KRA Must Notify Taxpayer in Writing for Insufficient Documentation

Case study: Commissioner of Domestic Taxes v WEC Lines Limited (Income Tax Appeal E156 of 2023) [2025] KEHC 12589 (KLR) (Commercial and Tax) (16 September 2025) (Judgment)

Background

WEC Lines Limited, a shipping agent for a Dutch company, filed for a VAT refund, arguing its services were zero-rated as exports. The KRA rejected the claim, stating in its formal decision that the law was misinterpreted—the services were not zero-rated. This was the Commissioner’s stated, official reason.

However, upon appeal by the taxpayer to the Tax Appeals Tribunal (TAT), the KRA’s defense changed. Suddenly, the rejection was not about the law anymore; it was because WEC Lines had allegedly failed to submit the necessary supporting documents.

This new argument was a complete departure from the reason given in the objection decision. It was, as the TAT and later the High Court found, a clear case of an “afterthought.”

The High Court Decision

The High court dismissed the KRA’s appeal, focusing sharply on this procedural misstep. The Court found that KRA had violated Section 51(4) of the Tax Procedures Act.

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 inwriting that the objection has not been validly lodged

In this case, the KRA did no such thing. It waited until the appeal stage to raise the issue of missing documents, having missed its statutory window to do so. This failure was fatal to its case.

As such KRA lost on this ground.

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CPA David Ndiritu Mwangi

Tax Disputes Resolution, Transfer Pricing, Tax Agent, Tax Advisory, Tax Consultant, Certified Public Accountant, Business Advisor.