[2024] KETAT 609 (KLR)

Ambale t/a Amber Technical Works & General Contractors v Commissioner of Legal Services & Board Coordination (Appeal E559 of 2023) [2024] KETAT 609 (KLR) (22 March 2024) (Ruling)

Neutral citation: [2024] KETAT 609 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Appeal E559 of 2023

E.N Wafula, Chair, M Makau, EN Njeru, E Ng'ang'a & AK Kiprotich, Members

March 22, 2024

Between

Hamisi Omar Ambale t/a Amber Technical Works & General Contractors

Appellant

and

Commissioner of Legal Services & Board Coordination

Respondent

Ruling

1. The Appellant moved the Tribunal vide a Notice of Motion application dated on 5th October 2023 filed under a certificate of urgency on the even date and supported by an Affidavit sworn by Hamisi Omar Ambale, the Applicant himself, on the same date seeking the following Orders: -a.Spent.b.That the Honourable Tribunal be pleased to grant the Appellant leave to file an Appeal out of time since the Appellant has been in and out of hospital and was not able to attend to the matter fully.c.That the Honourable Tribunal be pleased to deem the Memorandum of Appeal, Statement of Facts and Notice of Appeal filed on 5th September 2023 and duly filed.d.That the Honourable Tribunal treat such leave as granted and be pleased to admit the Appellant Appeal in opposition of the Respondent’s Objection decision.e.That this Honourable Tribunal be pleased to lift the Agency notices issued to the Appellant’s bankers.f.That this Honourable Tribunal sets aside the tax demand dated 18th December 2020 until the determination of this Appeal.g.That the Honourable Tribunal grants the costs for the application to the Appellant.h.That this Honourable Tribunal grants any other appropriate orders or reliefs that it may deem just and reasonable to do so.

2. The application is premised on the grounds, that: -i.The Objection decision which precipitated the present application and Appeal was wrongful and erroneous in law and in fact.ii.The Appellant’s request for resolution of the dispute through Alternative Dispute Resolution which was made to the Respondent was not responded to, and thus denied the Appellant his right to access to justice, since ADR is a means of resolving tax disputes as per Section 55 of the Tax Procedures Act, No. 29 of 2015. iii.The Appellant was sick and is sickly even up to date and was not able to attend to his tax obligations.iv.This application does not introduce a new or inconsistent cause of action as it relates to the same facts and circumstances upon which the underlying cause of action is based.v.This has been made in good faith and solely for the purpose of enabling this Honourable Tribunal to appreciate the real issues between the parties, and to make its decision based on the true representation of facts and circumstances surrounding the matter.vi.No prejudice whatsoever will be occasioned to the Respondent if the present application is allowed.vii.The Appellant will be highly prejudiced should this Honourable Tribunal fail to grant the orders sought herein.viii.It will be in the interests of justice and fair administrative action that this Honourable Tribunal grants the Appellant the orders sought herein.

3. The Respondent opposed the application through a Replying Affidavit sworn by Shairin Athman, an officer of the Respondent, on the 19th October 2023 and filed on the same date. The grounds of opposition as highlighted in the Affidavit were as follows: -i.That the application is an abuse of the Tribunal process and the Appellant is undeserving of the same. Further the application is undeserving of the orders.ii.That the Respondent filed and served its Statement of Facts at Tax Appeal Tribunal on 4th October 2023 in response to the subject Appeal filed on 31st August 2023. iii.That the Appellant herein seems to appeal against the Invalidation Notice dated 18th December 2020 issued by the Respondent against the partnership.iv.That the Respondent had raised a preliminary objection in its Statement of Facts dated 4th October, 2023 on the ground that the Appeal is incompetent for non-compliance with Section 13 (b) of the Tax Appeal Tribunal Act.v.That the instant application by the Appellant seeking for leave to file the Appeal out of time (even after the Respondent has already put in its response) is an afterthought and unprocedural.vi.That the instant application is meant to regularize/sanitize an irregularity.vii.That the Respondent issued notices of assessments on 24th February 2020 for Kshs. 43,046,559. 00 and on 11th March 2020 for Kshs. 12. 283. 105. 00 for partner Hamisi Ambale.viii.That the Appellant subsequently filed a late Objection against the assessments on 20th May 2020 but served upon the Respondent on 13th July 2020. ix.That the Respondent vide the letter dated 18th December 2020 wrote to the Appellant in response to the notice of objection and declared the application invalid since the Appellant failed to provide supporting documents to validate its Objection as prescribed in Section 51 (3) of the Tax Procedures Act 2015. x.That the Appellant on 5th October 2023 filed an application to file the Appeal out of time sighting sickness as the reason for delay.xi.That the Appellant has not set out and/or demonstrated any solid grounds that would warrant this Honourable Tribunal to exercise its discretion in favour of the Appellant. The Appellant has failed to lay a sufficient basis to the satisfaction of the Tribunal for extension of time to file an Appeal.xii.That the fact that the Appellant failed to follow up on the decision of the Respondent, for more than thirty-three (33) months, is a demonstration that the Appellant has not been vigilant and does not warrant the exercise of the Tribunal in its favour. The Appellant is guilty of laches.xiii.That the delay is unreasonable and not excusable on the grounds that the Appellant had no intention of settling the outstanding tax liability and only woke up after the agency notices.xiv.That in the circumstances, it is in the Public interest that this Honourable Tribunal dismisses the Appellant's application to pave way for the Respondent to collect taxes due from the Appellant which are key to the economic development of the Country.xv.That the indolence and negligence of the Appellant should not bar the Respondent from fulfilling its mandate of collecting taxes that are still due and payable.

Submissions by the Parties 4. The Appellant in its written submissions dated 18th October, 2023 and filed on 19th October, 2023 relied on Article 159 of the Constitution of Kenya 2010 and submitted that the Tribunal should be guided by the principle laid therein.

5. The Appellant submitted that Section 13 (3) and (4) of the Tax Appeals Tribunal Act grants power to the Tribunal to extend time for the Appellant to file an Appeal out of time.

6. The Appellant contented that Rule 10 of the TAT (Procedure) Rules provides for the reasons upon which the Tribunal may grant the extension of time being; absence from Kenya; Sickness; or any other reasonable cause.

7. The Appellant submitted that the Respondent issued agency notices to the Appellant’s bank on 5th May 2020 while the Appellant was ill and bed ridden.

8. The Appellant submitted that its case has a high probability of success and an amicable decision can be reached during the ADR process in the interest of justice.

9. The Appellant stated that it would be greatly prejudiced if the orders sought are not granted and the Appeal would be rendered nugatory.

10. The Respondent in its written submissions dated 25th October 2023 and filed on 27th October 2023, submitted that the application by the Appellant seeking for leave to file the Appeal out of time is unprocedural and is an abuse of the Court process and meant to regularize/sanitize an irregularity.

11. The Respondent submitted that it issued notices of assessments on 24th February 2020 for Kshs. 43,046,559. 00 and on 11th March 2020 for Kshs. 12,283,105. 00 for partner Hamisi Ambale, who subsequently filed a late objection against the assessments on 20th May, 2020 but served upon the Respondent on 13th July 2020.

12. The Respondent submitted that vide the letter dated 18th December 2020 it wrote to the Appellant in response to the notice of objection and declared the application invalid since the Appellant failed to provide supporting documents to validate the Objection as its prescribed in Section 51 (3) of the Tax Procedures Act 2015.

13. The Respondent submitted that the Invalidation Notice was rendered on 18th December 2020. The Appellant however, made the instant application on 5th October 2023, which is 33 months later, evidently out of time. That the Appellant has not been vigilant in pursing its Appeal.

14. The Respondent identified two issues for determination, namely;i.Whether the Applicant should be granted leave to appeal the Invalidation Notice out of time.ii.Whether the Appellant has demonstrated merit in their Intended Appeal or whether the Intended Appeal is arguable.

15. The Respondent submitted that the intended appeal is in contravention of the Tax Appeals Tribunal Act, which provides for the timelines within which a party aggrieved by a decision should prefer an Appeal and is defective for being time barred according to the statutory timelines contemplated under Section 13 (1) and (2) of the Tax Appeals Tribunal Act.

16. The Respondent submitted that the power to extend the time to file an Appeal before the Tribunal is discretionary. It is primarily governed by the provisions of Section 13 (3) and (4) of the Tax Appeals Tribunal Act and that the Appellant did not meet the threshold.

17. The Respondent relied on Section 56 (3) of the Tax Procedures Act and Section 13 (6) of the Tax Appeals Tribunal Act. Further, that it is also noteworthy that the Respondent rejected a late Objection and did not render an Objection decision under Section 51 (8) of the Tax Procedures Act.

18. The Respondent submitted that there is no appealable decision that can be appealed at the Tribunal. The Appellant therefore has no arguable Appeal.

19. The Respondent relied of the following case laws:-i.APA Insurance Limited vs. Michael Kinyanjui Muturi [2016] eKLR.ii.Nichola Kiptoo Arap Korir Salat vs. Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR.iii.Yussuf Mohamed Salat vs. Idriss Ali Ahmed [2009] eKLR.iv.Mwangi S. Kimenyi vs. Attorney General & Another [2014] eKLR.v.Joseph Gitahi Gachau & Another vs. Pioneer Holdings (A) Ltd & 2 Others, Civil Application No. 24 of 2008. vi.TAT Misc. App. No. E069 of 2023 Gitari Wholesalers Limited vs. Commission of Domestic Taxes.

Analysis and Findings 20. The instant application largely seeks for extension of time to deem the Appeal filed out of time as properly filed and served and orders lifting agency notices placed on the Appellant’s bankers pending the hearing and determination of the intended Appeal.

21. The Tribunal’s power to deal with applications of this nature is bequeathed by Section 13 (3) of the Tax Appeals Tribunal Act which provides that:“The Tribunal may, upon application in writing, extend the time for filing the Notice of Appeal and for submitting the documents referred to in subsection (2).”

22. Section 13 (4) provides for the grounds to be relied upon by such a party making an application of the instant nature, it provides that:-“(4)An extension under subsection (3) may be granted owing to absence from Kenya, or sickness, or other reasonable cause that may have prevented the applicant from filing the notice of appeal or submitting the documents within the specified period.”

23. The Appellant submitted that he was prevented from filing the Appeal within the statutory timelines on the ground of his sickness. The Appellant presented before the Tribunal treatment notes.

24. From the treatment notes presented by the Appellant, the Tribunal notes that the treatment relates to period between 26th December 2019 to 14th January 2021, the decision subject of the Appeal herein was made on 18th December 2020 during the period which the Appellant has demonstrated he was unwell.

25. The Tribunal further notes that thereafter there was no evidence relating to the Appellant’s health condition presented before it for the period beyond the 14th January 2021 to the time of lodging this application on the 5th October 2023, period whereof is 994 days or 33 months.

26. Further, the Agency notices sought to be lifted were issue upon the Appellant’s bankers on the 5th May 2020, the Appellant moved the Tribunal seeking to lift the same on 5th October 2023, over three (3) years later.

27. The powers of the Tribunal being invoke by the Appellant are discretionary and not as of right to the Appellant. The Tribunal is guided by the principles set out in the case of Leo Sila Mutiso vs. Rose Hellen Wangari Mwangi in considering an application of this nature, being:a.Whether there is a reasonable cause for the delay.b.The merits of the complained action.c.Whether there will be prejudice suffered by the Respondent if the extension is granted.

28. The Tribunal is invited to examine whether the delay was inordinate and whether the Appellant demonstrated a reasonable cause for the delay.

29. The Tribunal having considered the circumstances of this case takes the position that devoid of any reasonable explanation, as is in the present case, the delay of 33 months is inordinate.

30. It is noteworthy, that the Appellant relied on the ground of illness, which is not only reasonable, but provided for in law, it is not lost on the Tribunal that the Appellant has not been able to demonstrate and/or account for the delay period of 33 months in presenting the instant application or by providing documentary evidence in support of the alleged continued ill health.

31. The Appellant having failed to provide the requisite reasonable grounds and evidence of the ground of illness beyond the 14th January 2021, the Tribunal notes that the Appellant was indolent and guilty of latches in prosecuting the present application.

32. Consequently, the Appellant’s application dated 5th October 2023 fails and does not meet the test in law to warrant the same to be allowed.

33. The Tribunal notes that the appeal filed on the 5th September, 2023 having been filed without leave of the Tribunal is thus incompetent and unsustainable in law.

Disposition 34. Premised on the foregoing analysis, the Tribunal finds that the application is not merited and accordingly makes the following Orders: -a.The application be and is hereby dismissed.b.The appeal be and is hereby struck out.c.No orders as to costs.

35. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 22ND DAY OF MARCH, 2024. ERIC NYONGESA WAFULA - CHAIRMANMUTISO MAKAU - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBERABRAHAM K. KIPROTICH - MEMBER