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Small ClaimsAllowedNot stated in the judgment· [2021] SCC 4 (KLR)

Ujenzi Spreadmix Paints Co Ltd v Chasim Construction Co Ltd & another (Commercial Case 122 of 2021) [2021] SCC 4 (KLR)

Small Claims Court
21 June 2021
SGS. G. Gitonga
649 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~3 min to read original · ~4 min brief

The bottom line

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A Nairobi Small Claims Court ruled that buyers must pay the VAT portion of goods supplied unless they prove they remitted that tax to KRA themselves.

What this practically means

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Executive summary

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By a statement of claim dated 17th May 2021, the claimant sued for recovery of Kshs. 185,375 incurred on various types of paints supplied to the respondent. The respondent admitted owing Kshs. 124,935 but disputed the balance of Kshs. 60,422, contending it comprised VAT charges for which the claimant had produced no ETR receipts or tax compliance certificate to enable the respondent to remit the tax directly to KRA. Judgment on the admitted amount was entered for the claimant, leaving the VAT question for determination. The court held that payment of tax is a mandatory statutory duty under sections 5 and 8 of the VAT Act prescribing 16% on taxable supplies by a registered person, and that the paints supplied were not exempt under paragraph 27 of the First Schedule of the VAT Act 2013, which exempts only plants and machinery of chapters 84 and 85. The court reasoned that VAT is normally included in the purchase price, the supplier acts as a collection agent for KRA, and no evidence was tabled showing the respondent had remitted the disputed VAT to KRA. Judgment was entered for the claimant against the respondent jointly and severally in the sum of Kshs. 185,375, with disbursements awarded upon proof of receipts. No costs order or case authorities are recorded.

Key legal issues

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01

Whether the respondent should pay the disputed VAT component of Kshs. 60,422 on the paints supplied

Holding

The claimant is entitled to be paid the VAT component; judgment entered for the full claimed sum of Kshs. 185,375.

Reasoning

Payment of tax is a mandatory statutory duty under sections 5 and 8 of the VAT Act 2018, which prescribe 16% on taxable supplies by a registered person. The paints supplied were not exempt under paragraph 27 of the First Schedule of the VAT Act 2013, which exempts only plants and machinery of chapters 84 and 85. VAT is included in the purchase price and the claimant remits it to KRA upon payment. The respondent produced no evidence of having remitted the disputed VAT to KRA, which would otherwise have been to the claimant's credit.

p. 2

Legal principles established

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  • VAT is a mandatory statutory charge on taxable supplies, included in the purchase price; the supplier acts as a collection agent for KRA and is entitled to recover the VAT element from the buyer unless the buyer proves it remitted the VAT.

Court orders

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  1. 1.Judgment on the admitted amount of Kshs. 124,935 entered for the claimant
  2. 2.Judgment entered for the claimant against the respondents jointly and severally in the sum of Kshs. 185,375
  3. 3.Disbursements awarded to the claimant upon proof of receipts
Jurisdiction invoked
Small Claims Court Act (implied by the Small Claims Court forum); no express provision cited

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Ujenzi Spreadmix Paints Co Ltd v Chasim Construction Co Ltd & another (Commercial Case 122 of 2021) [2021] SCC 4 (KLR)", Case Analysis (2021). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/scc/2021/4/eng@2021-06-21

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.