Automated Summary
Key Facts
Majorel Kenya Limited (Appellant) applied for VAT refunds for December 2020, January 2021, and February 2021, claiming input tax of Kshs 4,245,613.00. The Commissioner of Domestic Taxes (Respondent) rejected the claims, asserting that the excess input tax must arise from zero-rated supplies made in the same tax period. The Appellant argued the VAT Act's Section 17[5]a is ambiguous and that the Respondent misinterpreted the provision by requiring zero-rated supplies to coincide with the tax period of the input tax. The Tribunal found no ambiguity in the section, ruled the Respondent's interpretation was correct, and dismissed the appeal. The Appellant's refund was denied as their supplies during the claimed periods were not zero-rated.
Tax Type
Value-Added Tax (VAT)
Issues
- The Tribunal concluded that the Respondent did not misinterpret Section 17[5]a of the VAT Act, as the requirement for zero-rated supplies to be made in the same tax period as the excess input tax arises was not implied in the Respondent's decision.
- The Tribunal determined that there is no ambiguity in Section 17[5]a of the VAT Act as asserted by the Appellant, and the Respondent correctly applied the Section to the Appellant's circumstances.
Tax Years
- 2021
- 2020
Holdings
- The Tribunal determined that the Respondent did not misinterpret Section 17[5]a of the VAT Act by requiring zero-rated supplies to be made in the same tax period as the excess input tax. The Respondent's objection decision correctly applied the statute's requirement that input tax must be used for zero-rated supplies to qualify for a refund.
- The Tribunal held that Section 17[5]a of the VAT Act is not ambiguous, as the literal interpretation of the provision indicates that a refund for excess input tax is only payable when the excess arises from making zero-rated supplies. The Appellant failed to demonstrate sufficient evidence of ambiguity in the statutory language.
Remedies
- Each party to bear its own costs.
- The Respondent's objection decision dated 23rd November 2021 be and is hereby upheld.
- The Appeal be and is hereby dismissed.
Tax Issue Category
Input Vs. Output Vat
Legal Principles
The Tribunal applied the Literal Rule of statutory interpretation, emphasizing that the language of the VAT Act provision must be given its ordinary meaning. The court held that Section 17[5]a is unambiguous and does not require implication or intendment, as the legislative intent is clear from the text itself.
Disputed Tax Amount
4422247.00
Precedent Name
- Cape Brandy Syndicate -vs- I.R. Commissioners
- Stanbic Bank Kenya Ltd -vs- Kenya Revenue Authority
- R - VS- Council for Legal Education and Kenya School of Law Exparte Sabiha Kassamia, and Ntele James Kipambe
- Mount Kenya Bottlers Ltd -vs- Attorney General and 3 others
Cited Statute
- Value Added Tax Act, 2013
- Tax Procedures Act
Judge Name
- Robert M. Mutuma
- Delilah Ngala
- Jephthah Njagi
- Eric N. Wafula
Passage Text
- In view of the foregoing, the Tribunal holds that the Respondent did not misinterpret Section 17[5]a of the VAT Act, 2013.
- The Appeal be and is hereby dismissed.
- The Tribunal having carefully reviewed the impugned objection decision, and the contentious Section 17[5] of the VAT Act is satisfied that there is no ambiguity in the provision as asserted by the Appellant.