https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/213

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E897/2025 SEATIDE LOGISTICS LIMITED VS KENYA REVENUE AUTHORITY JUDGMENT # BACKGROUND 1. The Appellant is a private limited liability company whose business is clearing and forwarding and whose principal place of business is in Nairobi County. 2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws. 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 Appellant was issued with tax assessment notice dated 27th January 2023 for Corporation tax for years 2017 to 2020, Pay as You Earn (PAYE) for 2017 to 2019 and Value Added Tax (VAT) for the month of December for 2017,2018,2019, 2020 and 2021 all amounting to Ksh 13,332,176.00. 4. The Appellant objected against the entire assessments vide a notice of objection dated 23rd February 2023. The Respondent vide amended assessment notice of 4th July 2023 partially amended VAT for December 2021. 5. The Respondent partially accepted the objection and amended the assessments save for VAT amount of Ksh 72,710.72. 6. On 13th March 2025, the Appellant was issued with a tax investigation finding which were confirmed by Notice of Tax Demand dated 22nd May 2025 which required the Appellant to pay for Ksh 406,173,201.00 in relation to income tax for years 2021, 2022 and 2023 and VAT for the December 2021, December 2022 and December 2023. 7. The Appellant objected against the entire assessments vide a letter dated 20th June 2025 which was acknowledged by the Respondent on the even date vide iTax. 8. The Appellant objection was declared invalid by the Respondent in an email of 4th July 2025 where the Appellant was required to validate their objection within seven (7) days of the date of the letter. 9. Similarly, in an email of 16th July 2025, the Appellant was required to validate its objection within seven (7) days by providing grounds of objection accompanied with relevant supporting documents. 10. The Respondent’s Objection Decision dated 23 rd July 2025 confirmed corporation tax and VAT assessments amounting to Ksh 406,173,201.00 as previously assessed in the assessment order. 11. A further confirmation assessment notice dated 29th July 2025 was issued by the Respondent via the iTax portal fully rejecting the Appellant’s objection. 12. Dissatisfied by the Respondent’s Objection Decision, the Appellant lodged its Notice of Appeal dated and filed on 20th August 2025. # THE APPEAL 1. The Appellant’s case was founded upon its Memorandum of Appeal dated and filed on 20th August 2025 wherein the Appellant raised the following grounds: 1. That the Respondent erred in law and fact by contravening the provisions of Section 17 of the VAT Act. The Appellant states that the Respondent’s argument of the Appellant failing to declare income from purchases claimed under the Company’s PIN are unfounded and baseless. The Appellant further states that it was the upon the Respondent to establish whether the purported Appellant’s customers claimed input VAT according to subsection (2) and (3) of Section 17 of the VAT Act. The Appellant states that the burden of proof was ought to the said customers to proof to it that they genuinely purchased and made the relevant payments to the Appellant. Additionally, the Appellant states that it should be well known to the Respondent that it has no power of allowing illegal input VAT claimed from the misuse of an entities PIN or individual PIN as per the provisions of Section 91 of the Tax Procedures Act (TPA) 2. That the Respondent failed to establish and understand the nature of business engaged by the Appellant before proceeding to confirm the purported baseless and erroneous findings of carrying out comparative sales analysis for the periods in question. The Appellant further states that it only engages in the clearing and forwarding activities that could not guarantee the income established by the Respondent in its additional assessments. The Appellant states that the Respondent failed to, first, examine and verify the legality of the purported purchases that were claimed by the purported Appellant’s customers by checking whether they conformed to the law by fulfilling the requirement of Section 17 of the VAT Act before proceeding to compel the Appellant to declare the same as sales income in its returns. The Respondent too failed to share the findings, if any, in regards to the documents used to claim VAT by the purported Appellant’s customers. Therefore, the Respondent’s confirmed assessment should be set aside by the Honourable Tribunal. 3. That the Respondent had previously looked upon the same issues for the year’s 2019, 2020 and 2021. The Respondent further issued additional assessments to the Appellant on un-declared income from purchases claimed under PIN. The Appellant objected the Respondent’s additional assessments and the Respondent issued objection decisions in favour of the Appellant. The Appellant wonders as to how the Respondent could overturn his own decision, proceed to issue new additional assessments on a matter that had already been handled with all the explanations and documents verified by the Respondent. The Appellant further states that the Respondent’s additional assessments are baseless and unfounded and of ill motive meant to cripple his business operations. Therefore, the Appellant prays that the Respondent’s additional assessments be set aside by this Honourable Tribunal. * 1. That the Appellant did not get an opportunity to be heard and to avail its supporting evidence and records for consideration of its objection application. The law provides for fair administration of justice and that one has to be accorded fair hearing before adjudged guilty of any offence. In this case, the Appellant did not get an opportunity to be heard and, therefore, cannot be adjudged guilty for an offence against which it did not get an opportunity to defend itself. This Honourable Tribunal, should therefore, grant the Appellant an opportunity to submit its evidential records in the interest of being judged fairly based on the evidence adduced. It is, therefore, the Appellant’s prayer that it shall be accorded fair hearing in regards to the Respondent’s exorbitant and excessive assessments. # THE APPELLANT’S CASE 1. The Appellant’s case was anchored upon its Statement of Facts dated and filed on 20th August 2025 together with documents attached thereto. The Appellant’s written submissions were not on record as directed by the Tribunal on 5th May 2026. 2. The Appellant held that in tax investigation findings, the Respondent majorly focussed on variances when it compared sales declared in VAT returns, income tax returns and purported purchases claimed from its PIN. 3. According to the Appellant, in its objection to the Respondent’s assessment, it clearly detailed grounds of objection to the assessments and that the Respondent’s disallowance of its input VAT was contrary to Section 17 of the VAT Act. That it had even previously objected against the assessments for the year 2021 which the Respondent accepted and even issued an amended assessment on 4th July 2023. 1. That the Respondent’s decision is not a reflection of the true tax liability and financial position of the Appellant as revenue generated during the disputed periods had been fully and correctly declared in its returns. 2. That despite alleging the Appellant’s misuse of Pyrite Investment Limited’s KRA PIN, the Appellant’s objection and Respondent’s objection decision of 23rd July 2025 put the matter to rest. 3. That the Appellant had expressed willingness to resolve the matter amicably by availing necessary documents and physical availability to offer oral explanation for matters requiring clarification. Additionally, the Appellant stated that it stood to suffer substantial loss and damage should the Respondent’s decision be enforced asserting that the decision was baseless and unsubstantial. 4. That it was just and fair that the Appellant be given an opportunity to be heard and avail evidential records. # The Appellant’s Prayers 1. The Appellant prayed that; 2. This Honourable Tribunal be pleased to allow the Appellant’s Appeal in its entirety. 3. This Honourable Tribunal be pleased to grant orders setting aside and annul the assessment by the Respondent. 4. The Honourable Tribunal be pleased to issue any other order favourable to the Appellant as it may find just and expedient to issue. 5. The Respondent to bear the costs for this Appeal by the Appellant. # THE RESPONDENT’S CASE 1. The Respondent replied to the Appeal through its statement of Facts dated and filed on 25th September 2025; and written submissions dated and filed on 20th April 2026. 2. According to the Respondent, it conducted tax investigations into the business affairs of the Appellant for the 2019 to 2024 tax period with a view to confirming whether the Appellant was tax compliant for the period. That this entailed review of Appellant’s filed returns which were compared with declared sales as per filed returns viz-a-viz purchases claimed in the Appellant’s PIN. 3. That as a result, there were underdeclared income tax and VAT variances noted emanating from misuse of Pyrite Investments Limited where there were declared entries without consent and approval of Pyrite Investments Limited as per the complaint lodged and recorded statements. 4. That investigations established that the Appellant imported a consignment of goods under entry No. 24MBAIM406866981, processed, paid customs and consignment was released under Pyrite Investments Limited. That however, a second consignment under entry No. 24MBAIM407425059 made under Pyrite Investments Limited was stopped pending investigations which revealed that another six Import Declaration Forms (IDF) had been lodged in a similar fashion without consent and approval of Pyrite Investments Limited yet they had indicated Pyrite Investments Limited as the primary importer. 5. As a result, the Respondent levied corporation tax and VAT amounting to Ksh 406,173,201.00 and that the letter of 13th March 2025 was a request requiring the Appellant to respond within 14 days and that the taxes were confirmed due to failure on the part of the Appellant to validate its objection. 6. As per the Respondent, the Appeal herein evokes two issues for determination as follows; 7. Whether the Respondent’s objection decision dated 23 rd July 2025 was proper in law? 8. Whether the Appeal herein should be allowed? 9. That even though Section 24 and 28 of the TPA allows the Appellant to file returns, the Respondent is not bound by information provided and can assess tax liability based on any other available information noting that Section 77 of the Income Tax Act (ITA) and Section 31 of the TPA allows the Respondent to issue additional assessments where a taxpayer has been assessed of a lesser amount based on any additional information and to the best of his judgement. 1. That investigations by the Respondent had revealed that the Appellant had misused the PIN of Pyrite Investment Limited by declaring entries without its consent and approval as per the complaint lodged and recorded statements and that the additional income tax and VAT assessments for the 2019 to 2024 tax period were based on variances in purchases claimed from the Appellant’s PIN as compared to filed returns. 2. The Respondent asserted that the Appellant lodged an invalid objection to the additional assessments besides failing to validate its objection by producing supportive documentation as required by Section 23,58 and 59 of the TPA despite email requests for the same. 3. The Respondent held that despite the burden of proof being upon the Appellant, it failed to prove before the Tribunal that the additional tax assessments were erroneous even though it had been given adequate opportunity to respond. 4. The Respondent therefore asserted that the additional income tax and VAT assessments as confirmed in the Objection Decision were proper based on available information and its best judgement as couched under Section 31 of the TPA. 5. The Respondent identified a single issue for determination in its written submissions as follows; # Whether the Respondent's Objection Decision dated 23rd July 2025 is proper in law? 1. According to the Respondent, the additional tax assessments and subsequent objection decision issued was proper in law and that even if Section 24 of the TPA allows a taxpayer to submit tax returns in the approved form and manner prescribed by the Respondent, the Respondent is not bound by the information provided therein and can assess for additional taxes based on any other available information. It further asserted that Section 31 of the TPA empowers it to make alterations or additions to original assessments from available information for a reporting period based on the Commissioner's best judgment. 1. Additionally, that Section 77 of the TPA allows the Respondent to issue additional assessments where a taxpayer has been assessed of a lesser amount based on any additional available information and to the best of his judgment. 2. As per the Respondent, the additional Income Tax and VAT assessments for the 2019 to 2024 tax period was based on variances in the purchases claimed from the Appellant's PIN and the declared sales in the Appellant's VAT and Income Tax returns for period under review. 3. The Respondent submitted that despite email requests of 4th July 2025 and 16th July 2025, the Appellant failed to validate their objection thus failed to avail documentation as required under Section 23, 58 and 59 of the TPA to enable the Respondent ascertain its tax liability. The Respondent buffered this position citing the holding in the case of **Ngurumani Traders Ltd v Commissioner of** # Investigation and Enforcement (2019) eKLR and The Commissioner for Her Majesty's Revenue and Customs TC/2017/02292. 1. The Respondent submitted that the burden of proof was upon the Appellant to prove that the additional tax assessments were wrong as required under Section 30 of the Tax Appeals Tribunal Act (TAT Act) a duty the Appellant failed to discharge since it failed to demonstrate that the additional tax assessments issued by the Respondent were incorrect. 2. The Respondent reiterated that the additional tax assessments were properly computed in line with the law as there were no documents adduced to the contrary. This position was buttressed citing the holding in the following cases; # Republic v KRA Proto Energy Limited (2022) eKLR * 1. **Pearson vs Belcher CH.M Inspector of Taxes, Tax Cases Volume 38** 2. **Intime Stone Age Limited v Commissioner of Domestic Taxes (Appeal 714 of 2022) [2023] KETAT 1002 (KLR)** **The Respondent’s Prayers** 1. The Respondent prayed that; 1. The Objection Decision dated 23 rd July 2025 conforming additional taxes amounting to Ksh 406,173,201.00 being corporation tax of Ksh 237,712,449.00 and VAT of Ksh 168,460,751.00 be upheld. 2. That this Appeal be dismissed with costs to the Respondent as the same is without merit. # ISSUE FOR DETERMINATION 1. The Tribunal having carefully considered the parties’ pleadings, documentation and Respondent’s submissions adduced before it notes that a sole issue distils for determination; **Whether the Appellant discharged its burden** # of proof. **ANALYSIS AND FINDINGS** 1. The Tribunal having established single issue for determination will proceed to analyse the same as follows; # Whether the Appellant discharged its burden of proof. 1. The appeal herein is in regards to corporation tax and VAT assessments amounting to Ksh 406,173,201.00 as confirmed in the Objection Decision dated 23rd July 2025. The said taxes emanated from tax investigation findings that majorly focussed on variances where sales declared in VAT returns were compared with income tax returns and purchases claimed in Appellant’s PIN. 2. The Tribunal notes Section 24(1) and (2) of the TPA provides that; *“(1)A person required to submit a tax return under a tax law shall submit the return in the approved form and in the manner prescribed by the Commissioner.* *(2) The Commissioner shall not be bound by a tax return or information provided by, or on behalf of, a taxpayer and the Commissioner may assess a taxpayer's tax liability using any information available to the Commissioner.”* 1. The Appellant’s position is that the Respondent offended Section 17 of the VAT Act by imputing that the Appellant failed to declare income claimed in its PIN asserting that it is the Respondent who bears the burden to proof whether the claimed input VAT fulfilled the requirements of Section 17 (2) and (3) of the VAT Act. In response, the Respondent held that its tax investigations were aimed at confirming that the Appellant was tax compliant for the period and that indeed the Appellant was found to have misused the PIN of Pyrite Investments Limited where entries had been declared without consent or approval from Pyrite Investments Limited who had lodged a complaint. 2. Section 29(1) of the TPA provides that; *“Where a taxpayer has failed to submit a tax return for a reporting period in accordance with the provisions of a tax law, the Commissioner may, based on such information as may be available and to the best of his or her judgement, make an assessment (referred to as a "default assessment") …”* 1. The Appellant opined that the Respondent failed to understand its business model and confirmed the impugned income returns without sharing the findings or documents of the purported customers. On its part, the Respondent held that the Appellant imported a consignment, processed, paid customs and released the same under Pyrite Investments Limited which had been done without consent or approval of the said customer as the primary importer. 2. The Tribunal notes that apart from denying to having ever dealt with Pyrite Investments Limited, the Appellant failed to demonstrate measures it had undertaken after becoming aware that claims had been made in its name for Pyrite Investments Limited. The Appellant made mere averments but availed no evidence in rebuttal to the Respondent’s assertions bearing in mind that the Respondent’s assessments carry the presumption of correctness. 1. The Appellant equally held that the Respondent sought to assess years where the matters had been looked at and settled thus, impossible to reopen yet the Appellant had even expressed willingness to resolve the matter amicably. 2. The Tribunal relies on Section 31(1) of the TPA which provides as follows *“Subject to this section, the Commissioner may amend an assessment (referred to in this section as the “original assessment") by making alterations or additions, from the available information and to the best of the Commissioner's judgement, to the original assessment of a taxpayer for a reporting period…”* 1. The Tribunal is guided by the holding in the case of **Kenya Revenue Authority v Man Diesel & Turbo Se, Kenya [2021] eKLR Nairobi High Court Income Tax Appeal No. E125 of 2020** that; *“The shifting of the burden of proof in tax disputes flows from the presumption of correctness which attaches to the Commissioner's assessments or determinations of deficiency. The commissioner's determinations of tax deficiencies are presumptively correct. Although the presumption created by the above provisions is not evidence in itself, the presumption remains until the taxpayer produces competent and relevant evidence to support his position. If the taxpayer comes forward with such evidence, the presumption vanishes and the case must be decided upon the evidence presented, with the burden of proof on the taxpayer.”* 1. Further, the Appellant asserted that it was not granted an opportunity to be heard or avail supporting evidence and was being condemned unheard. The Tribunal has looked at the chronology of events as laid out in the background of this Judgement and notes that the timelines from 13th March 2025 to 23rd July 2025, the Appellant was actively involved by the Respondent and was served upon two reminders on 4th July 2025 and 16th July 2025 to validate their Objection but failed. 2. The Tribunal finds it odd that at this juncture the Appellant turns around to claim that it was not afforded time whereas it has not challenged the Respondent’s assessments through documentary evidence or assertions in the chronology of events. 1. The Tribunal further observes that for a taxpayer facing a hefty assessment as Ksh 406,173,201.00 and it has not even attempted to substantively address the assessment save for merely making averments denying the Respondent’s assessment, The Tribunal reiterates its holding in **Bemarc Limited vs** # Commissioner of Domestic Taxes [TAT No. 101 of 2016] that; *“The Appellant in its Statement of Facts at paragraph 14 claims that it provided records for the Commissioner’s examination. Again, no evidence of this was availed before the Tribunal. In fact, we find it interesting telling that for an individual facing a hefty assessment of Ksh 31,489,319.89, the Appellant does not substantively dispute the specific tax issues raised in the additional assessment or the objection decision. This, coupled with the burden placed on the taxpayer by the provision of Section 56(1) of the Tax Procedures Act, 2015 only serves to buttress our position that the Appellant failed in its responsibility to provide its records and documents for examination by the Respondent.”* 1. The Tribunal finds that the Appellant failed to discharge its statutory burden of proof as couched under Section 56(1) of the TPA. 2. Consequently, the appeal herein fails. # FINAL DECISION 1. The upshot of the foregoing is that the Appeal herein lacks merit, and the Tribunal accordingly proceeds to make the following Orders: 2. This Appeal be and is hereby dismissed. 3. The Objection Decision dated 23rd July 2025 be and is hereby upheld; and 4. Each party to bear its own costs. 5. It is so Ordered. # DATED AND DELIVERED AT NAIROBI ON THIS 26TH DAY OF JUNE 2026 SIGNED BY/FOR: **★ TH E JUDICIAR Y O F KENY A ★** **HON. EUNICE NJERI NGANGA HON. SANKALE SPENCER OLOLCHIKE** **HON. BERNADETTE MUTHIRA GITARI** **HON. BILLY GRAHAM OKUMU MIJUNGU** Tax Appeals Tribunal Tribunal Date: 2026-06-26 15:18:36