1. This judgment is in respect of an appeal filed by Kenya Revenue Authority (hereinafter referred to as "the Appellant") against the entire decision of the Tax Appeals Tribunal (hereinafter referred to as "the Tribunal"), delivered on 9th May 2024. The Appellant seeks to have the Tribunal's decision, which allowed the Respondent’s Appeal and vacated the Appellant’s Confirmation of Assessment Letter dated 4th April 2023.
2. The background of the dispute is that the Appellant conducted an audit on the Respondent for the period 2018 and 2019 and, upon conclusion, issued an assessment of Kshs. 3,511,604/- on 9th April 2021. The Respondent lodged an objection against the Appellant’s assessment on 2nd May 2021, and the Respondent confirmed the assessments on 4th April 2023 and demanded a sum of Kshs 5,336,852 from the Respondent.
3. Dissatisfied with the Appellant’s decision, the Respondent appealed against the same to the Tribunal via a Notice of Appeal dated 4th April 2023. Upon considering the appeal, the Tribunal, vide its Judgment of 9 May 2024, allowed the appeal and set aside the Respondent’s Confirmation of Assessment dated 4 April 2023.
4. Aggrieved by the decision of the Tribunal, the Appellant appealed against the whole of that decision to this Court, raising the following grounds of appeal:
i. That the Tribunal erred in law and in fact in failing to find that the Respondent’s Notices of Objection of 2nd May 2021 were invalid and contrary to the provisions of section 51(3) of the Tax Procedures Act, Chapter 469B of Laws of Kenya for failure to state the grounds of objection, the reasons for the amendment sought and being not accompanied by the supporting documents.
ii. That the Tribunal erred in law in misconstruing section 51(4) of the Tax Procedures Act, Cap. 469B by failing to consider the import of the Appellant’s email Communication of 7th May 2021, thus finding that the Appellant did not submit to the Honourable Tribunal a copy of its invalidation notice.
iii. That the Honourable Tribunal erred in law in failing to find that there was no valid objection for the purposes of section 51(8)-(11) of the Tax Procedures Act, Cap. 469B.
iv. That the Honourable Tribunal erred in law and fact in misconstruing the provision of section 51(8) &(11) of the Tax Procedures Act, Cap. 469B by finding that the Appellant’s Letter dated 4th April 2023 was an Objection Decision.
v. That the Honourable Tribunal erred in law in failing to find that an Objection Decision can only issue if there is a valid Notice of Objection and that the sixty days contemplated under section 51(11) of the Tax Procedures Act, Cap. 469B starts to run upon receipt of a valid objection.
vi. That the Honourable Tribunal erred in law in failing to find that the Appellant’s Decision to invalidate and reject the Respondent’s notices of objection is not an appealable decision within the meaning of sections 51(12) and 52(1) of the Tax Procedures Act, Cap. 469B and section 12 of the Tax Appeals Tribunal Act, Chapter 469A of Laws of Kenya.
vii. That the Honourable Tribunal erred in law in entertaining an incompetent Appeal which was filed contrary to section 13(2) of the Tax Appeals Tribunal Act, Cap. 469A and Rules 4 and 5 of Tax Appeals Tribunals (Procedure) Rules, 2015, to the extent that it was not accompanied by a proper statement of facts.
viii. That the Honourable Tribunal erred in law in considering the documents (Respondent’s Letter dated 11th April 2023) that were not properly on record and which did not form part of the Respondent’s Memorandum of Appeal and Statement of Facts filed before it contrary to section 56(3) of the Tax Procedures Act, Cap. 469B and section 13(6) of the Tax Appeals Tribunal Act, Cap. 469A.
ix. That the Honourable Tribunal erred in law by failing to appreciate that the Respondent was bound by his Pleadings and was not allowed to introduce new facts, grounds and/or evidence in his Written Submissions.”
5. Based on the foregoing grounds, the Appellants prayed that the appeal be allowed with costs, and the Judgment of the Tax Appeals Tribunal dated 9th May 2024, and all its consequential orders, be set aside.
6. The appeal proceeded by way of written submissions. The Appellant filed its submissions dated 3rd October 2024. At the time of writing this judgment, the Respondent had yet to file any documents in opposition to the appeal nor participate in these proceedings, despite proof of service.
Analysis and determination
7. Having carefully considered the documents filed herein by the Appellant, including its submissions in support of the appeal, I find that the only issue for determination in this appeal is whether the Tribunal erred in setting aside the Appellant’s Confirmation of Assessment Letter dated 4th April 2023.
8. Section 51 of the Tax Procedures Act states:-
“(1) A taxpayer who wishes to dispute a tax decision shall first lodge an objection against that tax decision under this section before proceeding under any other written law.
(2) A taxpayer who disputes a tax decision may lodge a notice of objection to the decision, in writing, with the Commissioner within thirty days of being notified of the decision.
(3) A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if—
(a) the notice of objection states precisely the grounds of objection, the amendments required to be made to correct the decision, and the reasons for the amendments;
(b) in relation to an objection to an assessment, the taxpayer has paid the entire amount of tax due under the assessment that is not in dispute or has applied for an extension of time to pay the tax not in dispute under section 33(1); and
(c) all the relevant documents relating to the objection have been submitted.
(4) Where the Commissioner has determined that a notice of objection lodged by a taxpayer has not been validly lodged, the Commissioner shall within a period of fourteen days notify the taxpayer in writing that the objection has not been validly lodged and request the taxpayer to submit the information specified in the notice within seven days after the date of the notice.
(4A) Despite subsection (3), where a taxpayer fails to provide the information required under subsection (4) or fails to provide the information within the specified period, the Commissioner may make an objection decision within sixty days after the date on which the notice of objection was lodged.
…
(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 the Commissioner's decision shall be referred to as an "objection decision".
…
11) The Commissioner shall make the objection decision within sixty days from the date of receipt of a valid notice of objection failure to which the objection shall be deemed to be allowed.”
9. A background of this dispute is that the Appellant issued the Respondent with an assessment for the sum of Kshs.3,511,604/- on 9/4/2021 following an audit on the Respondent for the period 2018-2019. The Respondent lodged a notice of objection against the said assessment on 2/5/2021, and the Appellant stated that it reviewed the objection application and invalidated the same on 7/5/2021 for failure to provide supporting documentation. As a result, the Appellant confirmed the assessment and demanded payment of the taxes on 4/4/2023.
10. The Tribunal was of the view that the Respondent's notice of objection lodged on 2/5/2021 was not invalidated by the Appellant and was therefore validly lodged.
11. The Appellant submitted that the Respondent did not lodge a valid objection, and thus, there was no objection decision that could issue. Therefore, the Appellant argued that the Tribunal did not have jurisdiction as there was no appealable decision.
12. The procedure is clear; once a taxpayer is assessed, he may file an objection application under section 51(2) of the TPA. The Appellant would, under section 51(11), if it finds that the objection is validly lodged, issue an objection decision within sixty days from the date of receipt of a valid notice of objection; failure to which the objection shall be deemed to be allowed.
13. The record indicates that after the Respondent filed an objection application on 2/5/2021, the Appellant responded through an email dated 7/5/2021, urging the Respondent to comply with the requirements under section 51(3) of the TPA and inviting him to attend an interview within 7 days from the date of the email.
14. The Appellant wrote a further email to the Respondent on 31/8/2022 requesting for further documents to be availed by 6/9/2022. The two emails are produced on pages 62 and 63 of the record of appeal.
15. What followed, according to the record of appeal, is the issuance of an objection decision by the Appellant on 4/4/2023. The objection decision was produced on page 64 of the record of appeal. In the said letter, the Appellant made reference to the Respondent’s objection application dated 2/5/2021 and other reminder emails in response to the assessment amounting to Kshs.3,511,604.
16. The Appellant went on to state in the said letter as follows:
“Your objection is fully rejected due to failure to avail supporting documentation regarding the grounds. In this regard, the Commissioner hereby confirms the assessment as issued.”
17. I agree with the Tribunal’s finding that the Appellant’s letter dated 4/4/2023 amounted to an objection decision and not merely an ‘invalidation decision’ as purported by the Appellant. In fact, the title of the letter was ‘OBJECTION DECISION FOR ADDITIONAL ASSESSMENTS AMOUNTING TO KSHS 3,511,604.” The letter was written in response to the objection application of 2/5/2021.
18. The import of the foregoing, taking into account the Appellant’s letter of 4/4/2024, it is evident that the Respondent’s notice of objection was not invalidated by the Appellant as by law required, but was recognized and or treated by the Appellant as having been validly lodged.
19. Section 51(11) of the Tax Procedures Act provides that an objection decision must be issued within sixty (60) days from the date of receipt of a valid notice of objection. Where the Commissioner fails to make a decision within that statutory period, the objection is deemed to have been allowed by operation of law.
20. In any event, no reason has been advanced by the Appellant to this Court that would warrant the objection decision being considered on its merits despite having been issued outside the time limits authorized in law. It was incumbent upon the Appellant to demonstrate the existence of special circumstances or compelling reasons that would warrant the Court’s consideration of the objection decision on its merits despite the procedural irregularity. No such explanation or justification has been offered in this instance.
21. The upshot of the foregoing is that this Court finds no basis to interfere with the judgment of the Tribunal. The appeal is accordingly dismissed.
22. As to costs, the Court directs that each party shall bear its own costs, both before the Tribunal and in this appeal, noting in particular that the Respondent did not participate in these proceedings.
23. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
10TH DAY OF JULY 2025
ADO MOSES
JUDGE
In the presence of: -
Moses……….C/A
Abednego Ngetich……..for the Appellant
2. The background of the dispute is that the Appellant conducted an audit on the Respondent for the period 2018 and 2019 and, upon conclusion, issued an assessment of Kshs. 3,511,604/- on 9th April 2021. The Respondent lodged an objection against the Appellant’s assessment on 2nd May 2021, and the Respondent confirmed the assessments on 4th April 2023 and demanded a sum of Kshs 5,336,852 from the Respondent.
3. Dissatisfied with the Appellant’s decision, the Respondent appealed against the same to the Tribunal via a Notice of Appeal dated 4th April 2023. Upon considering the appeal, the Tribunal, vide its Judgment of 9 May 2024, allowed the appeal and set aside the Respondent’s Confirmation of Assessment dated 4 April 2023.
4. Aggrieved by the decision of the Tribunal, the Appellant appealed against the whole of that decision to this Court, raising the following grounds of appeal:
i. That the Tribunal erred in law and in fact in failing to find that the Respondent’s Notices of Objection of 2nd May 2021 were invalid and contrary to the provisions of section 51(3) of the Tax Procedures Act, Chapter 469B of Laws of Kenya for failure to state the grounds of objection, the reasons for the amendment sought and being not accompanied by the supporting documents.
ii. That the Tribunal erred in law in misconstruing section 51(4) of the Tax Procedures Act, Cap. 469B by failing to consider the import of the Appellant’s email Communication of 7th May 2021, thus finding that the Appellant did not submit to the Honourable Tribunal a copy of its invalidation notice.
iii. That the Honourable Tribunal erred in law in failing to find that there was no valid objection for the purposes of section 51(8)-(11) of the Tax Procedures Act, Cap. 469B.
iv. That the Honourable Tribunal erred in law and fact in misconstruing the provision of section 51(8) &(11) of the Tax Procedures Act, Cap. 469B by finding that the Appellant’s Letter dated 4th April 2023 was an Objection Decision.
v. That the Honourable Tribunal erred in law in failing to find that an Objection Decision can only issue if there is a valid Notice of Objection and that the sixty days contemplated under section 51(11) of the Tax Procedures Act, Cap. 469B starts to run upon receipt of a valid objection.
vi. That the Honourable Tribunal erred in law in failing to find that the Appellant’s Decision to invalidate and reject the Respondent’s notices of objection is not an appealable decision within the meaning of sections 51(12) and 52(1) of the Tax Procedures Act, Cap. 469B and section 12 of the Tax Appeals Tribunal Act, Chapter 469A of Laws of Kenya.
vii. That the Honourable Tribunal erred in law in entertaining an incompetent Appeal which was filed contrary to section 13(2) of the Tax Appeals Tribunal Act, Cap. 469A and Rules 4 and 5 of Tax Appeals Tribunals (Procedure) Rules, 2015, to the extent that it was not accompanied by a proper statement of facts.
viii. That the Honourable Tribunal erred in law in considering the documents (Respondent’s Letter dated 11th April 2023) that were not properly on record and which did not form part of the Respondent’s Memorandum of Appeal and Statement of Facts filed before it contrary to section 56(3) of the Tax Procedures Act, Cap. 469B and section 13(6) of the Tax Appeals Tribunal Act, Cap. 469A.
ix. That the Honourable Tribunal erred in law by failing to appreciate that the Respondent was bound by his Pleadings and was not allowed to introduce new facts, grounds and/or evidence in his Written Submissions.”
5. Based on the foregoing grounds, the Appellants prayed that the appeal be allowed with costs, and the Judgment of the Tax Appeals Tribunal dated 9th May 2024, and all its consequential orders, be set aside.
6. The appeal proceeded by way of written submissions. The Appellant filed its submissions dated 3rd October 2024. At the time of writing this judgment, the Respondent had yet to file any documents in opposition to the appeal nor participate in these proceedings, despite proof of service.
Analysis and determination
7. Having carefully considered the documents filed herein by the Appellant, including its submissions in support of the appeal, I find that the only issue for determination in this appeal is whether the Tribunal erred in setting aside the Appellant’s Confirmation of Assessment Letter dated 4th April 2023.
8. Section 51 of the Tax Procedures Act states:-
“(1) A taxpayer who wishes to dispute a tax decision shall first lodge an objection against that tax decision under this section before proceeding under any other written law.
(2) A taxpayer who disputes a tax decision may lodge a notice of objection to the decision, in writing, with the Commissioner within thirty days of being notified of the decision.
(3) A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if—
(a) the notice of objection states precisely the grounds of objection, the amendments required to be made to correct the decision, and the reasons for the amendments;
(b) in relation to an objection to an assessment, the taxpayer has paid the entire amount of tax due under the assessment that is not in dispute or has applied for an extension of time to pay the tax not in dispute under section 33(1); and
(c) all the relevant documents relating to the objection have been submitted.
(4) Where the Commissioner has determined that a notice of objection lodged by a taxpayer has not been validly lodged, the Commissioner shall within a period of fourteen days notify the taxpayer in writing that the objection has not been validly lodged and request the taxpayer to submit the information specified in the notice within seven days after the date of the notice.
(4A) Despite subsection (3), where a taxpayer fails to provide the information required under subsection (4) or fails to provide the information within the specified period, the Commissioner may make an objection decision within sixty days after the date on which the notice of objection was lodged.
…
(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 the Commissioner's decision shall be referred to as an "objection decision".
…
11) The Commissioner shall make the objection decision within sixty days from the date of receipt of a valid notice of objection failure to which the objection shall be deemed to be allowed.”
9. A background of this dispute is that the Appellant issued the Respondent with an assessment for the sum of Kshs.3,511,604/- on 9/4/2021 following an audit on the Respondent for the period 2018-2019. The Respondent lodged a notice of objection against the said assessment on 2/5/2021, and the Appellant stated that it reviewed the objection application and invalidated the same on 7/5/2021 for failure to provide supporting documentation. As a result, the Appellant confirmed the assessment and demanded payment of the taxes on 4/4/2023.
10. The Tribunal was of the view that the Respondent's notice of objection lodged on 2/5/2021 was not invalidated by the Appellant and was therefore validly lodged.
11. The Appellant submitted that the Respondent did not lodge a valid objection, and thus, there was no objection decision that could issue. Therefore, the Appellant argued that the Tribunal did not have jurisdiction as there was no appealable decision.
12. The procedure is clear; once a taxpayer is assessed, he may file an objection application under section 51(2) of the TPA. The Appellant would, under section 51(11), if it finds that the objection is validly lodged, issue an objection decision within sixty days from the date of receipt of a valid notice of objection; failure to which the objection shall be deemed to be allowed.
13. The record indicates that after the Respondent filed an objection application on 2/5/2021, the Appellant responded through an email dated 7/5/2021, urging the Respondent to comply with the requirements under section 51(3) of the TPA and inviting him to attend an interview within 7 days from the date of the email.
14. The Appellant wrote a further email to the Respondent on 31/8/2022 requesting for further documents to be availed by 6/9/2022. The two emails are produced on pages 62 and 63 of the record of appeal.
15. What followed, according to the record of appeal, is the issuance of an objection decision by the Appellant on 4/4/2023. The objection decision was produced on page 64 of the record of appeal. In the said letter, the Appellant made reference to the Respondent’s objection application dated 2/5/2021 and other reminder emails in response to the assessment amounting to Kshs.3,511,604.
16. The Appellant went on to state in the said letter as follows:
“Your objection is fully rejected due to failure to avail supporting documentation regarding the grounds. In this regard, the Commissioner hereby confirms the assessment as issued.”
17. I agree with the Tribunal’s finding that the Appellant’s letter dated 4/4/2023 amounted to an objection decision and not merely an ‘invalidation decision’ as purported by the Appellant. In fact, the title of the letter was ‘OBJECTION DECISION FOR ADDITIONAL ASSESSMENTS AMOUNTING TO KSHS 3,511,604.” The letter was written in response to the objection application of 2/5/2021.
18. The import of the foregoing, taking into account the Appellant’s letter of 4/4/2024, it is evident that the Respondent’s notice of objection was not invalidated by the Appellant as by law required, but was recognized and or treated by the Appellant as having been validly lodged.
19. Section 51(11) of the Tax Procedures Act provides that an objection decision must be issued within sixty (60) days from the date of receipt of a valid notice of objection. Where the Commissioner fails to make a decision within that statutory period, the objection is deemed to have been allowed by operation of law.
20. In any event, no reason has been advanced by the Appellant to this Court that would warrant the objection decision being considered on its merits despite having been issued outside the time limits authorized in law. It was incumbent upon the Appellant to demonstrate the existence of special circumstances or compelling reasons that would warrant the Court’s consideration of the objection decision on its merits despite the procedural irregularity. No such explanation or justification has been offered in this instance.
21. The upshot of the foregoing is that this Court finds no basis to interfere with the judgment of the Tribunal. The appeal is accordingly dismissed.
22. As to costs, the Court directs that each party shall bear its own costs, both before the Tribunal and in this appeal, noting in particular that the Respondent did not participate in these proceedings.
23. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
10TH DAY OF JULY 2025
ADO MOSES
JUDGE
In the presence of: -
Moses……….C/A
Abednego Ngetich……..for the Appellant