[2024] KETAT 1034 (KLR)

Chebungei v Commissioner of Domestic Taxes (Miscellaneous Case E173 of 2023) [2024] KETAT 1034 (KLR) (Commercial and Tax) (5 July 2024) (Ruling)

Neutral citation: [2024] KETAT 1034 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Miscellaneous Case E173 of 2023

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

July 5, 2024

Between

Sylus Kipngetich Chebungei

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Applicant vide a Notice of Motion dated the 1st November, 2023 that was filed on 9th November, 2023 and which was supported by an Affidavit sworn by the Applicant, himself, on the 1st November, 2023, sought for the following Orders:-i.Spentii.That the Applicant be granted an extension of time with regard to filing the Notice of Appeal and Memorandum of Appeal and Statement of Facts to this Tribunal out of time.iii.That the Notice of Appeal dated 17th October, 2022 and filed on the same day be deemed as duly filed and served.iv.That costs of this application be provided for.

2. The application is premised on the following grounds:-i.That upon subsequent engagements, the Respondent finally issued its Objection decision dated 14th September, 2022. ii.That the Applicant had objected to all the tax demands of KShs.524,507. 99 and thus not admitted to the taxes being demanded by the Respondent.iii.That the Applicant had delayed in the compilation of the relevant supporting documents due to sickness and recurrent admissions.iv.That the prescribed statutory time to lodge the Appeal with the Tribunal has since lapsed/expired.v.That the Applicant has urgently approached this Tribunal to preserve its right to appeal against the Objection decision. Should this application not be certified urgent and heard on priority basis, the Applicant stands to lose its right of access to justice and to be heard on its appeal due to circumstances that are not of its doing.vi.That if this application is not allowed, the Applicant will suffer irreparable loss and damage if the orders sought herein are not issued because the taxes being demanded are erroneous as the sales in returns disallowed has been adequately supported in form of documentary evidence and the intended Appeal is merited and stands high chances of success.vii.That the Applicant is desirous of pursuing its appeal with the Tribunal by availing all the documents requested for further review by the Tribunal or the ADR Department as may be directed.viii.That the tax assessments by the Respondent are not only excessive and unreasonable but also fail to reflect the actual trading position of the Applicant.ix.That the application will not prejudice the Respondent in any way but will provide an opportunity to this Tribunal to decide the issues in dispute on merit and ensure dispensation of justice.x.That the Respondent will not suffer any prejudice if the Orders sought are granted.xi.That the Applicant stand to suffer irreparable loss and damage if the orders sought in this application are not granted as the Respondent may proceed to enforce the agency notices.

3. The Respondent opposed the application through a Replying Affidavit sworn by Amos Nyaunga Oeta, an officer of the Respondent, on the 30th November, 2023 and filed on the same date. The grounds of opposition as highlighted in the Affidavit were as follows:-i.That on 16th March, 2022 the Respondent issued upon the Appellant additional Value Added Tax assessment for the tax period of December 2020. ii.That the Applicant on 1st September 2022 lodged a late objection to the additional assessment.iii.That the Respondent on 6th September 2022 wrote to the Appellant informing him that his objection was not validly lodged as stipulated under Section 51 of the Tax Procedures Act; and that he should provide clarification and documentary evidence in support of the late objection.iv.That the Applicant failed to provide the reason for late objection application and documentary evidence as requested.v.That the Respondent vide a letter dated 14th September 2022 invalidated the objection application and hence confirming the assessment.vi.That the Applicant is yet to provide documents to the Respondent for consideration.vii.That the Applicant herein has failed in lodging his appeal within the stipulated timelines as the invalidation decision notice was issued more than one (1) year two (2) months earlier.viii.That the Applicant indicates that he has been unwell thus the delay in lodging the Appeal.ix.That he has only provided a clinical note which do not sufficiently address the allegation that he was indisposed for a period of over one year which ordinarily would be addressed by comprehensive discharge letter or a doctor's letter on the same.x.That the Respondent will suffer great prejudice if the application is granted as this will delay collection of taxes which is the main mandate of Respondent, hence delayed service to all Kenyan Citizens.xi.That the Applicant has therefore not demonstrated in any way that he has an arguable appeal with any chances of success.xii.That the Applicant has not met the established threshold for the Tribunal to exercise its discretion in granting leave to file appeal out of time.xiii.That the Applicant has shown that it is indolent or does not have interest in appealing the decision of the Respondent.xiv.That the application herein is incompetent, frivolous, without merit and an abuse of the powers of this Tribunal.xv.That in the circumstances, it prayed that this Tribunal do dismiss the application herein with costs to the Respondent.

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 Appellant filed his submissions on 21st November 2023 while the Respondent filed its submissions on 3rd December 2023. The Tribunal has duly considered the written submissions in arriving at its determination in this Ruling.

5. The application is primarily praying to the Tribunal for extension of time to file an appeal out of time.

6. The power to expand time for filing an Appeal is donated by Section 13(3) of the Tax Appeals Tribunal Act which provides that:“The Tribunal may, upon application in writing, extend the time for filing the Notice of Appeal and for submitting the documents referred to in subsection (2).”It is therefore a discretionary power and not a right to be granted to the Applicant.

7. In determining whether to expand time, courts have in the past considered a number of factors. These factors were discussed in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 where the Judge held that:“It is now settled that the decision whether to extend the time for appealing is essentially discretionary. It is also well stated that in general the matters which this court takes into account in deciding whether to grant an extension of time are, first the length of the delay, secondly the reasons for the delay, thirdly (possibly) the chances of the appeal succeeding if the application is granted and fourthly the degree of prejudice to the respondent if the application is granted.”

8. The court in WasikevSwala [1984] KLR 591 provided the hierarchy of the factors to consider when it stated that:“an applicant must now show, in descending scale of importance, the following factors: -a.That there is merit in his appeal.b.That the extension of time to institute and/or file the appeal will not cause undue prejudice to the respondent; andc.That the delay has not been inordinate.

9. The Tribunal, guided by the principles set out in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997, WasikevSwala [1984] KLR and Section 13 of the Tax Appeals Tribunal Act 2013 used the following criteria to consider the application:a.The merits of the complained action.b.Whether there is a reasonable cause for the delay.c.Whether there will be prejudice suffered by the Respondent if the extension is granted.

Merits of the Complained action 10. The Tribunal considered whether the matter under dispute was frivolous to the extent that it would be a waste of the Tribunal’s time, or it was material to the extent that it deserved its day in the Tribunal.

11. The test is not whether the case is likely to succeed. Rather, it is whether the case is arguable. This was the finding in Samuel Mwaura Muthumbi v Josephine Wanjiru Ngungi & Another (2018) eKLR where the court stated that:-“Looking at the draft Memorandum of Appeal filed, I am unable to say that the intended Appeal is in arguable. Of course, all the Applicants have to show at this stage is arguability- not high probability of success. At this point the Applicant is not required to persuade the Appellate court that the intended or filed appeal has a high probability of success. All one is required to demonstrate is the arguability of the Appeal, a demonstration that the Appellant has plausible grounds of either facts or law to overturn the original verdict. The Applicants have easily met that standard. I believe that the Applicant has discharged this burden.”

12. The Tribunal was further guided by the findings of the court in Kenya Commercial Bank Limited Vs Nicholas Ombija (2009) eKLR where it was held that:“An arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court.”

13. Similarly, in Kenya Commercial Bank Limited Vs Nicholas Obija (2009) eKLR it was stated that “an arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court” that was also the position held in Stanley Kangethe Kinyanjui Vs Tony Keter & others (2013) eKLR where the court held that “on whether the appeal is arguable, it is sufficient if a single bonafide ground of appeal is raised, .. an arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court: one which is not frivolous.”

14. Regarding the merits of the Appeal, The Respondent stated that the Applicant failed to provide the reason for late objection application and documentary evidence as requested.

15. That the Respondent vide a letter dated 14th September 2022 invalidated the objection application and hence confirming the assessment.

16. That the Applicant is yet to provide documents to the Respondent for consideration.

17. The Applicant on its part stated that upon subsequent engagements, the Respondent finally issued its objection decision dated 14th September, 2022.

18. That the Applicant had objected to all the tax demands of KShs.524,507. 99 and thus not admitted to the taxes being demanded by the Respondent.

19. That the Applicant had delayed in the compilation of the relevant supporting documents due to sickness and recurrent admissions.

20. The Tribunal notes that the Respondent’s letter dated 14th September 2022 titled ‘application For Extension Of Time To Lodge An Objection Notice Against Value Added Tax Assessment Of Kshs. 524,508. 74 For December 2020’ was not an objection decision but a notification to the Applicant that its application for late objection had been declined by the Commissioner.

21. Section 51(7) provides as follows regarding late objections;“The Commissioner may allow an application for the extension of time to file a notice of objection if—a.the taxpayer was prevented from lodging the notice of objection within the period specified in subsection (2) because of an absence from Kenya, sickness or other reasonable cause; andb.the taxpayer did not unreasonably delay in lodging the notice of objection.”

22. It follows from the above provision of the law that the Applicant ought to have persuaded the Commissioner on the reasons for the late objection before its objection could be allowed. The Tribunal notes that although the Applicant has averred that the reason for late objection was illness, he has not demonstrated that it provided the Respondent with the evidence for this reason.

23. In the case at hand therefore, the Respondent rejected the Applicant’s late objection and therefore there is no objection decision that was subsequently issued.

24. Section 52(1) of the Tax Procedures Act provides as follows regarding appealable decisions to the Tribunal;“A person who is dissatisfied with an appealable decision may appeal the decision to the Tribunal in accordance with the provisions of the Tax Appeals Tribunal Act, 2013 (No. 40 of 2013).”

25. It follows from the above provision of the law that for a taxpayer to approach the Tribunal to argue its case, there ought to be an appealable decision from the Commissioner.

26. In addition, Section 3 of the Tax Procedures Act defines an appealable decision as follows;“"appealable decision” means an objection decision and any other decision made under a tax law other than—a.a tax decision; orb.a decision made in the course of making a tax decision;”

27. There is no objection decision that can enable the Applicant to approach the Tribunal with an appeal granting the extension of time for the Applicant to challenge the rejection of his application to lodge a late objection it would be a waste of the Tribunal’s time in view of the material fact that the application for lodging a late objection was not supported. Infact the Applicant appears unaware of what he ought to appeal against and of the possible remedies available to him.

28. Consequently, the Tribunal finds that the Applicant had no arguable appeal.

29. Having entered the above finding, the Tribunal did not delve into a determination of the other factors for consideration in such an application as such a determination had been rendered moot.

Disposition 30. Based on the foregoing analysis the Tribunal finds that the application lacks merit and accordingly 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 5TH DAY OF JULY, 2024. ERIC NYONGESA WAFULACHAIRMANABRAHAM K. KIPROTICH EUNICE N. NG’ANG’AMEMBER MEMBERELISHAH N. NJERU MAKAU MUTISOMEMBER MEMBER