Automated Summary
Key Facts
Sultan Limited (Appellant) appealed against the Commissioner of Domestic Taxes (Respondent) after being denied an extension to file a late objection to additional tax assessments (Kshs 4,825,167.51) for the period December 2019 to December 2022. The Appellant claimed the Respondent acted unreasonably by rejecting their extension application without considering documentary evidence of the director's illness and absence from Kenya. The Respondent argued the objection was invalid for lacking proper documentation and sufficient grounds. The Tribunal ruled it had no jurisdiction to review the Respondent's decision under Section 51(7) of the Tax Procedures Act, as such decisions are not appealable and must be challenged via judicial review, leading to the appeal being struck out.
Tax Type
Corporate Income Tax and Value-Added Tax (VAT)
Issues
- Whether the Respondent erred in disallowing purchases claimed by the Appellant. This issue was rendered moot after the Tribunal determined it lacked jurisdiction to hear the appeal.
- Whether the Tribunal has jurisdiction to hear and determine the appeal. The Respondent argued that decisions under Section 51(7) of the Tax Procedures Act are not appealable to the Tribunal and must be addressed via judicial review.
Tax Years
- 2022
- 2021
- 2019
- 2020
Holdings
- The Tribunal found that it lacks jurisdiction to hear the appeal as decisions under Section 51(7) of the Tax Procedures Act (TPA) are not appealable and must be subject to judicial review proceedings. The High Court in Commissioner of Investigations & Enforcement v Vyas t/a Rocon Enterprises (Income Tax Appeal E144 of 2021) [2022] KEHC 16027 (KLR) explicitly held that such decisions are not appealable to the Tribunal, rendering the appeal incompetent.
- The Tribunal determined that the issue regarding the Respondent's disallowance of purchases claimed by the Appellant is moot due to the lack of jurisdiction over the appeal. Since the Tribunal cannot entertain the appeal, it did not adjudicate the merits of the disallowed purchases.
Remedies
- The Appeal is hereby struck out; each party to bear its own cost.
- Each party to bear its own cost.
Tax Issue Category
Input Vs. Output Vat
Legal Principles
- The Appellant contended that the Respondent violated principles of natural justice by failing to consider explanations and documentary evidence, abandoning reconciliation efforts, and rejecting late objections without proper process. The Tribunal referenced this as part of the constitutional rights discussion.
- The Tribunal cited the Wednesbury case to emphasize the requirement for administrative bodies to act reasonably and rationally. The Appellant argued the Respondent's actions reached the threshold of unreasonableness, while the Tribunal noted jurisdictional limits for such reviews.
- The Appellant argued that the Respondent breached its legitimate expectation to fair, reasonable, just, and lawful tax administration under Article 47 of the Constitution and Section 4(1) of the Fair Administrative Action Act. The Tribunal acknowledged this principle as part of the Appellant's case.
- The Respondent asserted that the Appellant failed to discharge the burden of proof under Section 56(1) of the TPA by not providing sufficient documentation to challenge the assessments. The Appellant countered that it submitted supporting evidence.
Disputed Tax Amount
4825167.51
Precedent Name
- Digital Box Limited V Commissioner of Investigations and Enforcement
- Commissioner of Domestic Services V Galaxy Tools Limited
- Commissioner of Investigations & Enforcement v Vyas t/a Rocon Enterprises
- Atronix Limited V Commissioner Domestic Taxes
Cited Statute
- Tax Procedures Act, CAP 469B of Kenya's Laws
- Kenya Revenue Authority Act, CAP 469 of Kenya's Laws
- Income Tax Act
- Value Added Tax Act
- Fair Administrative Action Act
Penalty Amount
81476.47
Judge Name
- Robert M. Mutuma
- Jimmy M. Malla
- Eunice N. Ng'ang'a
- Gloria A. Ogaga
Passage Text
- 61. Whereas the Appellant asserted that it provided grounds for filing the objection late in the Notice of objection, the Tribunal lacks jurisdiction to look into decision made or not made under Section 51(7) of the TPA. The High Court and in particular, judicial review division is the proper forum for the Appellant to raise these issues.
- 64. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is incompetent and makes the following orders:- a. The Appeal be and is hereby struck out; b. Each party to bear its own cost.
- 62. Pursuant to the foregoing analysis of facts, case laws and the law, the Tribunal finds and holds that it does not have jurisdiction to hear and determine this Appeal.
Interest Amount
664415.51