The East Africa Tea Trade Associatlon which regulates the tea industry in East Africa restricts non-resident companies and persons from purchasing tea directly from the tea auction.

As a result, the Appellant was engaged as an agent by the Principal pursuant to a letter of engagement signed on the 3rd day of January, 2011 between the two parties.

The agreement states that the Principal will bear all costs including collection, blending, transportation, shipping and port charges. Further, the agreement states
that all costs incurred by the Appellant will be reimbursed so long as the same are supported with third party invoices.

As a consequence of making taxable supplies to the Principal, the Appellant proceeded to claim input VAT relating to the same.

The Appeal against the Respondents note of confirmation of the additional tax assessment was premised on the grounds set forth in the Memorandum of Appeal dated the 30th of June 2016 as hereunder :

i) That the Respondent erred in fact and law by finding that the input VAT claimed by the Appellant on shipping and packing expenses were not incurred in the furtherance of the business

ii) That the Respondent erred in fact and law by finding that the input VAT. incurred by the Appellant belongs to the Principal rather than the appellant

iii) That the respondent erred in fact and law by contending that the Appellant is not entitled to claim input tax on the account of the existence of an agency relationship between the Appellant and Ballahane Limited.

The Appellant in the Memorandum of Appeal prays for the Orders being that the Respondent's confirmed assessment has no basis in fact or in law and should be set aside.

The Tribunal having made the foregoing findings, holds that the assessed amount of Kshs.1,157,517/= plus any accrued interest and penalties thereon is payable by the Appellant. The Tribunal accordingly finds that the Appeal has no merit and proceeds to dismiss the same.