https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/203

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E968/2025 SMARTDUO LIMITED 1st Appellant - Versus - Kenya Revenue Authority 1st Respondent JUDGMENT **BACKGROUND** 1. The Appellant is a company incorporated in Kenya whose principal activity is purchase and sale of electronics 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 conducted a compliance check on the Appellant to validate the purchases claimed for the period May 2024 - December 2024. The Respondent then issued VAT assessment orders dated 20th February 2025 for the period May to December 2024 wherein it demanded the Appellant to pay Kshs 218,389,031.55 being the principal tax. 1. The Appellant being dissatisfied with the Assessment lodged its Notice of Objection on 25th April 2025. The Respondent issued an Objection Decision dated 16th June 2025 wherein it fully disallowed the objection and demanded the Appellant to pay Kshs 247,614,597.51 being the principal tax, penalty and interests. 2. The Appellant being dissatisfied by the objection decision lodged notice of appeal dated 3rd September 2025 and filed on 5th September 2025. It also filed Notice of motion on 5th September 2025 seeking leave to Appeal out of time. By consent, the Appellant was granted leave to file the appeal out of time on 12th September 2025. # THE APPEAL 1. The Appellant lodged its Memorandum of appeal dated 3rd September 2025 and filed on 5th September 2025 wherein the Appellant raised the following ground of appeal: 1. That the Respondent erred in assessing Value Added Tax for the periods 01/05/2024 to 31/05/2024, 01/06/2024 to 30/06/2024, 01/07/2024 to 3/07/2024, 01/08/2024 to 31/08/2024, 01/09/2024 to 30/09/2024, 01/10/2024 to 31/10/2024, 01/11/2024 to 31/11/2024, 01/12/2024 to 31/12/2024 on the basis that the additional assessment for those periods were not true reflection of the company's operations. # THE APPELLANT’S CASE 1. The Appellant relied on its statement of facts dated 3 rd September 2025 and filed on 5th September 2025. It did not file written submissions. 2. In further support of the appeal, the Appellant relied on the following three documents: 3. Assessment orders dated 20th February 2025; 4. Objection application acknowledgement receipts dated 25 th April 2025; 5. Objection decision dated 16th June 2025; # Appellant’s prayer 1. The Appellant prayed that: 1. The appeal be allowed 2. The Tribunal be pleased to set aside the Respondent's confirmed assessment. # THE RESPONDENT’S CASE 1. In opposition to the appeal, the Respondent lodged its Statement of facts dated 5th October 2025 and filed on 7th October 2025 and written submissions dated 30th January 2026 and filed on 3rd March 2026. 2. The Respondent averred that it conducted a compliance check on the Appellant to validate the purchases claimed for the period June 2024 - December 2024 and issued the Appellant with a notice of intention to issue assessments dated 9th September 2024 and 31st January 2025. It stated that the parties also had email correspondence where the Appellant was requested to provide supporting documents which unfortunately were never provided. 3. In issuing its assessment dated 17 th February 2025, the Respondent observed that: # Disallowed input tax - June 2024 to December 2024 1. That a scrutiny of VAT returns revealed local purchases claims amounting to Kshs 1,228,085,491. That In a bid to verify the validity of input tax claimed, letters were sent out to the Appellant’s local suppliers; Hotpoint Appliances, ASL Limited, Kenya Ports Authority, Turea Limited, China Square amongst others who responded in writing disowning the purchases claimed from them. Consequently, input tax of Kshs 196,493,678 claimed from local suppliers was then disallowed. # Undeclared Sales - June 2024 to December 2024 1. The Respondent stated that a comparison was done between sales declared in the Appellant's VAT returns vs purchases claimed by its customers M-Kopa and Infotech and variances were noted amounting to Kshs 136,845,956. The VAT payable was then computed on the variances in line with Section 5 (1)(a) of the Value Added Tax Act Cap 476(VATA) resulting to a tax of Kshs 24,163,023. 1. Based on the foregoing findings, the Respondent recomputed the Appellant’s VAT obligations and issued additional assessments comprising principal tax, penalties, and interest amounting to Kshs. 151,596,001, which amount the Appellant was required to pay. The Appellant thereafter lodged a notice of objection against the assessments. 2. The Respondent subsequently reviewed the Notice of Objection and requested the Appellant vide email sent on 12th May 2025 to provide the following documents in support of its Notice of Objection on or before 13th May 2025. 3. Purchase ledgers for the period under review; 4. Certified copies of the disallowed purchases invoices; 5. Proof of payment of the disallowed payments; 6. Supplier confirmation letters for the disallowed purchases; 7. Delivery notes to support the disallowed purchases; 8. Bank Statements for the period under review; 9. Any other evidence that the purchases invoices were claimed in compliance with Section 17 of the VAT Act; and 10. Any other relevant documents to support the objection. 11. On 14 th May 2025, the Respondent stated that it sent an email to the Appellant indication that it was yet to receive the requested documents for review. The Appellant then responded vide email sent on 14th May 2025 and requested for more time to provide the documents as its accountant was unwell. The Applicant's request was considered and the Applicant was asked to provide the requested documents on or before 26th May 2025 as the matter was already at day 27th of the objection process. The Respondent then issued its Objection Decision dated 16th June 2025 wherein it disallowed the notice of objection. 12. The Respondent in the objection decision noted that the Appellant made sales amounting to Kshs 1,157,385,452.94 based on purchases claimed by customers from its PIN for the period under review. However, the Appellant only declared sales amounting to Kshs 1,020,539,496.78 per self-assessment VAT returns. Therefore, a variance of undeclared sales of Kshs. 136,845,956.16 was charged VAT. 1. The Respondent also noted that purchases amounting to Kshs 1,228,085,491.17 claimed per self-assessment VAT returns were found to be fictitious and the corresponding input VAT disallowed. 2. The Respondent stated that it requested for production of the documents to support the objection via email on 12th May 2025. The Respondent stated that it issued a follow up email were also sent on 14th May and 23rd May 2025 to which the Appellant responded and stated that it was unable to provide the requested documents since its auditor was unwell. However, via email of 26th May 2025, the Appellant stated that it would provide the requested documents by 30th May 2025. 3. According to the Respondent, despite numerous follow ups, the Appellant failed to provide the documents thus it failed to meet the burden of proof set to prove that a tax decision is incorrect as provided in Section 56(1) of the Tax Procedures Act Cap 469B(TPA). Having failed to provide the requested documents for review, the Respondent stated that the Appellant did not prove that the Commissioner's assessments were incorrect. 4. The Commissioner also noted that the purported Appellants suppliers disowned in writing the purchases claimed using their PINS. Therefore, in line with Section 66 of the VATA, on tax avoidance schemes, the Respondent was of the view that it was evident that the Appellant had devised a scheme for tax evasion. In light of the above noted findings, the Appellant's notice of objection was fully rejected leading to this appeal. 5. The Respondent stated that in failing to provide the supporting documents, the Appellant failed to exercise its statutory burden of proof as required under Section 56 (1) of the TPA. 6. The Respondent noted that the Appellant has an obligation under Section 23 of the TPA to keep documents that enable determination of tax liability. The Respondent also averred that the general rule of evidence states that he who alleges must prove. In this regard, it cited Section 107 of the Evidence Act, Cap 80 which provides: 7. *whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.* 8. *When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.* 9. The Respondent asserted that it was clear that the Appellant failed to discharge the burden of proof as stipulated in Section 56(1) of the TPA thus the Appeal is unmerited and should be dismissed with costs to the Respondent. 10. The Respondent submitted that the Appellant's Input VAT claim was not justified, and that the Respondent's Objection Decision dated 16th June 2025 is proper. 11. It cited the case of ***Tarua Scrap Metal Dealers Limited v Commissioner for Domestic Taxes (Tax Appeal Eo53 of 2023) [2024] KETAT 355 (KLR)****; and* ***Commissioner Investigations & Enforcement v Sangyug Enterprises K Limited [2022] eKLR*** to support the position that Section 17 VATA provides the statutory basis to deduct and claim input VAT and that a registered tax payer is entitled to deduct input VAT on taxable purchases but that the same can only be allowed if the taxpayer holds such documentation which documentation includes an original tax invoice issued for the supply or a certified copy. The Respondent asserted that the Appellant failed to provide the documents. 12. The Respondent also relied on the case of ***Afya Xray Centre Limited v Commissioner of Domestic Taxes TAT Appeal No. 70 of 2017;* and *Pearson v Belcher CH.M Inspector of Taxes Tax Cases Volume 38*** to submit that the taxpayer has a duty to provide documents to discharge the burden of proof. 1. It relied on the case of the ***Commissioner for her Majesty's Revenue and Customs TC/2017/02292 Saima Khalid Appellant v The Commissioners for Her Majesty's Respondents Revenue & Customs*** to submit that the Respondent has the power to use available documents to make a decision based on the best judgement. 2. The Respondent cited the case of ***Geoffey Mwanjoria Mwangi v Commissioner of Domestic Taxes TAT No. 331 of 2018*** to support the position that the Respondent is empowered to use available documents to make a decision and where no document is tendered, the Respondent can confirm the assessment. # Respondent’s prayers 1. Based on the foregoing, the Respondent prayed as follows: 2. The objection decision dated 16 th June 2025 demanding for taxes amounting to Kshs 247,614,597.51 being VAT be upheld 3. This Appeal be dismissed with cost to the Respondent as the same is without merit. # ISSUE FOR DETERMINATION 1. The Tribunal has considered the parties’ pleadings and submissions, and has identified the following issue for determination: **Whether the Respondent** # erred in confirming the assessments **ANALYSIS AND FINDINGS** 1. Having identified the issue for determination, the Tribunal proceeds to analyse the same as hereunder: - # a. Whether the Respondent erred in confirming the assessments 1. The Appellant contended that the Respondent erred in issuing and confirming the VAT assessments for the period under review on the basis that the assessments did not reflect the company’s true operations. The Respondent, however, maintained that the assessments were properly raised following a compliance review and that the Appellant failed to provide documentary evidence to support its objection despite several requests and extensions of time. 2. The Tribunal reiterates that in tax matters, the taxpayer has a heavier burden to demonstrate that the Respondent’s decision was incorrect. The law creates a rebuttable presumption that the Respondent’s decision is correct. This legal presumption is provided for under Section 50(1)(a) of the TPA as follows: ## *‘‘50. Conclusiveness of tax decisions* *(1) Except in proceedings under this Part—* 1. *the production of a notice of an assessment or a document under the hand of the Commissioner shall be conclusive evidence of the making of the assessment and that the amount and particulars of the assessment are correct.’’* 2. Section 56(1) of TPA places the burden of proof upon the taxpayer. It provides that: *‘In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.’’* This position has been upheld by this Tribunal and the High Court alike. The Constitutional and Human Rights Court in ***Katambo v Attorney General & another (Petition E532 of 2022) [2023] KEHC 19949 (KLR) (Constitutional and Human Rights) (30 June 2023) (Judgment)*** stated as follows at paragraph 19 of the judgement: *‘‘Section 56(1) falls within Part VIII which provides for Tax Decisions, Objections and Appeals. The provision is applicable in proceedings where a decision has been made and the taxpayer objects to, or appeals against such decision. This being the case, it then falls upon the tax payer challenging a decision or assessment to provide proof that the assessment is not correct. It cannot therefore be argued that placing the burden of proof contravenes the provisions of Articles 49(1)(b) and (d) and 50(2)(a) and (l) of the Constitution.’’* 1. To discharge the burden of proof, the taxpayer has to adduce documents to support its notice of objection and the appeal. The taxpayer is statutorily mandated to keep records to enable determination of tax liability. In this regard, Section 23 (1)(b) of the TPA provides that, *‘‘a person shall—* 1. *maintain any document required under a tax law so as to enable the person's tax liability to be readily ascertained.’’* 2. Section 51(3)(c) of the TPA is key at the objection stage. It provides that: *(3) A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if—* 1. *all the relevant documents relating to the objection have been submitted.* 2. The Appellant was assessed on VAT obligation. Section 43 of the Value Added Tax Act Cap 476 (VATA) mandates the taxpayer to keep records to assist in determining tax liability with regards to VAT. The said law provides as follows: ## *‘‘43. Keeping of records* ***(1)****A person shall, for the purposes of this Act, keep in the course of his business, a full and true written record, whether in electronic form or otherwise, in English or Kiswahili of every transaction he makes and the record shall be kept for a period of five years from the date of the last entry made therein.’’* 1. The duty to adduce documentary evidence and to discharge the burden of proof does not terminate at the objection stage. The Taxpayer upon filing an appeal at the Tribunal, has to prove that the Respondent’s decision was incorrect. In this regard, Section 30 of the Tax Appeals Tribunal Act Cap 469A (TATA) provides as hereunder: *In a proceeding before the Tribunal, the appellant has the burden of proving—* 1. *Where an appeal relates to an assessment, that the assessment is excessive; or* 2. *In any other case, that the tax decision should not have been made or should have been made differently.* 3. The High Court in ***Eldama Technologies Limited v Commissioner of Customs & Border Control (Tax Appeal E200 of 2021) [2023] KEHC 20762 (KLR)*** stated as follows at paragraph 31 of the judgment: *‘’This means that it is the Appellant, as the taxpayer who is expected to surmount the burden of proving that the Commissioner was wrong in its assessment. In this case, the Commissioner raised the assessment due to the failure by the Appellant to produce all documents and records necessary for the audit. I have already found that indeed, the Appellant did not provide all the documents requested by the Commissioner, meaning that it failed to discharge its burden of proof as required by section 30 of the Tax Appeals Tribunal Act, 2013.’’* 1. Section 13(2) of the TATA also mandates the taxpayer to adduce documents that assists this Tribunal to make a just decision. It provides thus: *‘‘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—* 1. *A memorandum of appeal;* 2. *Statements of facts;* 3. *The appealable decision; and* ## *Such other documents as may be necessary to enable the* Tribunal to make a decision on the appeal.’’ (emphasis is ours). 1. Based on the foregoing statutory provisions and judicial authorities, the burden rests upon the taxpayer to provide documentary evidence both at the objection stage and before this Tribunal to demonstrate that the Respondent’s assessment was excessive or erroneous. Where a taxpayer fails to furnish supporting records during objection review and similarly fails to place such evidence before the Tribunal, the taxpayer cannot be said to have discharged the burden imposed under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act. 2. The Tribunal has reviewed the documents filed by the Appellant in support of the appeal. The Appellant only filed the assessment orders, objection acknowledgement receipts, and the objection decision. No invoices, delivery notes, supplier confirmations, payment records, bank statements, purchase ledgers, or any other supporting documents were produced to rebut the Respondent’s findings regarding disallowed input tax and undeclared sales. 3. Rule 5 of the Tax Appeals Tribunal (Procedure) Rules, 2015 requires an appellant to set out with precision the facts relied upon and to specifically refer to documentary or other evidence intended to be relied upon at the hearing. The Rule further requires that such documentary evidence be annexed to the statement of facts. 4. The Appellant’s Statement of Facts does not satisfy the requirements of Rule 5 of the Tax Appeals Tribunal (Procedure) Rules. The Statement merely narrates the chronology of the assessment, objection, and appeal process without providing material facts or documentary evidence capable of demonstrating that the Respondent’s assessment was incorrect. 5. The Tribunal further notes that despite the Respondent having requested supporting documentation during the objection review process and granting the Appellant additional time within which to furnish the same, the Appellant did not provide the requested records. Equally, no such records were availed before the Tribunal during the hearing of the appeal. 6. In the absence of documentary evidence rebutting the Respondent’s findings, the Tribunal is unable to conclude that the assessments were excessive, unlawful, or otherwise erroneous. Mere allegations unsupported by evidence cannot suffice to discharge the statutory burden imposed upon a taxpayer under the applicable tax laws. Consequently, the Tribunal finds that the Appellant failed to prove that the Respondent erred in confirming the assessments. # FINAL DECISION 1. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal lacks merit and makes the following orders: - 2. The Appeal be and is hereby dismissed; 3. The Objection decision dated 16 th June 2025 be and is hereby upheld; 4. Each party to bear its own cost. 5. It is so ordered. # DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JUNE 2026 SIGNED BY/FOR: **★ TH E JUDICIAR Y O F KENY A ★** **HON. ROBERT MUGAMBI MUTUMA (CHAIRPERSON) HON. EUNICE NJERI NGANGA HON. BONIFACE KIBIY TERER DOMINIC KIPKEMOI RONO HON. BILLY GRAHAM OKUMU MIJUNGU** Tax Appeals Tribunal Tribunal Date: 2026-06-03 15:34:30