Pearl industries a company manufacturing and selling fabrics was subjected to an investigation by KRA with a view of establishing the authenticity of documents used to support input tax claim on suspicion of VAT fraud. Consequently the commissioner disallowed some of the input tax claimed by the company for lack of supporting documents and issued it with additional assessments.
The company appealed through the tax appeals tribunal and got a favorable judgement where the tribunal held that the burden of proof lay with KRA to demonstrate that the invoices and documents provided were fictitious. On losing the case, KRA took the matter to high courts determination where the courts overturned the tribunals ruling, arguing that the burden of proof lies squarely with the tax payer.
In making the land mark ruling the presiding judge, Justice David Majanja said “In this case, the pendulum of proof swung three times; the first was upon the Respondent, which it did by providing the documents requested by the Commissioner; the second shifted the Commissioner, who after reviewing the documents challenged their authenticity and validity. This meant that the burden of proof finally swung back to the Respondent to prove that the Commissioner was wrong in its position and overall findings”.
Read the full case –
https://kra.go.ke/images/publications/KRA-Vs-Pearl-Industries-Limited-Judgement.pdf