https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7591

Pernod Ricard Kenya Ltd v Commissioner of Domestic Taxes (Tax Appeal E192 of 2024) [2026] KEHC 7591 (KLR) (Commercial and Tax) (3 June 2026) (Judgment) Neutral citation: [2026] KEHC 7591 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Tax Appeal E192 of 2024 BK Njoroge, J June 3, 2026 Between Pernod Ricard Kenya Limited Appellant and The Commissioner Of Domestic Taxes Respondent Judgment 1.This Judgment arises out of a decision by the Tax Appeals Tribunal delivered on 7th June, 2024. It challenges a decision of the Tax Appeals Tribunal to expunge a claim for Kshs. 57,986,843.00. This is on the grounds that an appeal has not been lodged by the tax payer in respect of the rejection of that claim. That once the tax authority rejected the claim, the appeal should have been filed within the requisite period of time. Background Facts 2.The Appellant, is aggrieved by the portion of the Judgment and order of Tax Appeals Tribunal delivered on 7th June, 2024. This is in expunging its claim for a refund for 2014/2015 in the aggregate sum of Kshs 57,986,843.00. It now appeals against that part of the Judgment on the following grounds:1.The Honourable Tribunal erred in expunging the Appellant’s claimed refunds for the aggregate sum of Kshs 57,986,843.00 for the year of income 2014/2015 (“the 2015 Refunds”) as sought in the Appellant’s application for refund made on 6th December, 2022 (‘the 2022 Refund Application”).2.The Honourable Tribunal erred in entertaining the Respondent’s belated objections to the propriety of the inclusion of the 2015 Refunds in the 2022 Refund Application, which objections were only raised for the first time in the Respondent’s submissions.3.The Honourable Tribunal erred in entertaining and upholding the Respondent’s said objection as:a.Such alleged impropriety was not the basis of the Respondent’s Rejection Order No. 20148270459 dated 6th April, 2023 (‘the 2023 Rejection”), which was the subject of the appeal; andb.It was not raised as part of the KRA defence to the appeal.4.The Honourable Tribunal erred in allowing KRA to raise such an objection in its submissions, then considering and upholding it, in violation of the Appellant’s fair trial rights under Article 50(9) of the Constitution.5.The Honourable Tribunal erred in denying the Appellant, its constitutional entitlement, as part of the Article 50 fair trial guarantees to a fair notice of the case and adequate opportunity to resist it.6.The Honourable Tribunal erred in failing to find and hold that the Respondent’s objections to the propriety of the inclusion of the 2015 Refunds in the 2022 Refund Application was contra statute as it was not one of the grounds stated in its response to the appeal nor grounds upon which the 2023 Rejection Decision was made.7.The Honourable Tribunal erred in accepting that the Respondent had notified that the Appellant of Rejection Order No. 20148142774 dated 24th February 2021 (“the 2021 Rejection Decision”) rejecting the Appellant’s earlier application made on 29th November 2016 (‘the 2016 Refund Application”) for the 2015 Refunds.8.The Honourable Tribunal erred in failing to find and hold that in the absence of proof of notification by the Respondent to the Appellant of the 2022 Rejection, it was not open to the Respondent to rely on it.9.TheHonourable Tribunal erred in holding that the Appellant’s only relief in respect to the 2015 Refunds was an appeal against the 2021 Rejection without evidence that the Appellant was ever notified of such rejection and informed on its right to appeal against it.10.The Honourable Tribunal erred in misconstruing the mandatory terms of section 47(3) of the Tax Procedures Act, 2015. In particular, the Tribunal erred in failing to find and hold that once the Respondent failed to make a decision on the Appellant’s 2022 Refund Application, then by operation of law, the entire application was granted as made.11.The Honourable Tribunal erred at paragraph 63 of its Judgement in initially correctly finding: “that failure by the Respondent to issue the rejection order within the stipulated timelines provided under statute implies that the Appellant’s application was deemed allowed by operation of the law” but thereafter misdirected itself by holding that: “an amount of Kshs 57,986,843.00 should be expunged from the claim as the Appellant ought to have made the proper applications to make its claim for the said amount.”12.The Honourable Tribunal erred in exercising a power it did not have i.e. ordering the expungement of the 2015 Refunds from the Appellant’s 2022 Refund Application, when in fact, this was neither a prayer nor an issue for determination before it.13.The Honourable Tribunal erred in law in failing to appreciate that the 2021 Rejection Decision was void ab initio in the face of the law having already allowed the said application under Section 47 (3) of the TPA.14.The Honourable Tribunal erred in law in failing to find that the 2021 Rejection Decision did not qualify as a proper tax decision for lack of sufficient reasons as envisioned under Section 49 of the TPA. 3.The Appellant prayed that:a.The Appeal be allowed with costs;b.The part of the Judgment of the Tax Appeals Tribunal delivered on 7th June 2024 expunging the sum of Kshs 57,986,843/- from the Appellants application for refund made on 6th December 2022 be reversed and set aside;c.A declaration be made that by operation of the mandatory provision of section 47(3) of the Tax Procedures Act, as the Respondent failed to make its decision within 90 days, the Appellant's application dated 6th December 2016 was granted as made;d.The Appellant be awarded the costs of the original case and of this appeal plus interest at court rates; ande.Such other and further relief as the Court may deem fit to grant. 4.The Respondent in response to the Appeal filed the Statement of Facts dated 20th November, 2024. It maintained that the refund claims in dispute had been previously lodged and conclusively determined, having been rejected on 24th February 2021. This was by way of a decision which the Appellant neither objected to nor appealed as required under the law. Consequently, the Appellant’s attempt to introduce a fresh refund application for the same period and amount amounted to a procedural impropriety. This is because the law provides clear mechanisms under Sections 51 and 52 of the Tax Procedures Act for challenging such decisions. The Appellant failed to invoke them, to its detriment. 5.Further, the Respondent asserted that any issues now raised regarding notification or the merits of the earlier rejection were neither pleaded before the Tribunal nor properly before this Court. This is because they are matters of fact barred under Section 56(2) of the Tax Procedures Act. 6.In any event, the Respondent contended that a valid refund decision was made within the statutory timeline and duly communicated. As such, the Tribunal correctly found the Appellant’s grounds of appeal to be without merit. This is because they seek to reopen a dispute that had already been conclusively settled. Issues for determination 7.The Court has carefully considered the Memorandum of Appeal, the Record of Appeal, the response, the written submissions, as well as the oral highlights by Counsel for the parties. The Court drafts the following single issue for determination; Whether the Appeal is merited. Analysis 8.It was the Appellant’s case that the Respondent failed to notify the Appellant of the 2021 Refund Rejection Notice. That the said notice, on its face, does not bear any receiving stamp indicating that it was served upon the Appellant. Neither is any email communication forwarding the same to the Appellant produced before this Court as evidence that the 2021 Refund Rejection was communicated to the Appellant. This is in contrast to the Refund Decision dated 6th April, 2023, which was expressly electronically communicated by an e-mail dated 23rd May, 2024 to the Appellant that is on record before the Court. 9.In contrast, the Respondent submitted that the rejection decision of 24th February, 2021 was indeed communicated and notified to the Appellant in iTax using the Appellant's addresses as stated in iTax and using the same reference number stated in the refund application. 10.According to the Appellant, Section 47(3) of the Tax Procedure Act only gives one mandatory course of action where a refund decision is not given within 90-days. The Refund Application is automatically allowed by operation of law. There are no words in Section 47(3) of the Tax Procedures Act that permit KRA or the Tribunal any other course of action. Whether this be to partially allow and partially reject the refund application or to investigate the validity or propriety of certain parts of the underlying refund application (as was the case here). There is no discretion to exempt some parts of the application for refunds either as the Tax Appeals Tribunal purported to do or at all. 11.. Section 47 of the Tax Procedures Act, provides that;47.Offset or refund of overpaid tax(1)Where a taxpayer has overpaid a tax under any tax law, the taxpayer may apply to the Commissioner in the prescribed form—(a)to offset the overpaid tax against the taxpayer’s outstanding tax debts and future tax liabilities including instalment taxes and input value added tax; or(b)for a refund of the overpaid tax—(i)in the case of income tax, within five years from the date on which the tax was overpaid;(ii)or in the case of any other tax, within twelve months from the date on which the tax was overpaid.(2)The Commissioner shall ascertain and determine an application under subsection (1) within ninety days and where the Commissioner ascertains that there was an overpayment of tax—(a)in the case of an application under subsection (1)(a) apply the overpaid tax to such outstanding tax debts or future tax liability; and(b)in the case of an application under subsection (1)(b), refund the overpaid tax within a period of six months from the date of ascertainment and, if the Commissioner fails to refund, the overpaid tax shall be applied to offset the taxpayer’s outstanding tax debt or future tax liabilities.(3)Where the Commissioner fails to ascertain and determine an application under subsection (1) within ninety days, the same shall be deemed ascertained and approved.(4)The Commissioner may, for purposes of ascertaining the validity of an application under subsection (1), subject the application to an audit.(4A)Where an application under subsection (1) has been subjected to an audit under subsection (4), the Commissioner shall ascertain and determine the application within one hundred- and twenty-days failure to which, the application shall be deemed to have been ascertained and approved.(5)Where the application is for a refund of tax under subsection (1)(b), the Commissioner shall apply the overpayment in the following order—(a)in payment of any other tax owing by the taxpayer under the specific tax law;(b)in payment of a tax owing by the taxpayer under any other tax law; and(c)any remainder shall be refunded to the taxpayer.(6)Where the Commissioner fails to refund the overpaid tax within the period specified in subsection (2)(b) , the amount due shall attract interest of one per cent for each month or part thereof during which the amount remains unpaid.(7)Where the Commissioner notifies a taxpayer that an application under subsection (1)(a) has been ascertained and applies the overpaid tax liability to offset an outstanding tax in accordance with subsection (2)(a), interest or penalties shall not accrue on the amount applied to offsetting the outstanding tax liability from the date of the notification.(8)Where the Commissioner has applied the overpaid tax to offset an outstanding tax liability under subsection (2)(a), any outstanding tax after such application shall accrue interest and penalties in accordance with this Act.(9)Notwithstanding any other provision of this section, where a person overpays an instalment tax due under section 12 of the Income Tax Act (Cap. 470), the Commissioner shall apply the overpaid tax to offset the taxpayer’s future instalment tax liability.(10)Where, after the application of the overpaid tax under subsection (9), the Commissioner later determines that there was no overpayment of instalment tax, the amount of the tax that was used to offset the taxpayer’s future instalment tax liabilities under subsection (9) shall be treated as a tax due to the Commissioner in the subsequent tax period.(11)The amount due under subsection (10) shall be due from the date that the Commissioner applied that amount to offset an instalment tax liability.(12)The Commissioner shall notify the taxpayer in writing of the amount due under subsection (10) and specify in the notification— (a) the interest on the amount due; and(b)any penalties due in respect of the amount due.(13)A person aggrieved by a decision of the Commissioner under this section may appeal to the Tribunal within thirty days after being notified of the decision. 12.The Court has perused the decision by the Tribunal. It notes that in dealing with the factual issues before it the Tribunal stated that it has perused through the documentation and has sighted the said refund application of Kshs 57,986,843.00. That it had been lodged under Number KRA201609226246 on 29th November, 2016.The same was rejected on 24th February, 2021 vide rejection order number 20148142774. 13.The Tribunal went ahead to state that it had has noted the Appellant’s mischief in lodging afresh, a rejected application with a new application instead of dealing with each rejection procedurally. It is noteworthy that the refund claim of Kshs 159, 095, 983.00 was inclusive of an amount of Kshs 71,701,369.00. For this, the Appellant had lodged an objection for on 27th July, 2022 which was invalidated by the Respondent on 4th August, 2022. The Appellant ought to have followed procedure for redress after the Respondent’s decision instead of sneaking it again under the claim lodged on 6th December, 2022. 14.Section 56(2) of the Tax Procedures Act, provides that the appeals to the High Court from decisions of the TAT are restricted to matters of law. The issues raised by the Appellant are factual issues already determined by the Tribunal. 15.Further to the above, the Court has perused the Record of Appeal. It is in agreement with the Respondent that the issue of notification or lack thereof of the rejection decision of 24th February, 2024, is raised in the Appellant's Memorandum of Appeal. However, it was neither an issue pleaded nor in contention before the Tribunal. It follows that therefore, this being an issue of fact, cannot be pleaded before the Court for the first time. This is pursuant to Section 56(2) read together with section 56(3) of the TPA. 16.Section 56(2) of the Tax Procedures Act (TPA), provides that;“An appeal to the High Court or to the Court of Appeal shall be on a question of law only.” 17.Therefore, the Court will not substitute its own conclusions for those of the Tribunal based on its own analysis of the facts. See: John Munuve Mati v Returning Officer Mwingi North Constituency & 2 others [2018] eKLR. Peter Gichuki King'ara Vs IEBC & 2 Others, Nyeri Civil Appeal No. 31 Of 2013, (Court of Appeal) (Visram, Koome & Odek, JJA) on what constitutes points of law. 18.The Court finds that the Appeal is without merit and is hereby dismissed. 19.As to costs, the same lie at the discretion of this Court. The Court directs that let each party bear its own costs of this Appeal. Determination 20.The Appellant’s appeal is HEREBY dismissed for lack of merits. 21.Each party to bear its own costs of the Appeal. 22.It is so ordered. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 03RD DAY OF JUNE, 2026.NJOROGE BENJAMIN K.JUDGEIn the presence of:Mr. Obegi for the Appellant.Mr. Nyapara for the Respondent.Mr. John Paul - Court Assistant.