https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/164

Pollen Ltd v Commissioner of Domestic Taxes (Tax Appeal E1000 of 2025) [2026] KETAT 164 (KLR) (Appeals) (13 July 2026) (Judgment) Neutral citation: [2026] KETAT 164 (KLR) Republic of Kenya In the Tax Appeal Tribunal Appeals Tax Appeal E1000 of 2025 RM Mutuma, Chair, G Ogaga, T Vikiru & JM Malla, Members July 13, 2026 Between Pollen Limited Appellant and Commissioner of Domestic Taxes Respondent Judgment Background 1.The Appellant is a private limited liability company incorporated in the Republic of Kenya whose principal business activity is the production of vegetable seeds for export. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 of the Laws of Kenya (“the KRA Act”). Under Section 5(1) of the KRA Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. 3.Further, under Section 5(2) of the KRA 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 set out in Parts I and II of the First Schedule to the KRA Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 4.The Appellant lodged Value Added Tax (VAT) refund claims amounting to Kshs. 41,741,294.00 for the tax periods of July 2024, August 2024, September 2024, October 2024, November 2024, January 2025, March 2025, April 2025 and June 2025 on 24th July 2025. 5.The Respondent rejected the refund claims vide VAT Claim Rejection Orders dated 28th July 2025 and 7th August 2025. 6.The Appellant, being dissatisfied with the Refund rejection decisions, filed its Notice of Appeal dated 27th August 2025 on even date. The Appeal 7.The Appeal is premised on the Memorandum of Appeal dated and filed on 10th September 2025, which raised the following grounds of appeal:a)That the Respondent erred in law and fact by rejecting the Appellant’s VAT refund claims on the basis of a misapplied Tax Appeals Tribunal ruling in Appeal No. E1064 of 2024;b)That the Respondent erred in law and fact by rejecting the Appellant’s refund claims on the erroneous basis that the Appellant allegedly acts as an agent in the name of and on behalf of Syngenta B.V.;c)That the Respondent erred in law and fact by failing to ascertain the validity of the Appellant’s refund claims as required by the provisions of Section 47 of the Tax Procedures Act, Cap 469B (“TPA”); andd)That the Respondent erred in law and fact by rejecting the Appellant’s valid refund claims amounting to Kshs. 41,741,294.00. Appellant’s Case 8.The Appellant’s case is also premised on the following documents filed before the Tribunal:a)The Appellant’s Statement of Facts dated and filed on 10th September 2025, together with the documents attached thereto; andb)The Appellant’s Written Submissions dated and filed on 18th May 2026. 9.The Appellant stated that it is a producer appointed by Syngenta Seeds B.V. (“Syngenta B.V.”), a non-resident company incorporated in the Netherlands, as a non-exclusive producer of vegetable seeds. In addition to producing vegetable seeds for export out of Kenya, the Appellant also provides research and development services (“R&D services”) to Syngenta Crop Protection AG (“Syngenta SCP”), a non-resident company based in Switzerland. 10.The Appellant described its production process as involving the receipt of materials for the production of seed varieties from Syngenta B.V. These materials remain in the ownership of Syngenta B.V. as they constitute its intellectual property (“IP”) and are protected under various international conventions. Upon receipt, the Appellant multiplies the materials and exports the resulting produce to Syngenta B.V. 11.The Appellant stated that the R&D services provided to Syngenta SCP comprise: the development of new active ingredients and new formulations in the crop protection field; the development of products, biotech and germplasm in the seeds field; and portfolio management in both fields. That under the R&D Services Agreement, all research and development results vest in Syngenta SCP, which is the sole beneficiary and user of the results, and no other party has rights to them unless specifically designated by Syngenta SCP. 12.The R&D services majorly relate to factors affecting the European and American markets but are carried out in the tropics because of longer production cycles that do not exist in Europe and America. 13.The Appellant averred that, whereas it was previously engaged in the production of flower cuttings and seed varieties, there was a change in business focus in 2023 whereby the company exited the flower cuttings business and is now solely focused on the production of vegetable seeds, specifically tomato seeds, and the provision of R&D services. 14.The Appellant stated that it provides both the production of vegetable seeds and the R&D services in its capacity as an independent contractor and is remunerated for goods exported to Syngenta B.V. and, separately, for the R&D services rendered to Syngenta SCP, on a cost-plus basis. That it is remunerated on a cost-plus basis to ensure compliance with the open market value considerations and the Arm’s-Length Principle as required by Section 18(3) of the Income Tax Act, Cap 470 (“ITA”) and Section 13 of the Value Added Tax Act, Cap 476 (“VAT Act”). 15.That this method of remuneration is not unique to the Appellant, as other unrelated producers contracted by Syngenta B.V. are also remunerated on a cost-plus basis. 16.The Appellant explained that in applying the cost-plus model it incurs its own costs for production and R&D, including utility costs (water and electricity), maintenance of the production plant, salaries and related benefits for employees, storage and insurance for materials, and costs arising out of idle capacity of the production plant. That the costs are summed up exclusive of VAT and an agreed mark-up, governed by the Arm’s-Length Principle, is applied for onward billing to Syngenta B.V. and Syngenta SCP respectively. 17.The Appellant asserted that its supplies, being goods delivered and services exported out of Kenya, were zero-rated under the Second Schedule to the VAT Act, and that it consequently accumulated excess input tax owing to making supplies taxable at the rate of zero per cent. In accordance with Section 17(5) of the VAT Act, the Appellant lodged its VAT refund claims amounting to Kshs. 41,741,294.00, which the Respondent rejected vide the Rejection Orders whose remarks stated as follows:“Rejected in compliance with the Tax Appeals Tribunal ruling.”and“Claim rejected since as per the contract with Syngenta Netherlands for production of unrooted cuttings of its flower varieties, Pollen Limited produces on behalf and in the name of Syngenta Netherlands and is reimbursed all cost incurred plus a 5% mark-up. Hence the input incurred is a cost to Syngenta and not Pollen. As per the TAT ruling E1064 of 2024, a principal-agent relationship was found to exist between Pollen Limited and Syngenta Netherlands.” I. The Respondent erred in law and fact by rejecting the Appellant’s VAT refund claims on the basis of a misapplied Tax Appeals Tribunal ruling in Appeal No. E1064 of 2024 18.The Appellant stated that the Rejection Orders cited the ruling in Appeal No. E1064 of 2024 Pollen Limited v Commissioner of Domestic Taxes (“the impugned Judgment”) as the basis for the denial and alleged that the Appellant acts as an agent of Syngenta B.V. and Syngenta SCP such that the input VAT incurred is not attributable to the Appellant. 19.That in the impugned Judgment the Tribunal found: that the Appellant’s contractual relationship with Syngenta B.V. created a principal-agent relationship despite express language in the agreement stating otherwise; that the cost-plus reimbursement model meant that Syngenta bore the economic burden of the input VAT; and that the Appellant had failed to provide sufficient documentation under Section 17(3) of the VAT Act to prove that zero-rated supplies had occurred. 20.The Appellant contended that the Respondent erred by applying the findings of the impugned Judgment to refund periods and transactions that were not the subject of that appeal. That the impugned Judgment related specifically to refund claims for April and May 2024 and did not consider the facts, documentation or contractual arrangements relevant to the tax periods in dispute, which required an independent consideration on their own factual and evidential footing. 21.The Appellant noted that the impugned Judgment is currently under appeal before the High Court and cannot be relied upon as a final and binding precedent, such that the Respondent’s reliance on a contested decision to reject unrelated refund claims was premature and procedurally improper. 22.The Appellant averred that the Respondent conducted no independent assessment of the refund claims for the tax periods in dispute, contrary to Section 47(2) of the TPA. That the Respondent issued summary rejection orders which merely invoked the impugned Judgment and repeated the agency allegation, without identifying any fresh audit findings, any specific defect in the underlying documentation, or any independent basis upon which the claims were said to fail. 23.That this blanket application of a disputed ruling to subsequent refund periods, without evaluating the specific merits of the current claims, had the effect of predetermining the applications and amounted to a procedural and substantive error. 24.The Appellant further pointed out that the Respondent’s rejection reasoning relied on outdated facts. That the Rejection Order dated 7th August 2025 referred to a contract for the production of “unrooted cuttings of flower varieties”, a business line the Appellant exited in 2023. That the Appellant is entitled to change its business model and to enter into lawful contracts in line with its commercial interests, and the Respondent could not reject the refund claims merely because the Appellant’s current activities differed from an earlier contract or previous business line. 25.Reliance was placed on Unilever Kenya Limited v Commissioner of Income Tax [2005] eKLR, where the Court affirmed the taxpayer’s freedom to arrange its affairs lawfully, citing the principle that: -“Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be.” 26.On the freedom and sanctity of contract, the Appellant cited National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & Another [2001] eKLR, where the Court of Appeal held that: -“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded.” 27.The Appellant maintained that by failing to consider the refund claims on their own merits, the Respondent fettered its discretion and acted irrationally, and that the Respondent’s powers must be exercised within the bounds of legality, fairness and respect for due process as affirmed in Keroche Industries Limited v Kenya Revenue Authority & 5 Others [2007] eKLR. The Appellant accordingly prayed that the Tribunal set aside the Rejection Orders as founded on an erroneous and blanket application of the impugned Judgment. II. The Respondent erred in law and fact by failing to ascertain the validity of the Appellant’s refund claims as required by Section 47 of the TPA 28.The Appellant asserted that, in rejecting the refund claims, the Respondent did not conduct any audit, request supporting documentation, or engage the Appellant in any substantive way to verify the validity of the claims. That the Respondent instead issued summary rejection orders founded on the alleged agency relationship and its reliance on the impugned Judgment. That Section 47(2) of the TPA provides as follows: -“The Commissioner may, for the purpose of ascertaining the validity of the refund claimed, subject the claim to an audit. The Commissioner shall notify in writing an applicant under subsection (1) of the decision in relation to the application within ninety days of receiving the application for a refund.” 29.The Appellant contended that the effect of the provision is that the Commissioner is required to undertake a process directed at ascertaining the validity of the refund claim before rendering a decision; that the exercise of the refund decision-making power must be preceded by a bona fide inquiry into the merits of the specific claim under consideration; and that the power to reject a refund claim cannot lawfully be exercised on the basis of assumption, predisposition, or the blanket application of findings made in an earlier and different dispute. 30.The Appellant confirmed that no audit has ever been conducted by the Respondent in relation to any of its refund claims, and that the Rejection Orders disclose no reasoned examination of the claims: the order dated 28th July 2025 merely recited that the claim was rejected “in compliance with the Tax Appeals Tribunal ruling,” while the order dated 7th August 2025 repeated the allegation that the Appellant produces on behalf of Syngenta Netherlands. That neither order demonstrates a fresh verification of the claims actually lodged. 31.The Appellant further argued that in its Statement of Facts the Respondent repeatedly relied on a Toll Production Agreement that was not in force during the tax periods in dispute. That the Tolling Agreement subsisted only up to 2019, when the Appellant’s business model changed and the relationship became governed by the Production and Sale Agreement, and that the Respondent was notified of the change of business model vide the Appellant’s letter dated 14th February 2019. 32.The Appellant posited that the Respondent’s failure to ascertain the validity of the refund claims violated its right to fair administrative action under Article 47(1) of the Constitution of Kenya, which guarantees every person the right to administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair, as well as Section 4(3) of the Fair Administrative Action Act, 2015, which requires an administrator whose action is likely to adversely affect a person’s rights to furnish a statement of reasons and the information, materials and evidence relied upon. 33.That the Respondent acted unreasonably by deeming the documentation provided insufficient without offering the Appellant any guidance on what documentation would suffice, and that its actions were ultra vires. 34.The Appellant also invoked the doctrine of legitimate expectation, contending that a taxpayer who complies with the statutory procedure for lodging refund claims is entitled to expect that such claims will be reviewed on their own merits through a lawful and procedurally fair process. Reliance was placed on Communications Commission of Kenya & 5 Others v Royal Media Services Limited & 5 Others, SC Petitions No. 14, 14A, 14B and 14C of 2014; [2014] eKLR, where Rawal, SCJ observed:“The doctrine of legitimate expectation requires the entrenchment of a duty to act fairly. A breach of Article 47 attracts remedies in Judicial Review especially where an aggrieved person had cause to expect that the attendant aspects of fair administrative action would be adhered to. It is clear that the essence of Article 47 is to protect a party’s legitimate claim of entitlement that is, procedural solidity and not a mere promise of consideration. As such, the court can quash any decision arrived at un-procedurally or unfairly but reserves itself no right to engage in the administrative duties of the body in question. The court must remain a court.” 35.In the premises, the Appellant urged the Tribunal to find that the Respondent’s failure to ascertain the validity of the refund claims, as required by Section 47 of the TPA, renders the Rejection Orders procedurally defective and legally untenable. III. The Appellant is not an agent of Syngenta B.V. 36.The Appellant averred that it is not an agent of Syngenta B.V. and that the Respondent misapprehended the nature of an agency relationship. On the use of the word “agent”, the Appellant cited Kennedy v De Trafford [1897] A.C. 180 at 188, where the court noted as follows:“No word is more commonly and constantly abused than the word ‘agent’. A person may be spoken of as an ‘agent’, no doubt in the popular sense of the word may properly be said to be an ‘agent’, although when it is attempted to suggest that he is an ‘agent’ under such circumstances as create legal obligations attaching to agency that use of the word is only misleading. Therefore, whatever expressions Dodson may have used calling himself an agent, and however true or applicable they may be in the popular sense, in point of law and in their legal sense, they are meaningless.” 37.On what amounts to agency in the context of a principal-agent relationship, the Appellant relied on Bowstead & Reynolds on Agency (Twenty-First Edition) at pages 2 and 3, which defines agency in the following terms:“The word ‘agency’, to a common lawyer, refers in general to a branch of the law under which one person, the agent, may directly affect the legal relations of another person, the principal, as regards yet other persons, called third parties, by acts which the agent is said to have the principal’s authority to perform on his behalf and which when done are in some respects treated as the principal’s acts. ... The term ‘agency’ is best used ... to connote an authority or capacity to create legal relations between a person occupying the position of principal and third parties. Usually, the legal relations so created will be contractual in nature.” 38.The Appellant maintained that an agency relationship requires the consent of both the principal and the agent, given either expressly or by implication from their words and conduct, and that without consent there cannot be an agency relationship. Reliance was placed on the English Court of Appeal in Garnac Grain Co. Inc. v H.M. Faure & Fairclough Ltd and Bunge Corporation [1967] 2 All E.R. 353, which described agency as:“A relationship between two persons by agreement or otherwise where one (the agent) may act on behalf of the other (the principal) and bind the principal by words or actions.” 39.The Appellant also cited Republic v Commissioner of Domestic Taxes Large Taxpayer’s Office ex parte Barclays Bank of Kenya Ltd [2012] eKLR and Kimaiyo Kiprotich & Another v Sirikwa Motors Limited & Another [2022] eKLR, in which Nyakundi, J. stated: -“The relationship of the Principal Agent can only be established by the consent of the Principal and Agent. They will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognize it themselves and even if they have professed to disclaim it. The consent must, however, have been given by each of them, either expressly or by implication from their words and conduct.” 40.From the foregoing authorities, the Appellant distilled two essential elements of an agency relationship: the consent (or assent) of both principal and agent; and the authority given to the agent by the principal to alter the principal’s legal relations with third parties. That the word “agent” is accordingly not to be used loosely. 41.The Appellant asserted that its relationship with Syngenta B.V. does not qualify as a principal-agent relationship because the Appellant has no power to bind Syngenta B.V. in contracts with third parties. That the Production and Sale Agreement effective 1st January 2019, by which the Appellant was appointed a non-exclusive producer of vegetable seeds, grants the Appellant no such power and, at Clause 13, specifically provides as follows:“The relationship between RSC and IMC is and will be that of independent contractors. Neither Party shall be an agent or legal representative of the other, either expressed or implied, nor shall either Party have the expressed or implied right or power to act for or conclude any agreement on behalf of the other Party, or to otherwise bind the other Party. Under no circumstances shall either RSC or IMC represent or hold itself out as an agent or legal representative of the other Party.” 42.The Appellant clarified that in the Agreement, “RSC” designates Syngenta Seeds B.V. while “IMC” designates the Appellant as the in-market company. That the express stipulation by the parties that their arrangement is not to be construed as an agency relationship is a weighty consideration in the absence of any evidence that the stipulation is a sham, as was held in Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389, and that the stipulation in Clause 13 was in force during the tax periods in dispute when the zero-rated supplies were made. 43.The Appellant further stated that it enters into contractual relationships with its suppliers on its own behalf, such that no obligations or liabilities are created between the third-party suppliers and Syngenta B.V., a position expressly required under the Production and Sale Agreement. That this Tribunal reiterated the position in Local Production Kenya Limited v Commissioner of Domestic Taxes (2019) eKLR, where it held that in the absence of the ability of a party to bind the principal in relation to third-party contracting, an agency relationship cannot be inferred, stating:“In light of the foregoing we find that the Respondent’s submissions that an agency relationship can be implied to be grossly incorrect and erroneous. It is trite law where the express terms of the contract are clear in a contract at arms-length there is no room to imply a term. If there was need to imply the parties would have inserted it as an express provision.” 44.The Appellant also relied on Farab International Fze v Commissioner of Domestic Taxes, Tax Appeal No. 381 of 2018, where this Tribunal declined to imply an agency relationship where none could be imputed from the documents governing the relationship between the parties, and on Kenya Bureau of Standards v Commissioner of Investigations & Enforcement, Appeal No. 136 of 2019, where the Tribunal observed: -“Consequently, ... asking this Tribunal to construe an agency relationship between the Appellant and the PVOC contractors is tantamount to asking it to rewrite the terms of the contracts...” 45.That the position was further buttressed by reference to Commissioner of Domestic Taxes v Microsoft East Africa Limited (Income Tax Appeal E212 of 2021) [2023] KEHC 17609 (KLR), wherein the High Court held that no agency relationship existed on the terms of the contract, stating: -“A plain reading of the paragraphs above indicates to this court that a principal-agent relationship was not established in the agreement. Paragraph 5.4 explicitly states that the Respondent did not have the authority to enter into any contracts on behalf of Microsoft Ireland Operations Limited unless otherwise authorized.” 46.In response to the Respondent’s allegation that Syngenta B.V. exercises a higher degree of control over the Appellant, the Appellant countered that the allegation is misleading and an oversimplification of the parties’ relationship. 47.That the requirements imposed in the Production and Sale Agreement and the R&D Services Agreement serve to ensure that: the parties’ dealings conform to the arm’s length principle and open market value considerations in compliance with applicable transfer pricing regulations; the intellectual property of Syngenta B.V. and Syngenta SCP remains in their control and is protected against counterfeits, a protection that is commercially essential in industries reliant on proprietary formulations and technology; and the quality of the goods and services produced meets global quality standards. 48.That such quality assurance requirements are standard in multinational group arrangements to safeguard brand integrity and regulatory compliance and are not indicative of day-to-day managerial control over the Appellant’s operations. 49.Regarding the R&D Services Agreement, the Appellant pointed out that Clause 2.1 thereof contains an independent-contractor stipulation in terms materially identical to Clause 13 of the Production and Sale Agreement, and that Clause 2.2 expressly provides that:“All agreements, contracts, relationships which the Service Provider may enter into with third parties in connection with the provision of the R&D Services shall be entered into in the name of the Service Provider and not SCP.” 50.The Appellant added that, in any event, part of the input VAT claimed relates to R&D services rendered to Syngenta SCP under a separate agreement, such that the Respondent erred in rejecting the entire refund claim on the strength of the alleged agency with Syngenta B.V. 51.The Appellant cautioned that if the Tribunal were to accept the Respondent’s characterisation, the following negative implications would follow: (a) the Tribunal would be rewriting the contract between the Appellant and Syngenta B.V., which specifically provides that the Appellant is not an agent; (b) the Tribunal would be imputing a legal relationship between the Appellant’s suppliers and Syngenta B.V.; (c) all taxpayers applying the cost-plus transfer pricing method under Rule 7(c) of the Income Tax (Transfer Pricing) Rules to comply with Section 18(3) of the ITA would be deemed agents of their non-resident related parties; 52.and (d) if the Appellant’s service providers were in fact making supplies to Syngenta B.V., a non-resident, such services would be exported services under Section 2 of the VAT Act and zero-rated under Paragraph 1 of Part A of the Second Schedule, meaning the Respondent would have erroneously collected the output VAT now claimed by the Appellant as input VAT. IV. The Respondent erred in law and fact by rejecting the Appellant’s valid VAT refund claims amounting to Kshs. 41,741,294 53.The Appellant asserted that the VAT refund claims lodged were valid and ought to have been allowed in their entirety. That the VAT Act allows taxpayers to claim input VAT pursuant to Section 17(1), which provides for the offsetting of input tax against output tax to the extent that the supply or importation was acquired to make a taxable supply, with “taxable supply” defined in Section 2 of the VAT Act as:“‘taxable supply’ means a supply, other than an exempt supply, made in Kenya by a person in the course or furtherance of a business carried on by the person, including a supply made in connection with the commencement or termination of a business.” 54.That Section 17(5) of the VAT Act provides:“(5)Where the amount of input tax that may be deducted by a registered person under subsection (1) in respect of a tax period exceeds the amount of output tax due for the period, the amount of the excess shall be carried forward as input tax deductible in the next tax period: Provided that any such excess shall be paid to the registered person by the Commissioner where— (a) the Commissioner is satisfied that such excess arises from making zero rated supplies; and (b) the registered person lodges the claim for the refund of the excess tax within twelve months from the date the tax becomes due and payable.” 55.That Section 7 of the VAT Act provides that where a registered person supplies goods or services and the supply is zero-rated, no tax shall be charged on the supply, but it shall in all other respects be treated as a taxable supply, and that a supply shall be zero-rated if the goods or services are of the description specified in the Second Schedule. That at the time of lodging the refund claims, Paragraph 1 of Part A of the Second Schedule to the VAT Act zero-rated “the exportation of goods or taxable services.” 56.The Appellant stated that the refund claims arose from the costs it incurred in the procurement of goods and services in the course or furtherance of its business, for which it paid consideration inclusive of the VAT charged by its suppliers, including costs relating to utilities, salaries, maintenance and third-party services. 57.The Appellant averred that it sampled the two largest refund claims, being June 2025 and August 2024, and furnished documentation in support of its eligibility and in affirmation of the accuracy of the VAT returns filed, comprising: the contracts with Syngenta B.V. and Syngenta SCP; the VAT returns; a breakdown listing of the input VAT claimed; purchase invoices evidencing procurement of goods and services; sales invoices; and customs entries. 58.That these documents demonstrate that the Appellant incurred input VAT in the course of producing and exporting vegetable seeds and providing R&D services to non-resident entities, and that the Respondent neither disputed the occurrence of the transactions nor challenged the zero-rated nature of the supplies, the rejection having been based solely on the impugned Judgment. 59.The Appellant contended that it bears the economic burden of the input costs incurred and that this burden is not shifted merely because it is remunerated under a cost-plus arrangement. That the remuneration received is exclusive of VAT, meaning the Appellant does not recover the VAT component from its clients and, unless the input VAT is allowed, remains out of pocket for the VAT element. That the input VAT does not form part of the cost base for determining its remuneration precisely because it is understood to be recoverable under Section 17 of the VAT Act. 60.Reliance was placed on Commissioners of Customs and Excise v Redrow Group Plc [1999] UKHL, where it was stated: -“The matter has to be looked at from the standpoint of the person who is claiming the deduction by way of input tax, was something done for him for which, in the course or furtherance of a business carried on by him, he has had to pay a consideration which has attracted value added tax?” 61.The Appellant posited that the question to be asked is whether it acquired goods and services for itself to enable it to fulfil its contractual obligations to its customers, and that in the present circumstances the answer is in the affirmative. That it procured inputs in its own name, exercised independent discretion over supplier selection, and bore the risks and liabilities associated with performance and compliance, as demonstrated by the sample supplier invoices for utilities such as electricity and security annexed to the Appeal. 62.That these factors demonstrate that the Appellant acted as a principal and not as an agent. 63.On its pricing model, the Appellant reiterated that the cost-plus method is one of the recognised transfer pricing methods under Rule 7(c) of the Income Tax (Transfer Pricing) Rules, as read with Rule 4 thereof, and is adopted to comply with Section 18(3) of the ITA and Section 13 of the VAT Act, which require related-party dealings to be conducted at arm’s length and at open market value. That the model is a commercially standard approach, widely adopted in business, which ensures both cost recovery and profitability, and its adoption does not disqualify the Appellant from claiming input VAT. 64.On the zero-rated status of the R&D services, the Appellant argued that the place of use of a service is key in determining whether a service is an exported service, and that in the absence of statutory guidance on the place of use or consumption, Kenyan courts have drawn from the OECD International VAT/GST Guidelines, as affirmed in Coca-Cola Central East and West Africa Ltd v Commissioner of Domestic Taxes [2020] eKLR, where the court stated: -“The statute itself does not flesh out the two important phrases that appear in the definition provision, ‘use or consumption outside Kenya’ and ‘performed in or outside Kenya’. The Guidelines are, therefore, an invaluable tool in determining the place of use and consumption where, like here, it is not readily apparent that a service is used or consumed in Kenya.” 65.That Guideline 3.1 provides that, for consumption tax purposes, internationally traded services and intangibles should be taxed according to the rules of the jurisdiction of consumption, in implementation of the destination principle, while Guideline 3.2 provides that for business-to-business supplies, the jurisdiction in which the customer is located has the taxing rights, the customer’s location standing as the appropriate proxy for the jurisdiction of consumption, with the identity of the customer normally determined by reference to the business agreement. 66.The Appellant maintained that Syngenta SCP, the customer under the R&D Services Agreement, is a non-resident company, and the services provided to it are therefore exported services within Section 2 of the VAT Act, zero-rated under Paragraph 1 of Part A of the Second Schedule. That the destination principle has been affirmed in Kenyan tax jurisprudence, including Commissioner of Domestic Taxes v Total Touch Cargo Holland [2018] KEHC 859 (KLR), where the High Court held: -“I am in full agreement with the above finding by the tribunal. The location where the service is provided does not determine the question of whether the service is exported or not. The test is the location (or place) of use or consumption of that service. Therefore the relevant factor is the location of the consumer of the service and not the place where the service is performed. In this case the service provided by KAHL was for use and consumption in Europe.” 67.The Appellant added that it is not in dispute that it exports the vegetable seeds it produces to Syngenta B.V., a non-resident company, as demonstrated by the customs entries annexed to the Appeal, such that the goods qualify as zero-rated supplies under the VAT Act. 68.Finally, the Appellant propounded that the Respondent’s reliance on private contractual terms to deny a statutory entitlement is contrary to law, as the VAT Act creates a statutory relationship between the taxpayer and the tax authority that cannot be displaced by commercial arrangements. Reliance was placed on Hapag-Lloyd Kenya Limited v Commissioner of Domestic Taxes [2025] KEHC 13331 (KLR), where the High Court held: -“The Tribunal was not entitled to override the express wording of section 17(5) by importing considerations of economic incidence or contractual arrangements. The VAT Act creates a statutory relationship between the taxpayer and the tax authority. Private agreements do not, and cannot, extinguish the statutory right to an input tax.” 69.The Appellant concluded that it has met all the statutory conditions under Section 17(5) of the VAT Act and is entitled to the refund of Kshs. 41,741,294.00. Appellant’s prayers 70.The Appellant prayed that the Tribunal finds that:a)The Appeal be allowed;b)The Respondent erred in law and fact by rejecting the Appellant’s refund applications on the assertion that the Appellant acts as an agent of Syngenta B.V.;c)The VAT refund claims amounting to Kshs. 41,741,294.00 are due and payable by the Respondent;d)The Respondent’s Refund Rejection Orders be set aside in their entirety;e)The costs of and incidental to the Appeal be awarded to the Appellant; andf)Any other orders that the Tribunal may deem fit. Respondent’s Case 71.The Respondent’s case is premised on the following documents filed before the Tribunal:a)The Respondent’s Statement of Facts dated 8th October 2025 and filed on 10th October 2025, together with the documents attached thereto; andb)The Respondent’s Written Submissions dated and filed on 19th May 2026. 72.The Respondent stated that the Appellant lodged VAT refund claims amounting to Kshs. 41,741,294.00 for the period between July 2024 and June 2025, and that the Appeal arose following the rejection of refund claim No. KRA202594566758 for the period July 2024, amounting to Kshs. 3,644,834.00, and refund claim No. KRA202594566876 for the periods August 2024 to June 2025, amounting to Kshs. 38,096,460.00. 73.The Respondent stated that the July 2024 refund claim was rejected in compliance with this Tribunal’s judgment in TAT E1064 of 2024: Pollen Limited v Commissioner of Domestic Taxes, and that the remaining claims were rejected on the basis of the contract with Syngenta Seeds B.V. under which, for the production of unrooted cuttings of its flower varieties, the Appellant produces on behalf of and in the name of Syngenta Seeds B.V. and is reimbursed all costs incurred plus a 5% mark-up, in the manner of a principal-agent relationship. 74.That the input VAT incurred was accordingly treated as a cost to Syngenta Seeds B.V. and not to the Appellant. 75.The Respondent averred that the Toll Production Agreement provides that Syngenta shall pay the producer a tolling fee calculated as the actual costs incurred by the producer for the performance of the production plus a mark-up of 5%, save for outsourced activities and local statutory foreign exchange losses or gains, for which no mark-up applies. 76.That from the terms of the agreements it is clear that there exists an agent-principal relationship between the Appellant and Syngenta B.V., and that Syngenta B.V. exercises a higher degree of control over the Appellant as indicated in both the Production and Sale Agreement and the Research and Development Agreement. 77.The Respondent maintained that the rejection of the refund claims was proper and in accordance with the law, because payments made by an agent on behalf of a principal are precluded from input VAT deduction. The Respondent further stated that under Section 56 of the TPA and Section 30 of the Tax Appeals Tribunal Act, Cap 469A, the Appellant bears the burden of demonstrating that a tax decision is incorrect. 78.In its Written Submissions, the Respondent identified two issues as dispositive of the Appeal: whether the Appellant is an agent of Syngenta B.V.; and whether the Appellant is entitled to a refund of the input tax claimed. I. Whether the Appellant is an agent of Syngenta B.V. 79.The Respondent contended that, contrary to the Appellant’s assertion that its relationship with Syngenta Seeds B.V. under the Production and Sale Agreement is one of independent contractors, a principal-agent relationship exists between them. That the recitals to the Agreement are instructive that the RSC was desirous of appointing IMC as a producer with a licence to produce, or have produced, varieties in the territory, and that Syngenta B.V. grants the Appellant a non-exclusive, non-transferable, royalty-free licence with the right to sub-license. 80.The Respondent argued that all sales and inputs belong to Syngenta Seeds B.V. as principal, and that the Appellant is not permitted to deal in the Basic Seeds supplied by Syngenta with any person without Syngenta’s express permission. That Syngenta B.V. exercises control over the Appellant as evidenced in Clause 3 of the Agreement, under which the Appellant commits to purchase any required Basic Seeds for its production exclusively from the RSC and may purchase from third parties only upon the RSC’s written consent, and that even sales to third parties may only occur with the RSC’s consent. 81.That the use of the tissue materials supplied is likewise restricted, the Agreement providing that:“IMC undertakes not to use, by any means or in favour of anybody, without prior written consent of RSC or Syngenta Crop Protection AG...” 82.The Respondent asserted that from these contractual excerpts, Syngenta B.V. controls all aspects of the production, leaving the Appellant as an agent. Concerning the Research and Development Services Agreement, the Respondent advanced the argument that although the parties are not designated as agents, the net effect of the Agreement is one of agency, since under Article 4.1 the Appellant is reimbursed all actual costs and expenses incurred, plus an initial mark-up of 5%, 83.the reimbursable costs being defined to include compensation of all persons engaged in the performance of the R&D services, travel and associated expenses, materials, supplies and equipment, utilities, depreciation and insurance chargeable to the R&D facilities, fees, and the costs of searching, evaluating, filing, maintaining and prosecuting patent rights. 84.The Respondent took issue with the Appellant’s argument that agency can only be created expressly and through consent, and placed reliance on the High Court decision in Nthiga v Nyaga (Civil Appeal 67 of 2023) [2024] KEHC 4512 (KLR), which defined agency as follows:“According to Halsbury’s Laws of England 4th Edition Volume 1(2) para 19 and 20 a principal/agent relationship is created by the express or implied agreement of principal and agent or by ratification by the principal of the agent’s acts done on his behalf. Express agency is created where the principal or some person authorized by him, expressly appoints the agent whether by deed, by writing under hand or orally. Implied agency arises from the conduct or situation of parties.” 85.The Respondent similarly invoked Cheshire and Fifoot, The Law of Contract, 5th Edition at pages 386 to 394 on the creation of agency, including agency by estoppel, citing the following passage attributed to Lord Cranworth:“No one can become an agent of another person except by the will of that person. His will may be manifested in writing or orally or simply by placing another in a situation in which according to the ordinary rules of law, or perhaps it would be more correct to say, according to the ordinary usages of mankind, that other is understood to represent and act for the person who has so placed him... this proposition, however, is not at variance with the doctrine that where one has acted as from his conduct to lead another to believe that he has appointed someone to act as his agent, and knows that the other person is about to act on that behalf, then unless he interposes, he will in general be stopped from disputing the agency, though in fact no agency really existed.” 86.On these authorities, the Respondent maintained that the agreements signed between the Appellant, Syngenta B.V. and Syngenta Crop Protection AG, taken together with the conduct of the parties and the control exercised over the Appellant, created an agency relationship notwithstanding the contractual disclaimers, and that the Appellant’s contention that agency can only arise by consent is misplaced. 87.The Respondent placed further reliance on Commissioner of Domestic Taxes v Dutch Flower Group Kenya (Income Tax Appeal E101 of 2020) [2021] KEHC 23 (KLR), where Mabeya, J. held: -“The Court’s conclusion is that, notwithstanding the wording of the agreement, the net effect is that the respondent is an agent of FRE. A clear agency relationship is created by the said agreement as FRE retains control over the respondent in the nature of the business the two are engaged on. That is the reason why FRE has the right under the agreement ‘to inspect the books of the Service Provider at first request’ in the event there is doubt as to the cost incurred by the respondent. It is unheard of where an independent entity will have to inspect the books of accounts of another entity to ascertain what costs have been incurred for purposes of re-imbursement.” 88.The Respondent noted that this Tribunal in TAT E1064 of 2024: Pollen Limited v Commissioner of Domestic Taxes pronounced itself in agreement with the Respondent, holding: -“57.Under the control test, an independent contractor does not serve under the control or command of the principal. Further, the Tribunal points out that under the equipment test, an independent contractor relies on own equipment and not the equipment provided by the principal... 61. Based on the foregoing analysis of the agreement, the Appellant cannot be said to have been an independent contractor when its costs were to be paid by Syngenta B.V. and considering that tools of production (seeds) were issued by Syngenta B.V even though the agreement purports to state that the relationship is that of an independent contractor. 62. Consequently, the Tribunal finds and holds that the service agreements between the Appellant and Syngenta B.V and Syngenta SCP created an agent-principal relationship.” 89.The Respondent concluded on this issue that Syngenta B.V. and Syngenta Crop Protection AG retain control over the nature of the activities undertaken by the Appellant and that, for all intents and purposes, the Appellant is their agent. II. Whether the Appellant is entitled to a refund of the input tax claimed 90.The Respondent contended that the Appellant is not entitled to the refund of the input VAT claimed, posing the question: on what basis would the Appellant be justified in claiming input VAT if even the cost of production and the cost of idle capacity of its production plant are reimbursed? That there would be no input attributable to the Appellant where every single cost incurred, including water, security and electricity, is reimbursed. 91.The Respondent advanced the position that input VAT is charged to a person who makes a taxable supply and is a cost incurred in making that taxable supply, and is not a conduit for enrichment. That in this case, the tax burden the Appellant seeks to alleviate through the input claim had already been borne by Syngenta B.V. and Syngenta SCP. Reliance was placed on Section 13(5) of the VAT Act, which provides:“(5)In calculating the value of any services for the purposes of subsection (1), there shall be included any incidental costs incurred by the supplier of the services in the course of making the supply to the client: Provided that, if the Commissioner is satisfied that the supplier has merely made a disbursement to a third party as an agent of his client, then such disbursement shall be excluded from the taxable value.” 92.The Respondent also cited Cofftea Agencies Limited v Commissioner of Domestic Taxes [2016], where the Tribunal held:“From the indisputable facts above, it is clear to the Tribunal that in making the subject payments, the Appellant acted as an agent of the Principal. The Appellant procured for the various services on behalf of the Principal and paid for the same from monies belonging to the Principal and/or subsequently fully reimbursed by the Principal.” 93.The Respondent argued that although the Appellant has in this Appeal attempted to distance itself from the Toll Agreement presented to the Respondent at other times, the R&D Services Agreement presented before the Tribunal has confirmed the same position as the Toll Agreement: Article 4.1 provides that the Appellant is reimbursed all costs and expenses, including utilities, plus an arm’s length mark-up, such that the allegation that the Appellant caters for its own expenses is untrue and misleading. 94.The Respondent further asserted that the Appellant supplies services of propagation and research and development which are remunerated via a commission from the principal, and that both services are performed in Kenya, attract VAT at the rate of 16%, and are not zero-rated as the Appellant asserts. 95.The Respondent rebutted the claim that the Appellant’s right to fair administrative action was undermined, maintaining that it properly rejected the refund applications because payments made by an agent on behalf of a principal are precluded from input VAT deduction, and that the reasons for the rejections were communicated under Section C (remarks) of the Rejection Orders. 96.Finally, the Respondent propounded that this Tribunal in Pollen Limited v Commissioner of Domestic Taxes (Appeal No. 311 of 2022) and TAT E1064 of 2024 has already set precedent on the issues before the Tribunal, and the judgments are yet to be overturned by the appellate court. That a mere appeal does not bar the Commissioner from abiding by those decisions, and that the present Appeal is an attempt to circumvent them by introducing clauses in which the Appellant now indicates that it is not an agent, yet nothing in the relationship has changed. 97.The Respondent accordingly invited the Tribunal to find that the rejection of the input VAT claims was done in conformity with the law. Respondent’s prayers 98.The Respondent prayed that the Tribunal:a)Dismisses the Appeal in its entirety;b)Upholds the VAT Claim Rejection Orders dated 28th July 2025 and 7th August 2025; andc)Orders the Appellant to pay the costs of the Appeal. Issues For Determination 99.The Tribunal has considered the Parties’ pleadings, the documents filed, and the rival submissions, and is of the considered view that the grounds of appeal and the Parties’ contentions distil into the following three issues for determination:A.Whether the Respondent discharged its statutory mandate under Section 47 of the Tax Procedures Act in rejecting the Appellant’s VAT refund claims;B.Whether the Appellant is an agent of Syngenta Seeds B.V. and Syngenta Crop Protection AG, and whether the Tribunal’s decision in TAT E1064 of 2024 governs the present Appeal; andC.Whether the Appellant is entitled to the VAT refund claims amounting to Kshs. 41,741,294.00. Analysis And Findings 100.Having framed the issues for determination, the Tribunal proceeds to analyse them sequentially as hereunder. A. Whether the Respondent discharged its statutory mandate under Section 47 of the Tax Procedures Act in rejecting the Appellant’s VAT refund claims 101.This issue consolidates the Appellant’s first and third grounds of appeal, both of which impugn the process by which the Rejection Orders were arrived at: first, that the Respondent mechanically applied the judgment in TAT E1064 of 2024 to claims that were not the subject of that appeal; and secondly, that the Respondent failed to ascertain the validity of the claims as required by Section 47 of the Tax Procedures Act (TPA). 102.Section 47 of the TPA, as it read at the time the refund applications were lodged and determined, provided in material part as follows: -“47.(2)The Commissioner shall ascertain and determine an application under subsection (1) within one hundred and twenty days and where the Commissioner ascertains that there was an overpayment of tax—… (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… (4) The Commissioner may, for purposes of ascertaining the validity of an application under subsection (1), subject the application to an audit.” 103.The Tribunal notes that the provision imposes two distinct obligations on the Commissioner: an obligation to ascertain the validity of the application, and an obligation to determine and communicate a decision within one hundred and twenty days. Whereas the power to subject a refund application to an audit under Section 47(4) of the TPA is discretionary, the obligation to ascertain is couched in mandatory terms. Ascertainment necessarily entails an inquiry directed at the specific refund claim before the Commissioner, the transactions and the documentation underlying that claim. 104.A decision that does not engage with the claim actually lodged cannot amount to ascertainment within the meaning of the provision. 105.Turning to the record, the Rejection Order dated 28th July 2025, covering the July 2024 claim of Kshs. 3,644,834.00, stated succinctly that the claim was “Rejected in compliance with the Tax Appeals Tribunal ruling.” The Rejection Order dated 7th August 2025, covering the claims for August 2024 to June 2025 amounting to Kshs. 38,096,460.00, rested on the contract with Syngenta Netherlands “for production of unrooted cuttings of its flower varieties” and on the finding in TAT E1064 of 2024 that a principal-agent relationship existed. 106.None of the refund rejection orders discloses any examination of the VAT returns, purchase invoices or export documentation for the tax periods in dispute; any audit findings; or any independent evidential basis upon which the Respondent concluded that the findings in TAT E1064 of 2024 applied with equal force to the present claims. The Tribunal notes that the Appellant’s averment that no audit was conducted, no documentation was requested, and no engagement of any kind took place, was not controverted by the Respondent. 107.The Tribunal further observes that the Rejection Order dated 7th August 2025 was premised on a business line, the production of unrooted cuttings of flower varieties, which the Appellant asserted that it had exited in 2023, over a year before the earliest refund period in dispute. 108.Relatedly, the Respondent’s Statement of Facts anchored the refund rejections on the Toll Production Agreement, an arrangement which, on the evidence before the Tribunal, was superseded on 1st January 2019 by the Production and Sale Agreement, a change of business model of which the Respondent was notified by the Appellant’s letter dated 14th February 2019, received by the Respondent on 15th February 2019. 109.The Commissioner, vested with the mandate to ascertain the validity of a tax refund claim, must direct its mind to the taxpayer’s actual activities and operative contractual arrangements during the periods under review. The Respondent manifestly did not, as the Tribunal has observed. 110.The effect of the Respondent’s approach was to convert findings made in relation to the April and May 2024 refund claims, on the documents then before the Tribunal, into an irrebuttable presumption against the Appellant for all subsequent periods, absent any inquiry. A refund decision under Section 47 of the TPA is claim-specific. While the Commissioner is entitled, and indeed expected, to have regard to prior determinations concerning the same taxpayer, prior determinations cannot substitute for the statutory duty to ascertain the claim actually lodged. 111.The Tribunal therefore finds that the Respondent failed to discharge its statutory mandate under Section 47 of the TPA. 112.The Appellant also mounted its challenge on Article 47(1) of the Constitution and the Fair Administrative Action Act, and invoked the doctrine of legitimate expectation. The Tribunal observes that complaints of violation of the right to fair administrative action are, in the first instance, the province of judicial review before the High Court, and this Tribunal, being a creature of statute, confines itself to the statutory question falling within its jurisdiction – whether the Commissioner discharged the mandate conferred by Section 47 of the TPA. 113.For the reasons set out above, that question is answered in the negative, and it is unnecessary to venture into the constitutional plane to resolve this issue. 114.The Tribunal is, however, mindful that the Respondent’s procedural default does not, of itself, establish the Appellant’s entitlement to the refunds. Under Section 56(1) of the TPA and Section 30 of the Tax Appeals Tribunal Act, the burden rests on the Appellant to demonstrate that the tax decisions were incorrect. The Tribunal accordingly proceeds to determine the substantive issues on the material placed before it. B. Whether the Appellant is an agent of Syngenta Seeds B.V. and Syngenta Crop Protection AG, and whether the Tribunal’s decision in TAT E1064 of 2024 governs the present Appeal 115.The question of agency is the substantive fulcrum of this Appeal, since the sole ground disclosed in the Rejection Orders is that the Appellant produces on behalf of and in the name of Syngenta and that the input VAT is therefore a cost to Syngenta and not to the Appellant. 116.The Tribunal begins with the applicable legal principles. Agency, as defined in Bowstead & Reynolds on Agency (Twenty-First Edition), cited by the Appellant, is the relationship under which one person, the agent, may directly affect the legal relations of another person, the principal, as regards third parties, by acts done with the principal’s authority. The English Court of Appeal in Garnac Grain Co. 117.Inc. v H.M. Faure & Fairclough Ltd and Bunge Corporation [1967] 2 All E.R. 353 emphasised that the relationship arises by agreement or otherwise where the agent may act on behalf of the principal and bind the principal by words or actions. Two elements are therefore essential: the consent of both principal and agent, whether express or implied; and the authority of the agent to alter the principal’s legal relations with third parties. 118.The Tribunal notes that indeed, the Respondent is correct, on the authority of Nthiga v Nyaga (Civil Appeal 67 of 2023) [2024] KEHC 4512 (KLR) and the learned authors of Cheshire and Fifoot, that agency may be created expressly or by implication from the conduct or situation of the parties, and may in appropriate cases arise by estoppel. 119.It is equally correct, as the High Court held in Commissioner of Domestic Taxes v Dutch Flower Group Kenya (Income Tax Appeal E101 of 2020) [2021] KEHC 23 (KLR), that a contractual label of “independent contractor” is not conclusive, and that the Tribunal must look to the substance and net effect of the arrangement. However, whether the agency alleged is express or implied, the substance sought remains the same: the conferment on the alleged agent of legal authority to affect the alleged principal’s relations with third parties. 120.Commercial influence, contractual specifications, or economic dependence, without that legal authority, do not constitute agency. As was cautioned in Kennedy v De Trafford [1897] A.C. 180, the word “agent” is not to be used loosely. The Production and Sale Agreement 121.The Tribunal has examined the Production and Sale Agreement effective 1st January 2019 between Syngenta Seeds B.V. (as RSC) and the Appellant (as IMC), which was placed before the Tribunal in full. 122.Clause 13 provides in express terms that the relationship between the parties is and will be that of independent contractors; that neither party shall be an agent or legal representative of the other, either express or implied; that neither party shall have any right or power to act for or conclude any agreement on behalf of the other or otherwise bind the other; and that under no circumstances shall either party hold itself out as the agent of the other. The clause does not merely attach a label: it expressly negates the defining legal attribute of agency, that is, the authority to conclude agreements or otherwise bind the other party vis-à-vis third parties. 123.The Tribunal observes that the structure of the operative clauses is consistent with that stipulation. Under Clause 2, the licence granted to the Appellant is to produce the seed products “in its own name” and the Appellant “is fully responsible for the Production.” Under Clause 3, the Appellant purchases the Basic Seeds from Syngenta B.V. at arm’s length transfer prices determined and invoiced annually; it is a buyer for value, not a mere custodian of a principal’s materials. 124.Under Clause 6, Syngenta B.V. in turn purchases the resulting Seeds Products from the Appellant at a price computed under Annex 1, and full legal title to the products passes to Syngenta B.V. upon delivery. A transaction of sale presupposes that title first resides in the seller; an agent does not hold title in the principal’s goods so as to sell them back to the principal. 125.Under Clause 7, the Appellant warrants that it has the knowledge, skills and experience to perform, holds all necessary licences and permits, carries sufficient insurance at its own expense against all business risks, indemnifies Syngenta B.V. against third-party claims arising from its handling of the seeds and production, and is liable for defective products, including latent defects. These are the incidents of an enterprise trading on its own account and bearing its own commercial risk; they are inconsistent with agency, in which performance risk and third-party liability reside with the principal. 126.The Respondent placed considerable weight on the indicia of control in the Agreement: the obligation to source Basic Seeds exclusively from Syngenta B.V. or, with written consent, from third parties; the restrictions on the use of the tissue material; the obligation to sell all production exclusively to Syngenta B.V.; and the prescription of quality standards, certification norms and growing protocols. The Tribunal has considered these provisions and finds that they regulate the subject matter of the production rather than the legal capacity of the Appellant. 127.The materials multiplied by the Appellant embody proprietary plant varieties and licensed intellectual property of the Syngenta Group; restrictions on their sourcing, use and onward disposal are the ordinary and commercially necessary incidents of a production licence over protected germplasm, designed to prevent unauthorised propagation and to preserve certification. 128.Exclusivity of supply and off-take, and adherence to prescribed quality standards, are familiar features of contract manufacturing arrangements between independent enterprises. The “control” relevant to the control test is command over the manner in which a person performs and the capacity to direct his legal dealings, not the contractual specification of what is to be produced, to what standard, and to whom it may be sold. 129.The Respondent’s reliance on Dutch Flower Group Kenya (supra) is noted, but the Tribunal finds that decision distinguishable. The feature that Mabeya, J. found decisive in that case was the principal’s contractual right to inspect the books of account of the service provider at first request in order to ascertain the costs incurred, a supervisory power over the counterparty’s accounts that the learned Judge considered unheard of between independent entities. No equivalent provision appears in the Production and Sale Agreement or the R&D Services Agreement before this Tribunal. 130.The inspection rights conferred on Syngenta B.V. under Clause 4 are confined to the production facilities and seed samples for purposes of quality assurance, which is a standard quality-control right and not an audit of the Appellant’s accounts. The Research and Development Services Agreement 131.As regards the R&D Services Agreement between the Appellant and Syngenta SCP, Clause 2.1 thereof contains an independent-contractor stipulation in terms materially identical to Clause 13 of the Production and Sale Agreement, and Clause 2.2 expressly requires that all agreements which the Appellant enters into with third parties in connection with the R&D services be entered into in the Appellant’s own name and not in the name of Syngenta SCP. 132.Clause 7 obliges the Appellant to provide the services with due care, skill, judgement and diligence in accordance with good industry standards, to correct defects free of charge within two years, and to remain liable for hidden defects for five years after the services are rendered. The service provider that warrants its professional output and bears defect liability at its own cost is, again, trading on its own account. 133.The Respondent contended that the cost-plus remuneration under Article 4.1 of the R&D Services Agreement, and under Annex 1 to the Production and Sale Agreement, under which the Appellant is reimbursed its actual costs, including utilities, depreciation and even idle capacity, plus a 5% mark-up, demonstrates that the Appellant bears no economic risk and is a mere conduit. The Tribunal is unable to agree, for three reasons. 134.The Appellant adopted the cost-plus method to establish the arm’s length pricing method to give effect to the requirement under Section 13 of the VAT Act that transactions between related parties be conducted at open market value. The composition of the cost base, including idle capacity and depreciation, is a matter of computing an arm’s length price for the products and services sold; it does not transform the sale into a disbursement made on another’s behalf. 135.The Tribunal finds that it cannot be the law that every member of a multinational group remunerated on a compliant cost-plus basis is, for that reason alone, the agent of its related counterparty. 136.Secondly, the pricing formula does not extinguish the enterprise risk which the agreements in fact allocate to the Appellant: the warranty and indemnity obligations, the liability for defects and hidden defects, and the obligation to insure at its own expense, remain the Appellant’s own. 137.The proviso to Section 13(5) of the VAT Act, on which the Respondent relied, excludes from taxable value disbursements made to a third party “as an agent of his client.” The payments the Appellant makes to its suppliers are not disbursements of that character: they discharge the Appellant’s own liabilities under contracts concluded in its own name, as the sample supplier invoices for electricity and security services on record confirm. The proviso to Section 13(5) of the VAT Act is therefore inapplicable. 138.Thirdly, on the economic burden of the input VAT, both agreements expressly state that the amounts agreed are exclusive of VAT. The VAT charged to the Appellant by its Kenyan suppliers is accordingly not passed on to Syngenta B.V. or Syngenta SCP through the cost base, and unless recovered under Section 17 of the VAT Act, it rests where it falls, on the Appellant. The Respondent’s assertion that the tax burden had “already been borne” by the Syngenta entities is therefore not supported by the contractual documents. 139.In any event, as the High Court held in Hapag-Lloyd Kenya Limited v Commissioner of Domestic Taxes [2025] KEHC 13331 (KLR), the right to input tax under Section 17(5) of the VAT Act is a statutory right arising between the taxpayer and the tax authority, which private contractual arrangements as to economic incidence do not, and cannot, extinguish. 140.For the foregoing reasons, the Tribunal finds and holds that the Appellant is not an agent of Syngenta Seeds B.V. or of Syngenta Crop Protection AG. The Appellant is an independent contractor which purchases its inputs in its own name, sells its production and services at arm’s length prices, and bears its own commercial risk, under agreements which expressly negate any authority to bind, and which the Respondent has not shown to be ingenuine. Whether the decision in TAT E1064 of 2024 should be upheld or distinguished 141.The Tribunal now confronts directly the question whether its earlier decision in TAT E1064 of 2024 Pollen Limited v Commissioner of Domestic Taxes, which the Respondent urged as binding precedent and which the Rejection Orders applied, governs the present Appeal. The Tribunal accords its previous decisions due comity and attaches considerable value to consistency in its jurisprudence: like cases should be decided alike. 142.However, the Tribunal is not bound by the doctrine of stare decisis to follow its own prior decisions where the facts and the evidence materially differ, and a refund determination under Section 47 of the TPA is a discrete decision in respect of discrete tax periods. No question of res judicata arises, since the tax periods and refund applications in TAT E1064 of 2024, being April and May 2024, are different from those now before the Tribunal. 143.Upon a reading of TAT E1064 of 2024, the Tribunal identifies the following material points of distinction from the present Appeal:i.The dispositive basis of that decision was evidentiary. The Tribunal there found that, other than the two agreements, the only documents produced were two invoices from Brinks Security Services dated 31st October 2017, which related neither to the claim periods nor to the refund transactions, and held that the Appellant had not adduced a single document contemplated by Section 17(3) of the VAT Act to prove that taxable, zero-rated supplies had occurred.ii.The evidentiary matrix in the present Appeal is materially different: the Appellant has placed on record its VAT returns for the tax periods in dispute, a breakdown listing of the input VAT claimed, the purchase invoices supporting the input tax, the sales invoices, and the customs entries evidencing exportation, alongside the operative agreements.iii.The agency finding in that decision was reached by application of the control test and the equipment test, on the understanding that the Appellant’s costs “were to be paid by Syngenta B.V.” and that the tools of production (seeds) “were issued” by Syngenta B.V.iv.The judgment did not analyse Clause 13 of the Production and Sale Agreement, which expressly negates any authority to bind, nor the passage of title and the allocation of warranty, indemnity and insurance risk under Clauses 3, 6 and 7, which, as found above, establish a relationship of purchase and sale at arm’s length prices in both directions rather than the issuance of tools to, and the funding of, an agent.v.The Appellant’s business changed materially in 2023 when it exited the flower cuttings business, such that the characterisation of its operations by reference to the production of unrooted cuttings of flower varieties, which underpinned both the earlier dispute and the Rejection Orders herein, does not reflect its activities during the tax periods in dispute. 144.In view of the foregoing, the Tribunal finds it appropriate to distinguish, and hereby distinguishes, the decision in TAT E1064 of 2024. That decision turned on a failure of proof and on a contractual analysis that did not engage the provisions which this Tribunal has found decisive on the fuller record now presented. It accordingly does not govern the determination of the present Appeal, and the Respondent’s reliance on it as an automatic answer to the claims for the tax periods in dispute was misplaced. C. Whether the Appellant is entitled to the VAT refund claims amounting to Kshs. 41,741,294 145.Having found that the Appellant is not an agent of the Syngenta entities, the Tribunal proceeds to consider whether the Appellant established its substantive entitlement to the refunds under Section 17(5) of the VAT Act, bearing in mind that under Section 56(1) of the TPA and Section 30 of the Tax Appeals Tribunal Act the burden of proof lies on the Appellant. 146.Section 17(5) of the VAT Act entitles a registered person to refund of excess input tax where two conditions are satisfied: the excess arises from the making of zero-rated supplies; and the refund claim is lodged within twelve months from the date the tax becomes due and payable. A third, anterior condition flows from Sections 17(1) and 17(3): the input tax must have been incurred on supplies acquired for the making of taxable supplies and must be supported by the prescribed documentation. Zero-rated supplies 147.It is not disputed that the Appellant exports vegetable seeds to Syngenta B.V., a non-resident company incorporated in the Netherlands. The exportation of goods is zero-rated under Paragraph 1 of Part A of the Second Schedule to the VAT Act, and the exportation is evidenced by the sales invoices and customs entries on record. The first stream of the Appellant’s supplies is accordingly zero-rated. 148.As regards the R&D services supplied to Syngenta SCP, a non-resident company based in Switzerland, the Respondent contended that the services are performed in Kenya and therefore attract VAT at 16%. The Tribunal, however, notes that the Respondent’s contention conflates the place of performance with the place of use or consumption. 149.The consistent position in Kenyan jurisprudence, informed by the OECD International VAT/GST Guidelines and the destination principle, is that the determinant of an exported service is the location of use or consumption, ordinarily proxied by the location of the customer identified in the business agreement, and not the place where the service is physically performed as affirmed by the High Court in Coca-Cola Central East and West Africa Ltd v Commissioner of Domestic Taxes [2020] eKLR and Commissioner of Domestic Taxes v Total Touch Cargo Holland [2018] KEHC 859 (KLR). 150.The Tribunal observes that under the R&D Services Agreement, all R&D results vest exclusively in Syngenta SCP, which is their sole beneficiary and user, and the services relate to the European and American markets. The use and consumption of the services therefore occurs outside Kenya, and the services constitute exported taxable services, zero-rated under Paragraph 23 of Part A of the Second Schedule to the VAT Act as it stood during the tax periods in dispute. 151.The Respondent’s further assertion that the Appellant is remunerated “via a commission” is not borne out by the agreements, which provide for a sale price and a service fee respectively, computed on a cost-plus basis. 152.Since the entirety of the Appellant’s output is zero-rated, the accumulation of excess input tax is the direct and logical consequence of its business model, the Tribunal finds that the Appellant’s refund application is in compliance with Section 17(5) of the VAT Act. The documentary burden of proof 153.The Appellant in the present Appeal annexed to its pleadings the VAT returns for the tax periods in dispute, a breakdown listing of the input VAT claimed, the input tax purchase invoices, the sales invoices, and the customs entries in support of the exportation, together with the operative agreements, and further provided detailed sampled documentation for August 2024 and June 2025. 154.The purchase invoices demonstrate that VAT was charged to the Appellant by its Kenyan suppliers on inputs, including utilities, security, maintenance and related services, acquired in the course or furtherance of its business of producing seeds for export and rendering R&D services. The Tribunal has reviewed the documentation and is satisfied that the documentary burden of proof in respect of the input VAT claimed has been discharged. 155.The evidentiary burden thereupon shifted to the Respondent to controvert the documentation or to identify any specific invoice that was invalid, unsupported, or attributable to a non-business purpose. The Respondent did not do so. It neither disputed the occurrence of the transactions nor challenged the quantum of the claims or the authenticity of any document; its rejection rested solely on the agency characterisation, which the Tribunal has found to be unsustainable, and on the transposed findings of TAT E1064 of 2024, which the Tribunal has distinguished. 156.As to timeliness, the refund claims were lodged on 24th July 2025 in respect of the tax periods from July 2024 to June 2025, and were therefore lodged within twelve months from the respective dates on which the tax became due and payable. 157.The totality of the foregoing is that the Appellant satisfied the conditions of Section 17(1) as read with Section 17(5) of the VAT Act, and discharged the burden cast upon it by Section 56(1) of the TPA and Section 30 of the Tax Appeals Tribunal Act. The Tribunal accordingly finds and holds that the Appellant is entitled to the VAT refund claims amounting to Kshs. 41,741,294.00. Final Decision 158.The upshot of the foregoing analysis is that the Tribunal finds the Appeal meritorious and accordingly proceeds to issue the following Orders:a)The Appeal be and is hereby allowed;b)The Respondent’s VAT Claim Rejection Orders dated 28th July 2025 and 7th August 2025 be and are hereby set aside in their entirety;c)The Respondent is hereby directed to process the Appellant’s VAT refund claims amounting to Kshs. 41,741,294.00 for the tax periods of July 2024 to November 2024, January 2025, March 2025, April 2025 and June 2025 in accordance with the provisions of Section 47(5) of the Tax Procedures Act within sixty (60) days of the date of delivery of this Judgment; andd)Each party to bear its own costs. 159.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 13TH DAY OF JULY 2026.ROBERT M. MUTUMA - CHAIRMANGLORIA A. OGAGA - MEMBERDR. TIMOTHY B. VIKIRU - MEMBERJIMMY M. MALLA - MEMBER