REPUBLIC OF KENYA IN THE TAX APPEALS TRIBUNAL APPEAL APPEAL NO.14 OF 2015 MOBILE PLANET LIMITED VERSUS THE COMMISSIONER OF DOMESTIC TAXES RESPONDENT

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1 REPUBLIC OF KENYA IN THE TAX APPEALS TRIBUNAL APPEAL APPEAL NO.14 OF 2015 MOBILE PLANET LIMITED APPELLANT VERSUS THE COMMISSIONER OF DOMESTIC TAXES RESPONDENT BACKGROUND 1. The Appellant is a limited company incorporated in Kenya Act Cap 486 of the Laws f Kenya having been incorporated engages in the business ta applications for mobile devices for the GSM market.? 2. The Respondent is established under he Kenya Revenue Authority Act, (Cap 469) "" of the Laws of Kenya, charged with the mandate to administer the Tax regime on ~~ ~enalf of the,overnment of Kenya. 3. The Tribunal de lvered its Judgement in the Appeal filed by the Applicant on 7 th ~ December 2016 dismissing the Appellant's Appeal and upheld the decision to. " charge WHT for thezperiod 2007 to 2011 for the sum of Kshs.44,165,227/= and further upheld the Commissioner's decision in terms of the letter dated 21 st January 2014 to Appellant charging VAT of Kshs.87,856,054/=. Ruling Appeal No.14 of 2015 (Mobile Planet Limited) Page 1

2 4. The Applicant herein who is the Appellant in the Appeal filed the Application for review of the Judgement rendered on 7 th December 2016 and relied on the following grounds in support thereof:- a. There are errors apparent on the face of the Tribunal record; b. In paragraph 34 of the Judgement, the Tribunal states that: "The Tribunal finds that by conse. Court in the Judicial Revie 349 of 2013 the Application No. on VAT was Ksbs.87, 856,054/=. The Tribunalis boun no variation or order setting the same aside that firs been placed inaccurate. The High Court Miscellaneous 13 which was determined on 14th February i. ies hereto agree that as at 29 h August 2013, the Applicant had a VAT Credit of Ksbs.89,071,289 ii. By virtue of the letter dated 21 st January 2014, issued by the Respondent, the Applicant is at liberty to file a VAT appeal to the Appeal Tribunal in accordance with the Value Added Tax Act... " Ruling Appeal No.14 of 2015 (Mobile Planet Limited) Page 2

3 5. The Respondent herein has not opposed the Application and prays that the same be allowed. ISSUESFOR DETERMINATION 6. Whether there was an error apparent on the face of the Tribunal record and in particular at paragraphs 10 and 34 of the Judgement and the decision of the Tribunal. ANALYSISAND FINDINGS Having heard the Applicant/ Appellant, the findings as follows:- 7. The Tribunal has reviewe and the Application for R "W of its udgement and finds tfiat indeed there was an error at paragraph 34 of the JudgemenT. the agreed VAT as at 29 th. / August 2013 was misstated as Ks_hs.87, /~mstead of Kshs.89,071,289/= as,;f~onsent that was recordedxin High Court Miscellaneous Application No. 8. before the Tribunal therefore was whether the additional was due and payable this being the difference in the amourtt at the time of initial demand being Kshs.107,442,002/= and the in depth audit which resulted to the amendment of the credit position from Kshs.87, /= to Kshs.89,071,289/=. It is therefore incorrect on the part of the Applicant to state that at paragraph 12 of the Application before the Tribunal that the VAT dispute had been dispensed with whereas the Respondent Ruling Appeal No.14 of 2015 (Mobile Planet Limited) Page 3

4 in their submissions dated 22 nd April 2016 stated that the Applicant/ Appellant did not pay reverse VAT through VAT 28 in order to allow the Applicant/Appellant claim in the subsequent month as an input. 9. The Tribunal finds that the onus is/was on the Applicant/Appellant to clearly demonstrate that they had paid for reverse VAT t rough VAT 28 and in the absence thereof the Applicant/Appellant has burden as provided for under Section The Tribunal further finds that the paragraph 26 an also submitted that the Appellant declared Reverse VATon serjiicelicense fees and periodic upgrades of so remitted through a VAT. which was disallowed as aired. Further, the R rspondent contended (f) tent providers whereas this was an importe'd service and woul. attract a charge of tax under this tax head The Refp'ondent also contended that all refunds were paid to the Appellant and responsibility. e Appellant to remit the employee of the Judgement which reads the Tribunal has restated has replicated here reaffirms tl;le position hereinabove as the Respondent has taken the position that the Applicant/Appellant had not filed the VAT 28 and remitted the tax due under this head, it therefore cannot be concluded that the VAT dispute had been dispensed with. 11. The Tribunal has further reviewed all the documents and submissions before it and notes that the Applicant/Appellant has not demonstrated in any way that they Ruling Appeal No.14 of 2015 (Mobile Planet Limited) Page 4

5 filed VAT 28 to enable them claim the sum of Kshs.18, /= a fact that remains undisputed and further that the letter dated 14th February 2014 was treated as the confirmed assessment pursuant to the consent in Court in High Court Miscellaneous Application No. 349 of 2013 on 14th February 2014 made a finding as follows: i. "The parties hereto the ii. By virtue of the left Respondent, the applica Appeal TJ ibunal in accordance with the Val iii. 12. The Tribunal therefore finds~that resolved at the I:::iighCourt.the issue of the n~ remittance of VAT 28 for the of the amount of Kshs.18, /= reminded an issue for determination ssment that needed to be addressed by the Tribunal as,,<n Amended Memorandum of Appeal dated 29 th March 2016 was filed by the Applicant/Agpellant challenging the reduction of VAT credit claimed P' by the Applicant/Appellant as stated at paragraph 5 of the Statement of Facts Relevant to the Memorandum of Appeal filed with the Amended Memorandum of Appeal. 13. The Tribunal further finds that the Applicant/Appellant despite filling a response to the Respondent's Submissions on Appeal did not refute the Respondent's Ruling Appeal No.14 of 2015 (Mobile Planet Limited) Page 5

6 submissions on the issue of not filling VAT 28 which would have granted them the opportunity to claim it in the subsequent month as an input. This in effect left the assessed VAT amount of Kshs.18,370,713/= outstanding. 14. The Tribunal finds that whereas the Respondent did not oppose the Application for Review of the Judgement, the Tribunal has had to interrogate all the documents, which required thorough interrogatio and determine the issue of VAT before it non remittance of VAT 28 remained an issue for e ermination and the Credit granted was based on the additional documents availed by tile Appellant after the in depth audit leaving t amount proved still outst 15. The Tribunal further finds t,,ress contents of paragraph 10 of the Judgement and has reviewetl did the Respondent state that the outstanding VAT was Kshs.89,071,289/=, submissions dated 22 nd April 2016 at e Respondent states as follows: The taxpayershou7d adjust its VAT credit by Kshs.19,400,248/= since the r taxpayer did not pay reverse VAT trough VAT 28 in order to allow him claim it in the subsequent month as an input" 16. The Tribunal finds that no additional evidence was placed before it to demonstrate that the Applicant/Appellant had filed all the VAT 28 as required and therefore in the absence of tangible evidence on the part of the Ruling Appeal NO.14 of 2015 (Mobile Planet Limited) Page 6

7 Applicant/Appellant the same remains undisputed and the amount of Kshs. 18,370,713/= remains outstanding as the assessed outstanding VAT and therefore not entitled to reverse VAT credit as claimed. 17. The Tribunal's finds that their hands are tied as Article 210 of the Constitution of Kenya 2010 does not allow for waiver or variation of tax unless as provided for by legislation. The Appellant, as already state satisfied the Tribunal that they filed the re refund and in the absence thereof the assessment of outstanding VAT is due and payable. DECISION 18. In light of the foregoing erefore reviews its Rule 19 of the Tax Appeals 19. Para raph 10 of the Judgment is reviewed to read The Respondent prays that the "the Commissioner's amended assessment a) Withholding tax fori'fhe years 2006 to July 2011 Kshs.44,165,227/= b) Value Added Tax TOTAL Kshs. 18,370,713/= Kshs. 62,535,940/= 20. The Tribunal having entered the above findings on the Appeal, dismisses the Appeal and upholds the decision of the Commissioner to charge WHT for the Ruling Appeal No.14 of 2015 (Mobile Planet Limited) Page 7

8 Commissioners decision to charge VAT of Kshs.18, /= in light of the failure by the Appellant to demonstrate that they had filed the requisite VAT 28 forms as was required to enable them claim a credit. 21. Each Party shall bear its costs. DATED and DELIVERED at NAIROBI this 11thday of DEQEMBER 2017.!jf' In the presence of:- H~~... for the Respondent LILIAN RENEE OMONDI MEMBER JOLAWIOBONDO MEMBER It-...Lli n.... ~1.R- ~ ABDULBASID AHMED MEMBER ~cv '<. PONANGIPALLI RAMANA RAO MEMBER Ruling Appeal No.14 of 2015 (Mobile Planet Limited) Page 8