[2024] KEHC 11728 (KLR)

Commissioner Customs & Border Control v Manufacturer Experts & Technical Services (Income Tax Appeal E175 of 2023) [2024] KEHC 11728 (KLR) (Commercial and Tax) (20 September 2024) (Ruling)

Neutral citation: [2024] KEHC 11728 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts)

Commercial and Tax

Income Tax Appeal E175 of 2023

MN Mwangi, J

September 20, 2024

Between

Commissioner Customs & Border Control

Appellant

and

Manufacturer Experts & Technical Services

Respondent

Ruling

1. Before me is the appellant/applicant’s Notice of Motion application dated 1st November, 2023 filed pursuant to the provisions of Rule 4 of the Tax Appeals Tribunal (Appeals to the High Court) Rules, 2015, Section 32 of the Tax Appeals Tribunal Act, Article 159 of the Constitution of Kenya 2010 and all other enabling provisions of the law. The applicant seeks orders for this Court to extend time for it to file a Memorandum of Appeal against the judgment of the Tax Appeals Tribunal delivered on 23rd December, 2022 and for the Memorandum of Appeal filed be deemed as duly filed and served, that the applicant be at liberty to amend its Record of Appeal once it obtains copies of certified typed proceedings and judgment of the Tax Appeals Tribunal. The applicant also prays for an order for stay of execution of the Tax Appeals Tribunal judgment dated 23rd December, 2022 in TAT No. 837B of 2021 to issue pending the hearing and determination of the appeal.

2. The application is premised on the grounds on the face of the Motion and is supported by an affidavit sworn on the same day by Sega N. Addah, an Advocate of the High Court of Kenya practicing at the applicant’s Legal Services Department. She averred that the Tax Appeals Tribunal delivered its judgment on 23rd December, 2023 without Notice to the applicant, and that, the applicant was not served with a Notice for delivery of the said judgment. She claimed that she was away on maternity leave and when she went back to work, she took stock of her matters, which included TAT No. 837B of 2021, the subject of the instant application, and upon making enquiries to the Tribunal was established that judgment in favour of the respondent was delivered on 23rd December, 2022. That dissatisfied by the said judgment, the applicant filed a Notice of Appeal on 22nd May, 2023 and requested for copies of the judgment and proceedings.

3. She averred that certified copies of the judgment and proceedings are yet to be supplied to the applicant by the Tribunal. She stated that the applicant was required to have lodged a Memorandum of Appeal against the Tribunal’s decision on or before 17th February, 2023. She referred to Rule 5 of the Tax Appeals Tribunal (Appeals to the High Court) Rules and stated that it requires a Memorandum of Appeal to be accompanied by among others supporting documents, and a copy of the Tribunal decision, thus the applicant believed that it required copies of certified typed proceedings and judgment before preparing its Record of Appeal. Counsel asserted that the respondent is threatening to enforce the impugned judgment to the detriment of the applicant, and the public at large, yet the applicant has an arguable appeal with high chances of success. She stated that it is in the interest of justice that the orders sought are granted.

4. In opposition to the application, the respondent filed a replying affidavit sworn on 7th February, 2024 by Moses Mburugu, the respondent’s Director who averred that in the event that the orders sought are granted, the respondent will suffer prejudice since the fruits of its judgment shall be delayed. He further averred that since the decree is a money decree, the applicant stands to suffer no prejudice that cannot be remedied by an award of damages. He asserted that the respondent is capable of refunding the decretal sum in the event that the applicant’s appeal is successful. Mr. Mburugu contended that the applicant has not offered any security and/or expressed willingness to comply with any of the conditions precedent to an application for stay of execution pending appeal.

5. He argued that the applicant only begun the appeal process when the respondent tried to execute the Tribunal’s judgment vide a letter dated 24th July, 2023 after the elapse of approximately three (3) months of documentation scrutiny by the Kenya Revenue Authority Officers. He urged this Court to order for deposit of the entire decretal sum in a joint interest earning account in the name of Counsel for the parties herein, in the event that it is inclined to grant the applicant the orders sought in the application herein.

6. The instant application was canvassed by written and oral submissions. The applicant did not file any written submissions but its Counsel on record made oral submissions on 22nd January, 2024 and 20th March, 2024. The respondent’s submissions on the other hand were filed on 7th March, 2024 by the law firm of Komu & Kamenju Advocates.

7. Ms. Sega, learned Counsel for the applicant relied on the provisions of Order 42 Rule 8 of the Civil Procedure Rules, 2010, the case of Kenya Revenue Authority v Eric Ogola ITA No. E003 of 2021, and the Court of Appeal case of National Industrial Credit Bank v Aquinas Francis Wasike & 2 others [2006] eKLR, and submitted that no such security as is mentioned in Order 42 Rule 6 of the Civil Procedure Rules, 2010 shall be required from the Government or its Officer carrying out official duties. She further submitted that the applicant’s case before the Tribunal was not determined on merits as the Tribunal found that the appeal before it had been filed out of time. She asserted that the applicant has an arguable appeal that should be determined by this Court on merits.

8. Mr. Wambugu, learned Counsel for the respondent cited the provisions of Order 42 Rule 6 of the Civil Procedure Rules, 2010 and the case of Jamii Bora Bank Limited & another v Samuel Wambugu Ndirangu to support his arguments. He submitted that the respondent had already paid the disputed tax, proving its ability to make a refund if required. He stated that under Section 42 of the Tax Procedures Act, the applicant has various means to recover unpaid taxes. He further stated that the applicant is at liberty to auction the respondent’s property, issue departure prohibition orders, and/or arrest Taxpayers under the said provisions. He argued that the respondent on the other hand would need to go through a lengthy legal process to recover any money owed by the applicant following the Tribunal's judgment.

9. Mr. Wambugu also contended that there was inordinate delay in filing the instant application, since the impugned judgment was delivered on 23rd December, 2022, the Notice of Appeal was filed on 22nd May, 2023, whereas the application herein was filed on 1st November, 2023. He contended that given the applicant’s poor history with processing and remitting tax refunds, an order for deposit of security should be made, if this Court is inclined to grant the orders sought.

Analysis And Determination. 10. Upon consideration of the application herein, the grounds on the face of it, and the affidavit filed in support thereof, the replying affidavit by the respondent, as well as the written and oral submissions made by Counsel for the parties, the issues that arise for determination are –i.Whether the application for leave to file an appeal out of time is merited; andii.Whether the applicant has satisfied the conditions set down to warrant being granted an order for stay of execution pending appeal.Whether the application for leave to file appeal out of time is merited.

11. Appeals from the Tax Appeals Tribunal to the High Court are provided for under Section 32 of the Tax Appeals Tribunal Act. Section 32(1) thereof states that –A party to proceedings before the Tribunal may, within thirty days after being notified of the decision or within such further period as the High Court may allow, appeal to the High Court, and the party so appealing shall serve a copy of the notice of appeal on the other party.

12. The Tribunal delivered its judgment on 23rd December, 2022. Thus, a party aggrieved by the said decision ought to have filed a Notice of Appeal against it, on or before 14th February, 2023, in light of the provisions of Order 50 Rule 4 of the Civil Procedure Rules, 2010 which states that –Except where otherwise directed by a judge for reasons to be recorded in writing, the period between the twenty-first day of December in any year and the thirteenth day of January in the year next following, both days included, shall be omitted from any computation of time (whether under these Rules or any order of the court) for the amending, delivering or filing of any pleading or the doing of any other act:Provided that this rule shall not apply to any application in respect of a temporary injunction.

13. The applicant herein contends that the Tribunal judgment was delivered without Notice to it, and it was also not served with a Notice for delivery of the said judgment. Counsel for the applicant contended that she was away on maternity leave and when she went back to the office, she took stock of her matters which included TAT No. 837B of 2021 the subject of the instant appeal, and that upon making enquiries from the Tribunal, it was established that judgment in favour of the respondent was delivered on 23rd December, 2022. She stated that since the applicant was aggrieved by the said judgment, it filed a Notice of Appeal on 22nd May, 2023 and requested for copies of the judgment and proceedings which have not been availed to it to date.

14. It is well settled that Courts have the power to enlarge time within which an applicant can lodge an appeal, pursuant to the provisions of Order 50 Rule 6 of the Civil Procedure Rules, 2010 which states that –Where a limited time has been fixed for doing any act or taking any proceedings under these Rules, or by summary notice or by order of the court, the court shall have power to enlarge such time upon such terms (if any) as the justice of the case may require, and such enlargement may be ordered although the application for the same is not made until after the expiration of the time appointed or allowed:Provided that the costs of any application to extend such time and of any order made thereon shall be borne by the parties making such application, unless the court orders otherwise.

15. The guiding principles when it comes to extension of time were laid down by the Supreme Court in the case of Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 others [2014] eKLR as hereunder-This being the first case in which this Court is called upon to consider the principles for extension of time, we derive the following as the underlying principles that a Court should consider in exercise of such discretion: 1. 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;

2. a party who seeks…extension of time has the burden of laying a basis to the satisfaction of the Court;

3. whether the Court should exercise the discretion to extend time, is a consideration to be made on a case-to-case basis;

4. [where] there is a reasonable [cause] for the delay, the delay should be explained to the satisfaction of the Court;

5. whether there will be any prejudice suffered by the respondents if the extension is granted;

6. whether the application has been brought without undue delay; and,

7. whether in certain cases, like election petitions, public interest should be a consideration for extending time.”

16. Pursuant to the provisions of Section 32(1) of the Tax Appeal Tribunal Act, this Court’s jurisdiction to determine an appeal from the decision of the Tax Appeals Tribunal is invoked by the filing of a Notice of Appeal. As explained hereinbefore, a Notice of Appeal against the Tribunal’s impugned decision that was delivered on 23rd December, 2023 ought to have been filed on or before 14th February, 2023. The applicant was not served with a Notice for the delivery of the said judgment, or informed of its delivery. Counsel stated that she learnt about delivery of the said judgment after she returned to work from maternity leave and since the applicant was aggrieved by the said decision, it lodged a Notice of Appeal on 22nd May, 2023.

17. It is however worthy of note that neither the applicant nor its Counsel on record has disclosed to this Court and to the respondent the date she learnt that the Tribunal had delivered its judgement on 23rd December, 2022, in order for this Court to assess whether the Notice of Appeal filed on 22nd May, 2023 was filed within the timelines provided for under Section 32(1) of the Tax Appeals Tribunal Act. In the absence of such disclosure by the applicant, this Court finds that judgment having been delivered by the Tax Appeals Tribunal on 23rd December, 2022, the Notice of Appeal filed on 22nd May, 2023 was filed out of time.

18. The above notwithstanding, upon perusal of the Case Tracking System, I note that the instant application was filed on 2nd November, 2023 approximately five (5) months after the filing of the Notice of Appeal. The explanation offered by the applicant for the delay in filing the Memorandum of Appeal is that it was occasioned by the delay in supply of certified typed proceedings and judgment. Upon perusal of the application herein and the annexures thereto, it is apparent that the applicant has since filed a Memorandum of Appeal and a Record of Appeal despite its assertion that copies of certified typed proceedings and judgment have still not been supplied to it by the Tribunal.

19. In the premise, I find that the applicant has not at the very least attempted to explain the delay in lodging an appeal against the Tribunal’s judgment delivered on 23rd December, 2022 within the timelines prescribed under Section 32(1) of the Tax Appeals Tribunal Act, and the delay in filing the instant application.

20. The Supreme Court in the case of Naomi Wangechi Gitonga & 3 others v Independent Electoral & Boundaries Commission & 17 others [2018] eKLR, held that 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. In determining whether or not to extend time within which the applicant herein can lodge an appeal against the impugned judgment, this Court has to balance the competing interest of the parties herein, the applicant’s constitutionally underpinned right of appeal, and the respondent’s right to enjoy the fruits of its judgment.

21. The rules of equity dictate that equity only aids the vigilant and not the indolent. As such, in the absence of sufficient explanation for the delay in lodging an appeal against the Tribunal’s impugned decision and the filing of the instant application, this Court finds that there has been inordinate delay in filing the instant application, thus the applicant is guilty of laches.

22. In the premise, I find that the application for extension of time to file appeal out of time is bereft of merits.

23. Court orders are not given in vain. Therefore, since the application for extension of time to file an appeal out of time is found to be without merits, the Court shall not deal with the issue of stay pending appeal as doing so will be an academic exercise.

24. I find that the application dated 1st November, 2023 is devoid of merits. It is hereby dismissed with costs to the respondent.It is so ordered.

DATED, SIGNED ANDDELIVERED ATNAIROBI ON THIS20TH DAY OFSEPTEMBER, 2024. RULING DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.NJOKI MWANGIJUDGEIn the presence of:Ms Sega for the applicantMr. Wambugu for the respondentMs B. Wokabi - Court Assistant.