Case Reference:Nuel Holding Ltd v Commissioner of Legal Services (Tax Appeal E1273 of 2025) [2026] KETAT 93 (KLR) (Appeals) (26 June 2026) (Judgment)
The Background of the Dispute
Nuel Holding Ltd is a limited liability company incorporated in Kenya, operating an ordinary commercial trading business. In September 2022, the company secured a purchase order from the Office of the President, reference number 24331, valued at a staggering Kshs 52,040,000. The company supplied the goods, issued invoices, and awaited payment from the client.
On November 15, 2022, the client finally processed and approved the payment voucher, releasing the substantial sum into Nuel Holding’s bank account. The company received the money, paid bills, settled salaries, and moved on. For Nuel Holding, November was a quiet month—no new transactions, no new sales, no new deliveries. Just a month when they finally got paid for work done months earlier.
But here is where the problem lay.
On March 14, 2024, more than a year after the payment was received, the Kenya Revenue Authority through the Commissioner of Legal Services issued a VAT assessment against Nuel Holding. The taxman had noticed that Kshs 52,040,000 had been deposited into the company’s account in November 2022 and demanded VAT on that amount.
Nuel Holding objected, arguing that it had already filed its tax returns in April 2023, that there were no transactions in November, and that the payment was merely settlement for work completed in September. The company also submitted medical documents explaining that the person responsible for tax compliance had been seriously ill, which caused the delay in filing the objection.
The Issue for Determination
The central issue in this case was deceptively simple but far-reaching:
When a company supplies goods or services in September but receives payment in November, at what point does VAT become payable?
- Nuel Holding’s position: VAT should be payable in September when the supply was made. The November payment was merely a recovery of receivables, not a new taxable event.
- The Commissioner’s position: Under Section 12 of the VAT Act, the time of supply is the earliest of the following events: (a) the date goods are delivered or services performed; (b) the date a certificate is issued by an architect, surveyor, or consultant; (c) the date the invoice is issued; or (d) the date payment for the supply is received, in whole or in part. Since payment was received in November, November became the taxable moment.
The Objection Process
On July 30, 2025, Nuel Holding formally objected to the tax assessment, contending that:
- There were no transactions in November 2022
- The last transaction was a purchase order dated September 23, 2022
- The payment voucher was processed on November 15, 2022, but this was merely settlement for an existing supply
- The person responsible for tax matters had been ill, causing the delay in filing the objection
The company submitted medical documents to support its explanation for the late filing.
However, the Commissioner was not satisfied with these materials. The taxman maintained that under Section 12 of the VAT Act, the date of payment receipt was the taxable moment, and the company had failed to provide any evidence that it had already paid VAT on that transaction.
On October 8, 2025, the Commissioner issued its Objection Decision, confirming the VAT assessment.
The Tax Appeal Tribunal’s Decision
Nuel Holding appealed to the Tax Appeal Tribunal. The Tribunal reviewed the records and ruled against the taxpayer.
The Tribunal’s key findings were as follows:
On the Time of Supply for VAT
The Tribunal relied on Section 12(1) of the VAT Act, which clearly provides:
“Subject to subsection (3), the time of supply, including a supply of imported services, shall be the earlier of— (a) the date on which the goods are delivered or services are performed; (b) the date a certificate is issued by an architect, surveyor, or any other person acting as a consultant in a supervisory capacity; (c) the date on which the invoice for the supply is issued; or (d) the date on which payment for the supply is received, in whole or in part.”
The Tribunal found that since Nuel Holding received payment on November 15, 2022, that date became the time of supply for VAT purposes. The fact that goods were delivered in September did not change this conclusion. The law was clear: payment triggers VAT.
On the Burden of Proof
The Tribunal applied Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act, finding that the taxpayer bears the burden of proving that an assessment is excessive or incorrect.
Nuel Holding failed to provide any evidence that it had already paid VAT on this transaction. No receipts, no payment vouchers, no accounting records—nothing. As the Tribunal stated:
“The Appellant failed to adduce positive documents to demonstrate that the Respondent’s decision was incorrect. Consequently, the Tribunal finds and holds that the Respondent’s decision was justified and the Appellant failed to discharge its burden of proof contrary to Section 30 of the Tax Appeals Tribunal Act, 2013 (TATA) and Section 56(1) of the Tax Procedures Act.”
The Tribunal cited the case of Mugo v Commissioner of Domestic Taxes (TAT E918 of 2024) KETAT 374 (KLR) , which established the precedent that taxpayers must provide documents to prove a tax assessment is wrong.
On the Medical Excuse
The Tribunal acknowledged the medical documents submitted but held that personal hardships—however genuine—cannot override statutory obligations. Illness does not exempt a taxpayer from tax obligations, nor does it shift the burden of proof.
The Final Result
The Tribunal dismissed the appeal, upheld the Commissioner’s Objection Decision dated October 8, 2025, and ordered each party to bear its own costs.
