[2024] KETAT 1596 (KLR)

Gedi Boss Trading and Transportation Limited v Commissioner of Domestic Taxes (Miscellaneous Application E1013 of 2024) [2024] KETAT 1596 (KLR) (Commercial and Tax) (18 October 2024) (Ruling)

Neutral citation: [2024] KETAT 1596 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Miscellaneous Application E1013 of 2024

RO Oluoch, Chair, AK Kiprotich, G Ogaga & Cynthia B. Mayaka, Members

October 18, 2024

Between

Gedi Boss Trading and Transportation Limited

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Applicant vide a Notice of Motion dated 10th September 2024 filed under a certificate of urgency and which was supported by an Affidavit sworn by Abdifatah Adan Gedi a director of the Applicant, sought the following Orders:-i.Spent.ii.That pending the hearing and determination of this application, the Tribunal do issue an order temporarily restraining the Respondent from taking recovery measures against the Applicant for the confirmed taxes of Kshs 17,912,852. 50. iii.That the Tribunal issue any other and or further orders that it may deem fit or just.

2. The application is premised on the following grounds:-i.That on various dates in 2024, the Respondent raised Income Tax assessments amounting to an incremental liability of Kaha 17,912,852. 50. ii.The Applicant aggrieved with these assessments and objected via a letter dated 25th March 2024 whose merits were not considered on account of Ksh,17,912,852. 50 uncontested taxes not paid and the default of furnishing relevant documents as alleged in the Respondent's objection decision dated 9th April 2024. iii.That on or about the 9th April 2024, the Respondent communicated its position on the objection application lodged by the Applicant.iv.That the decision communicated required the Applicant to make good on the assessed principal liability of Ksh.17,912,852. 50. on account of the objection application falling short of Section 56(1) of the Tax Procedures Act.v.That the failure to adhere to the provisions of Income Tax particularly the settlement of the tax in dispute was on account of the Respondent's complacency to allow claimable input to arrive at the correct tax position to the Applicant on the outstanding liability.vi.That the Applicant has demonstrated discernible goodwill and resolve to settle the matter amicably and equitably with respect to what is due and payable to the Respondent.vii.That the Applicant is apprehensive of the imminent agency notices to be issued on its Bankers to grave detriment of its business and the livelihoods of more than 20 employees unless this Tribunal grants the orders prayed for herein.

3. The Respondent opposed the application vide its Grounds of Opposition dated 18th September 2024. The grounds were as follows:-i.That the application is frivolous, lacking a legally cognizable cause of action against the Respondent. It is devoid of substance and therefore cannot be sustained before this Honourable Tribunal.ii.That application is incompetent, being predicated on an equally incompetent memorandum of appeal in contravention of Section 13(2) of the Tax Appeals Tribunal Act.iii.That application seeks relief that would be futile, exposing this Tribunal to public criticism and embarrassment, thereby constituting an abuse of the Court's process.

Analysis and Findings 4. The Applicant’s application is primarily praying to the Tribunal for orders to restrain the Respondent from taking recovery measures on pending taxes.

5. The Respondent on the other hand stated that the application was incompetent, being predicated on an equally incompetent memorandum of appeal in contravention of Section 13(2) of the Tax Appeals Tribunal Act.

6. The Tribunal notes that the Appellant had averred that it was aggrieved with the Respondent’s assessments and objected via a letter dated 25th March 2024 whose merits were not considered on account of Ksh,17,912,852. 50 uncontested taxes not paid and the default of furnishing relevant documents as alleged in the Respondent's objection decision dated 9th April 2024.

7. That on or about the 9th April 2024, the Respondent communicated its position on the objection application lodged by the Applicant.

8. The Tribunal perused through the documents filed by the Appellant and noted that the communication of 9th April 2024 was an email from the Respondent which informed the Appellant that it had not filed a valid objection. The email in part as follows;“…We refer to our email dated 28/3/24 where you were required to lodge a valid objection by 2nd April 2024, this request has not been responded to.Please note the requirements under Section 51(4) A on validation of objection application.From the foregoing, we regret to notify you that you do not have a valid objection.… ”

9. From the contents of the above-cited email, it was evident that the Appellant was merely being informed of its failure to lodge a valid objection. It is also clear that this was not an objection decision as averred by the Appellant

10. The Tribunal's powers to issue stay orders is donated by Section 18 of the Tax Appeals Tribunal Act. Under this Section, the Tribunal can only be enjoined to issue such orders in order to preserve the sub-strum of an appeal pending before it is so as not to let the appeal process being rendered superfluous and/or nugatory. The section provides as follows:“Where an appeal against a tax decision has been filed under this Act, the Tribunal may make an order staying or otherwise affecting the operation or implementation of the decision under review as it considers appropriate for the purposes of securing the effectiveness of the proceeding and determination of the appeal.”

11. Additionally, Section 12 of the Tax Appeals Tribunal Act provides as follows regarding appeals to the Tribunal;“A person who disputes the decision of the Commissioner on any matter arising under the provisions of any tax law may, subject to the provisions of the relevant tax law, upon giving notice in writing to the Commissioner, appeal to the Tribunal:”

12. Further, Section 52(1) of the Tax Procedures Act provides as follows regarding appeal of an appealable decision to the Tribunal;“A person who is dissatisfied with an appealable decision may appeal the decision to the Tribunal in accordance with the provisions of the Tax Appeals Tribunal Act, 2013 (No. 40 of 2013).”

13. From the above provisions of the law, it follows that for a taxpayer to approach the Tribunal for an appeal, there ought to be an appealable decision. Under Section 3 of the Tax Procedures Act, an appealable decision is defined as follows;“appealable decision” means an objection decision and any other decision made under a tax law other than—(a)a tax decision; or(b)a decision made in the course of making a tax decision;”

14. From the contents of the above-cited email, it was evident that the Appellant was merely being informed of its failure to lodge a valid objection. It is also clear that this was not an objection decision as averred by the Appellant.

15. Having noted that there was no objection decision in this case, the Tribunal determined that there was no decision which could enable the Applicant to approach the Tribunal with an appeal that could necessitate such orders as prayed for in this application.

16. In addition to the foregoing, the Tribunal further notes that the absence of an objection decision in this dispute infers that the Tribunal does not have jurisdiction to hear and determine this dispute because the Respondent has not issued an appealable decision as is envisaged in Section 52(1)of the TPA and Section 12 of the TAT Act. The Appellant’s appeal and this attendant Notice of Motion Application before the Tribunal is thus premature. The prayers sought therein cannot therefore be issued because the Tribunal lacks the jurisdiction to issue such order. In which case it must down its tools.

Disposition 17. Based on the foregoing, the Tribunal finds that the Application lacks merit and proceeds to make the following orders:i.The Application be and is hereby dismissed.ii.The Memorandum of Appeal and Statement of Facts filed with this Application and dated 10th September 2024 be and are hereby struck out.iii.No orders as to costs.

18. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 18THDAY OF OCTOBER, 2024. DR. RODNEY O.OLUOCH - PRESIDING CHAIRMANABRAHAM K. KIPROTICH - MEMBERGLORIA A. OGAGA - MEMBERCYNTHIA B. MAYAKA - MEMBER