[2024] KETAT 572 (KLR)

Uzuri Foods Limited v Commissioner Customs And Border Control (Tax Appeal E001 of 2023) [2024] KETAT 572 (KLR) (22 March 2024) (Judgment)

Neutral citation: [2024] KETAT 572 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E001 of 2023

CA Muga, Chair, BK Terer, D.K Ngala, GA Kashindi & SS Ololchike, Members

March 22, 2024

Between

Uzuri Foods Limited

Appellant

and

Commissioner Customs And Border Control

Respondent

Judgment

Background 1. The Appellant is a limited liability company incorporated in Kenya and carrying out the business of manufacturing.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of the laws of Kenya. Under Section 5(1) of the Act, the Respondent 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 performance of its functions under subsection (1), the Respondent is mandated to administer and enforce all provisions of the written laws as set out in Parts 1 & 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 purchased Estonian and Lithuanian milling wheat in bulk from Holbud ltd sometime in May, 2010. The customs value of the consignment was Kshs 21,902,016. 44 and the import duty assessed at 25% was 5,475,504. 00. Page 1

4. On 12th July 2010, the Appellant paid Kshs 5,968,297. 00 inclusive of Import Declaration Fees (IDF) of Kshs 492,793. 00.

5. A second consignment was for customs value of Kshs 50,587,386. 90 where import duty was assessed at the rate of 25% amounting to Kshs 12,646,847. 00. The Appellant on 14th July 2010 paid Kshs 13,780. 060. 00 inclusive of IDF of Kshs 1,138,213. 00. 00.

6. The Respondent vide a letter dated 30th July, 2010 issued a demand for payment of under-declared revenue for the two consignments amounting to Kshs 7,243,948. 00. The Respondent indicated in the letter that whereas Legal Notice No. EAC/8/2009 dated 2nd July 2009 had stayed the application of duty in the East Africa Community Common External Tariff (EACCET) and applied the rate of 25% for the period of one year, the stay had lapsed on 30th June 2010 and the rate automatically reverted to 35%.

7. On 30th August 2010, the Appellant paid additional import duty of Kshs 7,243,948. 00 to avoid enforcement measures as stated in the Respondent’s letter of 30th July, 2010.

8. Sometime in October 2010, the Appellant realized that whereas it had paid the import duty at 35%, in fact as per Legal Notice No. EAC/12/2010 dated June 2010 published in the East African Community Gazette the Council of Ministers had approved a remission of import duty on wheat grain from 35% to 10% for a period of one year with effect from 1st July 2010.

9. Having noted that there was a remission of duty to 10% at the time when the goods were entered, the Appellant applied for a refund of duty on 25th October, 2010 for an amount of Kshs 18,117,358. 67.

10. The Appellant made a follow-up of its application vide a letter dated 1st August 2014 where vide a letter dated 10th September,2014 the Respondent advised the Appellant to lodge its claim through the Region where the goods were cleared.

11. The Appellant sent another reminder on 28th September 2021 after which the Respondent issued a decision rejecting the Appellant’s claim vide its letter dated 12th October, 2021 stating that the request did not conform to the provisions of Section 144 of EACCMA.

12. The Appellant applied for a review of the decision vide its review application letter dated 12th November 2021.

13. By a letter dated 20th January 2022, the Respondent alleged that the Appellant’s letters dated 25th October 2010 applying for refunds were received on 29th June 2021. The Appellant replied to the Respondent’s issues raised in the said letter through its letter dated 17th February, 2022. The Appellant engaged the Respondent through several correspondence and vide a letter dated 9th December, 2022, the Respondent issued a decision rejecting the Appellant’s application.

14. Aggrieved by the Respondent’s decision the Appellant filed its Notice of Appeal dated 5th January, 2023 on even date.Page 3

15. The Appeal is premised on the following grounds of Appeal as stated in the Appellant’s Memorandum of Appeal dated 19th January 2023 and filed on even date:a.That the Respondent erred and misdirected itself in denying the Appellant funds that are lawfully due to it.b.That the Respondent erred in law and a decision on the Appellant’s application for review when the statutory period of thirty (30) days for making a decision had lapsed and as such, the application was deemed to have been allowed by operation of law as provided by Section 229(5) of the East African Community Customs Management Act,2004 (hereinafter ‘EACCMA’).c.That the Respondent erred and misdirected itself in failing to appreciate that Section 144(3) of EACCMA is a valid basis for a refund.d.That the Respondent erred in law and misdirected itself in misinterpreting Section 2 (2) (a) of the EACCMA.e.That the Respondent erred in law and misdirected itself in failing to take cognizance of the provisions of Section 120(1) of the EACCMA as to the applicable duty rates.f.That the Respondent erred in law and fact by failing to appreciate that the Appellant provided sufficient evidence of its entitlement to the tax refund claimed.g.That the Respondent’s rejection of the Appellant’s application for refund is in breach of the Appellant’s legitimate expectation.g.That the Respondent’s rejection of the Appellant’s application for refund is in breach of the Appellant’s right to property and fair administration and right as guaranteed under Article 47 and 40 of the Constitution of Kenya, 2010 (the Constitution).

The Appellant’s Case 16. The Appellant’s case is premised on its Statement of Facts dated and filed on the 19th January, 2023.

17. The Appellant stated that it made an application for a refund under Section 144 (3) of the EACCMA the basis of which is that on 29th June 2010, Legal Notice No. EAC/12/2010 was published in the EAC Gazette Vol.AT 1-No. 055 which indicated that in exercise of the powers conferred on it under Section 140 of EACCMA the East African Community (hereinafter ‘EAC’) Council of Ministers had approved a remission of import duty for wheat grain under HS Codes 1001. 9.20 and 1001. 90. 90 from 35% to 10% for a period of one year effective 1st July 2010 to 30 June 2011.

18. The Appellant stated that it imported two consignments of wheat which fall under HS Code 1001. 90. 90 and entered them in the Simba system on 9th July 2010 for entry number 2010MSA2351349 and 13th July 2010 for entry No. 2010MSA2355972 following completion of the inspection and clearance procedures.

19. The Appellant averred that it paid import duty at the rate of 25% on both consignments together with IDF amounting to Kshs 19,753,356. 00 and that subsequently the Respondent made a claim for an additional 10% import duty claiming that the applicable rate after 30th June 2010 was 35%. It then paid an additional Kshs 7,243,948. 00 on 30th August 2010 bringing the total amount paid on the two consignments to Kshs 26,992,305. 00.

20. The Appellant averred that since remission had been granted on import duty in respect of the goods, the actual import duty together with IDF that was payable was Kshs 8,874,946. 33, as such it was entitled to a refund of Kshs 18,117,358. 67 as provided under Section 144(3) of EACCMA. It therefore duly made the application for refund from the Respondent on 25th October 2010 for both consignments.

21. The Appellant asserted that it is lawfully entitled to a refund, having made a valid application for refund in accordance with the law. It argued therefore that the Respondent’s decision to deny the Appellant the refund of Kshs 18,177, 358. 63 where remission was provided for has no legal basis and should in the circumstances be overruled and set aside.

22. The Appellant asserted that the timelines within which the Respondent is required to make a decision on the Appellant’s claim should be within a period not exceeding thirty days of receipt of the application for refund as set out in Section 229 of EACCMA.

23. The Appellant provided the following summary of sequence of events to buttress its argument;a.25th October 2010 – Appellant files a claim for refund.b.1st August 2014 – Appellant sends a reminder to the Respondent following several unsuccessful follow-ups by its agents.c.10th September, 2014 – Respondent responds, indicating that the Appellant should comply with Sections 144, despite it having duty complied.d.28th September 2021 – Appellant sends a further reminder following its agents unsuccessfully following up at the Respondents’ offices.e.12th October 2021 – Respondent issues a decision rejecting the claim for a refund.f.12th November 2021 – Appellant sends a letter requesting for a review of the decision i.e. application for review under Section 229(1) of EACCMA.g.12th December 2021 – The thirty (30) day statutory timeline under Section 229 (4) of EACCMA lapses and the application for review is deemed to have been allowed under Section 229(5).h.20th January 2022 – Respondent sends a letter purporting to request for further information from the Appellant.i.17th February 2022 – Appellant responds to the issues raised by the Respondent.j.1st August 2022- Appellant sends a further response as the Respondent failed to respond to the initial letter.k.9th December 2022 – Respondent purports to issue a decision indicating that it would not further progress the Appellant’s claim.

24. The Appellant stated that from the above sequence of events, its claim for a refund was deemed to have been allowed by operation of the law on 12th December 2021 upon lapse of the thirty (30) days provided for the Respondent to make a decision on the application for review made on 12th November 2021.

25. It was the Appellant’s contention that if its letter dated 1st August 2022 was to be taken to have constituted the provision of further information , the decision issued on 9th December 2022 cannot be considered to have been a valid decision under Section 229 of EACCMA since it was made a whole four (4) months after the date when the Appellant provided further information .This had the effect that the Appellant’s claim for a refund was deemed to have been allowed by operation of the law and as such the Respondent ought to refund the Kshs 18,117,358. 67 it claimed.

26. The Appellant contended that in the alternative and without prejudice to the foregoing, even if the Respondent’s decision dated 9th December 2022 was to be considered a valid decision, which it denied, it was based on a misapprehension of Section 2(2) (a) of EACCMA.

27. The Appellant relied on Section 120(1) of EACCMA and Section (2)(2)(a) of EACCMA which provides that import duty shall be paid at the rate in force at the time when the goods liable to such duty are entered for home consumption and that goods shall be deemed to be entered when the entry made and signed by the owner in the prescribed manner is accepted and signed by the proper officer and any duty due or deposit required under this Act in respect of the goods has been paid, or security has been given for compliance with this Act.

28. The Appellant averred that a plain reading of the two Sections clearly implies that the import duty rate applicable is the one in force at the time when goods are entered, that is, when an entry made by the owner of goods is accepted and signed by the proper officer and duty paid in respect of the goods.

29. It reiterated that the goods were entered on 9th July 2010 for entry No.2010MSA2351349 and 13th July 2010 for entry No.2010MSA2355972 and import duty paid on 12th July 2010 and 14th July 2010 respectively, and additional duty paid on 30th August 2010. Section 120(1) of EACCMA specifies that import duty was payable at the rate in force when the goods arrived. In this case, as per legal Notice No. EAC/12/2010 which came into force on 1st July 2010 the applicable rate was 10% owing to the remission granted therein.

30. The Appellant contended that since the goods were entered after 1st July 2010 within the meaning of section 2(2) (a) of EACCMA the rate applicable was 10% and not 35%. As such it argued that the Respondents interpretation of section 2(2) (a) in its decision dated 9th December 2022 is erroneous and the Appellant is entitled to the refund it claimed.

31. The Appellant stated that in its application for refund dated 25th October 2010 it enclosed the following documents for both consignments:a.A summarized analysis of the claims.b.5 sets of completed Form C39. c.A copy of each import entry (2010MSA235149 and 2010MSA2355972).d.Copies of the import duty and IDF payment slips for each consignment.e.Demand letter dated 30th July 2010 seeking payment of additional duty.f.Copies of the payment slips in respect of the additional duty paid for each consignment.g.Copies of the invoices issued by Holbud limited for each consignment.

32. The Appellant argued therefore that from the documents it provided, it was clear that the Appellant had sufficient evidence of the value of the consignments, the entries made on the Simba system, the initial payments made at 25% and the additional payments paid at 10% following the Respondents demand. It subsequently provided a copy of the Legal Notice No. EAC/12/2010 although this was already in the public domain and the Respondent is reasonably considered to have known or taken note of its existence. As such the documents it produced in its refund claim provided sufficient proof of its entitlement to the refund.

33. The Appellant asserted that the EAC Council of Ministers made a representation that there would be a remission of import duty from 35% to 10% on wheat grain. This representation was clear, unambiguous and devoid of any qualification. It however paid import duty at the rate of 25% upon entering the goods in order to have them cleared since the Simba system provided that rate at the time. The Appellant stated that it was compelled to pay the additional duty of 10% which it did as it had no option but to comply or else risk being unnecessarily inconvenienced by the Respondent and its system.

34. The Appellant averred that it had legitimate expectation that it would enjoy the remission granted by the EAC Council of Ministers who are empowered to grant a remission under Section 140 of EACCMA and that the Respondent being the administrator was therefore reasonably expected to comply with the representation of the EAC Council of Ministers and would issue a refund in respect of the duty paid over and above the 10% provided in Legal Notice No. EAC/12/2010.

35. It was the Appellant s assertion that Section 144(3) of EACCMA clearly provided that the Respondent shall refund any import duty paid on goods in respect of which there is a remission in place. It was therefore not available for the Respondent to deny the Appellant the right to enjoy the remission from 35% to 10% which was provided at the time when the import duty was payable.

36. The Appellant referred to Article 47 of the Constitution that provides that every person has the right to fair administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair. It argued that the Respondent has a constitutional duty to act as per the said Article 47 of the Constitution and that its conduct therefore in relation to the Appellant’s application for a refund stands in stark contrast with these obligations.

37. The Appellant stated that firstly, the Respondent was not expeditious or efficient in dealing with the claim for a refund as it neglected the process or otherwise response to the Appellant’s application for a refund despite several follow-ups. The Respondent’s failure to respond to the Appellant’s request in time has caused the Appellant’s refund claim to be pending for over twelve 12 years. Secondly the Appellant stated that the Respondent has acted unlawfully and unreasonably by denying the Appellant a refund that it is entitled to as a matter of law pursuant to Legal Notice No. EAC/12/2010 read together with Section 144(3) of EACCMA.

38. It was the Appellant’s assertion that the Respondent’s actions were also in violation of the Appellant’s right to property which is espoused under Article 40 of the Constitution which provides for the right to property and prohibits the unlawful deprivation of property of any description or any interest in property.

39. The Appellant averred that the definition of property under Article 260 of the Constitution includes any vested or contingent right to or interest arising from money. It argued therefore that the Respondent’s decision to deny the Appellant a refund of import duty which it is lawfully entitled to is in breach of the Appellant’s right to property as envisaged under Article 40 of the Constitution. Further that failure to refund the Kshs 18,117,353. 67 has adversely impacted the Appellant’s business by affecting its liquidity.

Appellant’s Prayers 40. The Appellant prayed for the following orders;a.That this appeal be allowed and the Respondent’s decision dated 9th December, 2022 be set aside in its entirety.b.That an order be issued compelling the Respondent to refund to the Appellant the sum of Kshs 18,117, 358. 67 being import duty paid on goods in respect of which a remission of the duty was in force.c.That the cost of this appeal be borne by the Respondent.d.That the Tribunal be at liberty to grant any other or further remedies that it deems just and reasonable to grant in the circumstances.

The Respondent’s Case 41. In its Statement of Facts dated 17th February 2023 and filed on even date, the Respondent raised a Preliminary Objection and argued that the instant Appeal is fatally defective since the Memorandum of Appeal dated 19th January 2023 against the Respondent’s decision dated 12th October 2021 was filed outside the mandatory provisions of Section 13(b) of the Tax Appeals Tribunal Act, No 40 of 2013(hereinafter ‘TAT’).

42. In its response to the Appellant’s grounds of appeal, the Respondent raised two issues for determination:a.Whether the Appeal is valid having been filed out of time.b.Whether the Respondent erred by rejecting the refund application.

43. The Respondent reiterated its position as stated in the objection decision communicated to the Appellant and averred that whilst the vessel arrived on 16th June 2010 which was within the required timeframe of on or before June 2010 the entries were then registered and paid for after the lapse of the timelines (12th July 2010 and 14th July 2010, respectively). It further posited that Section 2(2)(a) of EACCMA, 2004 provides as follows:“For the purposes of this Act,(a)Goods shall be deemed to be entered when the entry in the prescribed manner is made and lodged by the owner and any duty due or deposit required under this Act in respect of the goods has been paid, or security has been paid or security has been given for compliance with this Act.”

44. The Respondent stated that by the time the Appellant paid the duties due, the stay had lapsed and the applicable rate was 35%. Further, that the Appellant failed to appeal the Respondent’s objection decision on time and as such the instant Appeal is not valid.

45. The Respondent asserted that Section 59(1) of the Tax Procedures Act No. 29 of 2015 (hereinafter ‘TPA’) mandates the Respondent to require the production of documents from a taxpayer for the purposes of obtaining full information. It averred that contrary to the Appellant’s averments; its decision and assessment was rendered in accordance with the law and that taxes outlined in its decision were in conformity with the laws and the same should be upheld.

Respondent’s Prayers 46. The Respondent prayed that the Tribunal would:a.Dismiss the Appeal.b.Uphold the Respondent’s decision dated 12th October 2021. c.Award the Respondent the costs of the Appeal.

Parties’ Submissions 47. In its Written Submissions dated 29th November, 2023 and filed on 30th November 2023 the Appellant raised the following three issues for determinationa.Whether the Appellant’s application for refund was valid and is therefore legally and properly entitled to the refund.b.Whether the Appellant’s refund application of 12th November 2021 was allowed by operation of the law.c.Whether the Appellant’s Appeal was filed out of time.

48. The Appellant reiterated the same arguments it had stated in its Statement of facts. As to whether the Appellant is lawfully entitled to a refund and its application for a refund is valid, the Appellant relied on the case of Mount Kenya Bottlers ltd & 3 others vs Attorney General & 3 others (2019) eKLR where the Court held that;“However, when it comes to interpretation of tax legislation, the statute must be looked at using slightly different lenses. With regard to tax legislation the language imposing the tax must receive strict construction. Judge Rowlett in his decision in Cape Brandy Syndicate vs I.R Commissioners (1921) 1KB (cited by the appellant) expressed the common law position in this area where he stated……In a taxing Act one has to look at what is clearly said .There is no room for any intendment. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.”

49. The Appellant submitted therefore that there is no ambiguity in the provisions of Section 144 of EACCMA as it is clear that there is no restriction in the time within which a taxpayer may make an application for a refund under subsection (3) as alleged by the Respondent in its decision of 12th October 2021. As such the Respondent cannot therefore purport to impose a time limitation and the wordings must receive strict constructions.

50. As to whether the Appellant’s claim for a refund is deemed to have been allowed by operation of the law under Section 229(5) of EACCMA, and as to the Respondent’s preliminary objection claiming that this Appeal is fatally defective for being filed outside the mandatory provisions of Section 13(b) of the TAT the Appellant submitted that this contention by the Respondent is misconceived. It submitted that the Respondent was first required to make a decision on the Appellant’s claim as set out at Section 229 of EACCMA where such decision shall be made within a period not exceeding thirty days of receipt of the application for refund failure to which the Respondent shall be deemed to have made a decision to allow the application.

51. The Appellant relied on the case of Republic vs Commissioner of Customs Services Ex-Parte Unilever Kenya Limited (2012) eKLR, where the Court held that:“My understanding of the above quoted section is that once a taxpayer lodges an application for review, the Commissioner of customs who is the Respondent in this case has 30 days within which to make and communicate a decision to the taxpayer. If the Respondent does not communicate a decision within 30 days, then the respondent “shall be deemed to have made a decision to allow the application”. The law is very clear that it can only be interpreted in one way. The ex-parte applicant lodged an application for review on 8th March, 2011 and provided further information on 16th March 2011 when samples for laboratory tests were taken by the respondent. The 30 days therefore started running from 16th March 2011. The respondent communicated the decision to the ex-parte application on 18th July, 2011. By communicating the decision four months from 16th March, 2011, the respondent was clearly in breach of the provisions of section 229 of EACCMA.I agree with the ex-parte applicant that due to the respondents breach of the clear provisions of section 229, there was no valid decision under section 229(4) EACCMA which the Ex-Parte applicant could have appealed against to the Tax Appeals Tribunal. The letter dated 18th July 2011 came three months late and by writing the letter, the respondent acted in gross violation of Act of Parliament.”

52. The Appellant submitted therefore that its claim for a refund is deemed to have been allowed by operation of the law and as such the Respondent’s contention that this Appeal is fatally defective since it was filed outside the mandatory provisions of Section 13(b) of the TAT is misconceived.

53. It was the Appellant’s submission that the Respondent misinterpreted Section 2(2) (a) of EACCMA and failed to consider Section 120 (1) of EACCMA. The Appellant implored the Tribunal to look at what is clearly said in Section 2(2)(a) and 120 of EACCMA in finding that the Respondent’s decision of 9th December 2022 is misguided.

54. The Appellant submitted that it provided sufficient evidence of its entitlement to the refund claimed and the Respondent subsequently unequivocally acknowledged the Appellant’s refund claim vide the Respondent’s letter dated 12th May, 2023 where the Respondent acknowledged that there was an erroneous demand from the Respondent to the Appellant for under declared revenue on imported wheat at the time and proceeded to advise the Appellant to seek a refund of the overpaid amount being Kshs 18,117, 358. 60.

55. The Appellant relied on the case of Synergy Industrial Credit Limited vs Oxyplus International Limited & 2 others (2021) eKLR where the Court held that:“A clear and unequivocally admission of fact is conclusive, rendering it unnecessary for the one party (in whose favour the admission was made to adduce evidence to prove the admitted fact, and incompetent for the other party, making the admission to adduce evidence to contradict it.It was the Appellant’s submission therefore that the Respondent cannot purport to contradict its clear and unequivocal admission that it made an erroneous demand to the Appellant for under declared revenue on imported wheat.”

56. It was the Appellant’s submission that the Respondent’s decision was in breach of the Appellant’s right to fair administrative action and right to property under Sections 47 and 40 of the Constitution. Further that Article 47 of the Constitution provides that every person has the right to fair administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair.

57. The Appellant relied on the case of Kenya Revenue Authority vs Export Trading Company Limited, (Petition No. 20 of 2020 (E021 of 2020) where the Court stated the following in relation to the Respondent’s obligation when dealing with applications for the refunds;“The common-law, in its evolution has defined the rules of conduct of a public authority taking a public decision, entrusting the overall control-jurisdiction in the hands of the Courts of law, but for Kenya, such general competence of the Courts is now no longer confined to the terms of statute law and subsidiary legislation, but has a fresh underwriting in the Constitution of Kenya, 2010. Article 47 which imposes a duty of fair administrative action, and (Art 10(2)(c) demands “good governance, integrity, transparency and accountability”. From the facts of the instant case, it is clear to this Court that the respondent failed to deal with the applicant’s claim of VAT refund in the context of fairness, transparency, accountability or good governance.”

58. The Appellant also relied on the following cases to buttress the fact that the Respondent has the constitutional duty to act expeditiously, efficiently, lawfully, reasonably and in a manner that is procedurally fair.a.Judicial Service Commission vs Mbalu Mutava & Another (2015) eKLR.b.Tata Chemicals Magadi Ltd vs Commissioner of Domestic Taxes (Large Taxpayers (2014) eKLR.

59. The Appellant submitted that the EAC Council of Ministers are empowered to grant remission under Section 140 of EACCMA which remission in this case was provided through Legal Notice No. EAC/12/2010 where import duty for wheat grain was adjusted from 35% to 10%.It submitted further that having paid duty initially at 25% and an additional 10% imposed by the Respondent, it had legitimate expectation that it would enjoy the remission granted on the consignments and that in accordance with Section 144(3) of EACCMA the Respondent would issue a refund in respect of the duty paid over and above the 10% provided in the Legal Notice No. EAC/12/2010.

60. It submitted that the Respondent’s apparent disregard of the applicable rate of 10% owing to the remission in its decision dated 9th December, 2022 with a view to avoid paying the Appellant’s lawful refund, breaches the latter’s legitimate expectation and right to Fair Administrative Action.

61. The Appellant relied on the case of Kenya Revenue Authority vs Export Trading Company Limited (Petition No 20 of 2020 (E021 OF 2020) where the Supreme Court of Kenya upheld the findings of the court of Appeal and the High Court, that the Kenya Revenue Authority (KRA) acted unfairly in demanding additional taxes and customs duties from the respondent for the importation of rice four years after the importation , which had been imposed at the original rate of 35% as opposed to the reviewed rate of 75% through an error attribution to the KRA’s Tradex Simba system. The Supreme Court in this matter firmly cemented the Administrative Law principle of legitimate expectation, and its connection to the Right to Fair Administrative Action in Kenya Tax Jurisprudence. In its decision, the supreme court held that the taxpayer in this case, the Respondent, had a legitimate expectation to have import duty levied by the revenue collector at the proprietor rates, and the failure to do so by the KRA breached this legitimate expectation.

62. The Appellant concluded its submission by asserting that the Respondent’s decision dated 9th December 2022 declining to refund the Appellant the amount of Kshs 18,117,358. 67 is invalid, erroneous unlawful and in breach of the Appellant’s rights and should not be allowed to stand.

63. The Respondent’s Written Submissions dated 8th December 2023 raised two issues for determination which it analysed as follows:

a. Whether the Respondent erred in rejecting the Appellant’s application for refund. 64. The Respondent submitted that it was not in contention that the taxes may have been paid in error as there was a new Legal Notice EAC/12/2010 in place, however it stated that there is a law governing the refund process. It submitted further that the Appellant was unable to demonstrate the authenticity of the refund application letter dated 25th October, 2010 and other documents attached including Form C.39 which were only signed by the Appellant but did not bear any stamp of the proper officer receiving and approving the same.

65. It was the Respondent’s submission that all documents received by the Authority must be marked with received stamp or signature and name of the receiving officer and that the unstamped and unsigned letter was an afterthought and strategy to claim a refund which was already out of time in the pretence that it had been lodged on time as the Application for refund was made on 1st August 2014.

66. The Respondent submitted that it notified the Appellant vide a letter dated 10th September, 2014 of the process of applying for a refund and that in the said letter, the Appellant was reminded of the timelines for application of the same. The Respondent submitted further that Section 144(2) of EACCMA, 2004 provides for lodgement of a refund claim within 12 months from date of payment of taxes, however the first contact from the Appellant on the same was in 2014 which was already time barred.

67. The Respondent stated that this being a claim for a refund, it has a duty to ensure the Appellant complied with all the requirements under the law including timelines within which to apply for refund. Further that the statute governing the refunds must be interpreted and applied strictly in accordance with rules of interpretation. It submitted that though the Appellant may have been entitled to a refund, the same ought to have been done in accordance with the law and no amount of acquiescence would have justified the Respondent refunding the Appellant outside the stipulated timelines. Further that though the demand may have been erroneous the Respondent had the responsibility to set the record straight and advice the Appellant on the correct procedure of the law in a case where its officers had issued misleading information through a demand.

68. The Respondent submitted that in two instances it declined the Appellant’s application for refund of import duty with clearly stated reasons. In the first instance, vide a letter dated 30th June 2021 it stated the reasons that the Appellant’s request was time barred and contrary to the express provisions of the law, while in the second instance, vide a letter dated 20th January 2022, the Respondent highlighted the issues that made it not possible for the Appellant to be refunded, one being that the Appellant failed to provide sufficient documents and particularly a received document showing that the refund claim was lodged within the statutory timelines.

69. The Respondent relied on the following cases in analysing this issuea.Cape Brandy Syndicate vs Inland Revenue Commissioner (1921) 1KB64b.Law Society of Kenya vs Kenya Revenue Authority & Another (2017) eKLRc.Niazons (K) Ltd vs China Road Bridge Corporation (K) Civil Appeal No 187 of 1999.

b. Whether the Respondent was in breach of the Appellant’s legitimate expectation 70. The Respondent submitted that if the parties were to apply the principles guiding a claim of legitimate expectation, the Appellant’s case would have failed the test because at no point did the Respondent make any promise or representation to the Appellant. It submitted further that at all material time it gave the Appellant guidance on how to proceed, reminding it of the statutory timelines within which they ought to have made the application.

71. It was the Respondent’s submission that it cannot be estopped from performing its statutory duty of collecting taxes on the basis of legitimate expectation. It maintained that it has a statutory duty to collect import duty on goods delivered in or imported into Kenya, as provided under EACCMA.

72. The Respondent submitted and maintained that it cannot confer a right that is not in existence under the law by agreeing to make a refund of an Application which was lodged 4 years from time the error occurred.

73. To buttress its argument, the Respondent relied on the following cases;a.Communication Commission of Kenya & others vs Royal Media Services & 5 others S.C Petition Nos 14,14A 14B and 14C of 2014b.Republic vs Kenya Revenue Authority Ex-Parte Cosmos Limited (2016) eKLR.

Issues For Determination 74. The Tribunal has considered the parties’ pleadings, documentation and the Written submissions and is of the considered view that the Appeal raises three issues for determination.a.Whether the Appeal is properly before the Tribunal.b.Whether the Refund application was proper.c.Whether the Respondent’s decision dated 9th December 2022 is valid.

Analysis And Findings 75. The Tribunal will proceed to analyse the issues as hereinunder:

a. Whether the Appeal is properly before the Tribunal 76. The Respondent had raised a Preliminary objection opposing this Appeal stating that it is fatally defective since the Appellant’s Memorandum of Appeal dated 19th January 2023 against the Respondent’s decision dated 12th October 2021 was filed outside the mandatory provisions of Section 13(b) of the TAT The said Section provides as follows:“A notice of appeal to the Tribunal shall –(b)be submitted to the Tribunal within thirty days upon receipt of the decision of the Commissioner”

77. The Tribunal notes that the letter dated 12th October, 2021 was in response to the Appellant’s letter of 25th September, 2021 which was a follow up of the refund application. The said letter advised the Appellant that the Respondent was not able to progress the Appellant’s request further since it did not fulfil the requirements of Section 144 of EACCMA. However there continued to be an exchange of communication and provision of documents by the Appellant. The Respondent vide a letter dated 9th December, 2022 and in response to the Appellant’s letters dated 1st August 2022 and 3rd October 2022, wrote in part as follows:“We refer to your letter Ref UFL/KRA/280921 dated 1st August, 2022 and subsequent one dated 3rd October 2022, in the absence of more evidence to support the claim, please be advised that we are not able to progress your appeal further due to the following reasons…”

78. After 12th October 2021 the Respondent continued to entertain the Appellant’s letters and documentation dated 1st August and 3rd October, 2022 and therefore the letter dated 9th December, 2022 superseded any earlier correspondence by the Respondent and as such the Tribunal’s finding is that the review decision is encompassed int the said letter dated 9th December, 2022. The Appellant subsequently filed its Appeal on 19th January 2023.

79. Section 230 of the East African Community Customs Management (EACCMA) prescribes timelines within which a person dissatisfied with the Respondent’s decision may file an appeal to the Tribunal. It provides as follows:“230(1)A person dissatisfied with the decision of the Commissioner under section 229 may appeal to a tax appeals tribunal established in accordance with section 231. SUBPARA (2)A person intending to lodge an appeal under this section shall lodge the appeal within forty-five days after being served with the decision, and shall serve a copy of the appeal on the Commissioner.”

79. The Respondent’s review decision was dated 9th December, 2022 and the Appellant’s Memorandum of Appeal was dated 19th January, 2023 which is forty days after being served with the Respondent’s decision hence within the timelines as prescribed under Section 230(2) of EACCMA.

79. It is the Tribunals view that every word of a statute must be given full effect as was held in case of Balwant Singh vs Jadgish Singh(2010 (262)ELT 50(SC) where the Supreme Court of India held as follows:“It is equally settled principle of law that the provisions of a statute, including every word, have to be given full effect, keeping the legislative intent in mind, in order to ensure that the projected object is achieved. In other words, no provisions can be enacted purposelessly.”

79. In view of the foregoing, the Tribunal finds that the Respondent’s Preliminary objection lacks merit as this Appeal is properly before the Tribunal.

(b) Whether the Refund application was proper. 82. It is not in contention that as at the time of entering the consignments on 12th July, 2010 and 14th July 2010 there existed the Legal Notice No EAC/12/2010 dated 29th June , 2010 where the EAC Council of Ministers had approved an import duty remission of wheat grain from 35% to 10%, yet the Respondent vide its letter dated 30th July, 2010 subjected the Appellant’s consignments to import duty at the rate of 35% in total disregard of the Legal Notice No EAC/12/2010.

83. It is notable that in the said letter dated 30th July, 2010 the Respondent referred to an expired Legal Notice namely EAC /8/2009.

83. The Respondent admitted the error at paragraph 12 of its Written submission by stating as follows:“The Respondent submits that it is not in contention that the taxes may have been paid in error as there was a new Legal Notice EAC/12/2010 in place…”

83. From the preceding analysis it is clear that the refund was owed and that the Appellant was not responsible for the Respondent’s inability to adjust the system to reflect and/ or apply the remission rates as amended by the various Legal Notices. It is also not in doubt from the preceding analysis and facts presented by the Appellant that it was entitled to the refund of Kshs. 18,117,358. 67.

83. Under EACCMA, there are protocols to be observed, a set of rules to be followed and procedures that need to be carried out in order for a taxpayer to claim its rights. The Appellant had an obligation to complete the Form C.39 and it did so, within the statutory timeline that was set which is 12 months. The application was drawn on 25th October, 2010.

83. The Tribunal has sighted and reviewed the Appellant’s application for the refund which it adduced as evidence with its pleadings. It could be said that the ineptitude of its staff or agent is to blame for the Appellant’s inability to claim its right. Its staff and/or agent who were responsible to seeing to the execution and completion of the said Form C.39 do not appear to have carried out the duties that were assigned to them to the best of their ability as the said form was improperly completed because the proper officer(s) of the Respondent did not execute the document as required, in the 3 spaces, to confirm that they have checked and found the application to be correct.

88. Section 30 of TAT provides as follows regarding who has the onus to prove that a tax decision ought to have been made differently:“In a proceeding before the Tribunal, the appellant has the burden of proving—a.where an appeal relates to an assessment, that the assessment is excessive; orb.in any other case, that the tax decision should not have been made or should have been made differently.”

89. In addition Section 56 (1) of the TPA provides as follows:“(1)(1) In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”

89. Further, Section 107 of the Evidence Act states as follows:“107. Burden of proof1. 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.2. When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.”

91. The Tribunal relies on the case of Mulherin v Commissioner of Taxationn 12013 FCAFC 115 where the Federal Court of Australia (PFC) held as follows:''A taxpayer must satisfy the burden of proof to successfully challenge income tax assessments. The PFC held that it is not enough for a taxpayer to simply demonstrate that the assessment issued by the Commissioner is incorrect. Rather, the onus is on the taxpayer in proving that an assessment issued by the Commissioner is excessive can only be discharged by the taxpayer by adducing positive evidence which demonstrates the taxable income on which tax ought to have been levied .That onus requires the taxpayer to positively prove his or her 'actual taxable income' and in doing so, must show that the amount of money for which tax is levied by the assessment exceeds the actual substantive liability of the taxpayer. "

92. The Tribunal therefore reiterates that the Appellant, completed a form but did not execute the same as required by law. As already outlined in the above paragraphs, the execution of the Form would have required that it be executed by a proper officer. Accordingly, the Tribunal finds that although the Appellant filled its part in form C.39, it was unable to prove that the same was presented to the Respondent on the said date, that is; 25th October, 2010 or at least a few days after that.

92. The finding of the Tribunal is that the application was not acknowledged by the Respondent as is statutorily required.

92. Accordingly, the finding of the Tribunal on this issue for determination is the refund application was improper.

c. Whether the Respondent’s decision dated 9th December 2022 is valid. 92. In view of the Tribunal’s foregoing finding that the refund application was improper this issue has been rendered moot.

Final Decision 96. The upshot of the foregoing analysis is that the Appeal lacks merit and the Tribunal accordingly proceeds to make the following Orders:a.The Appeal be and is hereby dismissed.b.The Respondent’s review decision dated 9th December, 2022 be and is hereby upheld.c.Each party to bear its own costs.

97. It is so ordered

DATED and DELIVERED at NAIROBI this 22nd Day of March, 2024CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERDELILAH K NGALA - MEMBERGEORGE KASHINDI - MEMBERSPENCER S. OLOLCHIKE- MEMBER