[2024] KETAT 1256 (KLR)

Gachui v Commissioner of Domestic Taxes (Tax Appeal E814 of 2023) [2024] KETAT 1256 (KLR) (9 August 2024) (Ruling)

Neutral citation: [2024] KETAT 1256 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E814 of 2023

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

August 9, 2024

Between

Susan Nungari Gachui

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Appellant vide a Notice of Motion dated the 19th day of April, 2024 filed under a Certificate of urgency on the 22nd April, 2024 and which is supported by an Affidavit sworn by Anne Mfundi, an Advocate for the Respondent, on the 19th day of April, 2024 sought for the following Orders:-a.Spentb.That the Honourable Tribunal be pleased to grant leave to the Respondent to file and serve its Statement of Facts out of time.c.That the annexed Statement of Facts dated 16th April, 2024 be deemed to be properly on record.d.That the costs of and incidental to this application abide in the cause.

2. The application is premised on the following grounds, that:-a.The Appellant filed the Appeal on 17th November, 2023 at the Tribunal.b.The Respondent inadvertently failed to lodge its response due to exigencies of work and thus has not filed a Statement of Facts in response to the Appeal.c.That it was an honest mistake of Counsel and that mistake of Counsel should not be visited on an innocent litigant.d.That the delay is neither deliberate not inordinate.e.That the Respondent’s Statement of Facts is meritorious and raises pertinent issues of law that ought to be ventilated by having it properly on record.f.That the Respondent is apprehensive that without the intervention of the Honourable Tribunal, the Respondent will not have an opportunity to substantively defend the Appeal and will be condemned unheard.g.That the Appellant will not suffer any prejudice if the Statement of Facts is admitted, since it will progress the Appeal and allow for a fair hearing in line with Article 50 of the Constitution.

3. The Appellant upon being served with the application signaled its opposition thereto by filing a Replying Affidavit sworn by herself on the 30th day of April, 2024 and filed on the even date, in which she raised the following grounds in opposition:-a.That the Respondent was served with the copies of the Appeal on the 17th November, 2023. b.That the application has been filed 154 days subsequent to the Respondent being served with the Appeal.c.That as per Section 15(1) of the Tax Appeals Tribunal Act, the Respondent ought to have filed its Statement of Facts within 30 days from the 17th November, 2023 and as such ought to have filed by 17th December, 2023. d.That the Respondent ought to have served the Statement of Facts upon the Appellant by 19th December, 2023. e.That the timelines for filing and service of the Statement of Facts on the part of the Respondent have been gauged in mandatory terms thereby calling for strict compliance with the set timelines.f.That the Respondent filed the application in the most casual manner after a delay of over 120 days in the discharge of its statutory obligation of filing and service of the Statement of Facts by stating its only reason as being due to the ‘exigencies of work’g.That the application does not satisfactorily prove that the delay was not inordinate nor does it provide a reasonable cause that prevented the timely submission and service of the required documents.h.That the Tribunal may extend time for compliance only where it is proved to the satisfaction of the Tribunal that there exists a reasonable cause for the delay. That such reasonable cause has not been adequately demonstrated by the Respondent.i.That the Respondent has not provided sufficient evidence or reasonable and specific instances that could justify the delay within the timelines prescribed by the Tax Appeals Tribunal Act.j.That the reasons provided by the Respondent are within their control and could have been avoided with due diligence and proper management and in any case would not justify a delay of over 120 days.k.That granting the extension would prejudice the Appellant’s position and delay the resolution of the matter which has adversely impacted on the Appellant to the extent that:-i.The legal proceedings have caused the Appellant significant emotional and psychological stress.ii.The additional hearing has resulted in higher legal costs to the Appellant that has limited financial resources.l.That the principles of fairness and justice which the Tribunal upholds mandate that all parties comply with the procedural timelines to ensure swift and efficient resolution of disputes.

Analysis and Findings 4. The parties in compliance with the directions by the Tribunal to the effect that the application was to be canvassed by way of written submissions duly filed their separate and respective submissions which the Tribunal has duly considered in arriving at its findings hereinafter.

5. The Respondent has sought for the enlargement of time within which to file its Statement of Facts in response to the Appeal, on the basis that its legal counsel assigned the conduct of the matter was prevented by exigencies of work in filing the Statement of Facts in time.

6. The timelines for filing a Statement of Facts on the part of the Respondent subsequent to being served with the Appeal documents are immortalised in Section 15(1) of the Tax Appeals Tribunal Act which provides as follows:-“The Commissioner shall within thirty days after being served with a copy of an appeal to the Tribunal, submit to the Tribunal enough copies as may be advised by the Tribunal, of –a.a statement of facts including reasons for the tax decision; andb.any other document which may be necessary for review of the decision by the Tribunal.” (Emphasis added)

7. To appreciate the intention of Parliament in requiring the strict compliance with the statutory timelines for filing the Statement of Facts and effecting service thereof upon the Appellant, a reading of Section 15(4) of the Tax Appeals Tribunal Act clearly demonstrates a corresponding intention to provide reprieve to a party who is prevented for good reason from complying with the mandatory statutory timelines. The Section provides as follows:-“The Tribunal may upon application in writing by the Commissioner, extend the time for submitting and serving the statement of facts and documents referred to in this section, where it is proved to the satisfaction of the Tribunal, that the delay is not inordinate or other reasonable cause that may have prevented the Commissioner from submitting and serving the statement of facts and the documents within the specified period.”

8. There is no dispute that the Appeal was filed and served upon the Respondent on the 17th November, 2023. The Respondent was thus expected to file its Statement of Facts in response to the Appeal by the 17th day of December, 2023.

9. The Respondent has in the most pedestrian and casual manner suggested that the delay in the compliance with the strict statutory timelines was the fact that its counsel suffered exigencies of work. The nature and extent of the work load that the Counsel was handling during the intervention period between the 17th November, 2023 when the Appeal was served and the 22nd April 2024 when the application was filed has not been in any manner disclosed. There is even no indication as to when the matter was allocated to Ms. Anne Mfundi; who has indicated to have been the Counsel allocated the matter.

10. The Tribunal notes that subsequent to the filing of the Appeal, the Appeal was set down for Pre-trial directions on the 1st February, 2024 vide a Mention Notice dated the 15th January, 2024 that was served by the Tribunal on the even date by way of an email at 15:34hours.

11. The matter came up for Mention before the Tribunal on the 1st February, 2024, and 15th April, 2024 and during which Mention sessions the Respondent was represented by Counsel. The Counsel indicated to be in conduct of the matter was Wamboi Ng’ang’a and both parties were of the consensus that the matter was under deliberation before the ADR forum.

12. The Tribunal is at a loss on how the Respondent failed to note any lapse in the filing of a response to the Appeal at the instance when the matter was set down for hearing and at what point in time the Counsel in conduct of the matter changed from Ms. Wamboi Ng’ang’a to Ms. Anne Mfundi. This material facts have not at all been addressed by the Respondent and no suggestion has been made as to how this impacted on the delay in appropriately attending to the matter on the part of the Respondent.

13. The Respondent’s inertia in appropriately attending to the matter suggests complete absence of exercise of due care and attention on the part of the Respondent in the manner of responding to this Appeal. The Respondent is a public body that plays a critical role in the revenue collection on behalf of the Government and cannot be allowed to discharge such a mandate in a casual manner, noting the Respondent has an elaborate legal department.

14. The Respondent ought to demonstrate due diligence and bona fide intentions when seeking for enlargement of time to discharge its statutory obligations. This is well captured in decision of the court in Diplack Kenya Ltd Vs. William Muthama Kitonyi [2018] eKLR which quoted approvingly the holding in Daphne Parry Vs. Murray Alexander Carson [1963] EA 546 as thus:-“Though the provision for extension of time requiring “sufficient reason” should receive a liberal construction, so as to advance substantial justice, when no negligence, not inaction, nor want of bona fides is imputed to the appellant, its interpretation must be in accordance with judicial principles.If the appellant had a good case on the merits but is out of time and has no valid excuse for the delay, the court must guard itself against the danger of being led away by sympathy, and the appeal should be dismissed as time-barred, even at the risk of injustice and hardship to the appellant.”

15. The Tribunal notes that inspite of the Respondent having been invited to attend to the Pre-trial Mentions in the Appeal in December, 2022 it took the Respondent close to three (3) months to take a proactive decision to defend the Appeal, that was appropriately filed and served on the part of the Appellant. The manifest laches on the part of the Respondent are completely inexcusable.

16. The Tribunal in the circumstances finds that the Respondent has not offered sufficient reason for the inaction on its part and is thus completely undeserving of any exercise of discretion in its favour.

Disposition 17. The upshot of the foregoing analysis is that the application lacks merit and the Orders that commend themselves to the Tribunal are as follows:-a.The application be and is hereby dismissed.b.The Appeal to proceed to hearing as undefended with the Respondent being at liberty to file any submissions restricted to any legal issues raised or arising in the Appeal.c.The matter is hereby listed for Mention for Pre-trial directions on the 21st August, 2024. d.No orders as to costs.

18. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 9THDAY OF AUGUST, 2024ERIC NYONGESA WAFULA - CHAIRMANELISHAH N. NJERU - MEMBERMUTISO MAKAU - MEMBEREUNICE N. NG’ANG’A - MEMBERABRAHAM K. KIPROTICH - MEMBERMEMBER MEMBER