https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/152

Suken Builders Ltd v Commissioner of Domestic Taxes (Tax Appeal E823 of 2025) [2026] KETAT 152 (KLR) (2 June 2026) (Judgment) Neutral citation: [2026] KETAT 152 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E823 of 2025 RM Mutuma, Chair, G Ogaga, T Vikiru & JM Malla, Members June 2, 2026 Between Suken Builders Limited Appellant and Commissioner of Domestic Taxes Respondent Judgment Background 1.The Appellant is a limited liability company incorporated in Kenya. Its principal business activity is that of construction. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 460 Laws of Kenya (KRA Act). Under Section 5 (1) of the Act, KRA is an agency of the Government for the collection and receipt of all revenue. For the performance of its function under Subsection (1), the Authority is mandated under Section 5(2) of the Act to administer and enforce all provisions of the written laws as set out in Parts I and II of the First Schedule to the KRA Act to assess, collect, and account for all revenues under those laws. 3.The Respondent issued the Appellant with an additional Value Added Tax (VAT) assessment on 28th May 2025 for the period of December 2024. 4.The Appellant lodged a notice of objection against the assessment on 27th June 2025, and on 2nd July 2025, the Respondent requested the Appellant to validate the Objection. 5.The Respondent averred that the Appellant responded on 7th July 2025, but only submitted a notice of objection and bank statements. 6.On 10th July 2025, the Respondent issued the Appellant with an Invalidation Notice. 7.The Appellant, being dissatisfied with the decision issued by the Respondent filed its Notice of Appeal dated 25th July 2025 on 29th July 2025. The Appeal 8.The Appellant did not file a Memorandum of Appeal. Appellant’s Case 9.The Appellant’s case is premised on the Appellant’s Statement of Facts dated 29th July 2025 and filed on 30th July 2025. The Appellant did not file Written Submissions and its case proceeded based on the pleadings on record. 10.The Appellant stated that on 28th May 2025, the TSO raised additional assessments against December 2024 VAT returns. 11.The Appellant objected to the additional assessment on 27th June 2025. It averred that communication ensued between the Parties however no compromise was achieved. 12.That the Respondent eventually raised an Objection decision on 10th July 2025, stating that the Appellant failed to validate the Objection. 13.That the Appellant has decided to file a notice of intention to appeal on dated 25th July 2025. 14.The Appellant averred that the output VAT assessment of Kshs. 6,091,675 by the Respondent is not correct. 15.The Appellant submitted that the Respondent’s demand for VAT relating to the period December 2024 as per the confirmed assessments has no basis in fact or in law, and prayed that this Honourable Tribunal sets aside the said assessments. Respondent’s Case 16.The Respondent’s case is premised on its Statement of Facts dated 10th March 2026 and filed on 12th March 2026. The Respondent did not file Written Submissions and its case proceeded on the basis of the pleadings on record. 17.The Respondent stated that on 28th May 2025, it issued the Appellant with an additional assessment for Value Added Tax (VAT) for the period of December 2024, amounting to Kshs. 6,091,675.83 in principal tax, plus interest of Kshs 365,500.55, totalling Kshs. 6,457,176.37. 18.That the Appellant lodged a notice of objection against the assessment on 27th June 2025, and on 2nd July 2025, the Respondent requested the Appellant to validate the Objection by providing specific documents: a valid notice of objection, VAT ledgers, sales and purchase ledgers and invoices, proof of payment to suppliers, and bank statements. 19.The Respondent averred that the Appellant responded on 7th July 2025, but only submitted a notice of objection and bank statements. 20.That consequently, on 10th July 2025, the Respondent issued an Invalidation Notice because the Appellant failed to provide the primary records (ledgers and invoices) required to verify the tax position. 21.The Respondent identified the following issues for determination:a)Whether the objection was validly lodged in accordance with Section 51(3) of the Tax Procedures Act, 2015,b)Whether the Appellant has discharged the burden of proof to show the assessment is incorrect. Whether the objection was validly lodged in accordance with section 51(3) of the Tax Procedures Act, 2015, 22.The Respondent contended that under Section 51(3)(c) of the Tax Procedures Act, 2015, a notice of objection is only validly lodged if all relevant documents relating to the objection have been submitted. 23.The Respondent stated that it requested VAT ledgers and purchase invoices to ascertain if the input tax claimed met the strict conditions under Section 17 of the VAT Act, 2013. 24.The Respondent submitted that the Appellant’s failure to provide these documents rendered the objection invalid by operation of law. The Respondent submitted that in the case of Mulherin v Commissioner of Taxation [2013] FCAFC 115 the Federal Court of Australia the Court held that in tax disputes, the tax payer must satisfy the burden of proof to successfully challenge income tax assessments. That the onus is on the taxpayer in proving that an assessment was excessive by adducing positive evidence which demonstrates the taxable income ought to have been levied. Whether the appellant has discharged the burden of proof to show the assessment is incorrect 25.The Respondent maintained that the additional assessment of Kshs 6,091,675.83 is correct and remains due and payable. That under Section 56(1) of the Tax Procedures Act, 2015, the burden of proof lies squarely on the Appellant to demonstrate that an assessment is excessive or erroneous. 26.That by providing only bank statements and withholding primary accounting records like sales/purchase ledgers, the Appellant has failed to provide a factual or legal basis to set aside the assessment. 27.The Respondent referred to the holding in Techno Atom Limited v Commissioner of Domestic Taxes (Tax Appeal 1255 of 2022) [2023] KETAT, where the Honourable Tribunal quoted as follows with approval the finding in Metcash Trading Ltd vs. South Africa Revenue Service & Anor, CCT 2000: -“The burden of proving the Commissioner wrong then rests on the Vendor because VAT is inherently a system of self- assessment based on the vendor‘s own records.”. 28.The Respondent maintained that the Invalidation Notice was issued legally due to the Appellant’s non-compliance with statutory documentation requirements. Respondent’s Prayers 29.The Respondent prayed that the Tribunal: -a)Dismisses the appeal with costs to the Respondent.b)Confirms the VAT assessment for December 2024 as a debt due. Issue For Determination 30.The Tribunal has considered the pleadings made by the Parties, and considers the issue for determination as follows:Whether there is a valid Appeal on record. Analysis And Findings 31.Having identified the issue for determination, the Tribunal proceeds to analyse the same as hereunder. 32.The Tribunal considered the validity of this Appeal under the following two limbs:a)Whether the Appeal is against an appealable decisionb)Whether the Appeal as filed is defective a) Whether the appeal is against an appealable decision 33.The Tribunal examined the decision contained in the letter dated 10th July 2025 and noted that the Respondent in the said letter rejected the Appellant’s Objection as it declared the Objection invalid for its failure to meet the requirements of Section 51(3) of the Tax Procedures Act (TPA). 34.The TPA mandates a taxpayer who disputes a tax decision to first lodge an objection against that tax decision under Section 51 of the Tax Procedures Act before proceeding under any other law. In this regard, Section 51(1) to the TPA provides as follows: -“A taxpayer who wishes to dispute a tax decision shall first lodge an objection against that tax decision under this section before proceeding under any other written law.’’ 35.What constitutes a validly lodged objection is outlined in Section 51(3) of the TPA, and Section 51(4) of the TPA vests in the Commissioner the powers to determine whether a notice of objection is validly lodged. In particular, Section 51(3) and 51(4) of the TPA provide as follows:“ 51.… (3)A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if—(a)the notice of objection states precisely the grounds of objection, the amendments required to be made to correct the decision, and the reasons for the amendments;(b)in relation to an objection to an assessment, the taxpayer has paid the entire amount of tax due under the assessment that is not in dispute or has applied for an extension of time to pay the tax not in dispute under section 33(1); and(c)all the relevant documents relating to the objection have been submitted.(4)Where the Commissioner has determined that a notice of objection lodged by a taxpayer has not been validly lodged, the Commissioner shall within a period of fourteen days notify the taxpayer in writing that the objection has not been validly lodged and request the taxpayer to submit the information specified in the notice within seven days after the date of the notice.” 36.The Tribunal notes that Section 51(4) of the TPA grants the Respondent the discretion to determine and notify a taxpayer who has lodged an objection when a notice of objection has not been validly lodged. In the event that the Respondent declares a notice of objection as not being valid, the legal consequence is that the taxpayer is regarded as not having filed a notice of objection at all and the taxpayer is barred from invoking the jurisdiction of this Tribunal under the Tax Appeals Tribunal (TAT) Act, pursuant to Section 51(1) of the TPA, therefore, the Tribunal lacks jurisdiction to entertain the Appeal. 37.The High Court in the case of Commissioner of Investigations & Enforcement v Vyas t/a Rocon Enterprises (Income Tax Appeal E144 of 2021) [2022] KEHC 16027 (KLR) observed that the Tribunal does not have jurisdiction to entertain decisions that are not appealable decisions when the Court analysed whether the Commissioner’s decision under Section 51(7) of the TPA is an appealable decision. The High Court held: -“ 15.The letter of January 13, 2020 declined the application for a late objection by the respondent under section 51(7) of the TPA. He did not make or communicate his decision in relation to any assessment under section 52 of the Act. 16.The same having not been an objection decision, it could only be challenged by way of judicial review and not appeal to the tribunal. Definitely the tribunal had no jurisdiction to entertain the appeal before it.” 38.The Tribunal notes that the Respondent’s refusal to admit an objection that is not validly lodged is an administrative exercise of discretion under Section 51(4) of the TPA. The Tribunal notes that discretional administrative decisions by the Respondent do not amount to appealable decisions however if the Appellant is aggrieved by such decision, they are entitled to challenge the alleged impropriety or unfairness of the decision through judicial review. 39.Consequently, the Tribunal finds that the invalidation decision that the Appellant appealed against is not an appealable decision, therefore there is no valid Appeal on record. b) Whether the appeal as filed is defective 40.The Tribunal notes that the Appellant received the Respondent’s decision on 10th July 2025 and thereafter filed a Notice of Appeal dated 25th July 2025 on 29th July 2025, accompanied by a Statement of Facts dated 29th July 2025 and filed on 30th July 2025. 41.At the outset, the Tribunal observes a critical procedural deficiency: The Appellant failed to file a memorandum of appeal, which is a mandatory foundational document in proceedings before the Tribunal. 42.The procedure governing appeals to this Tribunal is prescribed under Section 13 of the Tax Appeals Tribunal (TAT) Act. Section 13(1)(b) requires an Appellant to file a notice of appeal within thirty (30) days of receipt of the Commissioner’s decision. In the present case, the Respondent’s decision was received on 10th July 2025, and the Notice of Appeal was filed on 29th July 2025, within the prescribed 30-day window. 43.However, compliance with the timeline for filing the Notice of Appeal is only the first step in constituting a valid appeal. Section 13(2) of the TAT Act further requires that within fourteen (14) days from the date of filing the Notice of Appeal, an Appellant must submit to the Tribunal sufficient copies of the following documents:“ 13.… (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; and(c)the appealable decision; and(d)such other documents as may be necessary to enable the Tribunal to make a decision on the appeal.” 44.The requirements under Section 13(2) are not merely administrative formalities, they are the substantive requirements of a valid appeal. Chief among these is the memorandum of appeal, whose contents are expressly prescribed by Rule 4 of the Tax Appeals Tribunal (Procedure) Rules, 2015, which provides as follows: -“4. Memorandum of appeal (1)A memorandum of appeal referred in rule 3(2) shall—(a)be signed by the appellant;(b)set out concisely under distinct heads, numbered consecutively, the grounds of appeal without argument or narrative:(c)contain an index of all documents in the appeal with number of pages at which they appear; and(d)be accompanied by a copy of the—(i)tax decision; and(ii)notice of appeal. 45.The memorandum of appeal serves a fundamental purpose in the framework of proceedings: it defines the scope of the appeal by setting out the specific grounds upon which the Appellant challenges the Commissioner’s decision, and it anchors all other pleadings, including the statement of facts. Without a memorandum of appeal, the Tribunal is left without the essential document identifying what decision is challenged, on what grounds, and what relief is sought by an appellant. 46.The statement of facts, filed in isolation, is therefore untethered and cannot sustain the appeal on its own. In the absence of a memorandum of appeal, the pleadings are fundamentally incomplete and the appeal cannot be said to have been properly constituted. 47.The consequence of this deficiency is jurisdictional. The Tribunal is guided by the holding of Nyarangi JA in Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] KLR, where the Court of Appeal stated: -“… Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of the proceedings pending other evidence. A court of law downs its tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.” 48.This Tribunal’s jurisdiction to entertain and determine an appeal on its merits is contingent upon the appeal having been validly and properly constituted in accordance with the TAT Act and the TAT (Procedure) Rules, 2015. Where the Appellant has failed to comply with the mandatory requirement to file a memorandum of appeal, a document that goes to the very root of the appeal, the proceedings are not merely irregular, they are defective. 49.Drawing from the above, the Tribunal finds that, in the absence of a memorandum of appeal, there is no valid appeal before the Tribunal. The pleadings are incomplete, the appeal is defective, and the Tribunal consequently lacks the jurisdiction to proceed to determine this matter on its merits. Final Decision 50.The upshot of the above analysis is that the Tribunal finds that the Appeal is incompetent and accordingly proceeds to issue the following orders:a)The Appeal be and is hereby struck out.b)Each party to bear its own costs. 51.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 2ND DAY OF JUNE 2026.……………………………..….ROBERT M. MUTUMACHAIRMAN………………………………GLORIA A. OGAGAMEMBER……..….……..……………..DR. TIMOTHY B. VIKIRUMEMBER………………………………JIMMY M. MALLAMEMBER