[2025] KETAT 209 (KLR)

Chemical & Solvents (EA) Limited v Commissioner Legal Services and Board Cordination (Tax Appeal E262 of 2025) [2025] KETAT 209 (KLR) (4 April 2025) (Ruling)

Neutral citation: [2025] KETAT 209 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E262 of 2025

CA Muga, Chair, T Vikiru & BK Terer, Members

April 4, 2025

Between

Chemical & Solvents (EA) Limited

Applicant

and

Commissioner Legal Services and Board Cordination

Respondent

Ruling

1. The Applicant vide a Notice of Motion dated 14th March, 2025 and filed under a Certificate of urgency on the 15th March 2025, supported by an affidavit sworn by Abel Mokua sought the following Orders:a.Spent.b.That this Tribunal do consider the Applicant's reasons for late filing of the Appeal and grant the Applicant an extension of time to allow the Appeal to be filed out of time.c.That the Applicant’s Notice of Appeal, Memorandum of Appeal and Statement of Facts be deemed duly filed and properly served upon the Respondent.d.That pending the hearing and determination of this Application, the Tribunal do issue and order temporarily restraining the Respondent from taking recovery measures against the Applicant for alleged taxes amounting to Kshs. 78,361,964. 00 and or any other amount.e.That this Tribunal do issue any other and or further orders that it may deem fit or just.f.The cost of this Application be provided for.1. The Application was premised on the following grounds:a.That on 18th October, 2021, the Respondent made a decision declining the Applicant's objection to corporation tax assessment.b.That in the letter referred to herein above, the Respondent clearly stated that the issue at hand required reconciliation of some disallowed credits; which process, parties immediately embarked on as per attached evidence.c.That while the process of reconciliation was still underway, the Applicant was taken aback when it received from the Respondent a letter dated 14th January, 2025 demanding for the erroneously computed taxes amounting to a staggering sum of Kshs. 78,361,964. 00. d.That the above-mentioned action on the part of the Respondent was done in very bad faith, with the ulterior motive of making it difficult for the Applicant to operate.e.That the delay on the part of the Applicant in lodging the Appeal was occasioned by the Respondent's sharp practice and not due to the indolence or negligent omission of the Appellant.f.That the Applicant's diligence in its affairs is evident from its punctual objection of the initial assessments issued by the Respondent.g.That the Applicant's intended Appeal raises several arguable issues that should be canvassed before the Tribunal and determined on merit.h.That the Respondent will not suffer any prejudice if the orders prayed herein are granted because it will still be entitled to lawful taxes.i.That it is in the interest of justice and administrative fairness that the orders sought by the Appellant are granted.2. The Respondent having been served with the Application filed a Replying Affidavit sworn by Mike Njogu, its officer on the 26th day of March, 2025. The Respondent raised the following grounds in opposition to the Application:a.That it was only served with the Notice of Motion Application on 24th March 2025 hence necessitating of filing the Response on 26th March 2025. b.That the Notice of Motion Application seeks to extend the time to file an Appeal against the decision of the Commissioner issued on 18th October 2021 on grounds that the delay to file the Appeal was occasioned by the "Respondent's sharp practice".c.That the Applicant further averred that the parties were undertaking reconciliation and makes reference to a letter dated 27th September 2021 and 12th October 2021 as evidence of the same.d.That the two letters referred to relate to the objection stage way before the objection decision of 18th October, 2021 was issued and nothing after the decision was made.e.That once the objection decision was issued the Respondent became functus officio, that after realizing no appeal had been preferred against the decision on 14th January 2025 it proceeded to demand the taxes, this was 3 years and 5 months later.f.That the reason advanced for the delay in filing the Appeal for over 3 years and 5 months is "Sharp Practice" while no evidence of there being such practice has been placed before the Court.g.That further the Respondent is not aware of what exactly the Applicant means by stating "sharp practice".h.That the mandate of the Respondent is the recovery of taxes and seeking to recover taxes after 3 years 5 months following an objection decision cannot be called sharp practice.i.That the Respondent has not been engaged in any form of reconciliation after the objection decision has been issued.j.That further, the reasons advanced is not one of the reasons recognized under the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) for extension of time.k.That the delay in this matter is not only inordinate but further the reason is legally untenable and unsupported by any verifiable evidence.l.That the Tribunal is not allowed to act on unsupported averments and as such the delay remains unexplained and should be rejected.m.That the Application therefore failed to meet the threshold as required under section 13(3) and (4) of the TATA which dictates that sickness or absence from the country or a reasonable cause to be the only grounds by which an Applicant may be granted to file an Appeal out of time.n.That the Applicant showed that they had no reason in line with Section 13(3) and section 13(4) of the TATA to file an appeal out of time and therefore their delay was inordinate, unreasonable and a clear abuse of the court process.o.That the following provisions of the Evidence Act, CAP 80 of the Laws of Kenya under Section 109 require that:“The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person."p.That the Applicant did not provide any such reconciliations or sharp practice.q.That it was the Respondent's position that the Applicant does not qualify to be granted leave to file an appeal out of time.

Parties Submissions 3. The Tribunal directed that Application was to be canvassed by way of written submissions, however, neither party filed submissions in this matter. The Application therefore proceeds on the basis of the parties pleadings as filed.

Analysis And Findings 4. The Applicant delayed in lodging its Appeal at the Tribunal by over 3 years as the impugned objection decision is dated 18th October 2021 and the instant application was filed on 14th March 2025. According to the Applicant the reason for the delay was the Respondent’s ‘sharp practice’.

5. The Applicant contended that the parties were engaged in a reconciliation exercise when it received a demand notice on 14th January 2025 for taxes due and its view was that Respondent acted in very bad faith by issuing the demand notice whilst parties were engaging.

6. The Respondent on the other hand asserted that since it issued its objection decision, the parties never engaged and that the letters referred to by the Applicant as evidence of engagement between the parties were both dated before the objection decision and no correspondence has been adduced to demonstrate that the parties were indeed engaging.

7. The Tribunal perused the documents filed by the Applicant and noted that indeed there was no evidence that the parties were engaging.

8. The Tribunal finds the Applicant’s averment that it was being prejudiced by the Respondent’s sharp practice peculiar in that the Applicant has neither explained the supposed sharp practice nor has it attached any evidence of such “sharp practice” in that regard.

9. The view of the Tribunal is that tax statutes provide that an objection decision can only be reviewed by the Tribunal upon the filing of an appeal and therefore, any documentation exchanged after the objection decision is issued can only be reviewed by the Tribunal which has the jurisdiction to do so once an Appeal is properly and competently filed before it. The alternative is that documents provided after an objection decision is issued are considered by the Respondent during the ADR process. The Applicant did not demonstrate that such a process was underway.

10. Section 13 (4) of the TATA provides as follows with regard to extension of time to lodge an appeal out of time:“(4)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 filing the notice of appeal or submitting the documents within the specified period.”

11. The Applicant’s reason for delay was neither sickness nor absence from Kenya, the reason advanced by the Applicant was that the Respondent’s “sharp practice” could only be plausible under “other reasonable cause” but in this instance the same was not substantiated by the Applicant.

12. Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015, which makes provisions for the grounds upon which a party can rely on in making of an application for extension of time, provides as follows:“The Tribunal may grant the extension of time if it is satisfied that the applicant was unable to submit the documents in time for the following reasons-(a) absence from Kenya;(b) sickness; or(c) any other reasonable cause.”

13. It follows that the Applicant has the obligation of demonstrating the grounds upon which its Application is anchored pursuant to the provisions of Section 13 (4) of the TATA as read together with Rule 10 of the Tax Appeals Tribunal (Procedure) Rules.

14. In deeming whether the delay is inordinate or reasonable, the Tribunal is guided by the High Court case of Leo Sila Mutiso v Rose Hellen Wangari Mwangi, Civil Application Nai 251 of 1997 in which the learned trial Judge held as follows:“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.”

15. The Tribunal has perused the Applicant’s grounds as outlined in the application and Affidavit in support of the application thereof and observed that the Applicant has failed provide satisfactory ground for seeking leave before the Tribunal to file its Appeal out of time.

16. Further, the Tribunal has observed that the Applicant delayed in lodging its Appeal before the Tribunal by over 3 years, no evidence has been tabled before the Tribunal to show that this delay was not inordinate.

17. The Tribunal therefore finds that the reason for delay is unsatisfactory and the delay was inordinate as no satisfactory explanation has been advanced to persuade the Tribunal to exercise its discretion in favour of the Applicant.

18. Consequently, the Application is not merited and it fails.

Disposition 19. The upshot of the foregoing is that the Application lacks merit and accordingly the Tribunal makes the following Orders:a.This Application be and is hereby dismissed.b.The Notice of Appeal, Memorandum of Appeal and Statement of Facts all dated 11th March, 2025 filed with the Application are hereby struck out.c.No Orders as to costs .

20. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 4TH DAY OF APRIL 2025. ………………………………….CHRISTINE A. MUGACHAIRPERSON…………………………....... ……….……….…………DR. TIMOTHY B. VIKIRU BONIFACE K. TERERMEMBER MEMBER