[2022] KEHC 10524 (KLR)

Eldama Technologies Limited v Commissioner of Customs and Border Control (Tax Appeal E200 of 2021) [2022] KEHC 10524 (KLR) (Commercial and Tax) (14 June 2022) (Ruling)

Neutral citation: [2022] KEHC 10524 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Tax Appeal E200 of 2021

DAS Majanja, J

June 14, 2022

Between

Eldama Technologies Limited

Appellant

and

Commissioner of Customs and Border Control

Respondent

Ruling

1. By the Notice of Motion dated 16th February 2022, the Appellant invokes Order 42 rule 27 of the Civil Procedure Rules and section 78 of the Civil Procedure Act to seek leave to adduce additional documentary evidence in the form of an investigation report by the Directorate of Criminal Investigations (‘’DCI’’) on the subject matter of this appeal. The application is supported by the affidavit of its Advocate, Maurice Manani Muma, sworn on 16th February 2022. It is opposed by the Respondent through the affidavit of its officer, Kennedy Wambua, sworn on 22nd March 2022.

2. The application was urged by brief oral submissions made by the parties’ advocates. The arguments mirrored the grounds outlined in their respective depositions.

3. The Tax Appeals Tribunal (“the Tribunal’) delivered its judgment on 3rd December 2021 dismissed the Appellant’s appeal against the Respondent’s demand for KES. 31,733,260 on account of Import Duty, VAT, Import Declaration fees and Railway Development Levy. The main reason the appeal was dismissed was that the Appellant failed to discharge its burden of proof by failing to produce the requisite documents.

4. The Appellant contends that in the course of proceedings, the Respondent alleged fraud on the part of the Appellant but failed to prove it thus forcing the Appellant to engage the DCI to investigate the allegations of fraud with the purpose of establishing; nonpayment of taxes by the Appellant or its clearing agent, mis-declaration of imported goods, dishonest application of import entry numbers and evasion of taxes and collusion between Kenya Revenue Authority and Direct Wheelers Express Ltd, the clearing agents engaged by the Appellant in respect of the particular import, to defraud the Respondent of the applicable import taxes.

5. According to the Appellant, the DCI notified it that the report would be ready by 25th March 2022. At the time of hearing the application on 23rd May 2022, the Appellant had not filed the DCI report in court or served it on the Respondent.

6. Under section 78 of the Civil Procedure Act, the High Court exercising appellate jurisdiction has power to to take additional evidence or to require the evidence to be taken. This position is supported by Order 42 Rule 27 of the Civil Procedure Rules which provides as follows:27. Production of additional evidence in appellate court [Order 42, rule 27. ]

(1)The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the court to which the appeal is preferred; but if—(a)the court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted; or(b)the court to which the appeal is preferred requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, the court to which the appeal is preferred may allow such evidence or document to be produced, or witness to be examined.(2)Wherever additional evidence is allowed to be produced by the court to which the appeal is preferred the court shall record the reason for its admission.

7. Further, Rule 15 of the Tax Appeals Tribunal (Appeals to the High Court) Rules, 2015 also envisages admission of further evidence by providing that “The Court may, at the time of hearing of an appeal, admit other documentary or oral evidence not contained in the statement of facts of the appellant or respondent should it consider it necessary for determination of the appeal”.

8. The Supreme Court, in Mohamed Abdi Mahamud v Ahmed Abdullahi Mohamad & 3 others; Ahmed Ali Muktar (Interested Party) SCK Petition No. 7 of 2018 [2019] eKLR laid down the governing principles on allowing additional evidence by an appellate court as follows:(a)the additional evidence must be directly relevant to the matter before the court and be in the interest of justice;(b)it must be such that, if given, it would influence or impact upon the result of the verdict, although it need not be decisive;(c)it is shown that it could not have been obtained with reasonable diligence for use at the trial, was not within the knowledge of, or could not have been produced at the time of the suit or petition by the party seeking to adduce the additional evidence;(d)Where the additional evidence sought to be adduced removes any vagueness or doubt over the case and has a direct bearing on the main issue in the suit;(e)the evidence must be credible in the sense that it is capable of belief;(f)the additional evidence must not be so voluminous making it difficult or impossible for the other party to respond effectively;(g)whether a party would reasonably have been aware of and procured the further evidence in the course of trial is an essential consideration to ensure fairness and due process;(h)where the additional evidence discloses a strong prima facie case of willful deception of the Court;(i)The Court must be satisfied that the additional evidence is not utilized for the purpose of removing lacunae and filling gaps in evidence. The Court must find the further evidence needful.(j)A party who has been unsuccessful at the trial must not seek to adduce additional evidence to, make a fresh case in appeal, fill up omissions or patch up the weak points in his/her case.(k)The court will consider the proportionality and prejudice of allowing the additional evidence. This requires the court to assess the balance between the significance of the additional evidence, on the one hand, and the need for the swift conduct of litigation together with any prejudice that might arise from the additional evidence on the other.

9. The aforesaid considerations are based on the assumption that the court has the opportunity to examine the evidence proposed to be admitted. In this case, the Appellant seeks the court to admit the DCI report whose contents are unknown. The report was unavailable by the time the application was argued on 23rd May 2022. Without the material that the Appellant seeks to admit before the court, it cannot assess whether the new and additional evidence meets the threshold for admission.

10. I must therefore conclude that the Appellant has not shown substantial cause for admission of new evidence. I therefore dismiss the Notice of Motion dated 16th February 2022.

DATED AND DELIVERED AT NAIROBI THIS 14TH DAY OF JUNE 2022. D. S. MAJANJAJUDGEMr Manani instructed by Coulson Harney LLP Advocates for the appellant.Mr Koima, Advocate instructed by Kenya Revenue Authority for the Commissioner of.Domestic Taxes.