[2023] KETAT 580 (KLR)

Ballore NYK Auto Logistics Limited v Commissioner of Domestic Taxes (Miscellaneous Case E065 of 2023) [2023] KETAT 580 (KLR) (Commercial and Tax) (19 October 2023) (Ruling)

Neutral citation: [2023] KETAT 580 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Miscellaneous Case E065 of 2023

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

October 19, 2023

Between

Ballore NYK Auto Logistics Limited

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Applicant vide a Notice of Motion dated the June 26, 2023 and filed under Certificate of Urgency on the even date and which is supported by an Affidavit sworn by Lucia Khaemba, a Tax Manager of the Applicant, on the June 22, 2023 sought for the Orders that:-i.Spent.ii.The intended Applicant be granted an extension of time with regards to filing the Notice of Appeal to the Tribunal.iii.The Applicant‘s Notice of Appeal filed herewith be deemed to be duly filed and properly on record.iv.The Tribunal be pleased to grant the Applicant 14 days leave to file its Memorandum of Appeal and Statement of Facts upon extending time to Appeal out of time.v.The cost of this application to be in the intended appeal.vi.Any other orders that the Tribunal may deem just and expedient to grant in the circumstances.

2. The application is premised on the grounds that :-i.The Respondent issued its VAT Auto Assessment (VAA) orders to the Appellant dated November 15, 2019 for the tax periods January, March and May 2018 disallowing input VAT claimed and issuing an assessment of Kshs 4,258,036. 54. ii.The Applicant lodged its Notice of objection letter dated March 4, 2020. iii.Vide an email dated April 23, 2021 the Respondent issued its objection decision dated March 19, 2021 revising the VAT assessment downwards to Kshs 2,270,386. 68. iv.The Applicant was unable to file the appeal within the required time due to a breakdown in email communication as a result of company restructuring.v.The Applicant averred that it approached the Tribunal at the earliest juncture and the failure to file the Notice of Appeal as well as the Statement of Facts and Memorandum of Appeal within time was as the result of justifiable factors beyond the control of the intended Applicant. That there has been no inordinate delay.vi.The Applicant has an arguable Appeal with high probability of success which Appeal would be rendered nugatory unless the orders sought herein are granted,vii.If this application is allowed, the Respondent will not suffer any prejudice from the grant of the orders sought herein as it will have corresponding leave to respond.viii.It is in the interest of justice that the orders sought be granted.

3. The Respondent opposed the application through a Replying Affidavit sworn by Alfred Maritim, an officer of the Respondent, on the July 11, 2023 and filed on July 12, 2023. The grounds of opposition as highlighted in the Affidavit were as follows:-i.That the Respondent issued Assessment Orders for Value Added Tax (VAA) on 19th February, 2020 in the sum of Kshs. 4. 258. 036. 54ii.That the Applicant subsequently filed a notice of objection against the demand on 4th March, 2020. iii.That upon review of the grounds of objection and the supporting documents adduced, the Respondent vide its objection decision dated 19th March, 2021, partially accepted the objection by allowing input tax fully supported and disallowing input tax claimed twice or time barred.iv.That the Applicant has not set out and/or demonstrated any solid grounds that would warrant the Tribunal to exercise its discretion in favour of the Applicant. That the Applicant has failed to lay a sufficient basis to the satisfaction of the Tribunal for extension of time to file an appeal.v.That the fact that the Applicant failed to follow up on the decision of the Respondent, for more than twenty six (26) months, is a demonstration that the Applicant has not been vigilant and does not warrant the exercise of the Tribunal in its favour. That the Applicant is guilty of laches.vi.That the delay is unreasonable and not excusable on the grounds that the Applicant had no intention of settling the outstanding tax liability and only woke up after the agency notices were issued.vii.That the Applicant has not met the conditions of Section 13(4) of the Tax Appeals Tribunal Act to warrant the exercise of the Tribunal's discretion in its favour.viii.That the application is an afterthought, brought in bad faith, meant to delay the Respondent from collecting taxes that are due and payable and should not be entertained by this Tribunal as doing so would offend the equitable maxim of equity aids the vigilant and not the indolent and ultimately create bad precedent.ix.That the Applicant is not deserving of the orders sought in the application, as the whole period of delay has not been sufficiently explained satisfactorily to the Tribunal thus the Application ought to be dismissed.x.That the Respondent is merely carrying out its statutory duty under the law by issuing enforcement notices and consequently pray that its actions be upheld by the Tribunalxi.That the Respondent's mandate of collection of revenue is key to the economic development of the Country and consequently, the public and all the arms of the Government and specifically the Tribunal is called upon to assist the Respondent in carrying out its mandate so long as the same is within the Law.xii.That in the circumstances, it is in the public interest that this Tribunal dismisses the application to pave way for the Respondent to collect taxes due from the Applicant which are key to the economic development of the Country.xiii.That the indolence and negligence of the Applicant should not bar the Respondent from fulfilling its mandate of collecting taxes that are still due and payable.

Analysis and Findings 4. In compliance with the directions of the Tribunal to the effect that the application was to be canvassed by way of written submissions, the Applicant‘s filed its submissions 20th July, 2023 and the Respondent filed its submissions on July 26, 2023. The Tribunal has duly considered the written submissions of the Respondent in arriving at its determination in this Ruling.

5. he Tribunal is enjoined to determine the length and reason for the delay when considering an application for the extension of time to appeal out of time. The power to extend time is discretionary and unfettered but the same must be exercised judiciously and it is not a right to be granted to the Applicant.

6. In determining whether to extend time, the Tribunal was guided by the decision of the Court in Charles Karanja Kiiru v Charles Githinji Muigwa[2017] eKLR, where the learned Judge stated that:-―It is trite that extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party, at the discretion of the Court‖

7. On the criteria of the issues to be considered when granting an extension to file an appeal out of time, the Tribunal referred to the case of Odek, JJ. A in Edith Gichugu Koine vs. Stephen Njagi Thoithi [2014] eKLR, where the Court laid out the factors as thus:-―Nevertheless, it ought to be guided by consideration of factors stated in many previous decisions of this Court including, but not limited to, the period of delay, the reasons for the delay, the degree of prejudice to the respondent if the application is granted, and whether the matter raises issues of public importance, amongst others...

8. Further, in Sammy Mwangi Kiriethe & 2 others v Kenya Commercial Bank Ltd[2020] eKLR, the court held that:-―The Court considers the length of the delay; the reason for the delay; the chances of success of the intended appeal, and the degree of prejudice that would be occasioned to the respondent if the application is granted.

9. The Tribunal, guided by the principles set out in John Kuria v Kelen Wahito, Nairobi Civil Application Nai 19 of 1983 April 10, 1984, referred to by the judges in the case of Wasike v Swala [1984] KLR 591, Sammy Mwangi Kiriethe & 2 others v Kenya Commercial Bank Ltd (supra) and Section 13 of the Tax Appeals Tribunal Act, 2013 used the following criteria to consider the application.a.Whether there is a reasonable cause for the delay?b.Whether the appeal is merited?c.Whether there will be prejudice suffered by the Respondent if the extension is granted?a.Whether there is a reasonable cause for the delay

10. In considering what constitutes as a reasonable cause for delay, the court in Balwant Singh v Jagdish Singh & Ors (Civil Appeal No.1166 of 2006), held that: ―The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention.

11. The statutory timelines and provisions to file an appeal have been clearly set out in the Tax Appeal Tribunal Act. Section 13 (3) of the Tax Appeals Tribunal Act provides as follows with regard to the statutory timelines in commencing appeal process:-―A notice of appeal to the Tribunal shall—a.be in writing;b.be submitted to the Tribunal within thirty days upon receipt of the decision of the Commissioner.(2)The appellant shall, within fourteen days from the date of filing the notice of appeal, submit enough copies, as may be advised by the Tribunal, of—a.a memorandum of appeal;b.statements of facts; andc.the tax decision.

12. For a taxpayer who has not met the timelines as provided in the above provision of the law, Section 13(4) of the Tax Appeals Tribunal Act provides the conditions that the taxpayer ought to meet to enable the Tribunal to exercise its discretion to extend time to appeal. The Section provides as follows;―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 giving notice of appeal within the specified period.

13. Regarding the reasons for delay, the Respondent stated that the Applicant had not set out and/or demonstrated any solid grounds that would warrant the Tribunal to exercise its discretion in favour of the Applicant. That the Applicant had failed to lay a sufficient basis to the satisfaction of the Tribunal for extension of time to file an appeal.

14. That the fact that the Applicant failed to follow up on the decision of the Respondent, for more than twenty six (26) months, is a demonstration that the Applicant has not been vigilant and does not warrant the exercise of the Tribunal in its favour. That the Applicant is guilty of laches.

15. The Applicant on its part stated that it was unable to file the appeal within the required time due to a breakdown in email communication as a result of company restructuring.

16. The Tribunal noted that apart from the averment to the effect that it was restructuring, the Applicant did not provide any documentary evidence to support its averments.

17. The Tribunal‘s position is that for it to exercise its discretion to expand time, the Applicant ought to have demonstrated justifiable reason(s) for the delay of more than two years for consideration by the Tribunal as provided for under Section 13(4) of the Tax Appeals Tribunal Act.

18. The Tribunal in the circumstances finds that the Applicant has not advanced any reasonable cause of delay of more than two years to approach the Tribunal to vindicate its right to appeal against the tax demands by the Respondent.

19. The Tribunal is further persuaded by the decision in Abdul Aziz Ngoma vs. Mungai Mathayo [1976] Kenya LR 61, 62, where the court stated that:―We would like to state once again that this Court‘s discretion to extend time under rule 4 only comes into existence after ‗sufficient reason‘ for extending time has been established and it is only then that other considerations such as the absence of any prejudice and the prospects or otherwise of success in the appeal can be considered.

20. The Applicant therefore has in the circumstances substantively failed to meet the statutory and judicially established threshold for the grant of an application for the enlargement of time to file an appeal. The Tribunal therefore found it unnecessary to delve into the other issues that fell for its determination as they had been rendered moot.

Disposition 21. Based on the foregoing, the Tribunal finds that the application lacks merit and proceeds to make the following orders:i.The application be and is hereby dismissed.ii.No orders as to costs

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF OCTOBER, 2023. ERIC NYONGESA WAFULA - CHAIRMANELISHAH N. NJERU - MEMBERMUTISO MAKAU - MEMBEREUNICE N. NG‘ANG‘A - MEMBERABRAHAM K. KIPTROTICH - MEMBER