Background
1. This matter comes before the Court by way of appeal from the decision of the Tax Appeals Tribunal (hereinafter also referred to as “the Tribunal”) delivered on 5th July 2024. The Appellant challenges the Tribunal's findings and seeks to have the same set aside.
2. The Appellant contends that the Tribunal erred both in fact and in law in its determination that the Appellant should process a VAT refund application and pay the same despite the absence of a valid and pending application from the Respondent on the Appellant’s iTax platform.
3. The background of the matter is that the Respondent lodged VAT refund claims for the period August 2014 to June 2018, totaling Kshs. 47,730,804. The claims were however rejected by the Appellant, prompting objections by the Respondent dated 10th November 2021 and 14th February 2022.
4. On 10th June 2022, the Appellant responded to the Respondent’s objection, upholding its rejection of the Respondent’s VAT refund claim, but also referring the matter back to the Respondent’s account manager within the Appellant (Public Sector Division) for further review.
5. The review process took place between 12th July 2022 and 20th October 2022, but no outcome of the process was communicated by the Appellant to the Respondent, despite evidence of the Respondent supplying information and documents requested by the Appellant’s Officers.
6. On 30th April 2023, the Respondent’s tax agent wrote to the Appellant, informing the Appellant that the Respondent’s VAT refund claim had been allowed by operation of law since the Commissioner had failed to ascertain and determine the application within the 90 days allowed under Section 47(3) of the Tax Procedures Act (hereinafter also referred to as “TPA”). The Respondent, vide the same letter, also informed the Appellant that interest was also payable as provided under Section 47(6) of the Act.
7. The Respondent, thereafter, vide its letter of 30th April 2023, wrote to the Appellant enquiring about the delay in crediting the VAT refunds. According to the Respondent, its VAT refund application had been allowed by operation of Section 47(3) of the Tax Appeals Procedure Act, Cap. 469B Laws of Kenya, which deems a refund application automatically allowed where the Commissioner/Appellant fails to ascertain and determine an application within 90 days from the date of lodgment.
8. In response, by letter dated 8th September 2023, the Appellant instead advised the Respondent to reapply through the iTax system. According to the Appellant, the original claims had been rejected and were no longer active in the iTax system for further processing.
9. Dissatisfied with the Appellant’s decision as communicated in the said letter of 8th September 2023, the Respondent appealed to the Tax Appeals Tribunal vide its memorandum of appeal dated 25th September 2023.
10. On 15th July 2024, the Tribunal delivered its judgment in favour of the Respondent, allowing the appeal and directing the Appellant to make the refund of the Respondent’s VAT refund claim pursuant to Section 47(6) of the Tax Procedures Act.
The Appeal
11. Aggrieved by the Tribunal’s decision, the Appellant lodged the instant appeal to this Court, raising the following as grounds of appeal: -
i. That the Tribunal erred in law and fact by incorrectly classifying the Respondent’s letter dated 8th September 2023, as an appealable decision.
ii. The Tribunal erred in law and fact by overlooking the Appellant’s failure to comply with the requirements for lodging a valid appeal.
iii. The Tribunal erred in concluding that the Appellant’s rejection of the VAT refund application was unjustified.
12. The Appeal was canvassed by way of written submissions. The Appellant filed its submissions dated 14th February 2025, whilst the Respondent’s is dated 6th February 2025.
Appellant’s Submissions
13. In its submissions, the Appellant contended that the Tribunal erred in its decision by directing the Appellant to process a non-existent refund application. According to the Appellant, the Objection Decision having been issued on 10th June 2022, rejecting the refund application, there was no valid or pending VAT refund application on its iTax System for consideration. The Appellant asserted that since no reapplication was made by the Respondent on the iTax system as required by law, there was no pending application for the Appellant to determine.
14. It was further the Appellant’s submissions that contrary to the Tribunal’s findings, the Appellant’s letter of 8th September 2023 was not an appealable decision within the meaning of Section 3 of the Tax Procedures Act and could not therefore form the basis of an appeal at the Tribunal. The Appellant submitted that the said letter was merely a response to the Respondent’s inquiry and only advised the Respondent to lodge a VAT refund reapplication.
15. Citing the case of Owners of Motor Vessel “LILIANS” v Caltex Oil (Kenya) Limited 1989, the Appellant submitted that in the absence of an appealable decision, the Tribunal lacked jurisdiction to entertain the appeal since the Respondent failed to comply with the requirements of Section 52 of the Tax Procedures Act, which sets out the legal requirements for lodging a valid appeal at the Tribunal. The Appellant therefore asserted the proceedings at the Tribunal were, in the circumstances, a nullity ab initio.
16. The Appellant concluded its submissions by submitting that its rejection of the Respondent’s VAT refund application was in accordance with the law, followed due process, and no fault can be found with the same.
17. The Appellant therefore urged this Court to find merit in its appeal, set aside the decision of the Tribunal in its entirety, and allow the appeal with costs.
Respondent’s Submissions
18. On its part, the Respondent supported the Tribunal’s decision and urged this Court to sustain the same.
19. The Respondent submitted that the Tribunal was right in its finding that the Appellant’s letter of 10th June 2022 could not, in law, be considered an Objection Decision since it was not final. According to the Appellant, the said letter was clear that the review of the Respondent’s VAT refund application was ongoing and that a refund decision would only be issued once the review was complete.
20. The Respondent further submitted that the Tribunal in its finding that it is the Appellant’s letter of 8th September 2023 that communicated the Appellant’s final position on the matter, and was therefore, the appealable decision as understood under Section 52 (1) and (2) of the Tax Procedures Act as read together with Section 13(1) and (2) of the Tax Appeals Tribunal Act.
21. It was further the Respondent’s submissions that its Objection was deemed allowed by operation of law under Section 51(11) of the Tax Procedures Act since the Appellant failed to deal with the Objection within the 60 days’ statutory period. According to the Respondent, while it objected to the Appellant’s decision vide its letters of 17th November 2021 and 14th February 2022, the Appellant only issued its Objection Decision on 10th June 2022, which was way beyond the 60 days permitted under the law. The Respondent cited, among others, the case of Republic v Commissioner of Domestic Taxes Ex-parte Fleur Investment Ltd [2020] eKLR in support of this argument.
22. The Respondent further submitted that the Tribunal was right in its finding that the Respondent, having supplied to the Appellant additional documents for review between 12th July 2022 and 20th October 2022, the Appellant was expected to issue its Objection Decision by 20th January 2023, in line with Section 47(3) of the Tax Procedures Act.
23. The Respondent concluded by submitting that the instant appeal is a mere academic exercise with no basis at all and urged this Court to dismiss the same, uphold the Tribunal’s decision, and direct the Appellant to effect the VAT Refund in the sum of Kshs. 47,730,804/- pursuant to Section 47(6) of the Tax Procedures Act.
Analysis and Determination
24. This is an appeal from the Tax Appeals Tribunal to this court pursuant to Section 32 of the Tax Appeals Tribunal Act (Cap. 469A), which provides that appeals from the Tribunal lies to the High Court, and that the rules applicable in the High Court are those set out by the Chief Justice. Section 32 of the Tax Appeals Tribunal Act (hereinafter also referred to as “TATA”) provides as follows: -
“32. Appeals to the High Court on decisions of the Tribunal
(1) A party to proceedings before the Tribunal may, within thirty days after being notified of the decision or within such further period as the High Court may allow, appeal to the High Court, and the party so appealing shall serve a copy of the notice of appeal on the other party.
(2) The High Court shall hear appeals made under this section in accordance with rules set out by the Chief Justice.”
25. The Tax Appeals Tribunal (Appeals to the High Court) Rules – Legal Notice No. 226 of 2015 also provides as follows on how to appeal from the Tax Appeal Tribunal to this Court: -
“3. Time for filing of memorandum of appeal
The appellant shall, within thirty days, after the date of service of a notice of appeal under section 32(1), file a memorandum of appeal with the Registrar and serve a copy on the respondent.
8. Filing of statement of facts
The respondent shall file a statement of facts with the Registrar within thirty days of service upon him of the copy of memorandum of appeal by the appellant, during office hours.
15. Admission of other evidence
The Court may, at the time of hearing of an appeal, admit other documentary or oral evidence not contained in the statement of facts of the appellant or respondent should it consider it necessary for determination of the appeal.”
26. From the foregoing, it is clear that in considering appeals from the Tax Appeals Tribunal, this Court is empowered to examine both legal and factual aspects of a case. This includes the discretion to admit additional evidence—whether oral or documentary—where the Court deems such evidence necessary for the just determination of the appeal.
27. It is, however, important to note the apparent statutory tension between the applicable provisions. While Section 32 of the Tax Appeals Tribunal Act (TATA) and the Tax Appeals Tribunal (Appeals to the High Court) Rules grant the High Court jurisdiction to consider both legal and factual issues on appeal, Section 56(2) of the Tax Procedures Act (TPA)—which also governs appeals from the Tribunal—expressly limits such appeals to matters of law only. Section 56 of the TPA provides as follows: –
“56. General provisions relating to objections and appeals
(1) In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.
(2) An appeal to the High Court or to the Court of Appeal shall be on a question of law only.
(3) In an appeal by a taxpayer to the Tribunal, High Court, or Court of Appeal in relation to an appealable decision, the taxpayer shall rely only on the grounds stated in the objection to which the decision relates unless the Tribunal or Court allows the person to add new grounds. [Emphasis added].
28. The foregoing reveals a clear inconsistency in the statutory framework governing the scope of appeals from the Tribunal to this Court. In my view, the resolution lies in the application of the legal principle that a specific provision prevails over a general one where both address the same subject matter. This principle is embodied in the maxim lex specialis derogat legi generali, which dictates that the more specific statute overrides the more general in instances of conflict.
29. In the case of M J v N K & another (2017) eKLR the Court (Ougo J), stated as follows on the issue:
“The doctrine of lex specialis derogate generali is a Latin doctrine that means that the specific law prevails over general law. In Commercial Tax Officer, Rajasthan V M/S Binani Cement Ltd. & Another the Indian Supreme court held that,
‘It is well established that when a general law and a special law dealing with some aspect dealt with by the general law are in question, the rule adopted and applied is one of harmonious construction whereby the general law, to the extent dealt with by the special law, is impliedly repealed. This principle finds its origins in the latin maxim of generalia specialibus non derogant, i.e., general law yields to special law…’
The Supreme Court went on and stated that,
The rule of statutory construction that the specific governs the general is not an absolute rule but is merely a strong indication of statutory meaning that can be overcome by textual indications that point in the other direction. This rule is particularly applicable where the Legislature has enacted a comprehensive scheme and has deliberately targeted specific problems with specific solutions. A subject specific provision relating to a specific, defined and descriptable subject is regarded as an exception to and would prevail over a general provision relating to a broad subject”
30. In the case of Amondi & Co Advocates v County Government of Kisumu [2021] eKLR, the Court, upholding the principle that a more specific law overrides a general law, stated as follows:-
“In my considered opinion, when the provisions of the Advocates Act specify how interest may be awarded on the disbursements and costs, whether by scale or otherwise, it must be deemed that the said provisions oust the more general provisions of the Civil Procedure Act. I so hold because it is a cardinal rule of interpretation that when a statute specifies something as being applicable to matters which the statute applies, the said specification ousts other more generalized statutory provisions. I hold that the provisions of the Civil Procedure Act cannot oust the more specific provisions of the Advocates Act which were enacted to address the issues of Advocates’ costs…...”
31. Applying the aforementioned principle to the present case, it is clear that the Tax Procedures Act is specifically designed to address procedural aspects related to the administration of tax laws. This is evident from its short title, which describes it as “An Act of Parliament to harmonise and consolidate the procedural rules for the administration of tax laws in Kenya, and for connected purposes.”
32. The essence of the TPA, therefore, is to provide the general procedural framework for tax administration, covering aspects such as assessment, collection, objections, and other operational mechanics of the tax system. It sets out the broad rules of engagement between the taxpayer and the tax authority from the initial stages of a tax matter.
33. On the other hand, the Tax Appeals Tribunal Act is specifically enacted "to make provision for the establishment of a Tribunal; for the management and administration of tax appeals, and for connected purposes." This language unequivocally demonstrates that this Act is lex specialis, being the specific law designed to govern the entire appellate process concerning tax disputes. The Act deals with the structure, jurisdiction, procedures, and administration of the Tax Appeals Tribunal itself, and by extension, the specific pathway for taxpayers to challenge tax decisions by the Commissioner before the Appellate bodies, including the High Court.
34. It is instructive to note that it is pursuant to the provisions of Section 32(2) of the Tax Procedures Act that the Honourable Chief Justice promulgated the Tax Appeals Tribunal (Appeals to the High Court) Rules, which prescribe the procedure of tax appeals before this Court.
35. It therefore follows that Section 32 of the Tax Appeals Tribunal Act, as the more specific law governing appeals from the Tribunal to this Court, should prevail. This aligns with the High Court's powers as a first appellate court, which include reconsidering and re-evaluating evidence tendered before the trial court to draw its own conclusions, as enunciated in Selle & another v Associated Motor Boat Co. Ltd & Others [1968] EA, where the court stated: -
“........ An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect..."
36. Again, the Court of Appeal for Eastern Africa in Pandya -vs- Republic [1957] EA 336 is as follows: -
“On a first appeal from a conviction by a Judge or magistrate sitting without a jury the appellant is entitled to have the appellate court’s own consideration and views of the evidence as a whole and its own decision thereon. It has the duty to rehear the case and reconsider the witnesses before the Judge or magistrate with such other material as it may have decided to admit. The appellate court must then make up its own mind not disregarding the judgment appealed from but carefully weighing and considering it. When the question arises which witness is to be believed rather than another and that question turns on manner and demeanor, the appellate court must be guided by the impression made on the Judge or magistrate who saw the witness but there may be other circumstances, quite apart from manner and demeanor which may show whether a statement is credible or not which may warrant a court different.”
37. With the foregoing in mind, I now proceed to re-evaluate the evidence presented by the parties before the Tribunal, assess it afresh, and arrive at my own independent conclusions. In doing so, I remain cognizant of the fact that I did not have the benefit of seeing or hearing the witnesses testify firsthand.
38. Having considered the submissions by the parties, the issues for determination in this case are as follows: -
i. Whether the Respondent’s appeal before the TAT was valid
ii. Whether the Appellant was in law justified in rejecting the Respondent’s VAT claim.
Whether the Respondent’s appeal before the TAT was valid
39. The Appellant in this appeal has taken the position that the Respondent’s appeal before the Tax Appeal Tribunal was premature and incompetent since the letter of 8th September 2023 against which the appeal was based was not an appealable decision within the meaning of Section 52 of the Tax Procedures Act as read together with Section 32 of the Tax Procedures Act.
40. I have carefully perused the record of appeal and note that the Respondent’s letters of objection to the Appellant’s rejection of its VAT refund claims are dated 10th November 2021 and 14th February 2022. I have also established that vide its letter of 10th June 2022, the Appellant responded to the Respondent’s objection, upholding its rejection of the Respondent’s VAT refund claim, but also referring the matter back to the Respondent’s account manager within the Appellant (Public Sector Division) for further review. The Appellant’s letter of 10th June 2022 stated in part that:
“Rejected VAT Refunds
The Domestic Taxes Department rejected your refund application amounting to KES 47,730,804 for the period 2014 to 2018, for failure to provide information that the commissioner had requested you within the set timelines.
Conclusion
In light of the above, the Commissioner was right in rejecting your refund application however, we do acknowledge that the issue at hand requires review of the documentation necessary to process the refunds.
We have transferred the matter back to your account manager (Public Sector Division) to review the information presented and issue a refund decision upon completion of the process.”
41. From the foregoing, it is clear that, contrary to the Appellant’s contention, the letter dated 10th June 2022 did not convey the Appellant’s final determination regarding the Respondent’s objection to the refund decision. As such, it does not qualify as an “Objection Decision” within the meaning of Sections 51 subsections (8), (9), and (10) of the Tax Procedures Act.
42. Section 51 of the Tax Procedures Act is explicit in its requirements: an Objection Decision must contain a statement outlining the findings on the material facts and provide the reasons underpinning the decision. The relevant portion of the section states as follows:-
“8) Where a notice of objection has been validly lodged within time, the Commissioner shall consider the objection and decide either to allow the objection in whole or in part, or disallow it, and Commissioner's decision shall be referred to as an "objection decision".
(9) The Commissioner shall notify in writing the taxpayer of the objection decision and shall take all necessary steps to give effect to the decision, including, in the case of an objection to an assessment, making an amended assessment.
(10) An objection decision shall include a statement of findings on the material facts and the reasons for the decision. [Emphasis added]
43. In addition to the fact that the Appellant’s letter dated 10th June 2022 lacked a statement of findings on the material facts and failed to provide reasons for the decision, I further observe from the record of appeal that the letter was unsigned, rendering it unverifiable and lacking in evidentiary weight.
44. In the circumstances, I find no merit in the Appellant’s contention that the letter dated 10th June 2022 constituted an objection decision capable of being appealed under Section 3 of the Tax Procedures Act. The letter does not meet the statutory threshold required to qualify as such.
45. As for the Appellant’s submission that its letter dated 8th September 2023 was not an appealable decision but merely a piece of correspondence advising the Respondent to reapply for the refund, I respectfully disagree. A plain reading of the contents of that letter reveals that it was, in substance and effect, a communication of the Appellant’s final position on the Respondent’s VAT refund application.
46. Secondly, the record indicates that the Appellant’s letter dated 8th September 2023 was issued in response to the Respondent’s correspondence dated 31st August 2023. This correspondence was itself preceded by several earlier letters from the Respondent—specifically dated 12th July 2022, 20th October 2022, and 30th April 2023—raising the same issue. Notably, the Appellant did not respond to any of those prior communications.
47. Given the circumstances, I find and hold that the Appellant's letter of September 8, 2023, which communicated their final position on the matter, constituted an appealable decision. I therefore uphold the Tribunal's finding on this issue.
Whether the Tribunal erred in directing the Appellant to process the VAT Refunds
48. It's evident from the record that the VAT refund application at the core of these proceedings was initiated by the Respondent and formally acknowledged by the Appellant through these Refund Application Acknowledgement Receipts:
i. KRA201702752547 20th April 2017
ii. KRA201910518761 15th July 2019
iii. KRA201608696167 2nd November 2016
iv. KRA201701104177 17th February 2017
v. KRA201809107707 18th June 2018
vi. KRA201609072970 18th November 2016
49. The VAT refund claims were rejected by the Appellant on 19th April 2020. Following the rejection of the refund claims, the Appellant vide its letter of 10th June 2022 referred the matter back to the Respondent’s account manager (Public Sector Division) for reconsideration. Evidence on record further indicates that on 12th July 2022, the Respondent wrote to the Appellant forwarding invoices, ostensibly, to help resolve the queries the Appellant had on the refund claim. The said letter by the Respondent stated in part as follows:
“We hereby submit Thirteen files with original invoices and Five files with photocopied invoices of Embu Water and Sanitation Company (EWASCO) for the financial periods stated below…”
50. On 23rd September 2022, Ms. Susan Mwiti, an officer of the Appellant, emailed the Respondent to inquire about specific invoices that the Appellant noted still had outstanding queries.
51. The Respondent, on 20th October 2022, through its tax agent, wrote to the Appellant’s officers (Ms. Susan Mwiti) forwarding an “Excel document with clarification on the model of the vehicles the Respondent claimed to have imported”, to clarify any queries the Appellant may have had on the refund application. There is no evidence that the Appellant attended to, or provided any response to clarifications provided by the Respondent in the said mail.
52. It is the view of this Court that the Appellant’s failure to respond to the Respondent’s aforementioned letters can only be interpreted as an indication that the Appellant was satisfied with the explanations and documentation provided therein. Significantly, under Section 47(3) of the Tax Procedures Act, where the Commissioner fails to ascertain and determine a VAT refund application within ninety days, the application is deemed to have been ascertained and approved by operation of law.
53. I concur with the argument that the Appellant’s letter dated 8th September 2023, which invited the Respondent to re-lodge the VAT refund application, was a disingenuous attempt to prompt the Respondent to recommence a process that, in law, had already been concluded by operation of Section 47(3) of the Tax Procedures Act.
54. A reapplication would have resulted in the issuance of a new acknowledgement slip bearing different reference numbers from those initially generated. This, in effect, would have created a fresh and entirely distinct cause of action, thereby compromising the original application, which had already been deemed approved by operation of law.
55. It is the view of this Court that the Respondent’s VAT refund applications did not cease to exist within the iTax system merely by virtue of their initial rejection. The Appellant’s officers retained the view of the same, and a discretion to amend the status of the claims within the iTax system and allow the refund, provided that the Respondent demonstrated sufficient cause to warrant such action.
56. Consequently, I find no merit in the Appellant’s contention that the Tribunal erred in directing it to process a VAT refund application that was allegedly no longer in existence or pending within the iTax system. As previously observed, the application had not been extinguished, and the Appellant retained the capacity to take appropriate administrative action within the system.
57. Before concluding, this Court finds it necessary to underscore that a refund of Value Added Tax (VAT), like any other tax refund, ought only to be granted where it is lawfully due. Such determination must be grounded on the merits of the case and not on procedural technicalities. This position is consistent with the constitutional dictate under Article 210 of the Constitution, which provides that no tax or licensing fee may be imposed, waived, or varied except as authorized by law.
58. In the present matter, save for reliance on technical and procedural arguments, the Appellant has not advanced any persuasive substantive reason to demonstrate that the VAT refunds in issue are not lawfully payable.
59. In the result, this Court finds no justification to interfere with the decision of the Tax Appeals Tribunal.
60. Accordingly, the Appeal is hereby dismissed with costs to the Respondent.
61. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT
THIS 19TH DAY OF JUNE 2025
ADO MOSES
JUDGE
In the presence of:
Moses – Court Assistant.
Ms. Nyakio……….for the Appellant
Githinji h/b for Njeru………for Respondent
1. This matter comes before the Court by way of appeal from the decision of the Tax Appeals Tribunal (hereinafter also referred to as “the Tribunal”) delivered on 5th July 2024. The Appellant challenges the Tribunal's findings and seeks to have the same set aside.
2. The Appellant contends that the Tribunal erred both in fact and in law in its determination that the Appellant should process a VAT refund application and pay the same despite the absence of a valid and pending application from the Respondent on the Appellant’s iTax platform.
3. The background of the matter is that the Respondent lodged VAT refund claims for the period August 2014 to June 2018, totaling Kshs. 47,730,804. The claims were however rejected by the Appellant, prompting objections by the Respondent dated 10th November 2021 and 14th February 2022.
4. On 10th June 2022, the Appellant responded to the Respondent’s objection, upholding its rejection of the Respondent’s VAT refund claim, but also referring the matter back to the Respondent’s account manager within the Appellant (Public Sector Division) for further review.
5. The review process took place between 12th July 2022 and 20th October 2022, but no outcome of the process was communicated by the Appellant to the Respondent, despite evidence of the Respondent supplying information and documents requested by the Appellant’s Officers.
6. On 30th April 2023, the Respondent’s tax agent wrote to the Appellant, informing the Appellant that the Respondent’s VAT refund claim had been allowed by operation of law since the Commissioner had failed to ascertain and determine the application within the 90 days allowed under Section 47(3) of the Tax Procedures Act (hereinafter also referred to as “TPA”). The Respondent, vide the same letter, also informed the Appellant that interest was also payable as provided under Section 47(6) of the Act.
7. The Respondent, thereafter, vide its letter of 30th April 2023, wrote to the Appellant enquiring about the delay in crediting the VAT refunds. According to the Respondent, its VAT refund application had been allowed by operation of Section 47(3) of the Tax Appeals Procedure Act, Cap. 469B Laws of Kenya, which deems a refund application automatically allowed where the Commissioner/Appellant fails to ascertain and determine an application within 90 days from the date of lodgment.
8. In response, by letter dated 8th September 2023, the Appellant instead advised the Respondent to reapply through the iTax system. According to the Appellant, the original claims had been rejected and were no longer active in the iTax system for further processing.
9. Dissatisfied with the Appellant’s decision as communicated in the said letter of 8th September 2023, the Respondent appealed to the Tax Appeals Tribunal vide its memorandum of appeal dated 25th September 2023.
10. On 15th July 2024, the Tribunal delivered its judgment in favour of the Respondent, allowing the appeal and directing the Appellant to make the refund of the Respondent’s VAT refund claim pursuant to Section 47(6) of the Tax Procedures Act.
The Appeal
11. Aggrieved by the Tribunal’s decision, the Appellant lodged the instant appeal to this Court, raising the following as grounds of appeal: -
i. That the Tribunal erred in law and fact by incorrectly classifying the Respondent’s letter dated 8th September 2023, as an appealable decision.
ii. The Tribunal erred in law and fact by overlooking the Appellant’s failure to comply with the requirements for lodging a valid appeal.
iii. The Tribunal erred in concluding that the Appellant’s rejection of the VAT refund application was unjustified.
12. The Appeal was canvassed by way of written submissions. The Appellant filed its submissions dated 14th February 2025, whilst the Respondent’s is dated 6th February 2025.
Appellant’s Submissions
13. In its submissions, the Appellant contended that the Tribunal erred in its decision by directing the Appellant to process a non-existent refund application. According to the Appellant, the Objection Decision having been issued on 10th June 2022, rejecting the refund application, there was no valid or pending VAT refund application on its iTax System for consideration. The Appellant asserted that since no reapplication was made by the Respondent on the iTax system as required by law, there was no pending application for the Appellant to determine.
14. It was further the Appellant’s submissions that contrary to the Tribunal’s findings, the Appellant’s letter of 8th September 2023 was not an appealable decision within the meaning of Section 3 of the Tax Procedures Act and could not therefore form the basis of an appeal at the Tribunal. The Appellant submitted that the said letter was merely a response to the Respondent’s inquiry and only advised the Respondent to lodge a VAT refund reapplication.
15. Citing the case of Owners of Motor Vessel “LILIANS” v Caltex Oil (Kenya) Limited 1989, the Appellant submitted that in the absence of an appealable decision, the Tribunal lacked jurisdiction to entertain the appeal since the Respondent failed to comply with the requirements of Section 52 of the Tax Procedures Act, which sets out the legal requirements for lodging a valid appeal at the Tribunal. The Appellant therefore asserted the proceedings at the Tribunal were, in the circumstances, a nullity ab initio.
16. The Appellant concluded its submissions by submitting that its rejection of the Respondent’s VAT refund application was in accordance with the law, followed due process, and no fault can be found with the same.
17. The Appellant therefore urged this Court to find merit in its appeal, set aside the decision of the Tribunal in its entirety, and allow the appeal with costs.
Respondent’s Submissions
18. On its part, the Respondent supported the Tribunal’s decision and urged this Court to sustain the same.
19. The Respondent submitted that the Tribunal was right in its finding that the Appellant’s letter of 10th June 2022 could not, in law, be considered an Objection Decision since it was not final. According to the Appellant, the said letter was clear that the review of the Respondent’s VAT refund application was ongoing and that a refund decision would only be issued once the review was complete.
20. The Respondent further submitted that the Tribunal in its finding that it is the Appellant’s letter of 8th September 2023 that communicated the Appellant’s final position on the matter, and was therefore, the appealable decision as understood under Section 52 (1) and (2) of the Tax Procedures Act as read together with Section 13(1) and (2) of the Tax Appeals Tribunal Act.
21. It was further the Respondent’s submissions that its Objection was deemed allowed by operation of law under Section 51(11) of the Tax Procedures Act since the Appellant failed to deal with the Objection within the 60 days’ statutory period. According to the Respondent, while it objected to the Appellant’s decision vide its letters of 17th November 2021 and 14th February 2022, the Appellant only issued its Objection Decision on 10th June 2022, which was way beyond the 60 days permitted under the law. The Respondent cited, among others, the case of Republic v Commissioner of Domestic Taxes Ex-parte Fleur Investment Ltd [2020] eKLR in support of this argument.
22. The Respondent further submitted that the Tribunal was right in its finding that the Respondent, having supplied to the Appellant additional documents for review between 12th July 2022 and 20th October 2022, the Appellant was expected to issue its Objection Decision by 20th January 2023, in line with Section 47(3) of the Tax Procedures Act.
23. The Respondent concluded by submitting that the instant appeal is a mere academic exercise with no basis at all and urged this Court to dismiss the same, uphold the Tribunal’s decision, and direct the Appellant to effect the VAT Refund in the sum of Kshs. 47,730,804/- pursuant to Section 47(6) of the Tax Procedures Act.
Analysis and Determination
24. This is an appeal from the Tax Appeals Tribunal to this court pursuant to Section 32 of the Tax Appeals Tribunal Act (Cap. 469A), which provides that appeals from the Tribunal lies to the High Court, and that the rules applicable in the High Court are those set out by the Chief Justice. Section 32 of the Tax Appeals Tribunal Act (hereinafter also referred to as “TATA”) provides as follows: -
“32. Appeals to the High Court on decisions of the Tribunal
(1) A party to proceedings before the Tribunal may, within thirty days after being notified of the decision or within such further period as the High Court may allow, appeal to the High Court, and the party so appealing shall serve a copy of the notice of appeal on the other party.
(2) The High Court shall hear appeals made under this section in accordance with rules set out by the Chief Justice.”
25. The Tax Appeals Tribunal (Appeals to the High Court) Rules – Legal Notice No. 226 of 2015 also provides as follows on how to appeal from the Tax Appeal Tribunal to this Court: -
“3. Time for filing of memorandum of appeal
The appellant shall, within thirty days, after the date of service of a notice of appeal under section 32(1), file a memorandum of appeal with the Registrar and serve a copy on the respondent.
8. Filing of statement of facts
The respondent shall file a statement of facts with the Registrar within thirty days of service upon him of the copy of memorandum of appeal by the appellant, during office hours.
15. Admission of other evidence
The Court may, at the time of hearing of an appeal, admit other documentary or oral evidence not contained in the statement of facts of the appellant or respondent should it consider it necessary for determination of the appeal.”
26. From the foregoing, it is clear that in considering appeals from the Tax Appeals Tribunal, this Court is empowered to examine both legal and factual aspects of a case. This includes the discretion to admit additional evidence—whether oral or documentary—where the Court deems such evidence necessary for the just determination of the appeal.
27. It is, however, important to note the apparent statutory tension between the applicable provisions. While Section 32 of the Tax Appeals Tribunal Act (TATA) and the Tax Appeals Tribunal (Appeals to the High Court) Rules grant the High Court jurisdiction to consider both legal and factual issues on appeal, Section 56(2) of the Tax Procedures Act (TPA)—which also governs appeals from the Tribunal—expressly limits such appeals to matters of law only. Section 56 of the TPA provides as follows: –
“56. General provisions relating to objections and appeals
(1) In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.
(2) An appeal to the High Court or to the Court of Appeal shall be on a question of law only.
(3) In an appeal by a taxpayer to the Tribunal, High Court, or Court of Appeal in relation to an appealable decision, the taxpayer shall rely only on the grounds stated in the objection to which the decision relates unless the Tribunal or Court allows the person to add new grounds. [Emphasis added].
28. The foregoing reveals a clear inconsistency in the statutory framework governing the scope of appeals from the Tribunal to this Court. In my view, the resolution lies in the application of the legal principle that a specific provision prevails over a general one where both address the same subject matter. This principle is embodied in the maxim lex specialis derogat legi generali, which dictates that the more specific statute overrides the more general in instances of conflict.
29. In the case of M J v N K & another (2017) eKLR the Court (Ougo J), stated as follows on the issue:
“The doctrine of lex specialis derogate generali is a Latin doctrine that means that the specific law prevails over general law. In Commercial Tax Officer, Rajasthan V M/S Binani Cement Ltd. & Another the Indian Supreme court held that,
‘It is well established that when a general law and a special law dealing with some aspect dealt with by the general law are in question, the rule adopted and applied is one of harmonious construction whereby the general law, to the extent dealt with by the special law, is impliedly repealed. This principle finds its origins in the latin maxim of generalia specialibus non derogant, i.e., general law yields to special law…’
The Supreme Court went on and stated that,
The rule of statutory construction that the specific governs the general is not an absolute rule but is merely a strong indication of statutory meaning that can be overcome by textual indications that point in the other direction. This rule is particularly applicable where the Legislature has enacted a comprehensive scheme and has deliberately targeted specific problems with specific solutions. A subject specific provision relating to a specific, defined and descriptable subject is regarded as an exception to and would prevail over a general provision relating to a broad subject”
30. In the case of Amondi & Co Advocates v County Government of Kisumu [2021] eKLR, the Court, upholding the principle that a more specific law overrides a general law, stated as follows:-
“In my considered opinion, when the provisions of the Advocates Act specify how interest may be awarded on the disbursements and costs, whether by scale or otherwise, it must be deemed that the said provisions oust the more general provisions of the Civil Procedure Act. I so hold because it is a cardinal rule of interpretation that when a statute specifies something as being applicable to matters which the statute applies, the said specification ousts other more generalized statutory provisions. I hold that the provisions of the Civil Procedure Act cannot oust the more specific provisions of the Advocates Act which were enacted to address the issues of Advocates’ costs…...”
31. Applying the aforementioned principle to the present case, it is clear that the Tax Procedures Act is specifically designed to address procedural aspects related to the administration of tax laws. This is evident from its short title, which describes it as “An Act of Parliament to harmonise and consolidate the procedural rules for the administration of tax laws in Kenya, and for connected purposes.”
32. The essence of the TPA, therefore, is to provide the general procedural framework for tax administration, covering aspects such as assessment, collection, objections, and other operational mechanics of the tax system. It sets out the broad rules of engagement between the taxpayer and the tax authority from the initial stages of a tax matter.
33. On the other hand, the Tax Appeals Tribunal Act is specifically enacted "to make provision for the establishment of a Tribunal; for the management and administration of tax appeals, and for connected purposes." This language unequivocally demonstrates that this Act is lex specialis, being the specific law designed to govern the entire appellate process concerning tax disputes. The Act deals with the structure, jurisdiction, procedures, and administration of the Tax Appeals Tribunal itself, and by extension, the specific pathway for taxpayers to challenge tax decisions by the Commissioner before the Appellate bodies, including the High Court.
34. It is instructive to note that it is pursuant to the provisions of Section 32(2) of the Tax Procedures Act that the Honourable Chief Justice promulgated the Tax Appeals Tribunal (Appeals to the High Court) Rules, which prescribe the procedure of tax appeals before this Court.
35. It therefore follows that Section 32 of the Tax Appeals Tribunal Act, as the more specific law governing appeals from the Tribunal to this Court, should prevail. This aligns with the High Court's powers as a first appellate court, which include reconsidering and re-evaluating evidence tendered before the trial court to draw its own conclusions, as enunciated in Selle & another v Associated Motor Boat Co. Ltd & Others [1968] EA, where the court stated: -
“........ An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect..."
36. Again, the Court of Appeal for Eastern Africa in Pandya -vs- Republic [1957] EA 336 is as follows: -
“On a first appeal from a conviction by a Judge or magistrate sitting without a jury the appellant is entitled to have the appellate court’s own consideration and views of the evidence as a whole and its own decision thereon. It has the duty to rehear the case and reconsider the witnesses before the Judge or magistrate with such other material as it may have decided to admit. The appellate court must then make up its own mind not disregarding the judgment appealed from but carefully weighing and considering it. When the question arises which witness is to be believed rather than another and that question turns on manner and demeanor, the appellate court must be guided by the impression made on the Judge or magistrate who saw the witness but there may be other circumstances, quite apart from manner and demeanor which may show whether a statement is credible or not which may warrant a court different.”
37. With the foregoing in mind, I now proceed to re-evaluate the evidence presented by the parties before the Tribunal, assess it afresh, and arrive at my own independent conclusions. In doing so, I remain cognizant of the fact that I did not have the benefit of seeing or hearing the witnesses testify firsthand.
38. Having considered the submissions by the parties, the issues for determination in this case are as follows: -
i. Whether the Respondent’s appeal before the TAT was valid
ii. Whether the Appellant was in law justified in rejecting the Respondent’s VAT claim.
Whether the Respondent’s appeal before the TAT was valid
39. The Appellant in this appeal has taken the position that the Respondent’s appeal before the Tax Appeal Tribunal was premature and incompetent since the letter of 8th September 2023 against which the appeal was based was not an appealable decision within the meaning of Section 52 of the Tax Procedures Act as read together with Section 32 of the Tax Procedures Act.
40. I have carefully perused the record of appeal and note that the Respondent’s letters of objection to the Appellant’s rejection of its VAT refund claims are dated 10th November 2021 and 14th February 2022. I have also established that vide its letter of 10th June 2022, the Appellant responded to the Respondent’s objection, upholding its rejection of the Respondent’s VAT refund claim, but also referring the matter back to the Respondent’s account manager within the Appellant (Public Sector Division) for further review. The Appellant’s letter of 10th June 2022 stated in part that:
“Rejected VAT Refunds
The Domestic Taxes Department rejected your refund application amounting to KES 47,730,804 for the period 2014 to 2018, for failure to provide information that the commissioner had requested you within the set timelines.
Conclusion
In light of the above, the Commissioner was right in rejecting your refund application however, we do acknowledge that the issue at hand requires review of the documentation necessary to process the refunds.
We have transferred the matter back to your account manager (Public Sector Division) to review the information presented and issue a refund decision upon completion of the process.”
41. From the foregoing, it is clear that, contrary to the Appellant’s contention, the letter dated 10th June 2022 did not convey the Appellant’s final determination regarding the Respondent’s objection to the refund decision. As such, it does not qualify as an “Objection Decision” within the meaning of Sections 51 subsections (8), (9), and (10) of the Tax Procedures Act.
42. Section 51 of the Tax Procedures Act is explicit in its requirements: an Objection Decision must contain a statement outlining the findings on the material facts and provide the reasons underpinning the decision. The relevant portion of the section states as follows:-
“8) Where a notice of objection has been validly lodged within time, the Commissioner shall consider the objection and decide either to allow the objection in whole or in part, or disallow it, and Commissioner's decision shall be referred to as an "objection decision".
(9) The Commissioner shall notify in writing the taxpayer of the objection decision and shall take all necessary steps to give effect to the decision, including, in the case of an objection to an assessment, making an amended assessment.
(10) An objection decision shall include a statement of findings on the material facts and the reasons for the decision. [Emphasis added]
43. In addition to the fact that the Appellant’s letter dated 10th June 2022 lacked a statement of findings on the material facts and failed to provide reasons for the decision, I further observe from the record of appeal that the letter was unsigned, rendering it unverifiable and lacking in evidentiary weight.
44. In the circumstances, I find no merit in the Appellant’s contention that the letter dated 10th June 2022 constituted an objection decision capable of being appealed under Section 3 of the Tax Procedures Act. The letter does not meet the statutory threshold required to qualify as such.
45. As for the Appellant’s submission that its letter dated 8th September 2023 was not an appealable decision but merely a piece of correspondence advising the Respondent to reapply for the refund, I respectfully disagree. A plain reading of the contents of that letter reveals that it was, in substance and effect, a communication of the Appellant’s final position on the Respondent’s VAT refund application.
46. Secondly, the record indicates that the Appellant’s letter dated 8th September 2023 was issued in response to the Respondent’s correspondence dated 31st August 2023. This correspondence was itself preceded by several earlier letters from the Respondent—specifically dated 12th July 2022, 20th October 2022, and 30th April 2023—raising the same issue. Notably, the Appellant did not respond to any of those prior communications.
47. Given the circumstances, I find and hold that the Appellant's letter of September 8, 2023, which communicated their final position on the matter, constituted an appealable decision. I therefore uphold the Tribunal's finding on this issue.
Whether the Tribunal erred in directing the Appellant to process the VAT Refunds
48. It's evident from the record that the VAT refund application at the core of these proceedings was initiated by the Respondent and formally acknowledged by the Appellant through these Refund Application Acknowledgement Receipts:
i. KRA201702752547 20th April 2017
ii. KRA201910518761 15th July 2019
iii. KRA201608696167 2nd November 2016
iv. KRA201701104177 17th February 2017
v. KRA201809107707 18th June 2018
vi. KRA201609072970 18th November 2016
49. The VAT refund claims were rejected by the Appellant on 19th April 2020. Following the rejection of the refund claims, the Appellant vide its letter of 10th June 2022 referred the matter back to the Respondent’s account manager (Public Sector Division) for reconsideration. Evidence on record further indicates that on 12th July 2022, the Respondent wrote to the Appellant forwarding invoices, ostensibly, to help resolve the queries the Appellant had on the refund claim. The said letter by the Respondent stated in part as follows:
“We hereby submit Thirteen files with original invoices and Five files with photocopied invoices of Embu Water and Sanitation Company (EWASCO) for the financial periods stated below…”
50. On 23rd September 2022, Ms. Susan Mwiti, an officer of the Appellant, emailed the Respondent to inquire about specific invoices that the Appellant noted still had outstanding queries.
51. The Respondent, on 20th October 2022, through its tax agent, wrote to the Appellant’s officers (Ms. Susan Mwiti) forwarding an “Excel document with clarification on the model of the vehicles the Respondent claimed to have imported”, to clarify any queries the Appellant may have had on the refund application. There is no evidence that the Appellant attended to, or provided any response to clarifications provided by the Respondent in the said mail.
52. It is the view of this Court that the Appellant’s failure to respond to the Respondent’s aforementioned letters can only be interpreted as an indication that the Appellant was satisfied with the explanations and documentation provided therein. Significantly, under Section 47(3) of the Tax Procedures Act, where the Commissioner fails to ascertain and determine a VAT refund application within ninety days, the application is deemed to have been ascertained and approved by operation of law.
53. I concur with the argument that the Appellant’s letter dated 8th September 2023, which invited the Respondent to re-lodge the VAT refund application, was a disingenuous attempt to prompt the Respondent to recommence a process that, in law, had already been concluded by operation of Section 47(3) of the Tax Procedures Act.
54. A reapplication would have resulted in the issuance of a new acknowledgement slip bearing different reference numbers from those initially generated. This, in effect, would have created a fresh and entirely distinct cause of action, thereby compromising the original application, which had already been deemed approved by operation of law.
55. It is the view of this Court that the Respondent’s VAT refund applications did not cease to exist within the iTax system merely by virtue of their initial rejection. The Appellant’s officers retained the view of the same, and a discretion to amend the status of the claims within the iTax system and allow the refund, provided that the Respondent demonstrated sufficient cause to warrant such action.
56. Consequently, I find no merit in the Appellant’s contention that the Tribunal erred in directing it to process a VAT refund application that was allegedly no longer in existence or pending within the iTax system. As previously observed, the application had not been extinguished, and the Appellant retained the capacity to take appropriate administrative action within the system.
57. Before concluding, this Court finds it necessary to underscore that a refund of Value Added Tax (VAT), like any other tax refund, ought only to be granted where it is lawfully due. Such determination must be grounded on the merits of the case and not on procedural technicalities. This position is consistent with the constitutional dictate under Article 210 of the Constitution, which provides that no tax or licensing fee may be imposed, waived, or varied except as authorized by law.
58. In the present matter, save for reliance on technical and procedural arguments, the Appellant has not advanced any persuasive substantive reason to demonstrate that the VAT refunds in issue are not lawfully payable.
59. In the result, this Court finds no justification to interfere with the decision of the Tax Appeals Tribunal.
60. Accordingly, the Appeal is hereby dismissed with costs to the Respondent.
61. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT
THIS 19TH DAY OF JUNE 2025
ADO MOSES
JUDGE
In the presence of:
Moses – Court Assistant.
Ms. Nyakio……….for the Appellant
Githinji h/b for Njeru………for Respondent