Kenya Revenue Authority v David Mwangi Ndegwa
The bottom line
#Kenya's Court of Appeal confirmed that VAT applies to commercial premises; only land and residential premises are tax-exempt.
What this practically means
#Executive summary
#Key legal issues
#Whether the constitutional definition of 'land' includes buildings for purposes of the VAT Act
It does not. Article 260's definition applies only where the context permits, and the VAT Act may legitimately define land so as to exclude premises erected on it
Article 260 opens with 'In this Constitution, unless the context requires otherwise', showing the definition is not intended for all contexts. Other statutes, such as the Mining Act, Water Act and Petroleum Act, treat minerals, water and petroleum as distinct from land notwithstanding Article 260. The Latin maxims quicquid plantatur solo solo cedit and cuius est solum are not legal rules of universal application. The Land Act itself treats land as distinct from buildings. The Legislature was therefore free to define land differently in the VAT Act.
Whether paragraph 8 of Part II of the First Schedule to the VAT Act is ambiguous
There is no ambiguity; the provision clearly exempts only supply of land and residential premises, and commercial premises remain vatable
The draftsperson provided separately and distinctly for the exemption of supply of 'land' and of 'residential premises'. By the expressio unius est exclusio alterius maxim, the express mention of residential premises and the omission of commercial premises means commercial premises are not exempt. The legislative history confirms Parliament never treated residential and non-residential buildings as synonymous with land. Courts should not strain words to find ambiguity in a tax statute; absent ambiguity, the tax must be upheld.
Whether the VAT refund ordered by the High Court was payable
No; the VAT was lawfully levied on the supply of commercial premises, so the High Court erred in ordering the refund
Having found that the supply of commercial premises is not exempt from VAT and that paragraph 8 is not ambiguous, it follows that the appellant lawfully levied VAT on the respondent's transaction. The consequence is that the High Court's order for refund of Kshs. 11,200,080.00 cannot stand. Section 30 of the VAT Act on refunds of tax paid in error was held inapplicable below because the payment was made under protest, but that question falls away with the reversal.
Interpretation of mixed-use premises under paragraph 8
The Court declined to determine how VAT applies to mixed-use premises, as the issue was not before it and had not been fully argued
Although the High Court had used perceived unclarity over mixed-use premises to demonstrate ambiguity, and the Court itself raised the question of a commercial ranch, the Court held that the only question it could legitimately answer was whether commercial premises are exempt. Determining mixed-use questions without full argument would be mere obiter dicta; the issue must await a case where it is properly raised.
Legal principles established
#- The definition of 'land' in Article 260 of the Constitution is context-dependent and does not automatically apply to all statutes; a legislature may define 'land' differently in a particular statute without constitutional difficulty
- Under paragraph 8 of Part II of the First Schedule to the VAT Act, 2013, only the supply of land and of residential premises is exempt from VAT; supply of commercial premises is not exempt
- A court should not strain the words of a tax statute to find an ambiguity; where there is no ambiguity the tax must be upheld
- Courts must give effect to every word of a statute and eschew interpretations that render express provisions otiose
Court orders
#- 1.Appeal allowed
- 2.Judgment of the High Court dated November 29, 2018 set aside and substituted with an order dismissing the respondent's suit in the High Court
- 3.Appellant awarded costs of the suit and of the appeal
- On appeal from
- High Court at Nairobi
- Not stated in the judgment
- Jurisdiction invoked
- First appellate jurisdiction over the High Court (not expressly stated in the judgment; the appeal lies from the High Court under the Court of Appeal's ordinary appellate jurisdiction)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Revenue Authority v David Mwangi Ndegwa", Case Analysis (2025). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/510/eng@2025-03-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.