[2025] KETAT 69 (KLR)

Cellini Holdings Limited v Commissioner of Domestic Taxes (Tax Appeal E710 of 2024) [2025] KETAT 69 (KLR) (24 January 2025) (Ruling)

Neutral citation: [2025] KETAT 69 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E710 of 2024

RO Oluoch, Chair, G Ogaga & Cynthia B. Mayaka, Members

January 24, 2025

Between

Cellini Holdings Limited

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Appellant vide a Notice of Motion application dated 18th September 2024 filed under a certificate of urgency on the 9th October, 2024 and which was supported by an Affidavit sworn by Paul Kinuthia Muchene, a Director of the Appellant on the 18th September, 2024, sought the following Orders:a.Spent.b.Spentc.That the question of joinder of Pevans East Africa Limited, Vijito Consortium Limited and Gran Monimiento Limited as parties to this Appeal be heard and resolved first and before any other proceeding in this matter.d.That the Court be pleased to enjoin Pevans East Africa Limited, Vijito Consortium Limited and Gran Monimiento Limited as a party to this Appeal.e.That the costs of this application be in the cause.

2. The application is premised on the following grounds:-a.That hearing the substantive Appeal before or contemporaneously with the question of joinder may result in an absurdity and miscarriage of justice.b.That if the Tribunal adds the parties after the substantive hearing stage, such parties may not be able to assist the Tribunal to effectually determine the dispute in the Appeal.c.That at the same time, if the Tribunal considers the hearing of the Appeal before joining the intended subject parties, it would have presumed that the said parties would not have a response to clarify the alleged allegations and errors wrongly made in the Objection decision and levied against the Appellant.d.That hearing the impugned Objection decision directed at the Appellant without considering the yet-to-be-joined parties would deprive both the Appellant and yet-to-be-joined parties of the right to be heard and an opportunity to rectify the error apparent on the Objection decision and prayers in the Memorandum of Appeal.e.That the Appellant is extremely prejudiced by the Objection decision and the best way to fully meet the ends of Justice and the issues raised in the Memorandum of Appeal will be to grant this application.f.That the Appellant's hearing will be buttressed and pegged on the new, exonerating and intrinsic evidence to be adduced in the Supplementary Record of Appeal and documents to be adduced by the yet-to-be-joined parties wherein the veracity of the same ought to be tested through their Affidavits on record.g.That the current application to enjoin the yet-to-be-joined Interested parties is critical to a full and final determination of this Appeal.h.That having studied the Objection decision of the Respondent upholding the tax assessment against the /Appellant, the Appellant is persuaded that they have grounds to request that the yet-to-be-joined parties be enjoined as parties to the Appeal and even to lodge possible Affidavits in support of the Appellant.i.That the yet-to-be-joined parties and /or their Advocates interacted with the Appellant in the sale transactions the subject matter substratum of this Appeal in, inter alia, the following ways: -i.Extensive correspondence between yet-to-be-joined parties and the various advocates for the Appellant.ii.In some instances, the same Advocates for the yet-to-be-joined parties similarly acted for the Appellant mutatis mutandis.iii.Payment of the Purchase Price was made through the yet-to-be-joined parties' Advocate's office.j.That in view of the foregoing, it is clear that joinder of the yet-to-be-joined parties is necessary and that their presence before this most Honourable Tribunal would assist the Tribunal to effectually and completely adjudicate upon and settle all grounds raised in the Memorandum of Appeal.k.That hearing the Appeal before enjoining the yet-to-be-joined parties to the Appeal may result in a situation where intrinsic parts of the dispute are left unresolved amicably and may spill over to the High Court and even the Court of Appeal.l.That if the issues being raised by the Appellant were raised in another suit or further appeal, common issues of law and facts would arise in that suit/appeal as well as in this Appeal thereby leading to unnecessary wastage of the Tribunal and subsequent court’s time.m.That joinder of the yet-to-be-joined parties as a party to this stage would advance the overriding objective of this Honourable Tribunal and avoid a multiplicity of proceedings.n.That it is in the best interest of equity and justice that this application be allowed.o.That granting this application will enable the Court to dispense justice effectively, expeditiously, affordable and in line with Article 159 of the Constitution of Kenya, 2010. p.That in view of the foregoing, it is clear that the joinder of Pevans East Africa Limited, Vijito Consortium Limited and Gran Monimiento Limited is necessary and that their presence before the Tribunal would assist the Tribunal to effectually and completely adjudicate upon and settle all grounds raised in Memorandum of Appeal.

3. The Respondent opposed the application vide its Grounds of Opposition dated and filed on 13th November 2024. The grounds were as follows:-a.That the Tribunal has no jurisdiction to hear and issue orders sought in the application.b.That the Appeals to the Tribunal are restricted to decisions issued by the Commissioner against a taxpayer as provided for in Sections 12 and 13 of the Tax Appeals Tribunal Act.c.That the decision in issue is dated 23rd May 2024 issued to the Appellant herein and does not include other parties.d.That the Tax Appeals Tribunal Act and Tax Procedures Act do not have provisions that allow for additional/joinder of other parties to Appeals filed before the Tax Appeals tribunal.e.That the Appellant is allowed to provide documents and evidence to support its case as provided for in Section 30 of the Tax Appeals Tribunal Act and under the provisions of Section 20 of the Tax Appeals Tribunal Act, the Appellant is at liberty to call witnesses and produce documentary evidence to support its case.f.That the appeals to the Tribunal are determined based on findings on material questions of facts and reference to evidence as provided for in Section 29 of the Tax Appeals Tribunal Act which in turn ensures that the Appellant is granted a fair hearing in this Appeal.

Analysis and Findings 4. The application is primarily for the joinder of parties who the Appellant opines will provide and are in possession of pivotal information for claims made by the Respondent in its Objection decision. That these parties would also help the Tribunal justly determine the issues raised and as itemised in its grounds of Appeal.

5. The Respondent on the other hand opines that the application is an abuse process that is not known to the TPA and the TAT Act.

6. It is not clear from the Appellant’s pleadings why it cannot invite the parties it seeks to enjoin in the Appeal to be its witnesses. No evidence has been provided to show that none of them has shown unwillingness to attend as witnesses.

7. In any event, such unwillingness would be curable under Section 20(2) of the TAT Act which gives the Tribunal the power to compel a party to appear before it to testify on relevant matters that are within its knowledge.

8. Moreover, tax disputes are in persona. A party cannot therefore enjoin parties to An appeal to aid it in its defence. This is specifically because the Tribunal would not be able to issue any orders against such parties who may have been enjoined to the dispute because no assessment was ever issued against them and hence no positive order could be issued against them even if the evidence on record points to a tax liability in their direction.

9. Issuance of orders to enjoin parties with crucial information to an appeal in a tax dispute would thus be unlawful and unjustified as that would amount to inviting them to file a defence and defend themselves in a tax dispute and yet a tax assessment has not been issued against them under Sections 29, 30 and 31 of the TPA.

10. Granting the orders sought when there is a remedy capable of aiding the Appellant to get the justice it seeks under Section 20(2) of the TAT Act would thus not only be unsustainable given that the new or joined parties would have been invited to defend themselves against a tax dispute without being served with an assessment and also being allowed to go through the preliminary tax objection process laid out in Section 51 of the TAT Act.

Disposition 11. The foregoing analysis has thus led the Tribunal to the conclusion that the application herein lacks merits and it hence proceeds to make the following Orders:-a.The application be and is hereby dismissed.b.No orders as to costs.

12. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 24THDAY OF JANUARY, 2025. DR RODNEY O. OLUOCH - CHAIRPERSONGLORIA A. OGAGA - MEMBERCYNTHIA B. MAYAKA - MEMBER