Case Reference :Chairmania Events Ltd v Commissioner for Investigation and Enforcement (Tax Appeal E1370 of 2025) [2026] KETAT 283 (KLR) (14 August 2026) (Judgment).
Background Facts
Chairmania Events Ltd is a limited liability company incorporated in Kenya whose principal business activity is in events organization and support. During the year 2024, the company organized numerous events and also provided support to its clients on planning and organization of events. In the course of its business, Chairmania Events Ltd hired and outsourced several equipment and services from Terrex Traders Limited, including tents, projectors, sound systems, chairs, dais, and video systems. These outsourced equipment and services were all paid for as part of the company’s expenses, and tax invoices were provided by Terrex Traders Limited.
The company claimed input VAT from those supplies it received from Terrex Traders Limited and supported the claim using valid tax invoices in compliance with the provisions of Section 17 of the VAT Act and the VAT Regulations in force at the time. However, the Kenya Revenue Authority (KRA), through the Commissioner for Investigation and Enforcement, carried out investigations into the affairs of Chairmania Events Ltd for the year 2024 and issued a tax assessment for VAT amounting to Kshs. 15,755,537 on 3rd July 2025. The KRA’s basis for the assessment was that Terrex Traders Limited had been identified as a “missing trader,” the invoices and ETR receipts provided could not be authenticated on iTax, and the bank statements did not demonstrate any payments made to Terrex Traders Limited.
The company lodged an objection on 8th August 2025, but on 13th August 2025, the KRA declared the objection invalid and allowed the company to file a valid objection, which it did on 19th August 2025. The KRA issued an objection decision dated 16th October 2025 confirming the assessment. Aggrieved by the KRA’s decision, Chairmania Events Ltd filed a Notice of Appeal at the Tribunal on 14th November 2025.
The Appeal and Key Arguments
Chairmania Events Ltd’s Arguments
Chairmania Events Ltd argued that the KRA erred in law and fact by unreasonably disallowing input VAT claimed by the company and thereby raising additional assessment for VAT amounting to Kshs. 15,755,537 on the basis of disallowed invoices. The company contended that it had fully supported its claim and furnished the KRA with valid tax invoices, ETR receipts, proof of payments in the form of bank statements and payment receipts, supplier payment ledgers, payment vouchers, and proof of payment to customers. The company posited that it correctly claimed input VAT as per the provisions of the VAT Act, 2013 since all the invoices claimed are proper invoices with Electronic Tax Register receipts.
The company further argued that the KRA disregarded all the explanations and documentation provided and proceeded to disallow input VAT borne and claimed by the company. It contended that disallowing input VAT on the basis that corresponding output VAT had not been matched was illegal, as the company does not have visibility of the suppliers’ output tax declaration on iTax. The company also argued that the KRA acted illegally by disregarding the express provisions of Section 17 of the VAT Act, 2013 and Paragraph 9 of the VAT Regulations, 2017.
Additionally, Chairmania Events Ltd contended that the KRA issued the objection decision after the lapse of the statutory prescribed period of sixty days, thereby contravening Section 51(11) of the Tax Procedures Act. The company submitted that while it filed its objection on 8th August 2025, the KRA did not issue an objection decision within the mandatory sixty days, and instead issued it on 16th October 2025, four days after the lapse of the prescribed statutory period, hence the objection should be deemed to have been allowed by operation of law.
The company relied on several authorities, including Republic v Kenya Revenue Authority Ex Parte M-Kopa Kenya Limited [2018] eKLR, Eastleigh Mall Limited v Commissioner of Investigations & Enforcement [2023], and Commissioner of Domestic Taxes v Trical and Hard Limited [2022], where the court held that once competent and relevant evidence is produced, the burden shifts to the KRA. The company also cited Keroche Industries Limited v Kenya Revenue Authority & 5 Others [2007] for the proposition that the court must uphold the law and disallow unfair tax assessments.
Kenya Revenue Authority’s Arguments
The KRA contended that the disallowance of input VAT was lawful and in accordance with Section 17 of the VAT Act, which provides that input VAT is deductible only where it arises from an actual taxable supply and is supported by valid documentation and proof of an underlying commercial transaction. The KRA argued that in the present case, the company’s claim was based on invoices issued by Terrex Traders Limited, a supplier established during investigation to be a missing trader, and the invoices and ETR receipts provided could not be authenticated, with the company failing to demonstrate that the alleged purchases actually occurred.
The KRA further averred that the bank statements and payment records submitted did not demonstrate any payments made to Terrex Traders Limited, and in the absence of proof of settlement and delivery of goods or services, the KRA correctly concluded that no taxable supply had occurred. The KRA maintained that upon review, it established that the invoices submitted could not be authenticated as genuine invoices issued by the alleged supplier, and the ETR receipts provided could not be verified on iTax, with several instances not being accompanied by corresponding tax invoices.
The KRA submitted that further analysis of the company’s bank statements revealed no evidence of payments made to Terrex Traders Limited in respect of the purported purchases, and the company also failed to provide supplier statements and delivery notes to corroborate the alleged transactions. The KRA asserted that in the absence of authenticated invoices, verifiable ETR receipts, proof of payment, supplier statements, and delivery notes, the company failed to demonstrate the existence of an underlying taxable supply and consequently did not discharge the burden of proof required to sustain the input VAT claim.
Regarding the timeline objection, the KRA countered that the objection decision was issued within the statutory timelines prescribed under Section 51(11) of the TPA. The KRA argued that the company lodged the objection on 19th August 2025, and the objection decision was issued on 16th October 2025, which falls within 60 days from 19th August 2025. The KRA maintained that no deemed allowance arose under Section 51(11) of the TPA.
Tribunal’s Analysis and Findings
Issue 1: Whether the KRA’s Objection Decision was time-barred
The Tribunal analyzed the record of appeal and established that indeed the company’s valid notice of objection was lodged on 19th August 2025 and not 12th August 2025. A count of time from the 19th August 2025 in accordance with Section 77 of the TPA showed that the objection decision issued on 16th October 2025 was issued on the 44th day, well within the statutory timeline prescribed by Section 51(11) of the TPA. The Tribunal therefore found that Chairmania Events Ltd’s averment that the KRA’s decision was time-barred and that its notice of objection ought to have been deemed allowed by operation of law was unfounded and could not be sustained.
Issue 2: Whether the KRA erred by rejecting Chairmania Events Ltd’s input VAT claims and raising Additional VAT Assessments
The Tribunal observed that while the KRA acknowledged receipt of relevant supporting documentation required for claim of input tax in accordance with Section 17 of the VAT Act, it maintained that the documents were doubtful and that the company needed to prove the existence of an underlying transaction. The Tribunal perused the pleadings and noted that Chairmania Events Ltd provided the following documents in support of its claim for input tax: tax invoices and ETR receipts for the purchase made from Terrex Traders Limited, proof of payments in the form of bank statements and payment receipts made to suppliers, supplier payment ledgers, payment vouchers, and proof of payment to customers.
The Tribunal held that the plain and unambiguous language of Section 17(1), (2), and (3) of the VAT Act is clear that the only conditions provided for a taxpayer to qualify for deduction of input VAT are: that the input tax was incurred on a taxable supply made to or on importation made by a taxpayer at the end of the tax period, that the input tax is deducted by a registered person on taxable supplies made by him, that the registered supplier has declared the sales invoice in a return, that the input tax is to be allowable for deduction within six months after the end of the tax period in which the supply or importation occurred, and that the taxpayer shall have the relevant documentation. Chairmania Events Ltd in this case complied with all these four requirements when it submitted documents to the KRA, and indeed the KRA acknowledged that the company satisfied the statutory requirements for claim of input tax.
The Tribunal emphasized that the burden of proof in tax cases is not stationary and swings like a pendulum between the taxpayer and the KRA. The initial burden rests on the taxpayer with a presumption of correctness attaching to the KRA’s assessment, however, upon adduction of evidence by the taxpayer, the burden swings to the KRA to disprove the company’s assertions. In the instant case, once Chairmania Events Ltd provided the documents required of it by Section 17 of the VAT Act for the claim of input tax, the burden shifted to the KRA to dismantle the company’s evidence with precision, however the KRA failed to discharge this burden. The KRA had the option of investigating the documents provided by the company to assure itself of their authenticity but it did not do so.
The Tribunal further held that Section 17 of the VAT Act does not place a burden on Chairmania Events Ltd to confirm whether its suppliers actually filed their returns or documents as directed by the KRA. It was thus improper for the KRA to place a burden on the company to provide information which is not envisaged in the law as a condition precedent for allowing the company’s input tax claim. The Tribunal observed that if the taxpayer has complied with the applicable law, then the information obtained from third parties should not be used to forcefully bring the taxpayer within the tax dragnet because there is never an intendment or equity presumption about tax.
Citing the famous principle from Cape Brandy Syndicate v Inland Revenue Commissioner [1921] 1 KB, the Tribunal held that “in a taxing Act one has to look merely at what is clearly stated. There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used”. The Tribunal held the view that the Kenya Revenue Authority, being a tax authority clothed with the mandate to collect taxes and having investigative capacity, also being the custodian of taxpayers’ data, cannot reasonably turn to an individual taxpayer who has no view of third-party data and or control over the said third party and require it to verify the authenticity of transactions beyond submission of documents required of it in line with the applicable laws.
The Tribunal’s position that Chairmania Events Ltd was entitled to claim input VAT arising from these transactions upon meeting the prescribed legal requirements was affirmed in Commissioner of Domestic Taxes v Ramco Printing Works Limited [2022], where it was held that the taxpayer was entitled to claim input VAT upon satisfying itself that the taxpayer had established its case to the required standards. For these reasons, the Tribunal found and held that the KRA erred in disallowing Chairmania Events Ltd’s input VAT claims and also raising additional VAT assessments against the company.
Final Decision
On 14th August 2026, the Tribunal delivered its judgment allowing the appeal in its entirety. The orders made were as follows: the appeal was hereby allowed, the KRA’s objection decision dated 16th October 2025 was set aside, and each party was ordered to bear its own costs.
Key Lessons for Taxpayers
- Documents Must Tell a Complete Story: Chairmania Events Ltd provided all the required documentation, including tax invoices, ETR receipts, proof of payments, bank statements, supplier ledgers, and payment vouchers. These documents told a complete story of the commercial transactions, and the KRA’s failure to disprove them led to the company’s victory. This case demonstrates that when documents are complete, competent, and relevant, they will demolish the presumption of correctness attaching to the KRA’s assessment.
- Burden of Proof and the Swinging Pendulum: Under Section 56(1) of the Tax Procedures Act, the burden is on the taxpayer to prove that a tax decision is incorrect. However, as the Tribunal held, the burden swings like a pendulum. Once a taxpayer produces competent and relevant evidence, the presumption of correctness is demolished, and the burden shifts to the KRA to disprove the taxpayer’s assertions with precision. Chairmania Events Ltd successfully swung the pendulum in its favor by providing comprehensive documentation.
- Suppliers’ Non-Compliance Cannot Penalize the Taxpayer: The Tribunal made a landmark ruling that taxpayers are not required to verify whether their suppliers have filed their returns or declared output tax. This is a critical principle because the KRA cannot penalize a compliant taxpayer merely because a supplier turns out to be non-compliant or a “missing trader.” Chairmania Events Ltd was not required to concern itself with what third parties have filed in their returns provided it had the necessary legitimate documents to support its transactions.
- Section 17 of the VAT Act Conditions are Clear: The only conditions for claiming input VAT under Section 17 of the VAT Act are that the input tax was incurred on a taxable supply, the taxpayer is a registered person, the supplier has declared the sales invoice, the claim is made within six months, and the relevant documentation is provided. The KRA cannot introduce additional requirements not envisaged by the law, such as requiring the taxpayer to verify suppliers’ filings.
- Strict Interpretation of Tax Statutes: The principle from Cape Brandy Syndicate that in a taxing Act one has to look merely at what is clearly stated, with no room for intendment, no equity about tax, and no presumption about tax, was applied firmly in this case. The KRA’s attempt to read in additional requirements into Section 17 of the VAT Act was rejected by the Tribunal.
- The KRA Must Investigate Properly: Once Chairmania Events Ltd provided evidence, the KRA had the option of investigating the documents to assure itself of their authenticity, but it did not do so. The Tribunal held that data obtained from third parties should be subjected to further investigation and or corroboration with evidence from other sources of information and not be applied in a carte blanche manner to disenfranchise a taxpayer.
Conclusion
The decision in Chairmania Events Ltd v Commissioner for Investigation and Enforcement [2026] KETAT 283 (KLR) is a significant victory for taxpayers and a stark reminder that in Kenya’s self-assessment tax system, the burden rests on the business to keep proper records, but once those records are produced, the burden shifts to the KRA to disprove them with precision. Tax documentation should not merely exist—it should reconcile across the entire transaction trail. Chairmania Events Ltd succeeded because its invoices, payment records, bank statements, and ledgers told the same commercial story. For practitioners, this reinforces the importance of maintaining complete and verifiable records, as well as the importance of testing the full audit trail during a tax health check, rather than waiting until an assessment to discover that the supporting records do not speak to each other. This case also establishes an important principle that compliant taxpayers should not be penalized for the non-compliance of their suppliers.
