[2025] KETAT 138 (KLR)

Apex Communications Limited v Commissioner of Domestic Taxes (Tax Appeal E902 of 2023) [2025] KETAT 138 (KLR) (21 February 2025) (Ruling)

Neutral citation: [2025] KETAT 138 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E902 of 2023

M Makau, Chair, EN Njeru & B Gitari, Members

February 21, 2025

Between

Apex Communications Limited

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Applicant vide a Notice of Motion dated 10th January 2025 and filed on 13th January 2025 which is supported by an Affidavit sworn by Joan Maritim a representative of the Applicant, sworn on 10th January 2025 sought for the following Orders, that;a.This Tribunal be pleased to compel the Respondent to admit its online application dated 5th July 2023 for offsetting overpaid Corporate Tax of Kes. 5,666,218. 00 for the year 2015, against current and future liabilities in accordance with Section 47 (1) (b) of the Tax Procedures Act 2015 following the Honourable Tribunal’s earlier ruling of 3rd November 2023 which implicitly gave the Appellant a legal enforceable right under Section 51 (11) of the Tax Procedures Act.b.Costs of this Application be provided for.

2. The application is premised on the following grounds, that;a.Section 10 (1) of the Fair Administrative Action Act allows that such an application for judicial review be heard and determined without undue regard to technicalities.b.Section 11 (1) (f) of the Fair Administrative Act allows the Tribunal to grant any order that is just and equitable including an order compelling the performance by an administrator of a public duty owed in law and in respect of which the Applicant has a legal enforceable right.c.This application has complied with the doctrine of exhaustion under Section 9 (2) of the Fair Administrative Action Act following the dismissal of the Applicant’s case on the matter at hand in the Honourable Tribunal’s separate ruling dated 3rd November 2023 and judgement dated 21st November 2024 on grounds of procedural technicalities.d.The legality enforceable right pursued by the Applicant is provided for under Section 51 (11) of the Tax Procedures Act which deems the Applicant’s objection on the matter at hand as allowed following the Respondent’s refusal to issue an Objection Decision to date and within the set statutory timeline.

3. Upon being served with the application, the Respondent filed its grounds of opposition dated and filed on 22nd January 2025, raising the following grounds, that;a.The Appellant filed a Notice of Motion application dated 22nd August 2023 seeking a refund for overpaid taxes that arose in 2015 the said application was dismissed by the Tax Appeals Tribunal vide a ruling dated 3rd November 2023. The Tribunal held that the orders sought by the Applicant cannot be issued through an application and contravened the doctrine of exhaustion.b.The Applicant on 29th November 2023 lodged an Appeal in TAT E902 of 2023 Apex Communications Limited vs. Commissioner of Domestic Taxes seeking for orders to compel the Respondent offset over paid taxes. Judgement whereof was delivered on 21st November 2024, striking out the Appellant’s Appeal for want of compliance with Section 13 (4) of the Tax Appeals Tribunal Act 2013. c.The Applicant to date has never lodged an application seeking to file its Appeal out of time therefore the orders of the Tribunal remain in force.d.The Orders the Applicant is seeking are final orders, which cannot be issued on a Notice of Motion application except on a substantive Appeal.e.The Tribunal delivered a judgement on this matter is now functus officio and cannot adjudicate or determine the dispute further.f.On 5th July 2023, the Appellant made an application for utilization of taxes that had been overpaid during the year 2015. The Respondent reverted by issuing a notification barring submission of the application on the grounds that an application for utilization of overpaid taxes should be made within five (5) years.g.The Respondent contends that the application for utilization of overpaid taxes for refund and/or offset can only be made under the scope of Section 47 of the Tax Procedures Act, 2015. h.The Applicant has relied on Section 47 (1) (a) of the Tax Procedures Act which provides that an offset does not have specified time limits within which taxpayers should offset the overpaid tax against tax liabilities.i.The Respondent contends that Section 47 (1) (a) of the Tax Procedures Act on offsets was introduced vide the Finance Act 2022 and the effective date of the provision was 1st July 2022. j.The Respondent contends that prior to 1st July 2022, the law only allowed for refund of overpayments and these were restricted to a claim made within five (5) years of the overpayment.k.The Applicant’s claim for refund for the period of 2015 was lodged in July 2023 therefore outside the 5 year period and thus time barred. Further, the law applicable was Section 47 (1) of the Tax Procedures Act 2015. l.The Respondent contends that the Appellant cannot seek to use a law on offsets that was introduced effective 1st July 2022 to revive a claim that was already expired and time barred prior to 2022 and therefore extinguished pursuant to the previous Section 47 (1) of the Tax Procedures Act, 2015 now repealed.m.That contrary to the averments of the Applicant the Respondent’s decision was issued within the statutory timelines under Section 51 (11) of the TPA.

Parties. Submissions 4. Neither of the parties complied with the Tribunal’s directions that the parties herein file and exchange their respective written submissions, the Tribunal shall consider the application on the basis of the grounds set forth on the face of the application and those on the grounds of opposition.

Analysis and Findings 5. The Tribunal is enjoined to determine the Applicant’s application seeking orders to compel the Respondent to admit the Applicant’s online application dated 5th July 2023 for the offsetting the overpaid Corporate Tax.

6. A brief synopsis of this matter is that the Applicant amongst its grievances outlined in its Memorandum of Appeal, was that the Respondent wrongly set a timeline in the iTax system that is applicable to refund applications for overpaid taxes.

7. That the Applicant herein vide the application dated 21st July 2023 which was filed on 10th August 2023, sought the following orders;“i.That the system restriction in the Respondent’s electronic platform (iTax) dated 5th July 2023 barring the Applicant from offsetting overpaid Corporate tax of Kshs. 5,666,218 for the year 2015, against current and future liabilities is a tax decision by the Respondent and this Honourable Tribunal be pleased to set it aside.ii.That the Respondent be issued with an order of Mandamus compelling it to remove the system restriction and allow the Applicant to apply for a set-off of overpaid Corporate tax of Kshs. 5,666,218 for the year 2015 against the current and future liabilities”

8. The Tribunal noted that a ruling to the aforesaid application was delivered on 3rd November 2023, dismissing the application for want of proper procedure to vindicate the Respondent’s decision. The Applicant was to ventilate the issue at the hearing of the Appeal.

9. The Tribunal further noted that the Applicant’s Appeal vide the judgement delivered on 21st November 2024, was struck out for offending the provisions of Section 47 (13) of the Tax Procedures Act, in other words, the Appeal was lodged beyond the statutory timeline and without leave of the Tribunal to so do.

10. The issue that begs the attention of the Tribunal, is whether the orders sought can be granted.

11. Firstly, the orders sought in the instant application have been previously sought in the application dated 21st July 2023 as well as being a substantive ground in the Memorandum of Appeal, which have been dealt with vide the decisions of 3rd November 2023 and 21st November 2024.

12. Secondly, the orders sought are substantive by their very nature, which could only be determine in a or in the existence of a substantive Appeal, the Tribunal noted from the record that the Applicant’s Appeal was struck out by an order issued on 21st November 2024, thus as matters stand there exists no Appeal for the Tribunal to hear and determine.

13. The Tribunal is alive to the fact that applications of interlocutory and remedial nature can be presented and entertained even when an Appeal has not been lodged, however the instant orders sought by the Applicant are beyond such legal threshold.

14. An order determining the Applicant’s Appeal having been made on 21st November 2024 and prior to the reinstatement of the Appeal or leave to lodge an Appeal out of time being granted, the Applicant’s instant application as presented is unprocedural, untenable in law and no orders can flow therefrom under the circumstances obtaining.

15. The Tribunal having considered the application and the rival arguments has arrived at the inexorable finding that the Applicant’s application is incompetent and untenable in law.

16. Consequently, the Applicant’s application is unmerited and therefore fails.

Disposition 17. Based on the foregoing analysis, the Tribunal finds that the application is not merited and accordingly proceeds to make the following Orders, that;a.The application dated 10th January 2025 be and is hereby dismissed; and,b.No orders as to costs.

18. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 21ST DAY OF FEBRUARY 2025MUTISO MAKAU - CHAIRPERSONELISHAH NJERU - MEMBERBERNADETTE GITARI - MEMBER