'
1. The Appellant is a principal officer appointed under section 13 of the Kenya Revenue Authority Act. The Kenya Revenue Authority (KRA) is an agency of the Government of Kenya mandated with the duty of collection and receipting of all tax revenue and the administration and enforcement of all tax laws set out in parts 1 & 2 of the first schedule to the Act, for purposes of assessing, collecting and accounting for all tax revenues in accordance with those laws.
2. The Respondent is a limited liability company duly incorporated in Kenya and is in the manufacturing sector majoring in the production of Ken Tomato Sauce and Ken Chilli Sauce. It also minors in the production of Joy Mineral Water and Joy Fruit Juice.
3. The Appellant conducted an in-depth analysis of the Respondent’s income records including the bank statements with the aim of determining the correct taxable income from the Respondent.
4. The Appellant established that there were variances between the net income as per the bank deposits compared to declarations made by the Respondent in its returns for both income tax and VAT turnover. The Respondent attributed the variances identified by the Appellant, of kshs 64,755,555/=, to export sales but did not provide documentary evidence to prove that the same were export sales. Consequently, the Appellant established a principal tax of kshs 10,360,889/=.
5. On 09/03/2022, the Appellant assessed the Respondent for additional VAT for the years 2014, 2015, 2016 and 2017 in the sum of kshs 19,309,825/= inclusive of principal VAT interest and penalties. On 25/03/2022, the Respondent lodged a notice of objection against the assessment but it was invalidated by the Appellant on 06/04/2022 for failing to meet the requirements of section 51(3) of the Tax Procedures Act.
6. On 19/04/2022, the Respondent requested for more time to provide the documents and was granted 14 days to submit the relevant supporting documents. Upon receipt and perusal of the documents, the Appellant observed that the Respondent had not objected to the assessment for the year 2014 amounting to a principal amount of kshs 11,091,593/= inclusive of interest and penalties and thereby invalidated the objection through an email dated 03/08/2022.
7. On 18/01/2023, the Appellant issued a confirmation of assessment of the principal tax together with interest and penalties amounting to kshs 19,309,825/= as the Respondent had not paid the undisputed tax for the year 2014. Aggrieved by the said confirmation of assessment, the Respondent appealed to the Tax Appeals Tribunal.
Appeal before the Tax Appeals Tribunal
8. The Respondent (tax payer) raised the following grounds;
a) That the Commissioner erred in law and fact by imposing VAT additional assessment on the tax payer of kshs 19,309,825.00 which was the tax not allowed in the objection.
b) That the Commissioner erred in fact by failing to take into account and to consider that the system generated assessment number KRA202203229471 relating to 2014 was not assessed via the iTax system and it was not possible to lodge a Notice of Objection through the iTax system.
c) That the Commissioner failed to issue an objection decision within the timelines stipulated in law and issued a confirmation of assessment on 18/01/2023.
d) That the Commissioner erred in fact by providing VAT additional assessment on 09/03/2022 for 2014, November 2015, January 2016 and November 2017 which is more than 5 years from the time when the self-assessment was filed, hereby against Tax Procedures Act.
e) That in all circumstances of the case, the tax payer is willing to provide the export invoices for proof that the additional assessments are not payable as per the confirmation of the assessment.
9. The Tribunal found merit in the appeal and gave the following orders;
a) The Appeal be and is hereby allowed.
b) The Respondent’s invalidation decision and confirmation of the tax assessment dated 18/01/2023 be and is hereby set aside.
c) The matter is hereby referred back to the Respondent to consider and render an appropriate objection decision in respect of the Appellant’s notice of objection dated 25/03/2022 within sixty (60) days of the date of delivery of this judgment.
d) Each party to bear its own costs.
10. Aggrieved by that judgment, the Appellant herein appealed to this court, via a Memorandum of Appeal dated 20/12/2024, and raised the following grounds;
a) That the honorable Tribunal erred in law in finding that the Appellant’s Invalidation decision dated 6th April 2022 was improper.
b) That the honorable Tribunal erred in law and fact in finding that the Respondent’s notice of objection was valid.
c) That the honorable Tribunal erred in law and fact in setting aside the Appellant’s Invalidation decision.
d) That the honorable Tribunal erred in law and fact finding that the Appellant’s Invalidation notice denied the Respondent an opportunity to have its Notice of Objection determined on its proper merit.
11. Directions were given that the appeal be canvassed through written submissions and the only submissions on record are for the Appellant. The court proceeded with the appeal after satisfying itself that the Respondent was duly served but did not participate in the appeal.
Appellant’s Submissions
12. The Appellant identified the issues for determination to be;
a) Whether the objection decision was proper and within the confines of the law.
b) Whether the Appellant erred in issuing additional assessments.
13. As to whether the objection decision was proper and within the confines of the law, it was submitted that the Respondent failed to lodge a valid objection even after being granted an additional 14 days to do so. That the Respondent also failed to pay undisputed taxes thus leading to the issuance of a confirmation notice on 18/01/2023 as per the dictates of section 51(4) of the Tax Procedures Act (TPA).
14. The court was asked to bear in mind that the notice of objection was lodged on 25/03/2022 before the amendment of section 51(4) of the TPA by section 44 of the Finance Act, 2022.
15. As to whether the Appellant erred by issuing additional assessments, it was submitted that it was at liberty to make assessments based on information available to it in accordance with section 24(2) of the TPA. That, section 31 of the Tax Procedures Act empowers it to make alterations or additions to original assessments from available information for a reporting period based on the Commissioner’s best judgment.
16. It was submitted that the Respondent did not discharge its burden of proof
under Section 56 (1) of the TPA which places the burden on the tax payer to prove that a tax decision is incorrect. That, under Section 30 of the Tax Appeals Tribunal Act, the tax payer has the burden of proving that the assessment is excessive or that the tax decision should not have been made or should have been made differently.
Duty of Court
17. Section 56(2) of the Tax Procedures Act provides that an appeal to the High Court from the decision of the Tax Appeals Tribunal or to the Court of Appeal is on a question of law only. In John Munuve Mati -vs- Returning Officer Mwingi North Constituency & 2 others [2018] eKLR, the Court of Appeal summarized what amounts to “matters of law” as follows;
“The interpretation or construction of the Constitution, statute or regulations made thereunder or their application to the sets of facts established by the trial Court. As far as facts are concerned, our engagement with them is limited to background and context and to satisfy ourselves, when the issue is raised, whether the conclusions of the trial judge are based on the evidence on record or whether they are so perverse that no reasonable tribunal would have arrived at them. We cannot be drawn into considerations of the credibility of witnesses or which witnesses are more believable than others; by law that is the province of the trial court.”
18. I have considered the grounds of appeal, the statement of facts, the submissions and the entire record, and the issues that arise for determination are;
a) Whether the objection notices dated 23/03/2022 were valid.
b) Whether the Appellant erred by issuing additional assessments.
Analysis & Determination
Whether the objection notices dated 23/03/2022 were valid
19. According to the annextures marked ‘KRA4’ in the Record of Appeal, the taxpayer lodged objection notices dated 25/03/2022 against the additional Value Added Tax (VAT) assessment for the years 2014, 2015, 2016 and 2017. The objection notice for the year 2014 was done in writing while objection notices for 2015, 2016 and 2017 were done in writing and through iTAX.
20. In determining the validity of the said notices, the applicable law at the material time was section 51(4) of the Tax Procedures Act (TPA), 2015 which provided that;
“(4) Where the Commissioner has determined that a notice of objection lodged by a taxpayer has not been validly lodged, the Commissioner shall immediately notify the taxpayer in writing that the objection has not been validly lodged.”
21. Section 51(3) thereof provided for the parameters of a valid objection notice as follows;
“(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; and
(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.
(c)All the relevant documents relating to the objection have been submitted. (This paragraph was introduced by the Finance Act, No. 10 of 2018 hence applicable to this case).
22. In this case, the notices of objection were similar save for the KRA reference numbers and amounts involved. The notice objecting to the 2015 additional assessment states as follows;
“I am writing to you on behalf of Centro food Industries Ltd who is our client in applying for objection to the VAT additional assessment amounting to kshs 4,020,148.08 dated 9th March 2022 reference number “KRA2022032302236”
We make an objection to the VAT additional assessment on the grounds that the sales added of kshs 12,754,280 were exports. This is contrary to the ‘destination principle’ as per the provision of chapter 1.9 of the Organization for Economic Co-operation and Development, International VAT/GST Guidelines which provides that ‘Under the destination principle, exports are not subject to tax with refund of input taxes (that is, “free of VAT or zero-rated”)
The principal VAT of kshs 2,040,684 is not applicable because the resultant VAT should be kshs 0.
We look forward to your timely and positive response.”
23. The Appellant responded to the objection notices through a letter dated 06/04/2022 whereupon it declared them invalid for failure to comply with section 51(3) of the TPA. Further, the Appellant gave the taxpayer 7 days to avail the necessary documents. The taxpayer, through its tax agent, wrote an email to the Appellant on 19/04/2022 requesting for 14 days to avail the documents. The request was granted by the Appellant through an email dated 19/04/2022. Through an email dated 03/08/2022, the Appellant invalidated the objections once more on the ground that the taxpayer had not complied with section 51(3)(b) of the TPA i.e for failing to pay the ‘undisputed’ 2014 VAT assessment.
24. From the chronology of the matter and the exchange of correspondence between the parties, it is evident that the Appellant extended the time within which the taxpayer was to avail the necessary documents in order to comply with section 51(3)(c) of the TPA. It is also evident that the documents were submitted as acknowledged by the Appellant in its email dated 03/08/2022.
25. The bone of contention is whether the 2014 additional VAT assessment was undisputed as alleged by the Appellant. In its second Objection Review via email of 03/08/2022, the Appellant specifically stated; “As per the attached notice of assessment, taxes assessed were from 2014 to 2017, therefore, no objection was raised for 2014 amounting to a principal amount of kshs 11,091,593 inclusive of interest and penalties.”
26. From the annexure marked KRA4 it is evident that the 2014 assessment was objected to via the letter dated 25/03/2022 and the taxpayer’s argument before the Tribunal was that the system generated assessment number KRA202203229471 issued by KRA relating to the period 2014 was not done in the iTAX portal hence it was impossible to lodge a notice of objection through the ITAX. The Tribunal found as a matter of fact that; “..the taxpayer duly lodged its notice of objection in respect of the year 2014 and therefore the Respondent was not justified in finding that the amount assessed for the said year of income was undisputed.”
27. From the totality of the evidence on record, one can see that the Tribunal’s conclusion was based on the evidence before it and as such, the taxpayer did not fail to comply with the provisions of section 51(3)(b) since the tax assessment for 2014 was also in dispute. The objection notices dated 25/03/2022 were therefore valid and the Tribunal did not err in finding as much. Consequently, the invalidation decision dated 06/04/2022 and the resultant confirmation of assessment dated 18/01/2023 are improper.
Whether the Appellant erred by issuing additional assessments
28. Through a letter dated 09/03/2022, the Appellant issued additional assessments for the years 2014, 2015, 2016 and 2017.
29. Section 24 of the TPA provides that;
(1)A person required to submit a tax return under a tax law shall submit the return in the approved form and in the manner prescribed by the Commissioner.
(2) The Commissioner shall not be bound by a tax return or information provided by, or on behalf of, a taxpayer and the Commissioner may assess a taxpayer''s tax liability using any information available to the Commissioner.
30. It is clear from section 24(2) that the Commissioner is not bound by the self-assessed returns of a tax payer.
31. Section 31 of the TPA provides that;
(1) Subject to this section, the Commissioner may amend an assessment (referred to in this section as the “original assessment") by making alterations or additions, from the available information and to the best of the Commissioner''s judgement, to the original assessment of a taxpayer for a reporting period to ensure that;
……………………………………………..
……………………………………………..
(4) The Commissioner may amend an assessment;
(a)in the case of gross or wilful neglect, evasion, or fraud by, or on behalf of, the taxpayer, at any time; or
(b)in any other case, within five years of;
(i)for a self-assessment, the date that the self-assessment taxpayer submitted the self-assessment return to which the self-assessment relates; or
(ii)for any other assessment, the date the Commissioner notified the taxpayer of the assessment:
Provided that in the case of value added tax, the input tax shall be allowable for a deduction within six months after the end of the tax period in which the supply or importation occurred.
32. The determination of this issue depends on the interpretation of the above provision and it is trite that in interpreting tax statutes, the court should do so strictly without leaving room for intendment, implication or presumption as was held in Stanbic Bank Kenya Limited -vs- Kenya Revenue Authority (2009) eKLR. Similarly, in Commissioner of Investigations and Enforcement -vs- Libya Oil Kenya Ltd (Income Tax Appeal E104 of 2021) [2024] KEHC 3624 (KLR) (Commercial and Tax) (15 April 2024), the court stated that; “It is trite that Tax Statutes are to be strictly interpreted and there is no room for imputing that which has not been legislated into statute by Parliament.”
33. In this case, there is no evidence that the additional assessments were made as a result of ‘gross or wilful neglect, evasion, or fraud by, or on behalf of, the taxpayer’ so as to reach a conclusion that the Appellant was at liberty to do the amendment at any time as provided for by section 31(4)(a) of the TPA.
34. Paragraph 4 of the Memorandum of Appeal filed before the Tribunal alludes to the fact that the taxpayer had done a self-assessment of the returns thus bringing the matter within the purview of section 31(4) (b) of the TPA. This section requires the Commissioner to amend an assessment within five years from the date the taxpayer submitted the self-assessment return. There is no evidence of the exact dates that the self-assessments returns were submitted but Section 19 of the VAT Act provide that;
(1) Tax shall be due and payable at the time of supply.
(2)Notwithstanding the provision of subsection (1), a person may defer payment of tax due to a date not later than the twentieth day of the month succeeding that in which the tax became due.
35. Further, section 44 of the VAT Act provides that;
1)Every registered person shall submit a return, in the prescribed form and manner, in respect of each tax period not later than the twentieth day after the end of that period.
36. The interpretation of the above sections in the context of this matter is that for the Appellant to have investigated the taxpayer for the years 2014 to 2017, it means that the taxpayer had done self-assessments for each of those years. Taking 2014 for example, it means that regardless of the month that the self-assessment was done, the Commissioner should have done an amendment/additional assessment by the end of 2019 in order to be within the five-year period dictated by section 31(4)(b)(i) of the TPA. By parity of reasoning, it means that the amendment for the 2015 self-assessment should have been done by the end of 2020, the amendment for the 2016 self-assessment should have been done by the end of 2021 and the amendment for the 2017 self-assessment should have been done by the end of 2022.
37. It emerges then, that, it is only the self-assessment for the year 2017 that is within the five-year period dictated by the law and it is the only one that the Appellant could legally amend or issue an additional assessment.
38. In the circumstances it is my finding that the additional assessments for the years 2014, 2015 and 2016 are time barred.
39. The upshot is that the decision of the TAT is upheld to that extent and this matter be and is hereby remitted back to the Appellant to determine the objection notice with regard to the self-assessment for the year 2017 only.
40. The respondent will have the costs of this appeal.
41. Orders accordingly
Dated, signed and delivered via CTS this 24th October 2025
Mumbua T Matheka
Judge
'
1. The Appellant is a principal officer appointed under section 13 of the Kenya Revenue Authority Act. The Kenya Revenue Authority (KRA) is an agency of the Government of Kenya mandated with the duty of collection and receipting of all tax revenue and the administration and enforcement of all tax laws set out in parts 1 & 2 of the first schedule to the Act, for purposes of assessing, collecting and accounting for all tax revenues in accordance with those laws.
2. The Respondent is a limited liability company duly incorporated in Kenya and is in the manufacturing sector majoring in the production of Ken Tomato Sauce and Ken Chilli Sauce. It also minors in the production of Joy Mineral Water and Joy Fruit Juice.
3. The Appellant conducted an in-depth analysis of the Respondent’s income records including the bank statements with the aim of determining the correct taxable income from the Respondent.
4. The Appellant established that there were variances between the net income as per the bank deposits compared to declarations made by the Respondent in its returns for both income tax and VAT turnover. The Respondent attributed the variances identified by the Appellant, of kshs 64,755,555/=, to export sales but did not provide documentary evidence to prove that the same were export sales. Consequently, the Appellant established a principal tax of kshs 10,360,889/=.
5. On 09/03/2022, the Appellant assessed the Respondent for additional VAT for the years 2014, 2015, 2016 and 2017 in the sum of kshs 19,309,825/= inclusive of principal VAT interest and penalties. On 25/03/2022, the Respondent lodged a notice of objection against the assessment but it was invalidated by the Appellant on 06/04/2022 for failing to meet the requirements of section 51(3) of the Tax Procedures Act.
6. On 19/04/2022, the Respondent requested for more time to provide the documents and was granted 14 days to submit the relevant supporting documents. Upon receipt and perusal of the documents, the Appellant observed that the Respondent had not objected to the assessment for the year 2014 amounting to a principal amount of kshs 11,091,593/= inclusive of interest and penalties and thereby invalidated the objection through an email dated 03/08/2022.
7. On 18/01/2023, the Appellant issued a confirmation of assessment of the principal tax together with interest and penalties amounting to kshs 19,309,825/= as the Respondent had not paid the undisputed tax for the year 2014. Aggrieved by the said confirmation of assessment, the Respondent appealed to the Tax Appeals Tribunal.
Appeal before the Tax Appeals Tribunal
8. The Respondent (tax payer) raised the following grounds;
a) That the Commissioner erred in law and fact by imposing VAT additional assessment on the tax payer of kshs 19,309,825.00 which was the tax not allowed in the objection.
b) That the Commissioner erred in fact by failing to take into account and to consider that the system generated assessment number KRA202203229471 relating to 2014 was not assessed via the iTax system and it was not possible to lodge a Notice of Objection through the iTax system.
c) That the Commissioner failed to issue an objection decision within the timelines stipulated in law and issued a confirmation of assessment on 18/01/2023.
d) That the Commissioner erred in fact by providing VAT additional assessment on 09/03/2022 for 2014, November 2015, January 2016 and November 2017 which is more than 5 years from the time when the self-assessment was filed, hereby against Tax Procedures Act.
e) That in all circumstances of the case, the tax payer is willing to provide the export invoices for proof that the additional assessments are not payable as per the confirmation of the assessment.
9. The Tribunal found merit in the appeal and gave the following orders;
a) The Appeal be and is hereby allowed.
b) The Respondent’s invalidation decision and confirmation of the tax assessment dated 18/01/2023 be and is hereby set aside.
c) The matter is hereby referred back to the Respondent to consider and render an appropriate objection decision in respect of the Appellant’s notice of objection dated 25/03/2022 within sixty (60) days of the date of delivery of this judgment.
d) Each party to bear its own costs.
10. Aggrieved by that judgment, the Appellant herein appealed to this court, via a Memorandum of Appeal dated 20/12/2024, and raised the following grounds;
a) That the honorable Tribunal erred in law in finding that the Appellant’s Invalidation decision dated 6th April 2022 was improper.
b) That the honorable Tribunal erred in law and fact in finding that the Respondent’s notice of objection was valid.
c) That the honorable Tribunal erred in law and fact in setting aside the Appellant’s Invalidation decision.
d) That the honorable Tribunal erred in law and fact finding that the Appellant’s Invalidation notice denied the Respondent an opportunity to have its Notice of Objection determined on its proper merit.
11. Directions were given that the appeal be canvassed through written submissions and the only submissions on record are for the Appellant. The court proceeded with the appeal after satisfying itself that the Respondent was duly served but did not participate in the appeal.
Appellant’s Submissions
12. The Appellant identified the issues for determination to be;
a) Whether the objection decision was proper and within the confines of the law.
b) Whether the Appellant erred in issuing additional assessments.
13. As to whether the objection decision was proper and within the confines of the law, it was submitted that the Respondent failed to lodge a valid objection even after being granted an additional 14 days to do so. That the Respondent also failed to pay undisputed taxes thus leading to the issuance of a confirmation notice on 18/01/2023 as per the dictates of section 51(4) of the Tax Procedures Act (TPA).
14. The court was asked to bear in mind that the notice of objection was lodged on 25/03/2022 before the amendment of section 51(4) of the TPA by section 44 of the Finance Act, 2022.
15. As to whether the Appellant erred by issuing additional assessments, it was submitted that it was at liberty to make assessments based on information available to it in accordance with section 24(2) of the TPA. That, section 31 of the Tax Procedures Act empowers it to make alterations or additions to original assessments from available information for a reporting period based on the Commissioner’s best judgment.
16. It was submitted that the Respondent did not discharge its burden of proof
under Section 56 (1) of the TPA which places the burden on the tax payer to prove that a tax decision is incorrect. That, under Section 30 of the Tax Appeals Tribunal Act, the tax payer has the burden of proving that the assessment is excessive or that the tax decision should not have been made or should have been made differently.
Duty of Court
17. Section 56(2) of the Tax Procedures Act provides that an appeal to the High Court from the decision of the Tax Appeals Tribunal or to the Court of Appeal is on a question of law only. In John Munuve Mati -vs- Returning Officer Mwingi North Constituency & 2 others [2018] eKLR, the Court of Appeal summarized what amounts to “matters of law” as follows;
“The interpretation or construction of the Constitution, statute or regulations made thereunder or their application to the sets of facts established by the trial Court. As far as facts are concerned, our engagement with them is limited to background and context and to satisfy ourselves, when the issue is raised, whether the conclusions of the trial judge are based on the evidence on record or whether they are so perverse that no reasonable tribunal would have arrived at them. We cannot be drawn into considerations of the credibility of witnesses or which witnesses are more believable than others; by law that is the province of the trial court.”
18. I have considered the grounds of appeal, the statement of facts, the submissions and the entire record, and the issues that arise for determination are;
a) Whether the objection notices dated 23/03/2022 were valid.
b) Whether the Appellant erred by issuing additional assessments.
Analysis & Determination
Whether the objection notices dated 23/03/2022 were valid
19. According to the annextures marked ‘KRA4’ in the Record of Appeal, the taxpayer lodged objection notices dated 25/03/2022 against the additional Value Added Tax (VAT) assessment for the years 2014, 2015, 2016 and 2017. The objection notice for the year 2014 was done in writing while objection notices for 2015, 2016 and 2017 were done in writing and through iTAX.
20. In determining the validity of the said notices, the applicable law at the material time was section 51(4) of the Tax Procedures Act (TPA), 2015 which provided that;
“(4) Where the Commissioner has determined that a notice of objection lodged by a taxpayer has not been validly lodged, the Commissioner shall immediately notify the taxpayer in writing that the objection has not been validly lodged.”
21. Section 51(3) thereof provided for the parameters of a valid objection notice as follows;
“(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; and
(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.
(c)All the relevant documents relating to the objection have been submitted. (This paragraph was introduced by the Finance Act, No. 10 of 2018 hence applicable to this case).
22. In this case, the notices of objection were similar save for the KRA reference numbers and amounts involved. The notice objecting to the 2015 additional assessment states as follows;
“I am writing to you on behalf of Centro food Industries Ltd who is our client in applying for objection to the VAT additional assessment amounting to kshs 4,020,148.08 dated 9th March 2022 reference number “KRA2022032302236”
We make an objection to the VAT additional assessment on the grounds that the sales added of kshs 12,754,280 were exports. This is contrary to the ‘destination principle’ as per the provision of chapter 1.9 of the Organization for Economic Co-operation and Development, International VAT/GST Guidelines which provides that ‘Under the destination principle, exports are not subject to tax with refund of input taxes (that is, “free of VAT or zero-rated”)
The principal VAT of kshs 2,040,684 is not applicable because the resultant VAT should be kshs 0.
We look forward to your timely and positive response.”
23. The Appellant responded to the objection notices through a letter dated 06/04/2022 whereupon it declared them invalid for failure to comply with section 51(3) of the TPA. Further, the Appellant gave the taxpayer 7 days to avail the necessary documents. The taxpayer, through its tax agent, wrote an email to the Appellant on 19/04/2022 requesting for 14 days to avail the documents. The request was granted by the Appellant through an email dated 19/04/2022. Through an email dated 03/08/2022, the Appellant invalidated the objections once more on the ground that the taxpayer had not complied with section 51(3)(b) of the TPA i.e for failing to pay the ‘undisputed’ 2014 VAT assessment.
24. From the chronology of the matter and the exchange of correspondence between the parties, it is evident that the Appellant extended the time within which the taxpayer was to avail the necessary documents in order to comply with section 51(3)(c) of the TPA. It is also evident that the documents were submitted as acknowledged by the Appellant in its email dated 03/08/2022.
25. The bone of contention is whether the 2014 additional VAT assessment was undisputed as alleged by the Appellant. In its second Objection Review via email of 03/08/2022, the Appellant specifically stated; “As per the attached notice of assessment, taxes assessed were from 2014 to 2017, therefore, no objection was raised for 2014 amounting to a principal amount of kshs 11,091,593 inclusive of interest and penalties.”
26. From the annexure marked KRA4 it is evident that the 2014 assessment was objected to via the letter dated 25/03/2022 and the taxpayer’s argument before the Tribunal was that the system generated assessment number KRA202203229471 issued by KRA relating to the period 2014 was not done in the iTAX portal hence it was impossible to lodge a notice of objection through the ITAX. The Tribunal found as a matter of fact that; “..the taxpayer duly lodged its notice of objection in respect of the year 2014 and therefore the Respondent was not justified in finding that the amount assessed for the said year of income was undisputed.”
27. From the totality of the evidence on record, one can see that the Tribunal’s conclusion was based on the evidence before it and as such, the taxpayer did not fail to comply with the provisions of section 51(3)(b) since the tax assessment for 2014 was also in dispute. The objection notices dated 25/03/2022 were therefore valid and the Tribunal did not err in finding as much. Consequently, the invalidation decision dated 06/04/2022 and the resultant confirmation of assessment dated 18/01/2023 are improper.
Whether the Appellant erred by issuing additional assessments
28. Through a letter dated 09/03/2022, the Appellant issued additional assessments for the years 2014, 2015, 2016 and 2017.
29. Section 24 of the TPA provides that;
(1)A person required to submit a tax return under a tax law shall submit the return in the approved form and in the manner prescribed by the Commissioner.
(2) The Commissioner shall not be bound by a tax return or information provided by, or on behalf of, a taxpayer and the Commissioner may assess a taxpayer''s tax liability using any information available to the Commissioner.
30. It is clear from section 24(2) that the Commissioner is not bound by the self-assessed returns of a tax payer.
31. Section 31 of the TPA provides that;
(1) Subject to this section, the Commissioner may amend an assessment (referred to in this section as the “original assessment") by making alterations or additions, from the available information and to the best of the Commissioner''s judgement, to the original assessment of a taxpayer for a reporting period to ensure that;
……………………………………………..
……………………………………………..
(4) The Commissioner may amend an assessment;
(a)in the case of gross or wilful neglect, evasion, or fraud by, or on behalf of, the taxpayer, at any time; or
(b)in any other case, within five years of;
(i)for a self-assessment, the date that the self-assessment taxpayer submitted the self-assessment return to which the self-assessment relates; or
(ii)for any other assessment, the date the Commissioner notified the taxpayer of the assessment:
Provided that in the case of value added tax, the input tax shall be allowable for a deduction within six months after the end of the tax period in which the supply or importation occurred.
32. The determination of this issue depends on the interpretation of the above provision and it is trite that in interpreting tax statutes, the court should do so strictly without leaving room for intendment, implication or presumption as was held in Stanbic Bank Kenya Limited -vs- Kenya Revenue Authority (2009) eKLR. Similarly, in Commissioner of Investigations and Enforcement -vs- Libya Oil Kenya Ltd (Income Tax Appeal E104 of 2021) [2024] KEHC 3624 (KLR) (Commercial and Tax) (15 April 2024), the court stated that; “It is trite that Tax Statutes are to be strictly interpreted and there is no room for imputing that which has not been legislated into statute by Parliament.”
33. In this case, there is no evidence that the additional assessments were made as a result of ‘gross or wilful neglect, evasion, or fraud by, or on behalf of, the taxpayer’ so as to reach a conclusion that the Appellant was at liberty to do the amendment at any time as provided for by section 31(4)(a) of the TPA.
34. Paragraph 4 of the Memorandum of Appeal filed before the Tribunal alludes to the fact that the taxpayer had done a self-assessment of the returns thus bringing the matter within the purview of section 31(4) (b) of the TPA. This section requires the Commissioner to amend an assessment within five years from the date the taxpayer submitted the self-assessment return. There is no evidence of the exact dates that the self-assessments returns were submitted but Section 19 of the VAT Act provide that;
(1) Tax shall be due and payable at the time of supply.
(2)Notwithstanding the provision of subsection (1), a person may defer payment of tax due to a date not later than the twentieth day of the month succeeding that in which the tax became due.
35. Further, section 44 of the VAT Act provides that;
1)Every registered person shall submit a return, in the prescribed form and manner, in respect of each tax period not later than the twentieth day after the end of that period.
36. The interpretation of the above sections in the context of this matter is that for the Appellant to have investigated the taxpayer for the years 2014 to 2017, it means that the taxpayer had done self-assessments for each of those years. Taking 2014 for example, it means that regardless of the month that the self-assessment was done, the Commissioner should have done an amendment/additional assessment by the end of 2019 in order to be within the five-year period dictated by section 31(4)(b)(i) of the TPA. By parity of reasoning, it means that the amendment for the 2015 self-assessment should have been done by the end of 2020, the amendment for the 2016 self-assessment should have been done by the end of 2021 and the amendment for the 2017 self-assessment should have been done by the end of 2022.
37. It emerges then, that, it is only the self-assessment for the year 2017 that is within the five-year period dictated by the law and it is the only one that the Appellant could legally amend or issue an additional assessment.
38. In the circumstances it is my finding that the additional assessments for the years 2014, 2015 and 2016 are time barred.
39. The upshot is that the decision of the TAT is upheld to that extent and this matter be and is hereby remitted back to the Appellant to determine the objection notice with regard to the self-assessment for the year 2017 only.
40. The respondent will have the costs of this appeal.
41. Orders accordingly
Dated, signed and delivered via CTS this 24th October 2025
Mumbua T Matheka
Judge
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