[2023] KETAT 573 (KLR)

Oscars Foods Limited v Commissioner of Legal Service & Board Co-ordination (Tax Appeal 1182 of 2022) [2023] KETAT 573 (KLR) (13 October 2023) (Judgment)

Neutral citation: [2023] KETAT 573 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal 1182 of 2022

RM Mutuma, Chair, M Makau, EN Njeru, W Ongeti & BK Terer, Members

October 13, 2023

Between

Oscars Foods Limited

Appellant

and

Commissioner of Legal Service & Board Co-ordination

Respondent

Judgment

Background 1. The Appellant is a private limited company incorporated in Kenya under the Companies Act, 2015 laws of Kenya. The Appellant is engaged in the business of supply of meat products.

2. The Respondent is a principal officer appointed under and in accordance with Section 13 of the Kenya Revenue Authority Act, the Authority 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 Respondent carried out a review of the Appellant’s self-assessment returns for the period 2017 to 2019 and issued a demand notice dated 9th December 2021 for Kshs. 2,861. 458. 31 relating to VAT for the period under review, subsequently the Respondent issued three (3) additional assessments orders on VAT all dated 16th December 2020 in the cumulative sum of Kshs. 3,118,860. 81 as principal tax and interest thereon.

4. Further the Respondent issued a notice of intention to issue additional assessments dated the 14th January 2021 and thereafter issued the Appellant with a demand notice dated 27th January 2021 relating to VAT for the periods December 2017, December 2018 and December 2019 in the total sum of Kshs. 3,356,055. 00 being principal tax, penalties and interest.

5. The Appellant was issued with a further demand notice dated 23rd June 2022 for tax arrears on VAT amounting to Kshs. 3,531,483. 11 being principal tax, penalties and interest.

6. The Appellant lodged three (3) distinct notices of objection for each assessment order on the 14th July 2022 and received by the Respondent on the same date contesting the entire Respondent’s assessments.

7. The Respondent rendered its objection decision on the objections vide a letter dated 9th September 2022 rejecting the Appellant’s notices of objection and demanding the entire taxes assessed.

8. Being aggrieved with the Respondent’s decision, the Appellant lodged a Notice of Appeal dated and filed before the Tribunal on 5th October 2022.

The Appeal 9. The Appeal is premised on the following grounds as highlighted in the Memorandum of Appeal dated 11th October 2022 and filed on 13th October 2022:i.Oscars Foods Limited is a small-scale business based in Kikuyu Township which originally primarily dealt with meat products; pork, chicken. ii.Oscars Foods Ltd established trading through Uchumi Supermarkets but unfortunately the supermarkets eventually went under.iii.On ceasing to trade through Uchumi Supermarkets, Oscars Foods Ltd established a swimming pool and a gym in an effort to remain financially viable. Meat sales to other small-time buyers continued but at a very subdued level.iv.Oscars Foods Ltd did not have a properly established accounting function and thus neither transactional documents nor books of account were well kept. Daily sales were accounted for on the basis of Kgs of meat products sold multiplied with the authorized price. That after reconciling the meat opening and closing stocks in Kgs, the difference was the meat sale in Kg for this computation. The book keeper poster cash sales computed as above to the sales day book. Apart from the sales day book no other documentation was kept or is available. The computations and reconciliation were done on rough sheet which were not filed.iii.The same sales day book was used to record sale of meat product, swimming pool collections and payments received from the gym.iv.In the false believe that the purpose of the sale day book was only to ensure cash received was all accounted for, proper attention was not given to categorization of the three streams of income: Sale of meat products, receipts from the swimming pool and receipts from the gym. vii.Errors were made in the categorization of the streams of income where sale of meat products was described as receipts from swimming pool and gym.viii.Sale of meat products does attract VAT whereas swimming pool and gym services do. Therefore, the errors in categorization resulted in implied unpaid VAT which amounted to Kshs. 2,725,198 assessed.ix.Failure to maintain proper and formal transactional documentation and books of account is not unique to Oscars Foods Limited. Many small- scale businesses do not have the capacity and thus do not do this. This is particularly so in the sale of meat business where the butcher or meat seller is given a specified amount of meat at the beginning of each day and any weight deficit at end of the day is the cash expected.

The Appelant’s Case 10. The Appellant’s case is premised on the hereunder filed documents;a.The Appellant’s Statement of Facts dated 11th October 2022 and filed on 13th October 2022 together with the documents attached thereto.b.The Appellant’s written submissions dated 14th April 2023 and filed on the 17th April 2023 together with the documents attached thereto.

11. The Appellant submitted that it is a small-scale business based in Kikuyu Township which originally primarily dealt with meat products; pork, chicken.

12. That the Appellant established trading through Uchumi Supermarkets but unfortunately the supermarkets eventually went under.

13. The Appellant averred that when it ceased to trade through Uchumi Supermarkets, it established a swimming pool and a gym services business in an effort to remain financially viable, as the initial meat sales business to other small-time buyers continued but at a very subdued level.

14. That it was the Appellant’s assertion that it did not have a properly established accounting function and thus neither transactional documents nor books of account were well kept. That further the daily sales were accounted for on the basis of Kgs of meat products sold multiplied with the authorized price. After reconciling the meat opening and closing stocks in Kgs, the difference was the meat sale in Kg for this computation.

15. The Appellant stated that the book keeper posted cash sales computed as above to the sales day book. That apart from the sales day book no other documentation was kept or is available and the computations and reconciliation were done on rough sheet which were not filed.

16. The Appellant further stated that the same sales day book utilized to record the daily sales of meat was also utilized to record collections for the swimming pool and payments received from the gym.

17. The Appellant asserted that in the false believe that the purpose of the sale day book was only to ensure cash received was all accounted for, proper attention was not given to categorization of the three streams of income, being sale of meat products, receipts from the swimming pool and receipts from the gym.

18. The Appellant averred that the Respondent made errors in the categorization of the streams of income where sale of meat products was described as receipts from swimming pool and gym.

19. It was the Appellant’s submission that sale of meat products does attract VAT, whereas the sales from the swimming pool and gym services do. It was the Appellant’s further submission that the errors in categorization resulted in implied unpaid VAT which amounted to Kshs. 2,725,198. 00 as were assessed by the Respondent.

20. That the failure to maintain proper and formal transactional documentation and books of account is not exclusive to the Appellant and that many small- scale businesses do not have the capacity and thus do not do this. The Appellant qualified it statement and stated that this is particularly so in the sale of meat business where the butcher or meat seller is given a specified amount of meat at the beginning of each day and any weight deficit at end of the day is the cash expected.

Appellant’s Prayers 21. The Appellant’s prayer was that the Tribunal;i.Sets aside the confirmation and directs the Respondent to amend the assessment as per sales day books attached.

Respondent’s Case 22. The Respondent’s case is premised on the hereunder filed documents;a.The Respondent’s Statement of Facts dated and filed on the 1st November 2022 together with the documents attached thereto.b.The Respondent’s written submissions dated 20th April 2023 and filed on 25th April 2023.

23. The Respondent stated that its assessment was based on review of the Appellant’s self-assessments/returns for the period 2017 to 2019, which review established gross under-declaration of VAT sales as per the table below.Tax Head/Period Financial Year2017 Financial Year2018 Financial Year 2019

Sales Per Income TaxReturn 3,425,111. 00 7,148,774. 00 6,458,605. 00

Sales Per VAT Returns 0. 00 0. 00 0. 00

Variance 3,425,111. 00 7,148,774. 00 6,458,605. 00

Principal Tax @ 16% 548,017. 76 1,143,803. 84 1,033,376. 80

24. The Respondent averred that it informed the Appellant of the return review exercise and the eminent assessment vide the various notices sent as stipulated below: -a.11th November 2020 - return review;b.9th December 2020 - demand notice;c.16th December 2020 - additional assessments;d.14th January 2021 - intention to issues additional assessment;e.27th January 2021 - immediate demand notice;

25. That in the absence of credible explanations from the Appellant, the Respondent stated that it issued additional assessments on 16th December 2020 which the Appellant objected to on 14th July 2022.

26. That it was the Respondent’s assertion that the Appellant, notably, lodged the objection inordinately late, after 575 days. However, the Appellant’s reasons for lateness were considered by the Respondent and case approved for full review on 22nd August 2022.

27. The Respondent submitted that the Appellant objected on the ground that, most of the income used to compute the additional tax was income from sale of unprocessed meat in its natural form which did not attract VAT.

28. The Appellant adduced the following documentary evidence in support of the objection application namely; Sales analysis for years 2017 – 2019; Sales summaries for years 2017 – 2019; Uchumi appointment letter; Single business permit; Agreement for establishment of specialty shop as Uchumi Supermarkets Limited (in receivership).

29. The Respondent analyzed the documents and summarized as below: -PerAccounts CorrectCategorization VatableAmount VAT

2017

Sale of meat products 2,067,867 3,128,090

Swimming pool services 1,357,245 297,022 297,022 47,524

3,425,112 3,425,112 297,022 47,524

2018

Sale of meat products 1,910,954 6,485,704

Swimming pool services 2,999,660 324,420 324,420 51,907

Gym services 1,229,300 124,000 124,000 19,840

Functions 936,460 142,250 142,250 22,760

Bouncing castle 72,400 72,400 72,400 11,584

7,148,774 7,148,774 663,070 106,091

2019

Sale of meat products 1,233,400 5,657,217

Swimming pool services 3,441,080 483,759 483,759 77,401

Gym services 1,670. 975 204,479 204,479 32,717

Functions 13,000 13,000 13,000 2,080

Bouncing castle 100,150 100,150 100,150 16,024

6,458,605 6,458,605 801,388 128,222

30. It was the Respondent’s assertion that it reviewed the Appellant’s documents and noted that the sales ledger was not detailed in a manner that one could deduce the invoice numbers, customer details, description of goods and the pricing at the time.

31. That the sale analysis depicted unexplained adjustments, substantial changes in the sales figures from ―per accounts‖ to ―correct categorization‖ as per the table above. That there were no source documents necessitating the movement that were availed by the Appellant.

32. The Respondent stated that the sales ledger also pointed out to sales comprising of service attracting VAT yet the Appellant failed to declare the same in its VAT returns, the Appellant submitted a NIL self-assessment return for VAT.

33. The Respondent stated that through its email it requested from the Appellant on 26th August 2022 via email, for the source documents supporting the availed sales analysis and ledgers, however, the Appellant never availed any source documents.

34. The Respondent further stated that the agreement provided by the Appellant for the establishment of specialty shops between the Appellant and Uchumi Supermarkets Limited (in receivership) lacked an execution date, it lacked the effective dates of supply. The Respondent stated that with the aforesaid limitation, compounded with the lack of source documents of sale via the Uchumi outlet, the Respondent could not assess the proportion and nature of sales made at the outlet.

35. That furthermore, Clause 16 of the Uchumi agreement with the Appellant obligated the Appellant to supply Uchumi with sales reports and other information concerning its activities at the designated business points. Despite this, the Appellant failed to neither adduce any documentary evidence in support of its ground that raw meat was sold nor adduce records to demonstrate that meat was sold through the Uchumi outlet.

36. The Respondent stated that the single business permit detailed the Appellant’s business activity as that of food processing. That this is indicative of value addition to raw foods, which could probably mean cooked meals sold to customers, that from the Appellant’s sales analysis, it is not clear how processed foods were accounted for.

37. The Respondent averred that the Appellant never availed any ETR report to show that it accounted for vatable sales.

38. The Respondent stated that vide its email of 6th September 2022, the Respondent reminded the Appellant to share the clarification of the issues and additional documents requested for, request whereof was made earlier. It was the Respondent’s assertion that the Appellant has never shared such documents nor clarified the issues.

39. The Respondent upon the review of the objection issued its objection decision on 9th September 2022 confirming the assessments.

40. The Respondent submitted that it relied on the for following statutes;a.Section 23 of the TPA - Record keeping.b.Section 43 of the VAT Act - Keeping of records.c.Section 54A of the ITA - Keeping of records of receipts, expenses etc.

41. That the Respondent submitted that the Appellant admitted in all items (I to IX) of paragraph 3 of the MOA, that it failed to keep, retain or maintain proper accounting records of its business and therefore, the Respondent could not agree with the Appellant’s objection arguments/grounds.

42. The Respondent submitted that the Appellant is duty bound to keep and maintain proper records for purposes of computation of tax. That Section 23 of the TPA provides for record-keeping, subsection 1 reads as follows;―A person shall –a.Maintain any document required under a tax law, in either of the official languages;b.Maintain any document required under a tax law so as to enable the person’s tax liability to be readily ascertained; andc.Subject to subsection (3), retain the documents for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law‖

43. The Respondent stated that Section 43 of the VAT Act stipulates as follows, relating to keeping records;―(1)A 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.(3)Every person required under subsection (1) to keep records shall, at all reasonable times, avail the records to an authorized officer for inspection and shall give the officer every facility necessary to inspect the records.

44. The Respondent further referred to Section 82 of the TPA, which provides for the penalty for failing to keep records;―(1)A person who, without reasonable cause, fails to keep, retain, or maintain a document as required under a tax law without reasonable cause for a reporting period shall be liable to a penalty‖

45. The Respondent stated that it relied on the Appellant’s self-assessment and not incomplete nor erroneous records in assessing the Appellant, therefore, the Appellant’s assertion that there was an error in categorization of income streams in its preparation of self- assessment is spurious since the Appellant had the window of amending the self-assessment returns as is provided for under Section 31 of the TPA. The Respondent submitted that, the Appellant cannot therefore, fault the Respondent for relying on the available records to assess and confirm assessment after several failed attempts acquire all the necessary records.

46. The Respondent relied on Section 31 (1) (c) of the TPA 2015, which provides as follows:-(i)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 —(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.

47. The Respondent submitted that, in this context, the Appellant’s original assessment on VAT is a Nil return pitting the company’s income tax self- assessment, which depicted existence of substantial sales, the Respondent submitted that it therefore, used the best judgement to assess.

48. The Respondent relied upon Section 24 of the Tax Procedures Act, 2015, which provides that:-(1)A person required to submit a tax return under a tax law shall submit the return in the approved form and in the manner prescribed by the Commissioner.(2)The Commissioner shall not be bound by a tax return or information provided by, or on behalf of, a taxpayer and the Commissioner may assess a taxpayer's tax liability using any information available to the Commissioner.‖

49. The Respondent stated that the burden of proof of demonstrating that the Respondent erred in its assessment rests with the Appellant in accordance to Section 56 of the TPA, which burden the Appellant has failed to discharge.

50. The Respondent relied on the following case law;a.Commissioner of Domestic Taxes vs. Structural International Kenya Ltd (Income Tax Appeal No. E089 of 2020) [2021] KEHC 152 (KLR).b.Kenya Revenue Authority vs. Man Diesel & Turbo Se, Kenya [2021] eKLR, Nairobi High Court Income Tax Appeal No. E125 of 2020. c.Nairobi TAT Appeal No. 25 of 2016 Family Signature Limited vs. The Commissioner of Investigations & Enforcement.d.TAT Appeal No. 28 of 2018 Joycott General Contractors Limited vs. Kenya Revenue Authority.

Respondent’s Prayers 51. The Respondent prays that this Tribunal: i.Dismisses the Appeal.ii.Upholds the Respondent’s assessment and decision dated 9th September 2022. iii.Award the Respondent the costs of the Appeal.

Issues for Determination 52. The Tribunal upon careful consideration of the Appeal, opines that the issues that crystalize for its determination are;a.Whether supply of meat by the Appellant was tax exempt under VAT.b.Whether the Respondent’s justified in confirming VAT assessment on all the Appellant’s sales.

Analysis and Findings 53. The Tribunal having established the issue falling for its determination, the Tribunal wishes to analyze the same as hereunder.

a) Whether supply of meat by the Appellant was tax exempt under VAT. 54. The Respondent stated that the assessments were issued to the Appellant on 16th December 2020, the Appellant thereafter objected to the assessments on 14th July 2022 which were duly acknowledged by the Respondent. The Respondent averred that the objections were inordinately late by over 575 days.

55. The Tribunal noted that the Respondent considered the Appellant’s reasons for the inordinate delay, accepted the same and deemed the objections as validly lodged, which decision was communicated on the 22nd August 2022 to the Appellant.

56. Subsequently, the Respondent upon consideration of the grounds contained in the objections rendered its objection decision on 9th September 2022.

57. The Tribunal noted that the Appellant asserted that it was engaged, inter alia, in the sale of raw meat, which product does not attract VAT, however, the Appellant acknowledged in its pleadings and the Statement of Facts that it’s other revenue streams (swimming pool and gym service) attract VAT.

58. The Respondent submitted that the Appellant was a NIL filer for the period under review, yet it conducted business that ought to have been subjected to VAT. The Respondent alleged that the Appellant did not avail any ETR report to bring to account the vatable sales, some of the revenue streams whereof it acknowledged ought to have been subject to VAT, computed and returns made.

59. The Respondent in efforts to deem the meat products revenue stream that ought to have been subjected to VAT raised the following points;a.The agreement for a meat specialty store within Uchumi Supermarket, did not have an execution date or effective date;b.The Appellant’s single permit license described the business activity as Food Processing; andc.Based on the business activity indicated in the single business permit, it is possible indicator that the Appellant was engaged is supply of value- added meat.d.The Appellant did not keep records as required in law.

60. Having considered the Respondent’s submissions and perused the documents which were attached to the Respondent’s Statement of Facts, the Tribunal noted the following;a.The agreement between the Appellant and Uchumi Supermarkets, was;i.duly executed by the all the parties to the agreement.ii.It contained a date when the same was entered into, on the top right corner of each page of the agreement, being 18th March 2008. iii.It contained a commencement date indicated as 1st December 2007 (Now past). (sic)iv.It expressly provided what the Appellant’s business engagement would be, as, ―to sell farm fresh pork products (only) in the designated Uchumi Outlet.‖b.The single business permit attached related to the trading period 2016, particularly between 15th February 2016 to 31st December 2016, which was not the period under review.c.That the Appellant had provided the Respondent with a letter dated 2nd December 2014 extending the Appellant’s contract to continue selling beef, pork and rabbit, with all other terms unaltered.

61. It was the Appellant’s assertion that it sold fresh meat, particularly pork and chicken, which assertion was not disputed or challenged by the Respondent.

62. The Tribunal is persuaded that the Respondent was furnished with sufficient documents by the Appellant to support the objection as to the extent that the meat products sold by the Appellant was raw or fresh meat.

63. The Tribunal is further persuaded that the contents of the contract or agreement between the Appellant and Uchumi Supermarkets, the business engagement was clearly spelt out and there was no room for other probabilities, the Appellant was contracted to sell fresh meat.

64. With relation to Charge to tax, Section 5 (1) (a) and (3) of the ITA provides;-5. Charge to tax1. 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;(3)Tax on a taxable supply shall be a liability of the registered person making the supply and, subject to the provisions of this Act relating to accounting and payment, shall become due at the time of the supply.‖

65. As a deduction, for the Respondent to have assessed VAT on the Appellant, the Respondent ought to have demonstrated that the Appellant made a taxable supply.

66. The Tribunal’s understanding of ground 8 of the Appellant’s Memorandum of Appeal, was that as regards the sale of raw and/or unprocessed meat, is that, the Appellant’s sales were either zero-rated or exempt from charge to tax relating to VAT.

67. It is against the above backdrop that the Tribunal perused the Second Schedule to VAT Act which deals with tax exempted goods. The Tribunal established that most of the palatable raw/fresh meat (the two (2) categories of meat products included) are tax exempted, however, under certain conditions and criterion, which include the meat ought to be sold either in the state of being fresh, chilled or frozen; as a whole, uncut or half carcass; as cut into piece as meat on bone or boneless.

68. The Tribunal observed that in relation to pork, the Second schedule to the ITA provided as follows;―Exempt Goods, Part ITariff No. Tariff Description

0203. 11. 00 Carcasses and half-carcasses of swine, fresh or chilled.

0203. 12. 00 Hams, shoulders and cuts thereof, with bone in, ofswine, fresh or chilled.

0203. 19. 00 Other meat of swine, fresh or chilled.

0203. 21. 00 Carcasses and half-carcasses of swine, frozen.

0203. 22. 00 Hams, shoulders and cuts thereof, with bone in, ofswine, frozen.

0203. 29. 00 Other meat of swine, frozen.

69. The Tribunal further observed that in relation to chicken, the second schedule to the ITA provided as follows;―Exempt Goods, Part ITariff No. Tariff Description

0207. 11. 00 Meat of fowls of the species Gallus domesticus, notcut in pieces, fresh or chilled.

0207. 12. 00 Meat of fowls of the species Gallus domesticus, notcut in pieces, frozen.

0207. 13. 00 Cuts and edible offal, of fowls of the species Gallusdomesticus, fresh or chilled.

0207. 14. 00 Cuts and edible offal, of fowls of the species Gallusdomesticus, frozen.

70. The Tribunal’s perusal of the Fourth Schedule to the ITA, divulged that the proceeds from the sales of the services of the swimming pool and gym are not tax exempt on VAT and qualify to be taxable supplies as provided for under Section 5 (1) (a) of the VAT Act.

71. Accordingly, the Tribunal finds that the sales from raw and/or fresh meat whether in its state as fresh, chilled or frozen is tax exempt, it does not constitute a taxable supply and cannot be subjected to VAT.

b. Whether the Respondent’s justified in confirming VAT assessment on all the Appellant’s sales. 72. It was the Appellant’s assertion that it did not have a properly established accounting function and thus neither transactional documents nor books of accounts were well kept.

73. The Appellant in support of its objection provided documents being Income Tax self-assessment returns, Sales analysis for years 2017 – 2019, Sales summaries for years 2017 – 2019, Uchumi appointment letter and Single business permit and computed a sales split between vatable sales vis a vis non-vatable sales as follows:PerAccounts CorrectCategorization VatableAmount VAT

2017 Sale of meat products 2,067,867 3,128,090

Swimming pool services 1,357,245 297,022 297,022 47,524

3,425,112 3,425,112 297,022 47,524

2018

Sale of meat products 1,910,954 6,485,704

Swimming pool services 2,999,660 324,420 324,420 51,907

Gym services 1,229,300 124,000 124,000 19,840

Functions 936,460 142,250 142,250 22,760

Bouncing castle 72,400 72,400 72,400 11,584

7,148,774 7,148,774 663,070 106,091

2019

Sale of meat products 1,233,400 5,657,217

Swimming pool services 3,441,080 483,759 483,759 77,401

Gym services 1,670. 975 204,479 204,479 32,717

Functions 13,000 13,000 13,000 2,080

Bouncing castle 100,150 100,150 100,150 16,024

6,458,605 6,458,605 801,388 128,222

74. The Respondent submitted that the Appellant did not make VAT returns for the two revenue streams it admitted ought to have been taxed yet it made taxable supplies.

75. The Tribunal observed that the Appellant admitted its failure to maintain formal transactional documentation and proper books of accounts and it qualified the same by stating that such failure was not exclusive to the Appellant and that many other small-scale businesses do not have the capacity to do this.

76. The Tribunal observed that the Appellant did not keep or maintain proper records or any at all as is required under Sections 23 and 43 of the VAT Act, which Sections provide;-23. A person shall –d.Maintain any document required under a tax law, in either of the official languages;e.Maintain any document required under a tax law so as to enable the person’s tax liability to be readily ascertained; andf.Subject to subsection (3), retain the documents for a period of five years from the end of the reporting period to which it relates or such shorter period as may be specified in a tax law43(1)A 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.(3)Every person required under subsection (1) to keep records shall, at all reasonable times, avail the records to an authorized officer for inspection and shall give the officer every facility necessary to inspect the records.

77. The inference from the above provisions of the law is that a tax payer is required to keep books of accounts so as to be able to avail the records to an authorized officer for inspection. The law does not prescribe the formality of how the books ought to be kept.

78. Gleaning of the objection decision as well as annexed documents to the Appellant’s Appeal, the Tribunal is persuaded that the Appellant was able to provide a report to the Respondent showing the sales categories, which distinguished the non-vatable meat sales from the rest of the sales, information which was sufficient for the Respondent to inspect and make a decision therefrom.

79. Having considered all the elements of the grounds appealing the objection decision the Tribunal finds and holds that the Respondent erred in charging VAT on the all the Appellant’s sales.

Final Decision 80. Premised on the foregoing analysis the Tribunal finds the Appeal is merited and proceeds to issue the following Orders: -a.The Appeal be and is hereby allowed.b.The objection decision dated 9th September 2022 be and is hereby set aside;c.The Appellant is liable for VAT on taxable supplies amounting to Kshs. 281,837. 00 as follows:Year Amount

2017 47,524. 00

2018 106,091. 00

2019 128,222. 00

Total 281,837. 00d.Each party to bear its own costs.

81. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 13TH DAY OF OCTOBER, 2023ROBERT M. MUTUMA.................. CHAIRMANMUTISO MAKAU..........................MEMBERELISHAH N. NJERU......................MEMBERDR. WALTER ONGETI................. MEMBERBONIFACE K. TERER....................MEMBER