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02 December 2025 Kenya High Court rules that government's objection decision sent to wrong email was ineffective
The High Court of Kenya (Commercial & Tax Division) (court) in Imara Steel Mills Ltd. v. Commissioner of Investigations and Enforcement (Income Tax Appeal No. E140 of 2024), issued on 30 October 2025, upheld the taxpayer's appeal, overturning both the Tax Appeals Tribunal's judgment and the Kenya Revenue Authority's (KRA) assessments. The court held that the KRA failed to properly serve its Objection Decision upon the taxpayer within the 60-day statutory period, making it ineffective. The court also held that assessments for 2015 and 2016 were time-barred because they were issued beyond the five-year statutory limit. Imara Steel Mills Ltd. (Appellant) is a private company engaged in steel manufacturing in Kenya. The KRA (Respondent) conducted a tax audit for 2015–2019 and issued tax assessments on 25 March 2022. The Appellant objected to the assessments on 27 April 2022, but the KRA's Objection Decision, dated 24 June 2022, was sent to a nonexistent email address. It was not until 23 December 2022, that the Appellant became aware of the decision and appealed the decision to the Tax Appeals Tribunal (TAT). At the Tribunal, the Appellant argued that the decision was statutorily time-barred, but the Tribunal found for the Respondent, who had argued that the Appellant had not discharged its burden of proof. The Appellant then filed an appeal to the High Court. The Appellant asserted that the Objection Decision was not properly served within the 60-day statutory period, as it was sent to an incorrect email address instead of the registered iTax address, causing delayed receipt. The Appellant maintained that failure to serve the decision within the required timeframe meant the objection was allowed by law under Section 51(11) of the Tax Procedures Act. Additionally, the Appellant asserted that the 2015 and 2016 assessments were time-barred, having been issued beyond the five-year limit under Section 29(5) without evidence of fraud, evasion or neglect. The KRA argued that the audit was lawful, and assessments were based on discrepancies between the Appellant's declared sales and third-party purchase data on iTax. It claimed the objection was filed late and that the taxpayer failed to provide supporting documents such as financial statements, invoices and bank records. The KRA relied on statutory provisions requiring taxpayers to keep proper books for at least five years and asserted that assessments are presumed correct until proven otherwise, emphasizing that the Appellant did not discharge its evidential burden.
The Court held that although the Objection Decision was dated within the 60-day window, it was not properly served to the Appellant's registered iTax email, making it ineffective. Compliance requires not just issuing the decision but ensuring proper service through recognized channels. Sending it to an incorrect or inactive address does not meet this standard, and any decision not communicated within 60 days is void under Section 51(11). Consequently, the objection was deemed allowed by law. The Court ruled that the 2015 and 2016 assessments were issued beyond the five-year statutory limit without evidence of fraud or neglect to justify reopening those years, affirming that assessments outside the statutory period are invalid unless fraud or evasion is proven. This judgment underscores the need for strict compliance with statutory timelines and proper service in tax disputes. Tax authorities must issue assessments and communicate decisions within legal timeframes through correct channels, such as the taxpayer's registered iTax email. It also clarifies the treatment of time-barred assessments and promotes procedural fairness in tax dispute resolution processes.
Document ID: 2025-2396 | ||||||
