[2024] KETAT 1465 (KLR)

East Merchants Logistics Limited v Commissioner of Legal Services & Board Coodination (Tax Appeal E872 of 2024) [2024] KETAT 1465 (KLR) (11 October 2024) (Ruling)

Neutral citation: [2024] KETAT 1465 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E872 of 2024

RM Mutuma, Chair, M Makau, T Vikiru, D.K Ngala & Jephthah Njagi, Members

October 11, 2024

Between

East Merchants Logistics Limited

Appellant

and

Commissioner of Legal Services & Board Coodination

Respondent

Ruling

1. The Appellant moved the Tribunal vide a Notice of Motion dated 6th August 2024 and Amended Notice of Motion application dated 20th August 2024 under certificate of urgency that is supported by an Affidavit sworn on 20th August 2024 by James Ngige, a director of the Appellant/Applicant, seeking for the following Orders, that;a.Spent.b.Pending the hearing and determination of this application, the Honourable Tribunal do issue and order temporarily restraining the Respondent from taking recovery measures against the Applicant for the confirmed taxes of Kshs. 2,218,507. 00. c.The Honourable Tribunal be and is hereby pleased to grant leave to the Applicant to file and lodge an Appeal out of time in respect of the Respondent’s decision dated 18th September 2018 and 19th February 2021. d.This Honourable Tribunal issue any other and or further orders that it deem fit or just.

2. The application is premised on the grounds deponed in its affidavit, in a summary that: -i.The Respondent raised VAT and Income Tax – Company assessments amounting to an incremental liability of Kshs. 2,218,507/- on the 18th September 2018. ii.The Appellant being aggrieved Objected to the same on 2nd October 2020 to which the Respondent issued the Objection Decision in the sum of Kshs. 2,218,507. 00 dated 19th February 2021. iii.Failure to adhere to the provisions of Section 51 (3) particularly the settlement of the tax in dispute was on account of the Respondent’s complacency to allow input expenses to arrive at the correct tax position to the Applicant on the outstanding liability.iv.That the Applicant is apprehensive of the imminent agency notices to be issued on its Bankers to the grave detriment of its business and the livelihoods of more that 100 employees unless this Honourable Tribunal grants the orders prayed for herein.v.The Respondent was insensitive to my circumstances at the time as my recurrent bouts of ill health had incapacitated seamless flow of information as and when it was demanded.vi.The Applicant’s intended Appeal raises several arguable issues that should be canvassed before the Tribunal and determined on merits.vii.The Applicant was not aware of the decision by the Respondent until an agency notice was issued and account was attached in recovery.viii.The Applicant has not been accessing its email account for sometime and thus it did not know of the existence of the decision through letter dated 19th day of February 2018 or any other correspondences sent by the Respondent.ix.The Respondents will not suffer any prejudice if the orders are granted.x.The Tribunal be guided by its previous ruling in Kotile General Contractors Company Limited vs. Commissioner of Domestic Taxes [2020] eKLR.

3. The Respondent upon being served with the instant application filed a Replying Affidavit sworn and filed on 27th August 2024 by Victor Chabala, legal representative of the Respondent, which response raised the following grounds, that;i.The Respondent issued the Applicant with an assessment on 18th September 2018, relating to VAT for the period 2018, to which the Applicant lodge its Notices of Objection on 2nd October 2020. ii.The Respondent requested the Applicant for relevant supporting documents, having not provided any documents, the Respondent issued its Objection Decision on 19th February 2021 confirming the assessments.iii.The Applicant’s Notice of Appeal lodged on 14th August 2024 is 3 years and 5 months beyond the statutorily prescribed period and is contrary to Section 13 (1) (b) of the Tax Appeals Tribunal Act.iv.The delay is not only inordinate but has not been satisfactorily explained, such failure to offer valid reason does not warrant the Tribunal to exercise its discretion in the Applicant’s favour.v.The indolence of the Applicant ought not bar the Respondent from fulfilling its mandate of collecting taxes that are due and payable.vi.The Applicant has failed to satisfy the principles set out in the case of Nicholas Kiptoo Arap Korir Salat vs. Independent electoral and Boundaries Commission & 7 Others [2014] eKLR.

Parties Submissions 4. The Applicant having been granted time to file its written submissions on 12th September 2024, failed to do so, thus its application shall be considered based on the grounds set out on the face of the application as well as the amended notice of motion and the affidavits in support thereof.

5. The Respondent in its written submissions dated and filed on 27th August 2024, it submitted that the Applicant lodged its Notice of Appeal out of the statutory period as prescribed under Section 13 (1) (b) of the Tax Appeals Tribunal Act.

6. It submitted that the delay in the bringing of this application for over 3 years and 5 months is inordinate and invited the Tribunal to be guided by the principles outlined in the case of Utalii Transport Company Limited and 3 Others vs. NIC Bank Limited & Another [2014] eKLR and Nicholas Kiptoo Arap Korir Salat vs. Independent electoral and Boundaries Commission & 7 Others [2014] eKLR.

7. It submitted that the Applicant had not demonstrated any reason whatsoever in accordance to Section 13 (4) of the Tax Appeals Tribunal Act.

8. The Respondent submitted that the Applicant is deserved of the orders sought of staying the enforcement of the assessment and cited the case of Gatirau Peter Munya vs. Dickson Mwenda Kithinji & 2 Others [2014] eKLR and Centre for Rights Education and Awareness (CREAW) & Another vs. Speaker of the National Assembly & 2 Others [2017] eKLR.

9. The Respondent submitted that the Applicant failed to demonstrate the threatened/actual infringement and/or violation for any Constitutional rights to warrant the grant of conservatory orders, further that no Appeal is pending and prayed for the Applicant’s application to be dismissed with costs.

Analysis and Findings 10. The Tribunal is enjoined to determine the Applicant’s application for leave to extend time for the filing of the Appeal out of time and the lifting of the agency notices issued by the Respondent in enforcement of collection of taxes.

11. The Applicant was issued with an assessment dated 18th September 2018, filed an objection challenging the assessments on VAT, which process culminated with the Objection Decision issued on 19th February 2021. It is that decision that the Applicant seeks leave to appeal out of time.

12. It is not disputed by the parties herein that the Appellant’s intended Appeal is out of time as provided for under the provisions of Section 13 of the Tax Appeals Tribunal Act.

13. As precisely submitted by the Applicant, this Tribunal’s direction on applications of this nature is anchored on the provisions of Sections 13 and 18 of the Tax Appeals Tribunal Act.

14. Section 13 (2) of the Tax Appeals Tribunal Act prescribes a period of 30 days within which any party being aggrieved by the Respondent’s decision may lodge an Appeal to this Tribunal within 30 days.

15. Since the Applicant failed to lodge an Appeal to the Respondent’s decision of 19th February 2021, the Applicant be desirous of so doing took refuge under the provisions of Section 13 (3) of the Tax Appeals Tribunal Act.

16. Section 13 (3) of the Tax Appeals Tribunal Act provides;“(3)The Tribunal may, upon application in writing or through electronic means, extend the time for filing the notice of appeal and for submitting the documents referred to in subsection (2).”

17. The reasons and/or grounds upon which a party seeking for extension of time to file an appeal out of time are provided for within the provisions of Section 13 (4) of the Tax Appeals Tribunal Act, which provides;“(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.”

18. Additionally, Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015, in relation to grounds upon which a party can rely on in the making of an application for extension of time, provides;“(3)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.”

19. Flowing from the above provisions of law, the Applicant is dutybound and obligated in law to provide and demonstrate the grounds upon which its application is mounted within the ambits of Section 13 (4) of the TAT and Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015.

20. The Applicant theorized its challenges to the failure in bringing its Appeal within the timelines prescribed in in law, it outlined the following reasons; that the Applicant was experiencing bouts of ill health which had incapacitated seamless flow of information as and when it was demanded and that the Applicant had not been accessing its email account for sometimes, thus was no aware of the decision, and; that the Applicant learned of confirmed assessment through the issuance of the agency notices.

21. It is the Tribunal’s view that all the grounds and/or reasons advanced by the Applicant fall amongst the grounds provided in law to warrant the Tribunal consider the order sought.

22. The Tribunal cautiously perused the Applicant’s application as well as the affidavits in support and noted that, whereas the Applicant alluded to the fact that its director was ill for some time, there was no evidence presented in support of such an averment, treatment notes or medical reports would have sufficed.

23. Further, no explanation has been proffered in explaining which email the Objection Decision was send to that ought not to have been send to, thereby preventing the Applicant from receipt of the decision and expeditiously acting thereupon.

24. The Tribunal noted that the assessment related to VAT, which is a monthly obligation to the Applicant, the Tribunal is not persuaded by the Applicant’s position that it was unaware of the decision considering that the Applicant ought to make its VAT returns monthly, unless the Applicant has not made its VAT returns since 2021.

25. Additionally, the Applicant did not provide for the Tribunal’s benefit the agency notices or even the particulars of the same to support its position of eminent danger.

26. It is noteworthy that the delay in bringing the application for leave is over 3 years and the such delay ought to be explained and supported by evidence, it is trite law that averments are not evidence.

27. The Tribunal is guided by the High Court case of 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.”

28. The Tribunal therefore finds that the grounds advanced by the Applicant/Appellant for delay not been supported by evidence and explained to the satisfaction of the Tribunal, under the circumstances is not persuaded to exercise its discretion in favour of the Applicant.

29. Consequently, the Applicant’s application is not merited and therefore fails.

Disposition 30. Based on the foregoing analysis, the Tribunal finds that the application is not merited and accordingly proceeds to make the following Orders: -a.The Application dated 6th August 2024 and amended on 20th August 2024 be and is hereby dismissed.b.No orders as to costs.

31. It is so ordered.

SIGNED AND DELIVERED AT NAIROBI THIS 11TH DAY OCTOBER 2024ROBERT M. MUTUMA - CHAIRMANMUTISO MAKAU - MEMBERDR. TIMOTHY B. VIKIRU -MEMBERDELILAH K. NGALA - MEMBERJEPHTHAH NJAGI - MEMBER