Savla v Commissioner of Domestic Taxes (Civil Appeal E100 of 2022) [2026] KECA 1292 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that invoices and receipts alone don't win a VAT dispute; taxpayers must also answer KRA's reasonable questions about their transactions.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the documentation provided under section 17 of the VAT Act was sufficient proof of actual delivery of goods and/or services
- 2.Whether the appellant discharged the statutory burden of proof placed on the taxpayer
- 3.Whether the respondent's failure to provide the investigation report was consequential
- 4.Whether the demand for further information from the taxpayer was unreasonable
Key legal issues
#Whether documentation under section 17 of the VAT Act alone discharges the taxpayer's burden of proving input tax claims
No. Documentation must relate to an actual supply; the taxpayer must also answer reasonable inquiries for further information on the transactions
Section 17(1) permits deduction of input tax only where the supply was actually acquired to make taxable supplies. The High Court held, and this Court agreed, that the purchase must be real and not notional or artificial. Both the Tribunal and the High Court found that mere possession of the listed documents was insufficient, and the Court of Appeal endorsed that concurrent finding, holding that the demand for supplier details, ledgers, and proof of receipt of goods was relevant and within the appellant's reach.
Allocation of the burden of proof where fraud (missing trader) is alleged
The taxpayer bears the initial statutory burden; where a serious allegation of fraudulent evasion is raised, the taxpayer must first dispel it before the burden shifts to the tax authority
Section 30 of the Tax Appeals Tribunal Act and section 56(1) of the Tax Procedures Act place the burden of proving a tax decision incorrect on the taxpayer. The respondent alleged a missing trader fraud in which paid funds allegedly returned to the appellant. Because this was a serious allegation, the appellant was required to dispel it; his demand for the investigation report was premature since his own burden remained undischarged.
Whether the respondent's demand for further information was unreasonable
It was not; the information was relevant to the dispute and expected to be within the appellant's reach
The respondent sought supplier locations, contact persons, active contact details, detailed general ledgers for 2014-2017, cheque counterfoils, bank statements, and evidence of goods receipts and stock movement. The Court viewed this spectrum of information as relevant and reasonably within the taxpayer's reach; at the very least, any difficulty in availing it ought to have been explained. The taxpayer offered no such explanation, claiming only unreasonableness.
Scope of a second appeal in tax matters
Appeals to the High Court and Court of Appeal in tax matters are restricted to questions of law, though facts may give rise to questions of law where an erroneous conclusion rests on primary factual evidence
Section 56(2) of the Tax Procedures Act confines second appeals to questions of law. Relying on prior decisions of this Court, the panel accepted that an erroneous conclusion based on primary factual evidence is a point of law, but ultimately found that the appellant had simply failed to discharge his evidentiary burden, a concurrent factual finding of the Tribunal and High Court it declined to disturb.
Legal principles established
#- Possession of the documents listed in section 17(3) of the VAT Act is not by itself sufficient; a taxpayer must also prove an actual supply and answer reasonable inquiries for further information
- Where an allegation of missing trader fraud is raised, the taxpayer must first dispel it; only then does the burden crystallise on the tax authority
- A taxpayer must supply further information reasonably demanded by the tax authority or explain any difficulty in doing so; failure to do either means the burden of proof is not discharged
Court orders
#- 1.Appeal dismissed
- 2.Costs to the respondent
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court
- Jurisdiction invoked
- Second appeal under section 56(2) of the Tax Procedures Act, restricted to questions of law
Relief refused
#Vacatur of the tax assessment / setting aside the High Court decision confirming it
The appellant failed to provide the further information requested or explain why he could not, and so did not discharge his burden of proof
Order compelling the respondent to provide details of the investigation report
The burden on the respondent to demolish the taxpayer's evidence had not crystallised because the taxpayer had not discharged his own burden
Costs
Appeal dismissed with costs to the respondent
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the end, this appeal fails and is dismissed with costs to the respondent.
The appellant, having failed to provide the information or in the alternative, explain why he could not provide it, did not discharge his burden of proof.
This was a serious allegation that the appellant was required to dispel before the burden on the respondent to demolish the evidence adduced by the taxpayer could crystallise.
this was information that was not only relevant in the determination of the tax dispute but was also expected to be within the appellant’s reach.
it was not enough for a taxpayer to hold the documents listed under section 17 of the VAT Act
Issues in the judgment
#The judgment does not state the case number of the appeal, the names of the parties, the High Court case details, or the neutral citation; the appellant is referred to only as 'the appellant'.
Internal inconsistency in the dates of the respondent's objection decision: the narrative gives 19th July 2018, while the grounds of appeal refer to a decision dated 10th July 2018.
The delivery date printed is 10th July 2026, which may be a typographical error for an earlier year.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Savla v Commissioner of Domestic Taxes (Civil Appeal E100 of 2022) [2026] KECA 1292 (KLR)", Case Analysis (2026). Second appeal, memorandum of appeal dated 4th March 2022 (appeal number not stated in judgment). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1292/eng@2026-07-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.