[2025] KETAT 229 (KLR)

Sea and Voyage Enterprise Limited v Commissioner Legal Services and Board Coordination (Tax Appeal E726 of 2024) [2025] KETAT 229 (KLR) (Commercial and Tax) (9 May 2025) (Judgment)

Neutral citation: [2025] KETAT 229 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Tax Appeal E726 of 2024

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

May 9, 2025

Between

Sea and Voyage Enterprise Limited

Appellant

and

Commissioner Legal Services and Board Coordination

Respondent

Judgment

Background 1. The Appellant is private limited company incorporated in Kenya. The Appellant’s principal activity is the importation of goods and services on agency.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws (hereinafter “the Act”). Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws.

3. The Respondent vide a letter dated 22nd September 2023 raised additional tax assessments with respect to Income Tax and Value Added Tax amounting to Kshs 27,375,990 for the period between 2019 and 2023.

4. The Appellant, aggrieved by the assessments lodged late objections on 5th December 2023 on i-Tax. Consequently, the Respondent issued its objection decision dated 28th December 2023 fully rejecting the Appellant's objection and confirming the assessment.

5. The Appellant being dissatisfied with the Respondent’s objection decision, filed this Appeal vide a notice of appeal dated 4th June 2024 and filed on 1st July 2024 upon being granted leave to appeal out of time.

The Appeal. 6. The Appellant lodged Memorandum of appeal dated 4th June 2024 on 1st July 2024 wherein the Appellant raised a single ground of appeal which was that the Respondent erred in law by curtailing the Appellant's right to a fair hearing as enshrined in Section 4(3)(b) and 4(4)(b) of the Fair Administrative Action Act, CAP 7L of the Laws of Kenya (herein after FAAA) and Article 47 of the Constitution of Kenya,2010 (herein after the Constitution) by not allowing ample time for the furnishing of supporting documents.

Appellant’s Case. 7. The Appellant lodged its Statement of Facts dated 4th June 2024 and filed on 1st July 2024. Whereas the Tribunal granted the Appellant leave to file written submissions the Appellant’s submissions were not on record therefore, the Appellant’s case was based on its pleadings.

8. The Appellant stated that the Respondent amended the Appellant's self-assessment for the January to May 2018 period and imposed an added Value Added Tax (VAT) liability and Income Tax-Company liability amounting to Kshs 27,375,990. 00

9. The Appellant submitted that the focal issue for determination in this Appeal is whether the Respondent erred unfairly confirmed the assessments raised on the Appellant and whether the Respondent accorded a fair hearing to the Appellant. This was based on assertion that the Respondent's position that the Appellant did not validate the notice of objection leading to confirmation of the assessment.

10. The Appellant stated that its right to a fair hearing as enshrined in the FAAA and the Constitution was curtailed. According to the Appellant, the Respondent infringed on the Appellant's rights to a Fair Administrative Action as enshrined in section 4(3)(b) and 4(4)(b) of the FAAA and Article 47 of the Constitution when it imposed on the Appellant impractical timelines to validate its late objection or substantive objection during the review.

11. The Appellant argued that the duration of time the Respondent took in issuing the adverse decision was short as the Respondent's review took a total of 22 days despite the fact that Section 51(11) of the Tax procedures Act CAP 469B of the Laws of Kenya (herein after TPA) allows the Appellant to prosecute its case within the 60-day time window.

12. It is also submitted that the Respondent was insensitive to the strenuous circumstances that bedevilled the Appellant's attempts to address the issues set before it. The Appellant stated that its locus of business operations is in Moyale, a town whose network connectivity is abysmal while the review of the objection application was carried out close to 820 Kilometres away in Kitengela.

13. Consequently, the Appellant argued that it was manifestly clear that the assessments were not confirmed within the objective realms of fairness. Therefore, the Appellant’s plea was that the Respondent should be barred from demanding taxes on account of procedural technicalities.

14. The Appellant therefore, prayed that the Respondent's decision of 28th December 2023 be set aside.

Respondent’s Case. 15. The Respondent lodged a Statement of Facts dated 9th August 2024 and filed on even date. It filed its written submissions dated 19th February 2024 and filed on even date.

16. The Respondent stated that the Appellant lodged late objections on 5th December 2023 on i-Tax. The Respondent noted that the Appellant's objection did not conform to the provisions of Section 51(3) of the Tax Procedures Act (TPA). Consequently, the Respondent sent an email on 19th December 2023 informing the Appellant of the above and further requesting it to provide grounds of objection as per Section 51 (3) of the TPA and to state reasons for lateness as per Section 51 (7) of the TPA.

17. The Respondent averred that it sent reminders on 22nd December 2023 and 27th December 2023 reminding the Appellant to provide the reasons of late objection, grounds of objection and the requested documents. The Respondent averred that the Appellant did not respond to the emails and consequently issued the impugned objection decision

18. Contrary to the Appellant's assertion that it was not allowed ample time to comply, the Respondent averred that it gave the Appellant a chance to provide the grounds of objection, reason for late objection and provide requested documents as evidenced in the email correspondence.

19. The Respondent further averred that it was guided by Section 51 (11) of the TPA which provides for the statutory timelines in which it should render a decision. The Respondent argued that Section 51(11) of the TPA allows the Respondent to issue an Objection Decision within 60 days and that the Commissioner can issue the decision any day between day one and day sixty.

20. The Respondent averred that Appellant did not provide any evidence that would have altered the assessment. Further, the Respondent averred that the Appellant failed to validate its objection which rendered it invalid and despite the Respondent's reminder, the Appellant went mute and did not show any intentions of validating its objection.

21. The Respondent noted that Section 56(1) of the TPA and Section 30 of the Tax Tribunal Act (TATA) place the onus of proof in tax objections on the taxpayer who in this case failed to avail evidence that would support a contrary assessment or that would have guided the Respondent at arriving to a different objection decision.

22. The Respondent averred that it is allowed by Section 24(2) of the TPA to assess a taxpayer's liability using any information available to it. The Respondent further averred that it is allowed under Section 31 of the TPA to make additional assessments based on the available information to the best of its judgment.

23. The Respondent submitted that the assessments raised were in accordance to the law. It submitted that the Appellant failed to file the objection within time and failed to produce documents to justify late objection which was contrary to Section 51(7) of the TPA; failed to provide grounds in support of the objection and that the Appellant failed to adduce documents in support of the objection.

24. The Respondent maintained that this was contrary to Section 51(3) of the TPA. It also submitted that the Appellant failed to comply with requests to validate the objection therefore, the Respondent had no option but to confirm the assessments.

25. The Respondent cited the case of Digital Box Limited v Commissioner of Domestic Taxes [TAT Appeal No, 115 of 2017] to support a preposition that the Respondent is allowed to use available information to make a decision.

26. It submitted that the Appellant failed to discharge its burden of proof contrary to Section 56 (1) of the TPA and Section 30 of TATA. It cited the cases of Kenya Revenue Authority V Man Diesel & Turbo Se, Kenya [2021] eKLR; Miao Yiv Commissioner of Investigations & Enforcement TAT no 441 of 2019; and PZ Cussons East Africa Limited v Kenya Revenue Authority [2013] eKLR to affirm that the taxpayer has to demonstrate that the Respondent’s assessments and decision were wrong but the Appellant failed.

27. Based on the foregoing, the Respondent maintained that it did not err in assessing the tax payable and that it considered all the documents produced.

28. Consequently, the Respondent urged the Tribunal to:i.Uphold the objection decision dated 28th December 2023 as issued.ii.Uphold the assessments and resultant interest and penalties as issued.iii.Dismiss this appeal with costs to the Respondent.

Issues For Determination. 29. The Tribunal having carefully considered the parties pleadings documentation and submissions is of the view that there is a single issue for determination:Whether the Appeal is properly before the Tribunal.

Analysis And Findings 30. The Tribunal having determined the issue falling for its determination proceeds to analyse the same as hereunder:

Whether the Appeal is properly before the Tribunal. 31. The issue in dispute arose when the Respondent raised additional tax assessments on 22nd September 2023 to which the Appellant lodged a late objection on 5th December 2023. The Respondent upon consideration of the objection issued its objection decision on 28th December 2023.

32. A cursory review by the Tribunal of the Appellant’s pleadings, reveals that the Appellant did not attach the objection decision as part of its record. Section 13 (2) of TATA in relation to the filing of an appeal and the requisite documents to be attached and or furnished thereto, provides as follows:“(2)The appellant shall, within fourteen days from the date of filing the notice of appeal, submit enough copies, as may be advised by the Tribunal, of—(a)a memorandum of appeal;(b)statements of facts;(c)the appealable decision; and(d)such other documents as may be necessary to enable the Tribunal to make a decision on the appeal.”

33. A keen reading of the statute reveals that it bestows a mandatory obligation on the Appellant to attach and or present the appealable decision subject of the appeal. The Tribunal noted from the pleadings of the said appealable decision was not presented to the Tribunal. It is to be noted that the presentation of the said appealable decision is not an option available to the Appellant but that rather, the TATA is crafted in express and mandatory terms, the failure whereof attracts consequences to the Appeal. The absence of the appealable decision on record renders the Appeal fatally defective and therefore, incompetent.

34. Having established that the Appellant failed to present the Appealable decision in violation of Section 13 (2) (d) of TATA the Tribunal finds that it is without jurisdiction to hear the matter since the Appeal is incompetent, untenable in law and therefore improperly before the Tribunal.

Final Decision 35. The upshot of the foregoing is that the Tribunal finds and holds that the Appeal fails and proceeds to make the following Orders:a.The Appeal be and is hereby struck out.b.Each party to bear its own cost.

It is so Ordered.DATED AND DELIVERED AT NAIROBI ON THIS 9TH DAY OF MAY, 2025. CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBEROLOLCHIKE S. SPENCER - MEMBER