https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/201

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E991/2025 SILVER BUILDING WORKS AND GENERAL SUPPLIERS LTD VS KENYA REVENUE AUTHORITY JUDGMENT # BACKGROUND 1. The Appellant is a private limited company duly incorporated in Kenya under the provisions of the Companies Act and has operations in Kenya for Works & General Supplies, engaged in the business of selling building materials in Busia. 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 Respondent raised VAT default assessments amounting to Kshs. 4,514,690.48 after establishing that the Appellant had failed to file VAT self- assessment returns for December 2024, January 2025 and February 2025. 4. The Appellant objected in full to the Respondent’s assessment on 25th April 2025.The Respondent having considered the objection, issued Objection decision on 27th June 2025. 5. Dissatisfied by the Objection decision, the Appellant filed this appeal vide the Notice of appeal dated on 7th August 2025 and filed on 27th August 2025 with leave of the Tribunal. # THE APPEAL 1. The Appeal is premised on the Memorandum of Appeal dated 7 th August 2025 and field on 27th October 2025. The memorandum raised the following grounds of appeal: 1. The Respondent erred in law and fact by confirming the assessment without considering the legitimate VAT inputs for the month of January and February 2025. 2. Provision of Audited Accounts-The appellant had supplied the Respondent with Certified Audited Accounts but the Respondent did not bother to look at the Financial Reports. 3. Ignoring explanations-The appellant had provided several explanations verbally but still the respondent failed to consider the explanations and address them in its decision. 4. The respondent contravened article 47(1) and (2) of the constitution as the appellant was not made aware of the basis of the default assessment. # THE APPELLANT’S CASE 1. In support of the appeal, the Appellant relied on its Statement of facts dated 7th August 2025 and field on 27th August 2025 with no written submissions 2. The Appellant stated that on 27th June 2025 the Respondent issued an objection decision partially allowing the objection lodged against the assessment. 3. The Appellant stated that it raised an objection against the assessments on 25th April 2025 in accordance with Section 51(1) and (2) of the Tax Procedures Act 4. The Appellant stated that the objection was accompanied by objection acknowledgement receipts and a letter setting out the grounds of objection. 5. The Appellant stated that notwithstanding the objection, the Respondent issued an Objection decision on 27th June 2025 confirming the additional assessments. # Appellant’s Prayers 1. The Appellant prayed that the Tribunal; 1. Allows the Appellants Appeal against the unfair Respondent's decision dated 27th June 2025- 2. Refer this case to ADR. 3. Set aside the Respondent's assessment dated 27/05/2025 demanding kshs 1,707,482.48 (exclusive of interest and penalties) 4. Set aside all demand notices issued after the objection decision pending the determination of this case. 5. Conduct a fresh assessment of the Appellant's tax liability, considering all legitimate Inputs. 6. Grant any other relief the Tribunal deems just and equitable. 7. Set aside the notice of case forwarded for distress orders demanding principal tax until this case is heard and determined. # THE RESPONDENT’S CASE 1. The Respondent’s case was premised on its Statement of facts dated 30th September 2025 and filed on even date and its written submissions dated 23rd April 2026 and filed on even date. 2. The Respondent stated that the Appellant is a private limited company engaged in the sale of building materials in Busia and is registered for tax purposes and that it raised VAT default assessments amounting to Kshs. 4,514,690.48 pursuant to Section 29 of the Tax Procedures Act after establishing that the Appellant had failed to file VAT self-assessment returns for December 2024, January 2025 and February 2025. 3. The Respondent stated that the Appellant objected to the default assessments and that, regarding the December 2024 assessment, the Appellant objected on the basis that some of the sales deemed to have occurred during that period were fictitious. 1. The Respondent stated that the Appellant furnished a letter disowning the transactions, an affidavit, and bank statements to demonstrate that no income had been received from the disputed transactions and that it consequently amended the December 2024 assessment in line with the Appellant’s self- amended return since the Appellant had not yet onboarded to eTIMS during the review period. 2. The Respondent stated that for the January 2025 assessment, the Appellant merely lodged an objection without providing grounds or supporting documents and, consequently, the Respondent confirmed the assessment of Kshs. 995,515.45 as issued and that, in respect of the February 2025 assessment, the Appellant objected on the ground that legitimate input tax had been excluded. 3. The Respondent stated that input tax allowed through eTIMS is ordinarily matched to sales declared by suppliers and that where the input tax was not considered, it was because the supplier had failed to declare the sale in eTIMS and that the Appellant was advised to follow up with its suppliers to ensure that the transactions were declared in eTIMS so as to enable the Appellant to claim the input tax. 4. The Respondent stated that it rejected the Appellant’s ground of objection for February 2025 and confirmed the assessment of Kshs. 711,967.03 as issued. The Respondent referred to the Appellant’s objection dated 25th April 2025 and that it subsequently issued an Objection decision dated 27th June 2025 confirming tax payable of Kshs. 1,956,485.18 inclusive of interest and penalties. 5. The Respondent stated that the Appellant, being dissatisfied with the Objection decision, lodged the present appeal and that Section 29 of the Tax Procedures Act empowers the Commissioner to issue default assessments where a taxpayer fails to submit tax returns for a reporting period. 6. The Respondent stated that it relied on Section 29 of the Tax Procedures Act after establishing that the Appellant had failed to file VAT returns for the periods under review and that Section 23(1)(h) of the Tax Procedures Act requires a taxpayer to maintain documents necessary to enable the taxpayer’s liability to be readily ascertained. 7. The Respondent stated that the law obligates every taxpayer to maintain records and avail them to the Respondent whenever required and that the Appellant failed to provide sufficient documents to disprove the default assessments for January and February 2025 and, consequently, the assessments were confirmed. 1. The Respondent stated that the VAT Act prescribes specific documents necessary to establish or disprove a tax liability and that, in the absence of such documents, the Respondent’s assessment remains the correct assessment and that the Appellant merely provided verbal explanations which were not supported by documentary evidence. 2. The Respondent stated that the Appellant could not fail to provide documents and thereafter fault the Respondent for allegedly ignoring unsubmitted documents or explanations and that the Appellant failed to discharge the burden of proof imposed under Section 56 of the Tax Procedures Act, which requires a taxpayer to prove that a tax decision is incorrect. 3. The Respondent stated that the burden of proof may be discharged by producing evidence in support of the taxpayer’s claims or allegations and that the Appellant failed to discharge this burden and, therefore, the Respondent was justified in upholding the January 2025 and February 2025 default assessments. 4. The Respondent stated that it relied on the default assessments, the objection dated 25th April 2025, and the Objection decision dated 27th June 2025 in support of its case and that all its actions were undertaken in accordance with the provisions of the VAT Act and the Tax Procedures Act 5. The Respondent stated that the VAT default assessments were proper and issued in accordance with the applicable statutory provisions and that the Appellant failed to prove that the assessments were erroneous as required under Section 30 of the Tax Appeals Tribunal Act and Section 56 of the Tax Procedures Act. 6. The Respondent stated that the law places the burden of proof upon the Appellant to produce evidence challenging the Respondent’s decision to confirm the assessments. 7. The Respondent submitted that the issue for determination before the Tribunal was whether the demand for Kshs. 1,956,485.18 in VAT inclusive of penalties and interest was justified and that Section 56 of the Tax Procedures Act places the burden upon the taxpayer to prove that an assessment issued by the Commissioner is erroneous or incorrect, particularly in a self-assessment tax system. 1. The Respondent submitted that the evidentiary burden rested upon the Appellant to provide all relevant and sufficient tax records to enable the Respondent ascertain the correct tax liability. 2. The Respondent submitted that Section 59 of the Tax Procedures Act empowers the Commissioner to require a taxpayer to produce documents and furnish information relating to the taxpayer’s liability. 3. The Respondent submitted that Section 43 of the VAT Act obligates every registered person to maintain complete and accurate business records for a period of five years, including tax invoices, purchase invoices, stock records, tax accounts, and other prescribed documents. 4. The Respondent submitted that the Appellant failed to provide sufficient documentation to disprove the default assessments for January and February 2025 and that the assessments were therefore properly confirmed. 5. The Respondent submitted that the Appellant did not file a proper objection against the January 2025 assessment and consequently the taxes demanded for that period amounting to Kshs. 1,144,842.77 remained due and payable. 6. The Respondent submitted that the VAT Act prescribes specific documents required to prove or disprove a tax liability and that until such documents are produced, the Respondent’s assessment remains valid. 7. The Respondent submitted that the Appellant merely offered verbal explanations that were unsupported by documentary evidence and relied on # Joycott General Contractors Limited v Kenya Revenue Authority, TAT **No. 28 of 2018** where the Tribunal held that a taxpayer bears the burden of proving that the Respondent’s assessment is wrong and that unsupported allegations are insufficient to discharge that burden. 1. The Respondent submitted that the principles in **Joycott General Contractors Limited v Kenya Revenue Authority** were directly applicable because the Appellant failed or neglected to provide the documents necessary to support its objection. 1. The Respondent submitted that the issue of taxpayers failing to provide relevant and competent documents has been considered repeatedly by both the Tribunal and the High Court and relied on **Commissioner of Domestic Taxes** # v Trical and Hard Limited (Tax Appeal E146 of 2020) [2022] KEHC 9927 **(KLR)** where the High Court held that the evidential burden remains with the taxpayer unless competent and relevant evidence is produced. 1. The Respondent submitted that, in the absence of the necessary documentation, it was entitled under Section 31(1) of the Tax Procedures Act to apply its best judgment in making the VAT assessment amounting to Kshs. 1,956,485.18 and that this position was upheld in **Acrowood Imports &** # Exports Limited v Commissioner of Domestic Taxes, TAT No. E796 of 2023. 1. The Respondent urged the Tribunal to adopt the foregoing authorities because the Appellant had failed to discharge its evidentiary burden and relied # on Commissioner of Investigations & Enforcement v Dr. Evans Kidero **[2022] eKLR** where the Court held that Kenya’s self-assessment tax system requires taxpayers to maintain records and provide sufficient evidence to support their declarations. 1. The Respondent further relied on **Osho Drapers Limited v Commissioner of Domestic Taxes [2022] eKLR** where the Court held that a taxpayer must produce documents in order to discharge the burden of proof under Tax Procedures and that the Appellant failed to discharge the burden imposed under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act. 1. The Respondent submitted that the VAT assessments issued were lawful, justified, and ought to be upheld. # Respondent’s Prayers 1. Based on the above grounds, the Respondent prayed that: 2. The Tribunal upholds the Objection decision dated 27th June 2025 confirming VAT of Kshs. 1,956,485.18 inclusive of penalties and interest and; 3. Dismisses the Appeal with costs on the ground that it lacks merit. # ISSUE FOR DETERMINATION 1. The Tribunal has considered the parties’ pleadings and submissions, and has identified the issue for its determination: **Whether the Appellant** # discharged its burden of proof that the Objection decision dated 27th **June 2025 was incorrect.** **ANALYSIS AND FINDINGS** 1. Having identified the issue for determination, the Tribunal proceeds to analyse the same as hereunder: - # Whether the Appellant discharged its burden of proof that the Objection decision dated 27th June 2025 was incorrect 1. The Respondent established that the Appellant had failed to file VAT self- assessment returns for December 2024, January 2025 and February 2025. Consequently, the Respondent raised VAT default assessments amounting to Kshs. 4,514,690.48 pursuant to Section 29 of the Tax Procedures Act. The Appellant did not dispute that the returns for the relevant periods had not been filed. The issuance of the default assessments therefore arose from the Appellant’s failure to comply with its statutory obligation to file VAT returns. 2. On 25th April 2025, the Appellant lodged an objection against the default assessments. The Appellant stated that the objection was accompanied by objection acknowledgement receipts and a letter setting out the grounds of objection. However, the Appellant did not demonstrate that all relevant documents necessary to support its objection were submitted to the Respondent. 3. Regarding the December 2024 assessment, the Respondent acknowledged that the Appellant furnished a letter disowning certain transactions, an affidavit and bank statements showing that no income had been received from the disputed transactions. Upon considering those documents, the Respondent amended the December 2024 assessment in accordance with the Appellant’s amended return demonstrating that where the Appellant provided documentary evidence, the Respondent considered the same and granted relief. 4. In respect to the January 2025 assessment, the Respondent indicated that the Appellant merely lodged an objection without providing supporting grounds or documents. The Appellant did not place before the Tribunal any tax invoices, purchase records, sales records, bank statements or accounting records demonstrating that the assessment for January 2025 was erroneous however, the mere assertion that the Respondent failed to consider the Appellant’s position was not accompanied by evidence capable of disproving the assessment. 5. Further, in the February 2025 assessment, the Appellant contended that legitimate input tax had been excluded however, Respondent explained that input tax claims under eTIMS are ordinarily matched against sales declared by suppliers and that the disputed input tax had not been considered because the suppliers had failed to declare the relevant sales. The Appellant was advised to follow up with the suppliers to ensure the transactions were declared in eTIMS however, the Appellant did not provide supplier confirmations, eTIMS records, tax invoices or other documentary evidence showing that the input tax was properly claimable. 1. The Appellant further alleged that it had supplied audited accounts and certified financial reports to the Respondent, nevertheless, no audited accounts, financial statements or supporting schedules were produced before the Tribunal. Similarly, although the Appellant alleged that several verbal explanations had been given to the Respondent, such explanations were not supported by documentary evidence. 2. The Appellant also contended that the Respondent failed to disclose the basis of the default assessments contrary to Article 47 of the Constitution. However, the evidence on record shows that the Respondent explained that the assessments arose from the failure to file VAT returns for December 2024, January 2025 and February 2025. Furthermore, the Objection decision dated 27th June 2025 explained the reasons for confirming the January and February 2025 assessments. 3. On 27 th June 2025, the Respondent issued the objection decision confirming tax payable amounting to Kshs. 1,956,485.18 inclusive of penalties and interest after partially allowing the objection. The reduction of the initial assessment demonstrated that the Respondent considered the documents provided by the Appellant and only maintained the portions of the assessments that remained unsupported. 4. Following the filing of the Appeal on 7th August 2025 and its subsequent filing on 27th August 2025, the Appellant relied solely on its Statement of Facts and did not file written submissions. More importantly, the Appellant did not produce before the Tribunal the alleged audited accounts, tax invoices, supplier records, eTIMS reports, bank statements or any other evidence capable of demonstrating that the Objection decision was erroneous. 5. The Respondent, on the other hand, produced the default assessments and explained the basis upon which the taxes were confirmed. The Respondent also demonstrated that the Appellant failed to provide sufficient documentation to support its objections for January and February 2025. 6. The courts have consistently held that the burden of proving that a tax assessment is incorrect lies with the taxpayer. In Tyrus Muya t/a Specs Industries v Commissioner of Domestic Taxes [2019] eKLR, the High Court held that the taxpayer bears the responsibility of proving that an assessment is excessive or incorrect. Similarly, in CMC Aviation Limited v Crusair Limited (No. 1) [1987] KLR 103, the Court held that pleadings are not evidence and allegations contained in pleadings must be supported by proof. 7. Further, in Trust Bank Limited v Paramount Universal Bank Limited & 2 Others [2009] eKLR, the Court held that submissions and statements by parties cannot substitute evidence. The Appellant’s reliance on verbal explanations and unsupported assertions therefore could not discharge the evidentiary burden. 8. Accordingly, the chronology of events demonstrates that the Appellant only succeeded with respect to the December 2024 assessment because documentary evidence was provided and considered. However, in relation to January 2025 and February 2025, the Appellant failed to produce sufficient evidence to challenge the assessments or the objection decision. 9. In the circumstances, The Tribunal therefore finds that the Appellant failed to discharge the burden imposed under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act and consequently failed to prove that the Objection decision dated 27th June 2025 was incorrect. # FINAL DECISION 1. The upshot of the foregoing is that the Appeal is lacks merit and the Tribunal proceeds to make the following orders: 1. The Appeal be and is hereby dismissed. 2. The Objection Decision dated 27 th June 2025 be and is hereby upheld. 3. Each party shall bear its own costs. 2. It is so ordered # DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY 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: 2026-07-03 13:39:14