[2025] KETAT 193 (KLR)

Beast in Town Hardware v Commissioner for Domestic Taxes (Tax Appeal E1468 of 2024) [2025] KETAT 193 (KLR) (Commercial and Tax) (27 February 2025) (Ruling)

Neutral citation: [2025] KETAT 193 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Tax Appeal E1468 of 2024

E.N Wafula, Chair, D.K Ngala & GA Kashindi, Members

February 27, 2025

Between

Beast In Town Hardware

Appellant

and

Commissioner For Domestic Taxes

Respondent

Ruling

1. The Appellant moved the Tribunal vide the Notice of Motion application dated 18th December 2024 filed under a Certificate of Urgency on the 19th December, 2024 and which is supported by an Affidavit sworn on 24th July 2024 by Mr Bhimji Parbat Kerai, the Managing Partner of the Appellant, seeking for the following Orders; that;a.This Honourable Tribunal be pleased to extend the time within which the Appellant is to file the Memorandum of Appeal, Statements of Facts, Notice of Appeal and tax decisions.b.Consequently, the Memorandum of Appeal, Statement of Facts, Notice of Appeal and tax decisions be deemed to have been properly filed within time.c.Pending the hearing and determination of this application, the Honourable Tribunal be pleased to issue orders to stop the Respondent from enforcing the recovery of the tax under dispute.d.The Appellant be at liberty to apply for further orders as the Honourable Tribunal deem just to grant.e.The costs of this application be in the cause.

2. The application is premised on the grounds as set out on the face of the application and further deponed in its Affidavit as follows:-i.That the Appellant is committed to ensure that it is compliant with the inherent tax legislation and did not intend to delay the process.ii.That on 15th November, 2019 the Commissioner issued to the Appellant VAT Automated Assessment (VAA) KRA201915648273 of Kshs 689,053. 74 for VAT period February, 2018. iii.That the Appellant raised the objection to the additional assessment that is on 12th March, 2020 giving reasons and grounds for objection.iv.That the Commissioner was silent on the matter until more than three years later, that is, 25th May, 2023, that is when the Commissioner issued Confirmation Assessment Notice fully rejecting the objection. In his communication, he stated that the reason for objection is that the taxpayer did not avail records but there was no any communication from the Commissioner to avail the documents after the objection had been done by the taxpayer on 12th March 2020. v.That the late Appeal application was occasioned by sickness as indicated in medical prescriptions by physician.vi.That the Tribunal be at liberty to grant any other or further remedies that deems just and reasonable to grant in the circumstances.

3. The Respondent upon being served with the instant application filed a Replying Affidavit sworn by Sharlyne Risper Omido, an officer of the Respondent, in which response it raised the following grounds in opposition to the application:-a.That on 15th November 2019 it issued the Appellant with additional assessment for VAT for the period February 2018 for Kshs 689,053. 74b.That consequently, the Appellant lodged its notices of objection dated 12th March 2020 challenging the assessment in their entirety.c.That on 25th May 2023, the Respondent issued the Appellant with a late objection rejection notice confirming VAT of Kshs 689,053. 74 as due and payable for the period February 2018. d.That on 18th December 2024 the Appellant lodged an application for extension of time to file an appeal over 2 years and 7 months after the objection rejection notice was rendered.e.That the Appellant failed to file the Notice of Appeal, Memorandum of Appeal Statement of Facts and Tax decision within the statutory timelines contrary to Section 13(1) and 13(2) of the Tax Appeals Tribunal Act.f.That the Appellant averred that it failed to file its appeal within the statutory timelines as he was unwell. That in support of this, the Appellant has attached medical records from Kitale County Hospital.g.That a perusal of the attached medical treatment sheet will indicate that the Appellant had ample time to lodge an appeal at the Tribunal.h.That moreover, the Appellant was indolent and lethargic in filing the instant application since it was filed in December 2024 and is a demonstration that the Appellant has not been vigilant and does not warrant the exercise of the Tribunal discretion in its favour. The Appellant is guilty of laches.i.That the Appellant has failed to provide a valid reason for the late appeal contrary to the provision of Section 13(4) of the Tax Appeals Tribunal Act.j.That failure to provide a valid reason for the late appeal does not warrant this Honourable Tribunal to exercise its discretion in favour of the Appellant. The Appellant has failed to lay a basis to the satisfaction of the Tribunal for extension of time to file an Appeal.k.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 Honourable Tribunal.l.That the Appellant is not deserving of the orders sought in the application as the whole period of delay has not been declared and explained satisfactorily to the Tribunal thus the application ought to be dismissed.m.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.n.That in the circumstances it is in the interest of justice that this Honourable Tribunal dismisses the application to pave way for the Respondent to collect taxes due from the Appellant, which are key to the economic development of the Country.o.That the indolence of the Appellant should not bar the Respondent from fulfilling its mandate of collecting taxes that are due and payable.p.That the Appellant has failed to satisfy the principles as set out in the case of Nicholas Kiptoo Arap Korir Salat vs Independent Electoral and Boundaries Commission & 7 others (2014) eKLR.

Parties Submission 4. During the hearing of this application on 9th January, 2025 parties were directed to file their respective written submissions by the 23rd of January 2025. However by the said date only the Respondent had file its submissions, which the Tribunal will now proceed to highlight.

5. In its written submissions, the Respondent identified two issues for determination.a.Whether the Appellant should be granted leave to appeal out of time1. The Respondent submitted that the Appellant should not be granted leave to appeal the Respondent’s decision out of time for reasons that it would be in contravention of Section13(1)(2) of the Tax Appeals Tribunal Act, which provides for the timelines within which a party aggrieved by a decision should prefer an appeal. It therefore submitted further that the Appellant’s application and intended appeal is defective for being time barred according to the statutory timelines contemplated under the said sections.2. The Respondent submitted that in the instant Appeal, it rendered its decision on 25th May 2023 and that pursuant to Section13 (1) (2) of the Tax Appeals Tribunal Act, the Appellant ought to have appealed the decision within thirty (30) days, on or before 25th June 2023. The Appellant however made the instant application on 18th December, 2024 one (1) year seven (7) months later, evidentially out of time.3. The Respondent relied on the case of Mwangi vs Kenya Airways as cited in the case of APA Insurance Limited vs Michael Kinyanjui Muturi 2016 eKLR where the Court of Appeal listed four grounds for taking into account on whether to grant extension of time as follows;i.The length of delay;ii.The reason for the delay;iii.Possibly the chances of the appeal succeeding if the application is allowed; andiv.The degree of prejudice to the Respondent if the application is granted.4. It was the Respondent’s submission that the Tribunal’s power to extend the time to file an appeal before it is discretionary and is primarily governed by the provisions of Section 13(3)(4) of the Tax Appeals Tribunal Act. It therefore submitted that the Appellant did not meet the threshold set out in the cited case above in the following ways;a.The Appellant failed to demonstrate a reasonable cause of its failure to appeal within statutory timelines. The medical treatment records attached by the Appellant demonstrate that they had ample time to lodge an appeal and that it demonstrated lethargic conduct on the part of the Appellant.b.The Appellant did not demonstrate the existence of a prima facie arguable appeal, a cursory perusal of the filed Memorandum of Appeal utterly fails to disclose arguable grounds of appeal.5. The Respondent further averred that the Appellant failed to meet the threshold laid down in the case of Nicholas Kiptoo Arap Korir Salat vs Independent Electoral and Boundaries Commission & 7 others (2014) eKLR where the Court laid down the following criterion to be considered in extension of time:-a.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.b.A party who seeks for extension of time has the burden of laying the basis to the satisfaction of the court.c.Whether the court should exercise the discretion to extend time is a consideration to be made on a case to case basis.d.Whether there is a reasonable reason for delay, the delay should be made to the satisfaction of the court.e.Whether there will be prejudice suffered by the Respondent if the extension is granted.f.Whether the application for extension has been brought without undue delay.6. It was the Respondent’s submission that the Appellant has failed to satisfy the provisions of Section 13(4) of the Tax Appeals Tribunal Act and further failed to sufficiently account for the inordinate delay for the entire year 2024. Hence the delay was solely due to the indolence of the Appellant.7. The Respondent relied on the case of Yusuf Mohamed Salat vs Idris Ali Ahmed (2009) eKLR where the learned judge stated as follows:-“I would agree with Mr Matini that the sword of justice is double edged and equity aids the vigilant not the indolent.”

13. In determining whether the delay was inordinate, the Respondent cited the case of Mwangi S.Kimenyi vs Attorney General & Another(2014) eKLR which stated as follows:-“There is no precise measure of what amounts to inordinate delay. Inordinate delay will differ from case to case depending on the circumstances of each case, the explanation given for the delay and so on and so forth. Never the less, inordinate delay should not be difficult to ascertain once it occurs, the litmus test being that it should be an amount of delay which leads the court to an inescapable conclusion that it is inordinate and therefore inexcusable….”

14. The Respondent submitted that the delay of one year and seven months could not be termed as normal as the same was excessive and inexcusable and that it did not warrant the Tribunal’s exercise of discretion in favour of the Appellant.The Respondent further relied on the case of TAT No.201 of 2023 Cosmoplan Consultants Limited vs Commissioner Legal services & Board Coordination where faced with similar circumstances, the Tribunal declined an application for enlargement of time to file an appeal.

Analysis and Findings 15. The Tribunal is enjoined to determine the application for leave to extend time within which the Appellant is to file the Notice of Appeal, Memorandum of Appeal, Statement of Facts and tax decision. The application is anchored on Article 50(1) of the Constitution of Kenya, Sections 13(3)(4) & (5) and 16(2) of the Tax Appeals Tribunal Act and Rules 3(2) and 10 of the Tax Appeals Tribunal (Procedure) Rules 2015.

16. Rule 10 (1) & (3) of the Tax Appeals Tribunal (Procedure) Rules provides for the guidelines to be followed by any party seeking extension of time to file documents upon lapse of the period prescribed in law. It states as follows;1. “Where the documents referred to in rule 3(2) are not filed within the time specified therein the Tribunal may, upon application in writing extend the time for submitting the documents.(3The Tribunal may grant the extension of time if it is satisfied that the Applicant was unable to submit documents in time for the following reasonsa)Absence from Kenyab)Sickness; orc)Any other reasonable cause”

17. The Appellant had stated in its grounds that the delay in filing its appeal was occasioned by sickness, and proceeded to attach some medical report from Kitale County Hospital.

18. The Respondent in opposing the application, stated that a perusal of the attached medical treatment sheet from Kitale County Hospital indicated that the Appellant had ample time to lodge an appeal at the Tribunal.

19. The Respondent further argued that the Appellant was indolent and lethargic in filing the instant application since it was filed in December 2024 and that it is a demonstration that the Appellant had not been vigilant and does not therefore warrant the exercise of the Tribunal’s discretion in its favour.

20. It is the Tribunal’s view that the grounds and/or reasons advanced by the Appellant fall amongst the grounds provided in law to warrant the to Tribunal consider the order sought.

21. The Tribunal has carefully perused the Appellant’s supporting documents and more particularly the medical report from Kitale County Hospital and observes that it bears a stamp dated 19th June, 2023. However the year in the date on the handwritten medical chit seem to have been altered at three different places hence one may doubt the authenticity of the said document.

22. The Tribunal further observes that the said medical report was for June 2023. However the Appellant has neither adduced any further medical report that would account for the one and a half years delay from June 2023 to December, 2024 to the satisfaction of the Tribunal. The Tribunal is therefore inclined to agree with the Respondent that the delay between June2023 and December 2024 was inordinate.

23. The Tribunal in its finding is persuaded by the Ugandan case of Ojara vs. Okwera (Miscellaneous Civil Application 2017/23) [2018] VGHCCD 42 where it was stated as thus:-“An order for enlargement of time to file the appeal should ordinarily be granted unless the applicant is guilty of unexplained and inordinate delay in seeking the indulgence of the court.”

24. It is therefore the Tribunal’s finding that the Appellant has not established any reasonable cause for the delay.

25. With the application for leave to file an appeal out of time having failed the Notice of Appeal and the Appeal documents filed simultaneously with the application have no legal foundation and the Appeal is thus unsustainable in law.

Disposition 26. The Tribunal in the circumstances finds that the application lacks merit and the Appeal filed therewith is incompetent and the Orders that accordingly recommend themselves to the Tribunal are as follows:-a.The application be and is hereby dismissed.b.The Appeal be and is hereby struck out.c.No orders as to costs.

27. It is so ordered

DATED AND DELIVERED AT NAIROBI THIS 27THDAY OF FEBRUARY, 2025ERIC NYONGESA WAFULA - CHAIRMANDELILAH K. NGALA - MEMBERGEORGE KASHINDI - MEMBER