A construction firm has lost a bid to produce documents in support of the transactions comprising value-added tax (VAT) payment slips, monthly returns and acknowledgments of VAT return receipts as it fights the taxman over a Sh2.4 million tax demand.
High Court judge Chacha Mwita dismissed the plea by Builders Junction saying allowing the production of the evidence will be prejudicial to the Kenya Revenue Authority (KRA).
The judge said the evidence sought to be adduced was at all times in the possession of the company and there was an opportunity for it to produce them before the Tax Appeals tribunal but failed.
“Having considered the application and arguments by parties, I am not satisfied that the application has met the threshold for adducing new evidence at the appellate stage,” the judge said.
Justice Mwita added that additional evidence should not be allowed if it is intended to fill gaps in a party’s case and a party should demonstrate that it was not in the possession of the evidence or could not obtain it even after due diligence.
The company told the court that the taxman conducted investigations and issued the demand of Sh2.4 million in June 2018. The firm filed an objection but it was dismissed for lack of sufficient evidence. The same was also dismissed by the tribunal, forcing the company to head to the High Court.
The construction firm blamed its tax advisers saying they failed to place the documents before the Tribunal, even though they were necessary for the determination of the dispute. The firm said it should not be denied the opportunity to table the evidence.
The KRA opposed the application saying the firm has not shown that the tribunal refused to admit the evidence or that at the time of the appeal, the company did not have the documents sought to be admitted as additional evidence.
The court heard that the firm had an opportunity to produce those documents at the objection and appeal stages but did not.
Further, the court heard that the KRA will suffer prejudice as it will not have the opportunity to review the documents and confirm their authenticity with the suppliers if the application was allowed.