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Gapco Kenya Limited v Commissioner of Domestic Taxes (Appeal 1038 of 2022) [2023] KETAT 984 (KLR) (6 October 2023) (Judgment)

Gapco Kenya Limited v Commissioner of Domestic Taxes (Appeal 1038 of 2022) [2023] KETAT 984 (KLR) (6 October 2023) (Judgment)
Citation
Gapco Kenya Limited v Commissioner of Domestic Taxes [2023] KETAT 984 (KLR)
Media Neutral Citation
[2023] KETAT 984 (KLR)
Court
Tax Appeal Tribunal
Outcome
Allowed
Case number
Appeal 1038 of 2022
Judges
Grace Mukuha, E Komolo, Jephthah Njagi, T Vikiru, G Ogaga
Judgment date
6 October 2023
Language
English
Type
Judgment
Original source file
Download DOC (102.0 KB)
Collections
Date published
11 January 2024
Case action
Judgment
Filing county
Nairobi
Order
a) The Appeal be and is hereby allowed. b) The Respondent’s objection decision dated 11th August 2022 be and is hereby set aside. c) Each party to bear its own costs
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Background
1.The Appellant is a private limited liability company incorporated in Kenya under the Companies Act. Its principal activity is marketing and distributing of petroleum products.
2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 460 Laws of Kenya (KRA Act). Under Section 5 (1) of the Act, KRA is an agency of the Government for the collection and receipt of all revenue. Under Section 5(2) of the Act with respect to the performance of its function under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Parts I and II of the First Schedule to the KRA Act for the purposes of assessing, collecting, and accounting for all revenues in accordance with those laws.
3.The Respondent issued its notice of assessment to the Appellant on 31st May 2022 wherein the Respondent charged Withholding Income Tax (WHT) on demurrage charges paid by the Appellant to Total Outre-Mer S.A. (TOM) following its conclusion that the demurrage charges were income deemed to be accrued in or derived from Kenya.
4.The Appellant lodged its objection in a notice of objection dated 28th June 2022, to which the Respondent issued its objection decision on 11th August 2022 confirming the WHT assessments on payments of demurrage charges to TOM.
5.The Appellant being dissatisfied with the objection decision filed its Notice of Appeal on 8th September 2022.
The Appeal
6.The Appeal is premised on the Memorandum of Appeal dated and filed on 21st September 2022 which raised the following grounds: -a)That the Respondent erred in assessing Withholding Income Tax (WHT) on demurrage fees paid by the Appellant to Total Outre-Mer S.A. (TOM) in the year 2017 based on the contention that the payments made by the Appellant to TOM attracted WHT at the rate of 15% in line with provisions of Section 35 (1) (c) of the Income Tax Act (ITA) read together with Paragraph 3(c) (ii) of the Third Schedule to the ITA. For payments made in the years 2018 and 2019, the Respondent contended that the payments attracted WHT at the rate of 20% in line with the provisions of Section 35 (1)(m) of the ITA read together with Paragraph 3 (o) of the Third Schedule to the ITA.b)That the Respondent erred in assessing WHT on demurrage paid by the Appellant to TOM without distinguishing demurrage relating to wet cargo and demurrage relating to dry cargo. The Appellant contends that demurrage fees that relate to wet cargo, in this case, petroleum products, is an amount levied as liquidated damages to the ship owner by the charterer or shipper for failure to complete loading or discharging within the time allowed under a voyage or charterparty. On the other hand, demurrage fees in relation to dry cargo are an amount levied due to late return of ocean containers.c)That the Respondent erred in law and fact in the interpretation of the judicial pronouncement of Income Tax Appeal No. 13 of 2017 Ocean Freight (E.A.) Limited vs the Commissioner of Domestic Taxes as held at the High Court.d)That the Respondent erred in law and fact in assessing WHT on the demurrage fees paid to TOM, a company that is tax resident in France by failing to consider the provisions of Article 8 (2) of the Kenya-France Double Taxation Agreement that assigns taxing rights on the demurrage income to France where TOM is tax resident.
The Appellant's Case
7.The Appellant’s case is premised on the following documents:-a)Appellant’s Statement of Facts filed on 21st September 2022 and the documents attached thereto.b)Appellant’s Written Submissions dated and filed on 20th March 2023 and the authorities thereto.
8.The Appellant stated that the Respondent conducted a verification of the Appellant’s operations covering the tax periods of 2017 to 2019 which resulted in the Respondent issuing Withholding Income Tax (WHT) assessments communicated to the Appellant in a letter dated 31st May 2022. The assessments amounted to Kshs. 31,401,919.00, comprising principal tax of Kshs. 18,990,555.00, penalty of Kshs. 1,899,055.50 and interest of Kshs. 10,512,308.00.
9.The Appellant stated that the assessments relate to the Respondent’s decision to charge WHT on demurrage fees paid by the Appellant to Total Outre-Mer S.A. (TOM) which the Respondent contended, were subject to WHT deduction.
10.The Appellant stated that it objected to the assessments in a letter dated 28th June 2022 and that the Respondent confirmed the assessments on 11th August 2022 on the basis that demurrage charges were deemed to be income accrued in or derived from Kenya, and therefore subject to WHT as per Sections 3 and Section 35 (1) (c) of the ITA which the Appellant was obligated to withhold and remit to the Respondent.
11.The Appellant contended that there should be a distinction between demurrage relating to dry cargo and demurrage relating to wet cargo. It described demurrage levied on dry cargo as an amount levied due to late return of ocean containers which is a post-importation charge. It described demurrage charges in relation to wet cargo as an amount levied by the shipowner for failure to complete loading or offloading wet cargo, such as petroleum products, within the agreed time under voyage or charterparty, and an amount that is part of freight.
12.The Appellant submitted that demurrage charged on dry cargo and demurrage charged on wet cargo are distinct from each other, and relied on the decision in the High Court case Income Tax Appeal No. 13 of 2017 Ocean Freight (E.A.) Limited v Commissioner of Domestic Taxes where the court posited: -“9.The point of contention is how to treat demurrage charges on containers. Is it part of freight or should it be treated as rent for detained containers". Treating it as one and not the other has an implication as to whether it is to be brought to charge under the Income Tax Act as existing at the material time.”
13.The Appellant cited Income Tax Appeal No. 13 of 2017 Ocean Freight (E.A.) Limited v Commissioner of Domestic Taxes in its submission that demurrage charges on petroleum products are part of freight, where the High Court held: -“20.It would seem probable that the demurrage incurred for the period of preloading or for failure to unload the vessel before the lapse of the contract period is clearly demurrage associated with the freight. The freight comes to an end at the port of landing and any demurrage imposed on the container for late return after port is a post importation charge. There is therefore merit in distinguishing or segregating this charge from costs on freight.”
14.The Appellant stated that it paid the demurrage charges to TOM, a company resident in France, and submitted that payments by a Kenyan resident entity should be analysed in line with the provisions of the Kenya-France Double Taxation Agreement.
15.The Appellant submitted that Paragraph 1 of the Kenya-France DTA provides that the DTA has the force of law in Kenya and in the event of a conflict between the Kenyan Income Tax Act (ITA) and the DTA, then the DTA should prevail. To support this submission, it cited Article 2 (6) of the Constitution of Kenya which provides that: -“Any treaty or convention ratified by Kenya shall form part of the law of Kenya under this Constitution.”
16.The Appellant averred that the Kenya-France DTA is modelled along both the Organisation for Economic Cooperation and Development Model Tax Convention (OECD Model) and the United Nations Model Double Taxation Convention (UN Model), and that these models are accompanied by commentaries which are integral in the interpretation of the Articles of the DTA.
17.The Appellant submitted that based on the UN Model, Kenya’s taxing rights under the Kenya-France DTA are limited to dividends (Article 10), interest (Article 11) and royalties (Article 12), and that any other items of income not expressly stated in the DTA are supposed to be taxed in the contracting state, in this case, France.
18.The Appellant further submitted that any demurrage fees incurred by a ship that is chartered by TOM is chargeable to tax in France, citing Article 8 (2) of the Kenya-France DTA which states: -“Profits of an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable in the Contracting State in which the place of effective management of the enterprise is situated.Provided that where such an enterprise derives profits from such operation in the other Contracting State:(a)Such profits shall be deemed to be an amount not exceeding 5 per cent of the full amount received by the enterprise on account of the carriage of passengers or freight embarked in that other State; and(b)The tax chargeable in that other state shall be reduced by an amount equal to fifty per cent thereof.”
19.The Appellant submitted that TOM is an entity whose place of effective management is France, and in line with the provisions of Article 8 (2) of the Kenya-France DTA, Kenya does not have taxing rights on the demurrage income derived from or accrued in Kenya and the same should be taxed in France.
20.The Appellant averred that demurrage incurred in importation of wet cargo is part of freight cost, which is income chargeable to tax on the ship owner as per Section 9 (1) of the ITA, and therefore the Respondent erred in fact and in law in charging the same to tax under Section 35 of the ITA.
Appellant's Prayers
21.The Appellant prays that the Tribunal: -a)Allows the Appeal.b)Sets aside the confirmed assessment of Kshs. 31,401,919.00 inclusive of interest and penalties.c)Awards the costs of this Appeal to the Appellant.
Respondent's Case
22.The Respondent’s case is premised on the following documents:-a)Respondent’s Statement of Facts filed on 19th October 2022 and attachments thereto.b)The Respondent’s Written Submissions dated and filed on 18th April 2023.
23.The Respondent stated that the dispute arose from a tax audit that was carried out on the Appellant for the periods 2017 to 2019 which led to it issuing to the Appellant a letter with its preliminary audit findings dated 22nd February 2021, which the Appellant responded to in a letter dated 25th March 2021.
24.The Respondent averred that on 3rd November 2021 it held a meeting with the Appellant to discuss the WHT assessments, and that the Appellant agreed to furnish documents for the sale of the Appellant to TOM.
25.The Respondent stated that for the periods 2017 to 2019 the Appellant incurred demurrage fees for delays experienced in offloading of petroleum products at the Mombasa Port and did not operate WHT on the demurrage fees paid to TOM as required by the law.
26.The Respondent affirmed that it issued its notice of assessment to the Appellant on 31st May 2022 wherein the Respondent charged Withholding Income Tax (WHT) on demurrage charges paid by the Appellant to Total Outre-Mer S.A. (TOM) following its conclusion that the demurrage charges were income deemed to be accrued in or derived from Kenya.
27.The Respondent confirmed that the Appellant lodged its objections to the WHT assessments on 28th June 2022, to which the Respondent issued its objection decision on 11th August 2022 confirming the WHT assessments on payments of demurrage charges to TOM. That the Appellant appealed this decision.
28.The Respondent’s contention was that the demurrage fees payments made by the Appellant to TOM in the year 2017 attracted WHT at the rate of 15% in line with the provisions of Section 35 (1) (c) of the ITA read together with Paragraph 3 (c) of Head B of the Third Schedule to the ITA cited consecutively below: -“Section 35 (1) (c) of the ITA35(1)(c)Every person shall, upon payment of any amount to any non-resident person not having a permanent establishment in Kenya in respect of—a rent, premium or similar consideration for the use or occupation of property, except aircraft or aircraft engines, locomotives or rolling stock;which is chargeable to tax, deduct therefrom tax at the appropriate non-resident rate.”Paragraph 3 of Head B of the Third Schedule to the ITA“3.The non-resident tax rates shall be—(c)(ii)in respect of a rent, premium or similar consideration for the use of property other than immovable property, fifteen per cent of the gross amount payable;”
29.The Respondent submitted that amendments to the ITA made by the Finance Act 2018 included the following specific provisions with respect to demurrage: -(a)Section 2 of the Income Tax Act is amended—(a)by inserting the following new definition in proper alphabetical sequence—“demurrage charges” means the penalty paid for exceeding the period allowed for taking delivery of goods, or returning of any equipment used for transportation of goods”.b)Section 10 of the Income Tax Act is amended in subsection (1) by adding the following new paragraphs immediately after paragraph (h)—(i)demurrage charges; andSection 10 of the ITA included payments by a resident person made to any other person in respect of demurrage charges in the list of payment amounts deemed to be income which accrued in or was derived from Kenya.c)Section 35 of the Income Tax Act is amended by –(a)in subsection (1), by inserting the following paragraph immediately after paragraph (l)—(m)demurrage charges;The amendment provided for withholding tax on demurrage charges.d)The Third Schedule to the Income Tax Act is amended—(b)in paragraph 3, by inserting the following new subparagraphs immediately after subparagraph (n)—(o)demurrage charges, paid to ship operators,The amendment provided the non-resident WHT rate on demurrage charges to be 20% of the gross amount payable;
30.The Respondent further submitted that following an amendment to the ITA made by the Finance Act 2019, taxation of demurrage charges was covered under Section 9 of the ITA as income of certain non-resident persons deemed to be derived from Kenya with effect from 7th November 2019.
31.The Respondent cited the following on the construction of tax statutes with reference to the Privy Council’s decision in Mangin v Inland Revenue Commissioner [1971] AC 739 by Lord Donovan: -“…the words are to be given their ordinary meaning, looking only at what is clearly said. There is no room for any intendment. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used…”
32.The Respondent submitted that it is very clear from Section 35 of the ITA that WHT shall be charged on certain payments made to non-resident persons, and that it correctly brought to charge the demurrage charges which the Appellant failed to deduct and remit taxes due.
Respondent's Prayer
33.The Respondent prays that the Tribunal:a)Upholds the Respondent’s objection decision dated 11th August 2022.
Issues for Dtermination
34.The Tribunal has considered the facts of the matter and the submissions made by the parties, and considers the issue for determination as follows:Whether the WHT assessments are justified.
Analysis and Findings
35.Having identified the issue that calls for its determination, Tribunal proceeded to analyse them as hereunder.
36.The Respondent affirmed that it issued its notice of assessment to the Appellant on 31st May 2022 wherein the Respondent charged WHT on demurrage charges paid by the Appellant to Total Outre-Mer S.A. (TOM) following its conclusion that the demurrage charges were income deemed to be accrued in or derived from Kenya.
37.The Appellant lodged its objections to the WHT assessments on 28th June 2022, to which the Respondent issued its objection decision on 11th August 2022 confirming the WHT assessments on payments of demurrage charges to TOM.
38.The Tribunal has analysed the WHT assessments in two parts: for the tax periods before 1st July 2018 and the tax period after.
Additional assessments of WHT for periods before 1st July 2018
39.It is the Tribunal’s considered view that the Income Tax Act did not provide the meaning of the term demurrage, neither did it describe income in the nature of demurrage prior to 1st July 2018. In Black’s Law Dictionary, demurrage means: -“The sum which is fixed by the contract of carriage, or which is allowed, as remuneration to the owner of a ship for the detention of his vessel beyond the number of days allowed by the charter-party for loading and unloading or for sailing. Also the detention of the vessel by the freighter beyond such time.”
40.The Tribunal notes that the Respondent assessed tax on the demurrage payments to TOM in the periods before 1st July 2018 as tax on a rent, premium or similar consideration for the use or occupation of property other than immovable property. Demurrage is not rent, premium or similar consideration for use or occupation of property. Demurrage on the other hand, is a penalty, being liquidated damages payable for delayed loading or unloading of a vessel.
41.The Tribunal recognises that the Respondent on several occasions referred to the demurrage payments which the Appellant made to TOM as payments made to a non-resident person not having a permanent establishment (PE) in Kenya. The Tribunal is satisfied that for the tax periods before 1st July 2018, the provisions of Sections 3, 10 and 35 of the ITA are very clear and do not expressly deem demurrage earned by a non-resident person as taxable income.
42.The Respondent contended that the demurrage fees payments made by the Appellant to TOM in the year 2017 attracted WHT at the rate of 15% being tax on income of a non-resident person under Section 3 (2) (a) (iii) chargeable to WHT in line with the provisions of Section 35(1)(c) of the ITA at the non-resident rate provided in Paragraph 3 (c) of Head B of the Third Schedule to the ITA.
43.The Tribunal finds that the Respondent is estopped from claiming WHT on demurrage from the Appellant as the same was not in force at the time. A party can only be liable for taxes where the law is specifically binding on them. The Tribunal refers to its holding in TAT 841 of 2022 Oceanfreight East Africa Limited v Commissioner of Domestic Taxes where the Tribunal held that: -“85.The Tribunal finds that the Respondent’s levying of withholding tax was founded on illegalities which cannot be supported in law, the same finds legal backing in the case of Macfoy v United Africa Co. Ltd [1961] 3 All E.R 1169 as quoted in the case of Omega Enterprises (Kenya) Limited v Kenya Tourist Development Corporation Limited & 2 others [1998] eKLR that: -“If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set it aside. It is auTOMatically null and void without more ado, though it is sometimes convenient to have the Court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”86.The Tribunal is guided by its holding in a similar matter in the case of Gulf Badr Group (k) Limited v Commissioner of Domestic Taxes, TAT 896 of 2022 where it was held that;“In the circumstances, the Tribunal found that there was not withholding tax applicable to the Appellant in the period before the promulgation of the Finance Act 2018.’”
44.In view of the foregoing, the Tribunal finds that the additional assessments of WHT for periods before 1st July 2018 as raised by the Respondent in the objection decision of 11th August 2022 were not justified.
b) Additional assessments of WHT for periods from 1st July 2018 to 6th November 2019
45.Following that the Respondent does not dispute that TOM, the recipient of the demurrage payments is a non-resident person not having a PE in Kenya, the Tribunal proceeds to establish the correct tax treatment of the demurrage payments made to TOM by the Appellant from 1st July 2018 to 6th November 2019 on that basis.
46.The Finance Act 2018 introduced in the ITA the meaning of demurrage charges under Section 2 of the ITA effective from 1st July 2018, providing that: -“demurrage charges” means the penalty paid for exceeding the period allowed for taking delivery of goods, or returning of any equipment used for transportation of goods”
47.The Tribunal observes that demurrage paid to non-residents in the periods from 1st July 2018 to 6th November 2019 was business income of a non-resident person deemed to be income which accrued in or was derived from Kenya under Section 10 (1) (i) of the ITA and subject to WHT under Section 35 (1) (m) of the ITA at the non-resident rate of 20% as provided in Paragraph 3 (o) of Head B of the Third Schedule to the ITA following the amendments to the ITA made by the Finance Act 2018.
48.The Appellant interpreted the holding of the High Court in Income Tax Appeal No. 13 of 2017 Ocean Freight (E.A.) Limited v Commissioner of Domestic Taxes that the demurrage incurred for the period of preloading or for failure to unload the vessel before the lapse of the contract period is demurrage associated with the freight, to mean that demurrage charges on petroleum products is part of freight.
49.The Appellant further averred that TOM is an entity whose place of effective management is France, and in line with the provisions of Article 8 (2) of the Kenya-France Double Taxation Avoidance Agreement (DTAA), Kenya does not have taxing rights on the demurrage income derived from or accrued in Kenya and the same should be taxed in France. Referring to Article 8 (2) of the Kenya-France DTAA, the Appellant interpreted the demurrage income of TOM as income of an enterprise from operation of ships in international traffic.
50.To address the Appellant’s argument that the demurrage paid to TOM from 1st July 2018 was not taxable in Kenya in accordance with the Kenya-France DTAA, the Tribunal reviewed the documents that the Appellant furnished it with and established that the Appellant made mere averments regarding TOM’s tax residency being in France without adducing evidence of the same.
51.In reliance on Section 41 of the ITA, wherein the application of special arrangements for relief from double taxation is provided, the Tribunal notes that there is a limitation of benefits clause that must be tested to correctly operate double taxation avoidance agreements. Section 41 (1) of the ITA states as follows: -“(1)The Minister may from time to time by notice declare that arrangements, specified in the notice and being arrangements that have been made with the Government of any country outside of the Republic of Kenya with a view to affording relief from double taxation in relation to income tax and any taxes of a similar character imposed by the laws of that country, shall, subject to subsection (5) but notwithstanding any other provision to the contrary in this Act or in any other written law, have effect in relation to income tax, and every such notice shall, subject to the provisions of this section, have effect according to its tenor.”
52.The Tribunal notes that Subsections (5) and (6) of Section 41 of the ITA provide the limitation of benefits tests as cited below: -“(5)Subject to subsection (6), where an arrangement made under this section provides that income derived from Kenya is exempt or excluded from tax, or the application of the arrangement results in a reduction in the rate of Kenyan tax, the benefit of that exemption, exclusion, or reduction shall not be available to a person who, for the purposes of the arrangement, is a resident of the other contracting state if fifty per cent or more of the underlying ownership of that person is held by an individual or individuals who are not residents of that other contracting state for the purposes of the agreement.(6)Subsection (5) shall not apply if the resident of the other contracting state is a company listed in a stock exchange in that other contracting state.”
53.The Tribunal refers to Paragraph 1 of the Ninth Schedule to the ITA where the term ‘underlying ownership’ in relation to a person, means an interest in the person held directly, or indirectly through an interposed person or persons, by an individual or by a person not ultimately owned by the individuals.
54.The Tribunal finds that the Appellant failed to prove that the tax residency of TOM is in France and further failed to demonstrate TOM’s underlying ownership or listing status at a stock exchange in France. In this case, the Tribunal is unable to be persuaded that the Kenya-France DTAA could be applied to determine the taxing rights of Kenya on the demurrage paid to TOM and any preferential tax rate that could have otherwise been applicable on that income under the DTAA.
55.The Tribunal reiterates that the burden of proving that a tax assessment is wrong falls on the Appellant and that the Appellant failed to disprove with evidence the Respondent’s assessments as required under Section 56 (1) of the TPA and buttressed in the High Court’s decision in Commissioner Investigations and Enforcement v Kidero (Income Tax Appeal E028 of 2020) [2022] that: -“25.… In line with section 56(1) of the TPA, the taxpayer bears the burden of proving that assessment made by the Commissioner is incorrect…26.But the burden imposed on the taxpayer does not exist in a vacuum, it [is] also buttressed by the obligation on the taxpayer to maintain records. Section 54A of the ITA provides that:54A(1)A person carrying on a business shall keep records of all receipts and expenses, goods purchased and sold and accounts, books, deed, contracts and vouchers which in the opinion of the Commissioner, are adequate for the purpose of computing tax…The aforesaid provision is augmented by section 23(1)(B) of the TPA which imposes a duty on the taxpayer to keep records required under any law so as to enable the person’s tax liability to be readily ascertained.”
56.Failure of the Appellant to discharge its burden of proof results in the Tribunal’s finding that the Respondent was justified in issuing the WHT additional assessments for the tax periods from 1st July 2018 to 6th November 2019.
57.The Tribunal however, finds that despite the WHT on demurrage being applicable for the tax periods from 1st July 2018 to 6th November 2019, the Respondent lacks the powers to collect and recover the WHT principal tax, penalties and interest from the Appellant in these tax periods, following the deletion of Section 35 (6) of the ITA under Section 9 of the Finance Act of 2016 effective from 9th June 2016. Section 35 (6) of the ITA read as below before its deletion: -“35(6)Where a person who is required under this section and in accordance with the rules made under section 130, to deduct tax—(a)fails to make the deduction or fails to deduct the whole amount of the tax which he should have deducted; or(b)fails to remit the amount of a deduction to the Commissioner on or before the twentieth day following the month in which the deduction was made or ought to have been made,the Commissioner may impose such penalty as may, from time to time, be prescribed under the rules, and the provisions of this Act relating to the collection and recovery of tax and the payment of interest thereon, shall apply to the collection and recovery of that amount of tax and penalty as if they were tax due and payable by that person and the due date for the payment of which was the date on which the amount of tax should have been remitted to the Commissioner.”
58.To buttress its finding on the Respondent’s powers of collection and recovery of WHT not deducted by the Appellant for periods between 1st July 2018 and 6th November 2019, the Tribunal relies on TAT 304 of 2019 Pevans East Africa Limited v Commissioner of Domestic Taxes [2019] where the Tribunal held that: -“79.The Tribunal is alive to the fact that the Finance Act 2016 amended Section 35 of the ITA by deleting subsection 35 (6). The import of this amendment was that where a person has failed to withhold tax as prescribed, the Commissioner cannot demand the tax not withheld from the person who should have withheld. Consequently, the Respondent cannot demand tax from the Appellant as if it was tax due from it. It is also appreciated that when parliament intended withholding tax to be recovered from the withholding tax agent as if it was tax due, the legislation clearly stated so.”
59.In view of the aforesaid analysis, the Tribunal finds that the Respondent has no legal basis for collecting and recovering the WHT which the Appellant failed to deduct from demurrage payments to TOM and the resultant penalties and interest, as tax due and payable by the Appellant.
Final Decision
60.The upshot of the foregoing is that the Appeal succeeds, and the Tribunal accordingly proceeds to make the following Orders:a)The Appeal be and is hereby allowed.b)The Respondent’s objection decision dated 11th August 2022 be and is hereby set aside.c)Each party to bear its own costs.
61.It is so ordered.
DATED AND DELIVERED AT NAIROBI THIS 6TH DAY OF OCTOBER, 2023.GRACE MUKUHACHAIRPERSONDR ERICK KOMOLOMEMBERJEPHTHAH NJAGIMEMBERTIMOTHY VIKIRUMEMBERGLORIA A. OGAGAMEMBER
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