have been sufficient to help the Appellant to prove its case to obtain orders stopping the Respondent from taxing this transaction twice. 26.Its failure to discharge its burden of proof by providing this evidence means that the Respondent acted within its legal mandate to assess and collect VAT on this supply at the time of receipt of payment, which was done in November 2022, as evidenced by the payment voucher dated 15th November 2022. 27.The Tribunal’s conclusion on the consequences of the Appellant’s failure to discharge its burden of proof was endorsed in Mugo -vs- Commissioner of Domestic Taxes (TAT E918 of 2024) KETAT 374 (KLR), where the court 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 its 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.” 28.Flowing from the above analysis, the Tribunal finds and holds that the Respondent was justified to disallow the Appellant’s objection as outlined in its Objection Decision dated 8th October 2025. Disposition 29.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 8th October 2025 be and is hereby upheld.c.Each Party is to bear its own costs. 30.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 26TH DAY OF JUNE 2026DR. RODNEY ODHIAMBO OLUOCH - CHAIRPERSONCYNTHIA B. MAYAKA - MEMBER DR. ERICK KOMOLO - MEMBERABDULLAHI DIRIYE - MEMBER