[2024] KETAT 563 (KLR)

CFAO Agri Limited v The Commissioner of Custom and Border Control (Tax Appeal E064 (NRB) of 2023) [2024] KETAT 563 (KLR) (22 March 2024) (Judgment)

Neutral citation: [2024] KETAT 563 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E064 (NRB) of 2023

RM Mutuma, Chair, EN Njeru, M Makau, B Gitari & AM Diriye, Members

March 22, 2024

Between

CFAO Agri Limited

Appellant

and

The Commissioner of Custom and Border Control

Respondent

Judgment

Background 1. The Appellant herein is a limited liability company incorporated in the Republic of Kenya, whose operations started in the year 2016. The principal activity of the company is the formulation and blending of specific crop and soil fertilisers, a process that involves conversion of raw materials to value added compounds under the Baraka brand. The company operates from its Eldoret factory.

2. The Respondent is a principal officer appointed under and in accordance with Section 13 of the Kenya Revenue Authority Act, the Authority is charged with the responsibility of among others, assessment, collection, accounting, and the general administration of tax revenue on behalf of the Government of Kenya.

3. The Respondent’s Post Clearance Audit team carried out a desk audit of the Appellant’s customs transactions leading to issuance of an initial demand notice dated 14th October 2022 whose liability was Kshs. 46,753,820. 00. The Appellant objected to this demand vide a letter dated 18th October 2022. Upon review of the application, the Respondent requested to visit the Appellant’s factory to examine production process.

4. Upon visiting the Appellant’s factory, the Respondent reviewed the demand dated 14th October 2022 leading to issuance of an amended demand notice dated 30th November 2022 wherein the Respondent demanded principal taxes amounting to Kshs. 83,246,482. 00 comprising of IDF and RDL of Kshs. 66,597,187. 00 and Kshs. 16,649,295. 00 respectively. Dissatisfied by the amended assessment, the Appellant lodged an application for review dated 29th December 2022. Consequently, the Respondent issued its review decision dated 27th January 2023.

5. The Appellant being dissatisfied with the review decision, lodged this Appeal vide Notice of Appeal dated 24th February 2023.

The Appeal 6. The Memorandum of Appeal dated and filed on 10th March, 2023 raises the following grounds of appeal as follows:a.That the Respondent erred in law and fact by incorporating in its amended demand notice of 30th November 2022, the initial demand of Kshs. 46,753,820 even though the Respondent failed to respond to the Appellant's application for review within the stipulated timeline of 30 days thereby acting contrary to the provisions of Section 229 of EACCMA;b.That the Respondent erred in law and fact by failing to give a conclusive determination to the issues in dispute by seeking to conduct further audit checks on the Appellant's business;c.That the Respondent erred in law and fact by finding that the processes undertaken by the Appellant in its factory does not result in an actual change in form of the imported products and hence, does not qualify as a manufacturing process;d.That the Respondent erred in law and fact by seeking to collect IDF and RDL at the rates of 3. 5% and 2%, respectively, contrary to the legitimate expectation created vide its letter to KAM dated 11th May 2020 in which it acknowledged the Appellant as one of the manufacturers who had been approved by the National Treasury as qualifying for the reduced rate of 1. 5%; ande.That the Respondent erred in law and facts by assessing the Appellant's under both the provisions of sections 135 and 249 of EACCMA when only Section 135 is applicable.

Appellant’s Case 7. The Appellant’s case is premised on its;a.Statement of Facts dated 10th March 2023 and filed on the even date together with the documents attached thereto;b.Witness Statement of Peter Gichovi dated and filed on 21st June 2023 and admitted on oath as evidence in chief on the 21st November 2023; andc.Written submissions dated and filed on 6th December 2023.

8. In support of the first ground of the Appeal that the Respondent failed to issue the review decision within the required timelines, the Appellant argued that it submitted its first application for review against the demand dated 14th October 2022 through letters dated 18th October 2022 in compliance with the Section 229 (1) and (2) of the EACCMA. The Appellant also argued that whereas it lodged an application for review dated 29th December 2022 pursuant to Section 229 (1) of the East African Community Customs Management Act, 2004 (“EACCMA’’), the Respondent issued a late review decision dated 27th January 2023 with no conclusive decision.

9. The Appellant relied upon Section 229 (4) and (5) of the EACCMA which requires the Respondent to communicate its decision within 30 days in writing to the person lodging the application failure to which the application stands as allowed. The Appellant argued that the Respondent had until 18th November 2022 to issue its decision, instead the Respondent issued an amended demand notice on 30th November 2022.

10. The Appellant relies on the cases of Republic vs. Commissioner of Customs Services Ex-Parte Unilever Kenya Limited [2012] eKLR wherein W. Korir, J (as he then was) opined thus: -“By communicating the decision four months from 16th March, 2011 the respondent was clearly in breach of the provisions of section 229 of EACMA. There is evidence that the parties kept on communicating even after the 30 days had lapsed and one can say that the ex-parte applicant had consented to the delay by continuing to communicate over the issue with the respondent. One can say the ex-parte applicant was being a wily fox by giving the respondent the impression that the awaited decision was going to be lawful. The Exparte Applicant was however being clever within the law and the law allows such cleverness. The law is however clear and even if the ex-parte applicant had consented to the delay that would still not have made the respondent's demand valid. The implication of the Respondent’s non-communication within the statutory period of 30 days is that the ex-parte applicant did not owe the taxes demanded by the demand notice of 9th February 2011. ’’

11. The Appellant also relies on Associated Battery Manufacturers Limited vs. Commissioner of Customs Services (TAT Appeal No.1 of 2015) where the court while making reference to Section 229 of the EACCMA, held that: -“it must be noted that Section 229 is couched in mandatory terms. It clearly provides that the Commissioner “shall" within a period not exceeding thirty days communicate his reply to an application for review... this provision is couched in mandatory terms. It is clear and requires no further explanation. The Respondent does not have any mandate under the-Act to extend time.”

12. In addition, the Appellant relied on the case of BIC East Africa Limited vs. Commissioner Customs & Border Control (Tax Appeal No. 127 of 2020), to emphasise that the Respondent has to issue its decision within 30 days. Therefore, the Appellant argued that pursuant to Section 229 (5) of the EACCMA, coupled with the various rulings cited above, the Appellant submitted that the Respondent's demand for Kshs. 46,753,820. 00 dated 14th October 2022 was deemed to have been allowed by operation of the law and that the demand for the same amount as contained within the Respondent’s amended demand notice of 30th November 2022 is unfounded in law, hence is invalid.

13. In support of the second ground of Appeal that the Respondent did not issue a conclusive determination to the issues, the Appellant argued that the Respondent in its review decision made a determination on one issue of the four raised by the Appellant. The Appellant stated that the Respondent only addressed the Appellant's reservation to the Respondent's incorporation of its initial demand of Kshs. 46,753,280. 00 to its amended demand notice dated 30th November 2022 despite failing to respond to the Appellant's application for review within the stipulated timeline of 30 days. The Appellant argued that the Respondent sought to conduct further audit checks on the Appellant's operations pursuant to Sections 235 and 236 of EACCMA, and that the audit would gather information as stipulated under Section 229 (4) of EACCMA.

14. The Appellant stated that the Respondent had an obligation to make a conclusive decision on the Appellant's application for review based on the explanations and the documentations availed. The Appellant stated that was unfair for the Respondent to review the application but still leave a disclaimer of further audit checks and audits.

15. In support of the third ground of Appeal that the Respondent erred in law and fact by finding that the processes undertaken by the Appellant in its factory does not result in an actual change in form of the imported products and hence, does not qualify as a manufacturing process, the Appellant reiterated that the principal activity of the Appellant is blending of specific crop and soil fertilisers, a process that involves conversion of raw materials, i.e., the granular Urea, DAP and Potassium Chloride, into value added compounds that is the final fertiliser blend.

16. The Appellant stated that it has invested in both human resources and plant and machinery for the formulation of recipes and blending of various fertilisers under the Baraka brand. The fertiliser blends are based on varying recipes depending on the target crop, for instance, the fertiliser blend for rice differs from the fertiliser blend for potatoes. According to the Appellant, during the manufacturing process, the Appellant sets the desired recipe on a control computer, after which the Granular Urea, DAP and Potassium Chloride are loaded onto hoppers.

17. The Appellant stated that the production process includes: metal screen, mixing, and addition of micronutrients in powder form. Coating agent (ferticoat/vegetable oil) is added to the mix after which it is passed through a paddle blender. Finally, the final product, the blended fertiliser is emptied onto a conveyer belt which transports it to the bagging machine for weighing, bagging and finally stitching.

18. According to the Appellant, its fertiliser blends are registered with the Kenya Bureau of Standards (“KEBS”) under the Baraka brand. The Appellant stated that the production went through trial and approval phase with KEBS and met the threshold for its final product to be classified as a compound fertiliser (multi-nutrient fertilisers). The Appellant achieved a standardisation mark 28167 (S-Mark) for its products. The Appellant also stated that to be granted S-Mark, manufactured goods are expected to meet quality requirements as specified in the various Kenya/Approved Standards pursuant to Section 10 of the Standards Act Cap 496 and a permit to use S-Mark is issued to affirm the standardization.

19. According to the Appellant, since the Miscellaneous Fees and Levies Act 2016 does not define the term ‘manufacturing’, the Appellant urged the Tribunal to use the literal meaning of the terms ‘manufacturing’ and ‘raw materials’ as defined in the Black Law Dictionary 4th Edition and in Cambridge Dictionary. The Appellant also referred the Honourable Tribunal to the case of National Bank of Kenya Ltd vs. The Commissioner [Tax Appeal no. E155 & 533 of 2020] wherein the High Court determined that a word/term should be given its plain and literal meaning before seeking its legal meaning or definition in other statutes.

20. According to the Appellant, Section 7 (3) (b) of the Miscellaneous Fees and Levies Act 2016 provides for a reduced IDF rate of 1. 5% on goods imported under the East African Community (“EAC”) Duty Remission Scheme. Therefore, the Appellant maintained that its products in issue are manufactured products contrary to the view taken by the Respondent.

21. In support of the fourth ground of Appeal that the Respondent seeks to collect IDF and RDL at the rates of 3. 5% and 2% unlawfully and contrary to legitimate expectation, the Appellant stated that the Finance Act 2019 amended Sections 7 and 8 of the Miscellaneous Fees and Levies Act, 2016 to allow for a reduced rate of 1. 5% for both IDF and RDL on “raw materials and intermediate products imported by manufacturers upon recommendation to the Commissioner by the Cabinet Secretary responsible for matters relating to industry.

22. The Appellant argued that following the application through KAM, the relevant recommendation was obtained from the Cabinet Secretary responsible for matters relating to industry, followed by approvals by the National Treasury and a recommendation that was communicated to the Respondent. The approved list of the Appellant's raw materials as granted by the National Treasury as of 30th January 2020. Subsequently, vide a letter dated 11th May 2020, the Respondent communicated to the KAM acknowledging the recommended list of manufacturers from National Treasury whose PIN numbers were adjusted in the SIMBA and iCMS systems to reflect subsidised rates of 1. 5% for IDF and RDL.

23. The Appellant stated that the Respondent's communication to it through the membership organisation, KAM, informed its customs declarations going forward, i.e., at a reduced rate of 1. 5%. The Appellant stated that in amending its systems to apply a reduced rate of 1. 5% to the Appellant's imports, the Respondent created a legitimate expectation that the company’s products indeed qualified as raw materials or intermediate products for manufacture. Therefore, the Appellant argued that in issuing the demand for additional RDL and IDF, the Respondent denied the Appellant its right to fair administrative action as enshrined under Article 47 (1) and (2) of the Constitution of Kenya 2010 and Sections 4 and 6 of the Fair Administrative Action Act, 2015.

24. The Appellant averred that it has established existence of legitimate expectation and that the Respondent erred in infringing the expectation. The Appellant referred this Tribunal to the cases of Keroche Industries Limited vs. Kenya Revenue Authority & 5 Others Nairobi [2007] eKLR, and Kenya Revenue Authority vs. Export Trading Company Limited (Petition 20 of 2020) [2022] KESC 31 (KLR) wherein the issue of legitimate expectation was adequately addressed by the Courts. Consequently, it is the Appellant’s case that the Respondent has not exercised fair administrative action in relation to this matter and has also breached the Appellant's legitimate expectation.

25. Finally, in support of the fifth ground of appeal that the Respondent erred in law and facts by assessing the Appellant’s under both the provisions of Sections 135 and 249 of EACCMA when only Section 135 is applicable, the Appellant argued that amended demand notice of 30th November 2022 was issued under both Sections 135 and 249 of EACCMA.

26. According to the Appellant, the additional demand of IDF and RDL, if it were valid, would amount to a short levy which must be recovered under the provisions of Section 135 of EACCMA. In addition, the Appellant averred that Section 135 provides for a late payment (default) penalty of 2% per month, similar to the late payment interest of 2% per month payable under Section 249. Therefore, the Appellant stated that the two Sections are mutually exclusive and cannot be applied together.

Appellant’s Prayers 27. The Appellant urged this Honourable Tribunal to make orders that:a.This Appeal be allowed;b.The Respondent's decision dated 27 January 2023 be set aside and annulled; andc.The costs of and incidental to this appeal be awarded to the Appellant

Respondent’s Case 28. The Respondent’s Case is premised on its;a.Statement of Facts dated 12th April 2023 and filed on 13th April 2023 together with the documents annexed thereto; andb.Written Submissions dated 26th July 2023 and filed on the 27th July 2023;

29. On issues on the applicable IDF and RDL rates, the Respondent averred that desk audit conducted covering the period October 2017 pursuant to Section 235 and 236 of the EACCMA revealed that the Appellant under declared Import Declaration Fees and Railway Development Levy rates on Granular Urea (Fertilizer Agricultural Grade) to 1. 5% which is the rate for raw materials whereas the applicable rate for Urea that is in a ready state is supposed to be IDF 3. 5% and 2% for RDL. This prompted the Respondent to issue a demand for additional taxes of Kshs. 46,753,820. 00.

30. Since the Appellant’s objection dated 18th October 2022 was premised on the grounds that it was a blending company which deals in crop specific fertilizer blending that involves conversion of raw materials to value added compounds under Baraka brand, the Respondent stated that it decided to visit the Appellant’s factory to find out whether there was any manufacturing taking place. From the visit, the Respondent established as follows:i.The Appellant imports several products in finished form, mixes them and packages them under the brand name Baraka fertilizer. The company also imports Di-Ammonium Phosphate (DAP) Fertilizer and Potassium Chloride-Granular Grade in its finished form;ii.The different types of finished fertilizers are loaded in different Hoppers (urea, DAP, potassium chloride) mixed together as per the specification and an item called coating oil is used in the mixing process so that the nutrients are attached together.iii.The Respondent noted that there was no change of form of the fertilizers but just 4 mixture after undergoing the mixing process. The mixed fertilizers are then bagged in 25kg or 50kg and dispatched to the market.iv.The Respondent also found out that the Appellant sells its products both locally and exports to Uganda under E101 regime.

31. The Respondent averred that it requested the Appellant for documents such as Certificate of Inspection, Bill of Lading, Production Flow Chart, List of products produced by the Plant, the number of acquired empty bags both locally and imported and their invoices. Upon review of the documents, the Respondent argued it noted that the Appellant imports the Granular Urea 46% in bulk mostly from Qatar; The company source labelled packing materials locally from Allpack Industries Ltd; The Certificate of conformity (PVOC) for the granular urea was provided to confirm the goods were a finished product; and a brochure was provided confirming the range of products being blended by the Appellant. The Respondent concluded Granular Urea as used by the Appellant was not raw material.

32. The Respondent having gone through the factory processes and documents presented by the Appellant, the Respondent concluded that the Appellant’s processes are approved, which may not qualify as manufacturing and that the goods imported by the Appellant do not conform to the description of raw materials. Consequently, the Respondent issued amended demand notice for Kshs. 83,246,482. 00 for the non-qualifying goods, which demand was inclusive of the initial demand of Kshs. 46,753,820. 00.

33. On the issue on the timelines for issuing the review decision, the Respondent averred that from the initial demand of Kshs. 46,753,820. 00 vide the letter dated 14th October 2022, the Respondent clearly indicated that the said demand/assessment was limited to the Simba/ICMS systems declarations and the conclusions drawn therefrom and that the Respondent reserved the right to review the demand where new information became available.

34. It is the Respondent’s case that the factory visit presented new information to the Respondent and this was in conformity with Section 229 of the EACCMA which provides that the Respondent shall communicate its decision within a period not exceeding thirty days of the application and any further information the Commissioner may require from the person lodging the application. According to the Respondent, the factory visit, as well as the reviewing of the documents that the Respondent had requested for, amounted to further information required by the Respondent from the Appellant.

35. The Respondent maintained that it did not fail to communicate to the Appellant that it was reviewing the objection within timelines. Consequently, the Respondent referred to the email correspondence dated 18th November 2022 wherein the Respondent wrote to the Appellant making reference to the Appellant’s objectionit they will receive the Respondent’s review decision after the visit to the factory, to which the Appellant acknowledged receipt.

36. The Respondent stated that it sought for further documents from the Appellant on 17th November 2022, and the 30 days for issuing the review decision under Section 229 (4) of EACCMA ought to count from this day. In addition, the Respondent argued that on 29th November 2022, a report on the factory visit was finalised and signed by the Respondent with findings on the factory visit leading to inclusion of Di-ammonium sulphate and potassium chloride to be in the amended demand for taxes of Kshs. 83,246,482. 00 contained in amended demand dated 30th November 2022 which the Appellant responded to resulting to issuance of review decision dated 27th January 2023.

37. The Respondent maintained that it acted within the ambit of Section 229 of the EACCMA and the allegations to the contrary made by the Appellant are misleading.

38. On the issue of breach of doctrine of legitimate expectation, the Respondent contended that there was no contravention of the doctrine because the Respondent assert that it complied with the provisions of the law.

Respondent’s prayers 39. The Respondent prayers are that the;a.Appellant’s Appeal be dismissed with costs,b.Assessment raised by the Respondent amounting to Kshs. 83,246,482. 00 inclusive of interest be found due and payable as per the objection decision rendered by the Respondent.

Issues for Determination 40. The Tribunal having considered the Memorandum of Appeal, the parties’ Statements of Facts, and submissions, puts forth the following issues for determination:a.Whether the Respondent’s Review Decision is statutory time barred;b.Whether the Appellant’s products in issue are manufactured so as to entitled them preferential rates of Import Declaration Fee and Railway Development Levy under the Miscellaneous Fees and Levies Act 2016; andc.Whether the Respondent breached the Appellant’s legitimate expectations.

Analysis and Findings 41. The Tribunal wishes to analyse the issues as hereunder.

a. Whether the Respondent’s Review Decision is statutory time barred. 42. The Appellant submitted that it submitted its first application for review against the demand dated 14th October 2022 through letters dated 18th October 2022 and 19th October 2022 which were lodged in compliance with the Section 229 (1 and (2) of the EACCMA. The Appellant relied upon Section 229 (4) and (5) of the EACCMA which requires the Respondent to communicate its decision within 30 days in writing to the person lodging the application failure to which the application stands as allowed. The Appellant argued that the Respondent had until 18th November 2022 to issue its decision instead the Respondent issued an amended demand notice on 30th November 2022.

43. On the other hand, the Respondent submitted that it did not fail to communicate to the Appellant that it was reviewing the objection within timelines. The Respondent referred to the email correspondence dated 18th November 2022 wherein the Respondent wrote to the Appellant making reference to the Appellant’s objection to the demand notice and further indicated to the Appellant that it will receive the Respondent’s review decision after the visit to the factory. The Respondent also submitted that it sought for further documents from the Appellant on 17th November 2022, and the 30 days for issuing the review decision under Section 229 (4) of the EACCMA ought to count from this day.

44. The issue then, is, did the Respondent issue the review decision within the required statutory timelines under Section 229 (4) of the EACCMA?

45. Section 229 (4) of EACCMA provides as follows:‘‘The Commissioner shall, within a period not exceeding thirty days of the receipt of the application under subsection (2) and any further information the Commissioner may require from the person lodging the application, communicate his or her decision in writing to the person lodging the application stating reasons for the decision.’’

46. The Tribunal has examined the pleadings from both parties and notes that the Respondent issued demand notice dated 14th October 2022. In compliance with Section 229 (1) of EACCMA, the Appellant lodged its application for review within 30 days of receipt of the demand notice through the letter dated 18th October 2022. The interpretation of Section 229 (4) of the EACCMA means that the Respondent ought to have issued its decision on or before 18th November 2022.

47. The Respondent submitted that it did not issue the review decision within the expected timelines because it sought for further documents from the Appellant on 17th November 2022, and the 30 days for issuing the review decision under Section 229 (4) of the EACCMA ought to count from this day. The Respondent also submitted that it had to visit the Appellant’s factory which led to amended demand dated 30th November 2022 to include Di-ammonium sulphate and potassium chloride leading to demand for taxes of Kshs. 83,246,482. 00. The Respondent submitted that the additional information obtained on the visit to the factory is within the meaning of ‘‘and any further information the Commissioner may require from the person lodging the application’’ under Section 229 (4) of EACCMA. The question then is, is the Respondent justified in this line of reasoning?

48. Section 229 (4) of EACCMA has two limbs. The first limb is ‘the receipt of the application under subsection (2)’ while the second limb is about ‘receipt of any further information the Commissioner may require from the person lodging the application.’ The two limbs are conjoined by coordinating conjunction ‘‘AND’’ as opposed to ‘‘OR.’’ The issue in the interpretation of the provisions is whether or not the two limbs are conjunctive or disjunctive.

49. It is clear to us that the use of the word ‘‘AND’’ in under Section 229 (4) of the EACCMA makes the two limbs conjunctive in that they are related and tired together, and the Section does not give the Respondent options in timelines in issuing review decisions. In other words, it means that the Respondent cannot issue the review decision on ‘the receipt of the application under subsection (2) or when the Respondent receives additional information from the Applicant.

50. On the other hand, if the Section 229 (4) of the EACCMA was meant to be interpreted disjunctively as the Respondent appears to suggest, then, the coordinating conjunction ‘‘OR’’ would have been employed by the legislature as opposed to ‘‘AND.’’ Had the coordinating conjunction ‘‘OR’’ been used, then the Respondent would have had an option to issue review decision either on ‘the receipt of the application under subsection (2) or when the Respondent receives additional information from the Applicant.

51. Section 229 (4) of the EACCMA can be compared and contrasted with domestic law, mainly Section 51 (11) of the Tax Procedures Act No. 29 of 2015 before it was amended by Finance Act No. 22 of 2022. The said Section 51 (11) employed coordinating conjunction ‘‘OR’’ instead of ‘AND’ before its amendment. It used to provide as follows:-“(11)The Commissioner shall make the objection decision within sixty days from the date of receipt of—a.the notice of objection; orb.any further information the Commissioner may require from the taxpayer.”

52. Before the amendment to the said Section 51 (11), the Respondent had an option or freedom to issue objection decision within sixty days from the date of receipt of the notice of objection; or within 60 days from the date of receipt of any further information the Commissioner may require from the taxpayer. However, upon amendment, this option or freedom was abolished also. The current Section 51 (11) of the Tax Procedures Act provides as follows.

53. The ‘confusion’ arising from the use of coordinating conjunction ‘‘AND’’ and ‘‘OR’’ in statutes is not novel. The Supreme Court was called upon to interpret the provisions of Section 83 in Odinga & another v Independent Electoral and Boundaries Commission & 2 others; Aukot & another (Interested Parties); Attorney General & another (Amicus Curiae) (Presidential Election Petition 1 of 2017) [2017] KESC 42 (KLR). Section 83 provided as follows:“No election shall be declared to be void by reason of non-compliance with any written law relating to that election if it appears that the election was conducted in accordance with the principles laid down in the Constitution and in that written law or that the non-compliance did not affect the result of the election.”

54. The Supreme Court had the following to say in the aforementioned case at paragraphs 192 and 193. ‘‘192. There are clearly two limbs to all the above quoted provisions: compliance with the law on elections, and irregularities that may affect the result of the election. The issue in the interpretation of the provisions is whether or not the two limbs are conjunctive or disjunctive.193. …However, under both the repealed National Assembly and Presidential Elections Act (section 28) and the current Elections Act (section 83) the term used is or instead of and appearing in the English Acts. The use of the word or clearly makes the two limbs disjunctive under our law. It is, therefore, important that, while interpreting Section 83 of our Elections Act, this distinction is borne in mind. In the circumstances, authorities from many Commonwealth countries, such as Nigeria, Ghana, Zambia, Tanzania and Uganda whose provisions are not in sync or exact parri materia with ours may not be useful.’’

55. After the Judgment of the Supreme Court in the above case, the Parliament in its wisdom amended Section 83 of the Elections Act to replace the coordinating conjunction ‘OR’ with coordinating conjunction ‘AND.’ The amended Section 83 now provides as follows:“A Court shall not declare an election void for non-compliance with any written law relating to that election if it appears that- (a) the election was conducted in accordance with the principles laid down in the Constitution and in that written law; and (b) the non-compliance did not substantially affect the result of the election.”

56. In Republic vs. Commissioner Of Customs Services Ex-Parte Africa K-Link International Limited [2012] eKLR, C.W. Githua J observed as follows:‘‘ I fully associate myself with the interpretation given to Section 229 of the Act by Korir J in R Vs Commissioner of customs Exparte Unilever Ltd (supra) in which he held that once an application for review is made against the Commissioner’s decision under Section 229 of the Act, the commissioner must communicate his/her decision to the tax payer within 30 days and failure to do so means that the commissioner will be deemed to have allowed the application for review by operation of the law and will be barred from demanding payment of the taxes specified in the decision subject matter of the review.However, it is my view that in order for Section 229 (4) and (5) to apply in favour of a taxpayer, the taxpayer must lodge a valid application for review in terms that are clear and unambiguous and which show clearly that the tax payer was making an application for review under Section 229 of the Act.’’

57. The Tribunal is guided by the sentiments of the C.W. Githua J and Korir J in the aforementioned case laws and notes that the Respondent did not accuse the Appellant of filing an invalid application for review. It then follows that the Respondent had to make a decision within 30 days as contemplated under Section 229 (4) of EACCMA but the Respondent failed to do so.

58. The Respondent having failed to comply with Section 229(4) of EACCMA, Section 229 (5) of EACCMA kicks in. It provides as follows:“(5)Where the Commissioner has not communicated his or her decision to the person lodging the application for review within the time specified in subsection (4) the Commissioner shall be deemed to have made a decision to allow the application.”

59. The Tribunal finds that that the Appellant’s application for review dated 18th October 2022 stood as allowed by operation of law. Consequently, The Tribunal finds and holds that the Respondent’s review decision is statutory time barred.

60. It is important to comment on the amended demand notice dated 30th November 2022. Bearing in mind the tight timelines under EACCMA, the Respondent ought to have issued the review decision within 30 days upon receiving the Appellant’s review dated 18th October 2022 whether the Respondent had requested for additional information or not. It means that where the Respondent asks for further information, the Respondent still has to issue review decision within 30 days from the day of receipt of the review application from a taxpayer. Anything else that the Respondent did beyond 18th November 2022 was null and void ab initio. If the Respondent had issued the review decision as required under Section 229(4) of EACCMA, the Respondent would not have issued amended demand notice dated 30th November 2022 and the Appellant would not have filed a second review application dated 29th December 2022. Therefore, the Tribunal cannot examine anything that was done beyond the statutory timelines.

61. This Tribunal having established that the Appellant’s application for review dated 18th October 2022 stood as allowed by operation of law, the Tribunal shall not delve into into the residual issues as the same have been rendered moot.

Final Decision 62. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is meritorious and consequently makes the following Orders; -a.The Appeal is hereby allowed;b.The Respondent’s review decision dated 27th January 2023 is hereby set aside.c.Each party to bear its own costs.

62. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 22ND DAY OF MARCH, 2024ROBERT M. MUTUMA - CHAIRPERSONELISHAH N. NJERU - MEMBERMUTISO MAKAU - MEMBERBERNADETTE M. GITARI - MEMBERMOHAMED A. DIRIYE - MEMBER