The Right to Object and the Cost of Delay

Under Section 51 of the Tax Procedures Act, 2015, a taxpayer who disagrees with a tax assessment has the right to object. This safeguard ensures fairness and accountability in tax administration.

An objection must be submitted in writing within 30 days, stating the grounds of dispute and supported by relevant documentation.

Once lodged, the Commissioner must issue an Objection Decision within 60 days. Failure to do so results in the objection being deemed allowed by operation of law.

What Happened?

The Kenya Revenue Authority (KRA) issued Baus Optical Company Limited with tax assessments totaling Kshs. 624 million in VAT and income tax.

Baus lodged its objection on 6 September 2022. However, the Commissioner issued an Objection Decision on 8 November 2022, raising questions about compliance with the statutory 60-day timeline.

At the Tribunal

The Tax Appeals Tribunal held that KRA failed to prove the actual date of receipt of the objection. As a result, it ruled that the objection was deemed allowed by law.

The Commissioner appealed, arguing that the Tribunal improperly raised the issue of timelines suo moto, since it had not been pleaded.

Before the High Court

Justice Visram held that timelines under the TPA are jurisdictional. Jurisdiction cannot be conferred by consent, and any breach renders subsequent action invalid.

The Court affirmed that the Tribunal was entitled, and indeed obligated, to raise the issue of timelines suo moto, as it goes to the root of jurisdiction.

Effect of Delay

The Court emphasized that this consequence is strict and automatic. It is not subject to discretion or equitable considerations.

Since KRA failed to prove the actual date of receipt, the Court upheld the Tribunal’s decision and dismissed the appeal.

Key Takeaway

For taxpayers and businesses, this decision underscores the importance of closely monitoring objection timelines and asserting rights where statutory defaults occur.