The High Court has dismissed an appeal by a general supplier seeking to quash a tax demand of Sh154 million, saying the trader was to blame for failing to provide documents to support its transactions as the taxman requested.
Rahisi Cash and Carry Traders had appealed against the dismissal of its case by the Tax Appeals Tribunal after providing tax invoices and corresponding ETRs as proof of supplies.
Justice Fred Mugambi, however, said the burden of proof in tax matters is like a pendulum swinging between the taxpayer and taxman at different points but more times than not swings towards the taxpayer.
“The Commissioner requested for [sic] more evidence from the appellant as empowered to do under section 59 of the TPA and section 43 of the VAT Act. This evidence was not availed [sic] meaning that the pendulum stalled on the appellant,” the judge said.
Justice Mugambi said the law imposes an obligation on taxpayers to keep their records for a period of up to five years and produce them when required by the tax authorities.
“I do not find anything unreasonable about the request for further evidence under the circumstances, which the appellant was at pains to produce, hence the objection decision which the Tribunal confirmed,” the judge said.
The trader who does resale appealed against the demand for tax assessment on May 23, 2018.
The supplier filed a notice of objection to the assessment but the taxman confirmed the assessment in its objection decision in July 2018. However, the trader faulted the taxman for not providing reasons for the assessment to back the objection decision.
Justice Mugambi stated the commissioner demanded purchase ledgers, stock sheets and payment documents, but they were never supplied.
“The appellant cannot therefore not say that it was not informed of the reasons for the assessment. The objection decision contained sufficient reasons and thus the reason why the appellant preferred an appeal before the Tribunal and ultimately before this court.”
