[2024] KETAT 1092 (KLR)

Atcost Structures Limited v Commissioner of Domestic Taxes (Tax Appeal E476 of 2024) [2024] KETAT 1092 (KLR) (19 July 2024) (Ruling)

Neutral citation: [2024] KETAT 1092 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E476 of 2024

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

July 19, 2024

Between

Atcost Structures Limited

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Appellant moved the Tribunal vide a Notice of Motion application dated the 6th May 2024 and filed under a Certificate of urgency on the 7th May, 2024 and which was supported by an Affidavit sworn by Juma Awili, Managing Director of the Appellant, on the 6th May, 2024 seeking for the following Orders, that: -a.Spent.b.Pending the hearing and determination of this application/Appeal, the Honourable Tribunal be pleased to issue orders ceasing the demand of principal taxes and their resultant penalties/interest thereof.c.The Appellant be granted leave to file a Notice of Appeal out of time to this Tribunal.d.The Appellant’s Notice of Appeal attached herein be deemed to have been properly filed and be admitted into record of this Honourable Tribunal.e.The Appellant be granted leave to file and serve all documents as set out under Section 13 (2) of Tax Appeals Tribunal Act.f.The Respondent be at liberty to file a response if it so wishes.g.That costs of this application be in the cause.

2. The application is premised on the grounds, that: -a.On or about September 2023, the Respondent herein issued an Objection decision that confirmed additional assessment Number KRA202312800351 and KRA202312789462 on iTax.b.The Appellant was regrettably misled into appealing only the confirmation of assessment number KRA202312800351 and the matter is currently being finalized at the Alternative Dispute Resolution stage with the Respondent’s team.c.It was during the working meetings with the Respondent’s team that the Appellant was made aware of the need to appeal to the confirmation of additional assessment number KRA202312789462. d.The Respondent arbitrary issued assessment number KRA202312789462 with the improper workings which came out during the ADR process.e.The Appellant did not receive any official and substantive communication from the Commissioner as the assessment/review stage in reference to the workings and tabulations of this particular assessment.f.The unawareness and misinformation on this particular assessment, largely occasioned the Appellant not to be able to file the Appeal on time as is required in law.g.The Appellant has approached this Honourable Tribunal at the earliest juncture and failure to file the appeal on time was because of justifiable opportunity factors beyond the control of the Appellant, who seeks the indulgence of the Tribunal to be allowed to file the appeal out of time.h.The delay is not inordinate as it was beyond the Appellant’s scope and that the Respondent shall not suffer any prejudice if the orders are granted.i.The Appellant has an arguable appeal with a high chance of success as per the Memorandum of Appeal to be adduced.j.The Appellant has already engaged the Respondent in a view to resolve all the tax disputes thereofk.It is therefore in the interest of justice that the Appellant be granted leave to file its appeal out of time.

3. The Respondent upon being served with the instant application filed a Replying Affidavit sworn by Victor Chabala alias Andambi Chabala, an Advocate of the Respondent, on the 15th May, 2024 and filed on the even date which raised the following grounds in opposition to the application, that;i.The Appellant/Applicant filed an Appeal on 6th November 2023 in TAT No. E777 of 2023 which is ongoing before the Tribunal and the deponent being in conduct of the said Appeal and therefore versed with the matters therein.ii.The Appellant in the instant Appeal i.e. E476 of 2024 filed the Appeal on 6th November 2023 which Appeal relates to the Objection decision dated 4th September 2023 and which related to the Appeal number E777 of 2023. iii.The Appellant in Appeal number E476 of 2024 is referring to the same assessment and objection as the one in Appeal E777 of 2023. iv.The Appellant has lodged an Appeal 6 months after lodging an Appeal on the same Objection decision, which delay the Appellant has not explained satisfactorily.v.The Appellant has not paid the VAT liability in nine (9) monthly instalments yet the Appellant had accepted liability as is stated in the Objection decision.vi.The Appellant has not come with clean hands, comes in bad faith and misleads the Tribunal as the matter is sub judice.vii.The Appellant has not advanced any reasonable grounds for the delay in filing the instant application.viii.The Appellant has been indolent and is in a fishing expedition to warrant the discretion of the Honourable Tribunal.

Parties Submissions 4. The Appellant, though directed to file its written submissions to the application, it did not do so, thus the Tribunal shall consider its application on the basis of grounds on the face of the application and averments in the affidavit in support of the application.

5. The Respondent filed written submissions dated 22nd May, 2024 and filed on the even date in which it stated that the delay was inordinate and the principles for determining whether the delay is inordinate were set out in the case Utalii Transport Company Limited & 3 Others v. NIC Bank Limited & Ano. [2014] eKLR.

6. The Respondent submitted that the power to extend time by the Tribunal is discretionary, the reasons to be considered were outline in Section 13 (4) of the Tax Appeals Tribunal Act. In that regard, the Respondent cited the case of Nicholas Kiptoo Arap Korir Salat v. Independent and Boundaries Commission & 7 Others [2014] eKLR.

7. The Respondent submitted that the Appellant has failed to advance sufficient or reasonable grounds why it filed a late Appeal.

8. The Respondent submitted that the Appeal herein is sub judice and the Appellant has not disclosed that there exists another Appeal being TAT E777 of 2023 relating to the same Objection decision.

9. The Respondent submitted that despite the Appellant claiming to have been extensively sick as one of his reasons for delay, the Appellant did not attach any evidence of this to its application, the reasons provided by the Appellant do not therefore meet the requirements as provided for under Section 13 (4) of the Tax Appeals Tribunal Act.

10. The Respondent submitted that the Appellant is not deserving of orders for the stay of enforcement against the Objection decision dated 4th September 2023 and cited the cases of Gatirau Peter Munya v. Dickson Mwenda Kithinji & 2 Others [2014] eKLR.

Analysis and Findings 11. The Appellant in the instant application seeks, inter alia, orders for the extension of time for filing of an appeal out of time and orders restraining the Respondent from demanding principal taxes together with interest and penalties, which application the Tribunal shall consider.

12. It was the Appellant’s submission that the delay was not inordinate, premised on the reasonable grounds that the Respondent did not formally communicate to the Appellant on its decision and was misled in appealing only to the confirmation of assessment KRA202312800351 and which is currently pending at ADR.

13. Conversely, the Respondent submitted that there is inordinate delay in the bringing of the application as the Objection decision sought to be challenged was issued on 4th September 2023 and no reasonable grounds and explanations have been advanced.

14. The Respondent further stated that the instant Appeal is sub judice as the Appellant lodged Appeal No. E777 of 2023 on 6th November 2023 and therefore this Appeal is fatally defective.

15. Whereas the Tribunal is seized with the power under the provisions of Section 13 of the Tax Appeals Tribunal Act and Rule 10 of the Tax Appeals Tribunal (Procedure) Rules to entertain applications of this nature, at the moment it is faced with a critical issue of sub judice, which issue ought to take precedence to all other considerations.

16. The Respondent argued that there is a direct co-relation between Appeal Number E777 of 2023 and the instant Appeal, both lodged by the Appellant as against the Respondent herein. That the nexus being both Appeals emanate from the Appellant’s dissatisfaction with the Respondent’s Objection decision issued on 4th September 2023 relating to VAT and Income tax additional assessments.

17. The Respondent invited the Tribunal to evaluate the evidence and find that the Appellant’s instant Appeal is sub judice and to strike out the Appeal and the instant application.

18. The Tribunal has perused the documents presented in TAT Appeal No. E777 of 2023 and noted as follows;i.The Appeal is between the Appellant and the Respondent herein;ii.The Notice of Appeal is dated 19th October 2023 and filed on 23rd October 2023;iii.The Notice of Appeal indicates that the appealable decision was issued on 23rd September 2023;iv.The Objection decision attached therein subject of this Appeal was issued on 4th September 2023;v.The dispute relates to the assessment on Income tax and VAT for the year 2020 in the sum of Kshs. 4,460,743. 95 issued on 30th June 2023; and,vi.The Appellant’s Objection to the assessment was lodged on 7th July 2023.

19. Further, the Tribunal has perused the instant Appeal and from the documents filed has noted as follows;i.The Appeal is between the Appellant and the Respondent herein;ii.The Notice of Appeal is dated 6th May 2024 and filed on 7th May 2024;iii.The Notice of Appeal indicates that the appealable decision was issued in September 2023;iv.The Objection decision attached therein was issued on 4th September 2023;v.The dispute relates to the assessment on Income tax and VAT for the year 2020 in the sum of Kshs. 4,460,743. 95 issued on 30th June 2023; and,vi.The Appellant’s Objection to the assessment was lodged on 7th July 2023.

20. The Tribunal having perused the Objection decisions filed as well as the prayers sought in the Memorandum of Appeal in the respective Appeals, observed that the Objection decisions flow from the same assessment and the prayers sought in the respective Appeals are verbatim.

21. Whereas the grounds on the respective Memorandum of Appeals differ from one point to another, to the Tribunal’s mind the grievances of the Appellant herein flow from the same Objection decision.

22. The Black’s law dictionary 9th Edition defines sub judice as;“Before the Court or Judge for determination.’The purpose of the sub-judice rule is to stop the filing of a multiplicity of suits between the same parties or those claiming under them over the same subject matter so as to avoid abuse of the Court process and diminish the chances of courts, with competent jurisdiction, issuing conflicting decisions over the same subject matter. This means that when two or more cases are filed between the same parties on the same subject matter before courts with jurisdiction, the matter that is filed later ought to be stayed in order to await the determination to be made in the earlier suit. A party that seeks to invoke the doctrine of res sub-judice must therefore establish that; there is more than one suit over the same subject matter; that one suit was instituted before the other; that both suits are pending before courts of competent jurisdiction and lastly; that the suits are between the same parties or their representatives.”.

23. In the Kenyan jurisprudence, parties to any proceedings and courts of competent jurisdiction are prohibited from filing or hearing respectively, more than one suit relating to the same cause of action, essentially the suits being of between the same parties and pending before the same court or difference courts.

24. The Tribunal is guided by the case in Republic v. Paul Kihara Kariuki, Attorney General & 2 others Ex parte Law Society of Kenya [2020] eKLR Where the Court aptly pronounced itself on the subject of sub judice as follows;“The purpose of the sub-judice rule is to stop the filing of a multiplicity of suits between the same parties or those claiming under them over the same subject matter so as to avoid abuse of the Court process and diminish the chances of Courts, with competent jurisdiction, issuing conflicting decisions over the same subject matter. This means that when two or more cases are filed between the same parties on the same subject matter before Courts with jurisdiction, the matter that is filed later ought to be stayed in order to await the determination to be made in the earlier suit. A party that seeks to invoke the doctrine of res sub judice must therefore establish that; there is more than one suit over the same subject matter; that one suit was instituted before the other; that both suits are pending before Courts of competent jurisdiction and lastly; that the suits are between the same parties or their representatives.”

25. The essential elements to consider while bringing into operation the doctrine of sub judice, are, inter alia;i.The matter in issue and in the subsequent suit is directly and substantially in issue in the previously instituted suit;ii.The parties in the both suits are the same, either directly or indirectly; and,iii.The court in which the first suit is instituted, is a court having jurisdiction or competence to grant the relief claimed in the subsequently instituted suit.

26. Upon the comparison and contrast of the Appeal documents in TAT Appeal No. E777 of 2023 and the instant Appeal, the Tribunal has established that the Appellant’s respective Appeals are identical and relate to the same parties, assessment and Objection decision.

27. The Appellant herein has the positive duty to demonstrate to this Tribunal, how different the circumstances of and its action in the instant Appeal are to TAT Appeal No. E777 of 2023 at the moment that the issue of duplicity of Appeals was raised by the Respondent, considering that both Appeals were drawn and lodged by the Appellant pro se. The Appellant has failed to do so.

28. The Tribunal therefore finds that the instant Appeal not only mimics TAT Appeal No. E777 of 2023, but is identical, the lodging of the instant Appeal is the sum total of multiplicity of Appeals before this Tribunal.

29. It is the Tribunal’s position that the Appellant has an Appeal on record affording it the opportunity to ventilate its claim, and which Appeal was filed earlier to the instant application. If the Appellant foresees any deficiency of whatever nature with the Appeal No. E777 of 2023, the law then provides an avenue to cure the same by way of amendment instead of instituting a fresh Appeal to the same legal grievances. The Applicant therefore, ought to prosecute its Appeal in TAT Appeal No. E777 of 2023.

30. The Tribunal having held as herein above, it shall refrain from considering the issues as to whether the Applicant’s application meets the threshold in law to warrant the same to be granted on not, as such is an exercise in futility.

31. Consequently, the Applicant’s application is not merited and therefore fails.

32. The Appeal that the Appellant seeks to sanitize, having been filed out of time cannot, with the existence of a related and similar appeal, found an appeal to be separately determined on its merit.

Disposition 33. Based on the foregoing analysis, the Tribunal finds that the application is not merited and the Appeal filed therewith is thus rendered incompetent and the Tribunal accordingly proceeds to make the following Orders: -a.The application be and is hereby dismissed.b.The Appellant’s Appeal be and is hereby struck out.c.No orders as to costs.

34. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY JULY, 2024ERIC NYONGESA WAFULA - CHAIRMANMUTISO MAKAU - MEMBEREUNICE N. NG’ANG’A- MEMBERABRAHAM K. KIPROTICH - MEMBERELISHAH N. NJERU- MEMBER