[2024] KETAT 464 (KLR)

Green Mango Investment Limited v Commissioner Domestic Taxes (Appeal E100 of 2023) [2024] KETAT 464 (KLR) (22 March 2024) (Ruling)

Neutral citation: [2024] KETAT 464 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Appeal E100 of 2023

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

March 22, 2024

Between

Green Mango Investment Limited

Appellant

and

Commissioner Domestic Taxes

Respondent

Ruling

1. The Respondent moved the Tribunal vide a Notice of Motion application dated 29th September 2023 and filed under a Certificate of urgency on 3rd October 2023 and supported by an Affidavit sworn by Wambui Ng’ang’a, the Advocate of the Respondent, on the 29th September, 2023, seeking the following Orders: -a.Spentb.Spentc.That the Honourable Tribunal be pleased to reviewed and set aside the proceedings of 6th September 2023 and the resultant orders.d.That the Honourable Tribunal be pleased to make a declaration that the Respondent’s Statement of Facts dated and filed on 24th April 2023 was duly filed and served and the same to be deemed as properly filed and served and duly on record.e.That the Honourable Tribunal be pleased to make a declaration that the Respondent proceeds with the case by the way of a Witness Statement rather than written submissions as ordered by the Tribunal on 6th September 2023. f.That the Honourable Tribunal be pleased to make a declaration that the Respondent has since been served with the Respondent’s Statement of Facts which had been filed on 24th April 2023. g.That the costs of this application be in the course.

2. The application is premised on the grounds: -i.That the matter came up for Mention on 6th September 2023 when the Tribunal declared that the Appeal was undefended and proceeded to issue directions on hearing.ii.That the Applicant had already filed its Statement of Facts on 24th April 2023 which was received and stamped by the Honourable Tribunal.iii.That when the matter came up for Mention on 6th September 2023, the Respondent was not given an opportunity to explain why the Statement of Facts filed on 24th April 2023 had not been received by the Appellant despite the same having been filed.iv.That should the matter proceed for hearing as per the Honourable Tribunal's directions, the Respondent will be greatly prejudiced as it will be condemned unheard.v.That the Respondent herein is desirous of having its Statement of Facts dated and filed on 24th April 2023 considered as required by the rules of substantive justice and therefore prays that the proceedings of 6th September 2023 and the resultant orders therein be reviewed and set aside.vi.That unless the Tribunal certifies this application as urgent and reviews its orders issued on 6th September 2023 by setting the same aside and declaring that the Respondent's Statement of Facts dated and filed on 24th April 2023 was properly filed, the Respondent herein is at danger of suffering irreparable harm to its access to justice.vii.That this application has been made without inordinate delay, since the matter has not been set down for hearing, and upon Counsel for the Respondent noting that its Statement of Facts had not been served on 6th September 2023, which information Counsel only became aware of on 6th September 2023 when the matter came up for Mention.viii.That the Respondent then proceeded to serve the Appellant on the 11th of September 2023. ix.That the Respondent is desirous of defending itself in this Appeal vide a witness statement and the documents filed herein which includes the Statement of Facts dated 24th April 2023. x.That upon consultation with the Advocate on record for the Appellant Ms. Sharon Chepkwony, she is not opposed to the Respondent proceeding by way of Witness Statement.xi.It is in the interest of justice that this Honorable Tribunal allows this application and for the Respondent to be heard on its defense in this Appeal.xii.That no prejudice will be suffered by the Appellant if the orders sought herein are allowed.xiii.That the Honourable Tribunal has jurisdiction to grant the orders sought.

3. The Appellant opposed the application through a Replying Affidavit sworn by Sharon Cherotich Chepkwony, the Advocate on record for the Appellant, on the 18th October 2023 and filed on the 19th October 2023. The grounds of opposition as highlighted in the Affidavit were as follows: -i.That the Appellant filed its Memorandum of Appeal and Statement of facts on 24th March 2023, thereafter the parties engaged in Alternative Dispute Resolution (ADR).ii.That on 1st August 2023 the Respondent was directed to file and serve its Statement of Facts before the next date which was schedule for 22nd August 2023, however, the Tribunal did not sit and the matter was rescheduled to 6th September 2023. iii.That on 6th September 2023, both parties were represented by Counsel before the Tribunal, the Tribunal was informed that the Respondent was yet to serve the Appellant with its Statement of Facts, and that on the part of the Appellant, the Appellant was ready to proceed by way of written submissions. Counsel for the Respondent informed the Tribunal that they intended to proceed by way of viva voce evidence. The Tribunal declined to allow this request, noting that the Respondent had not served its pleadings. The Tribunal further issued directions on filing submissions and scheduled the matter for a further mention on 12th October 2023 to confirm compliance.iv.That on 11th September 2023, Appellant’s Counsel received a call from one of the Advocates’ representing the Respondent, indicating that it had filed its Statement of Facts in April 2023 and served it, however the email was undelivered. The said Advocate was requested to send the Statement of Facts and to make the appropriate application before this Honourable Tribunal, since directions had already been issued on the hearing of the Appeal.v.That on the same date, Counsel for the Respondent sent the Statement of Facts via email. Counsel for the Appellant replied to the email, indicating that the Tribunal had issued directions on 6th September 2023 on filing of submissions within 14 days and that on the Appellant’s part, and would be proceeding on the basis of the directions unless fresh directions were issued to the contrary.vi.That the Appellant duly filed its submissions on 20th September 2023 in compliance with the Tribunal's directions.vii.That on 3rd October 2023, the Respondent filed the present application. It is noteworthy that the application was filed almost 1 month after the Mention of 6th September 2023, and only 9 days away from the Mention scheduled for 12th October 2023. viii.That in the assertion that the Appellant’s Counsel was not opposed to re-service of the Statement of Facts and to proceeding by way of a witness statement is incorrect and aimed at misleading this Honourable Tribunal, which had already issued its directions on the mode of hearing. That the Appellant remains willing to adhere to the Tribunal's directions unless further directions are issued.ix.That contrary to the Respondent's assertion that it was only made aware that the Appellant was not served on 6th September 2023, it is clear from the above sequence of events that as at 1st August 2023, the Respondent was aware that the Appellant had not been served with the Statement of Facts. The Tribunal accorded the Respondent an opportunity to serve the same by 22nd August 2023, and the Respondent still had every opportunity to serve it before 6th September 2023. It failed to do so, which further points to apathy in the way it has handled the Appeal herein.x.That the Statement of Facts ought to have been served within 2 days of filing, that is, on or before 26th April 2023. This is a statutory timeline that ought to be strictly adhered to.xi.That whereas the Respondent claims that the service email did not go through due to connectivity issues, it has not provided any undelivered email as proof of the same. It is therefore clear that the omission to serve the Appellant was not a mistake, but a pure and simple inaction and willful neglect by Counsel for the Respondent.xii.That the Respondent is guilty of inordinate delay, having filed the present application six (6) months after the time when it was statutorily required to serve the Statement of Facts, and two (2) months after it was made aware of its failure to serve the Appellant. The application is clearly an afterthought, having been filed after this Honourable Tribunal issued directions on hearing.xiii.That the Appellant has a right to have its Appeal heard and determined expeditiously, which right ought to be upheld by this Honourable Tribunal.xiv.The Appellant prayed for the application to be dismissed with costs.

Submissions by the Parties 4. The Respondent in its written submissions dated 25th October 2023 and filed on the 26th October 2023, submitted that it identified one issue for determination, being;

Whether or not the orders sought are merited? 5. The Respondent submitted that should the matter proceed for hearing as per the Honourable Tribunal’s directions, the Respondent will be greatly prejudiced as it will be condemned unheard having not been given an opportunity to defend itself.

6. The Respondent contended that the filing of the Statement of Facts had already been done with the Tribunal on the 24th April 2023 at the date the Orders were issued on the 6th September 2023, which is an error apparent on record.

7. The Respondent submitted that it has a plausible defence and ought to be accorded an opportunity to be heard as demanded by the cardinal rules of natural justice.

8. The Respondent submitted that there was no inordinate delay as the matter had not been set down for hearing.

9. The Respondent further submitted that all along it had desired to proceed with the hearing by way of oral evidence.

10. The Respondent relied on the decision in Signature tours & Travel Ltd vs. National bank of Kenya.

11. The Appellant in its written submission dated 25th October 2023 and filed on 26th October 2023 identified three issues for determination argued under the following headings, namely;a.The mandatory nature of the requirement for service of the Respondent’s Statement of Facts;b.The Commissioner’s inordinate delay in filling the application; andc.The Commissioner has not given a sufficient reason for its failure to serve its Statement of Facts.

12. The Appellant relied on the provisions of Section 15 of the TAT Act and submitted that the provisions are couched in mandatory terms, imposing on the Commissioner to file its Statement of Facts within 30 days and service whereof ought to be effected within two days of the filing, in the instant case the Applicant ought to have served the Statement of Facts by the 26th April 2023.

13. The Appellant argued that Section 15 (4) of the TAT Act affords the Respondent an opportunity to seek an extension of time for submitting and serving its Statements of Facts, the Respondent submitted that the Applicant did not seek for extension of time.

14. The Appellant submitted that the Respondent sought to rely on Rule 17 of the Tax Appeals (Procedure) Rules, 2015 which provide for the mode of service of summons and which is not in issue in the instant application.

15. The Appellant stated that the Respondent inordinately delayed in making this application.

16. The Appellant urged that the Tribunal’s record reflects that counsel for the Appellant raised the issue of service of the Statement of Facts on 1st August 2023 at which point the Respondent was directed to put its affairs in order by the 22nd August 2023, but the Respondent did not do so.

17. The Appellant submitted that it raised the issue of service of the Statement of Facts once again on 6th September 2023, at which point the orders were issued that the Appeal proceeds as undefended. It was upon receipt of the adverse orders that the Respondent served the Statement of Facts on 11th September 2023.

18. The Appellant stated that it was not until the 3rd October 2023 that the Respondent filed the instant application, when it had every opportunity between the 1st August 2023 and 6th September 2023 to file an application under Section 15 (4) of the TAT Act seeking for extension of time to serve the Statement of Facts, which was not done.

19. The Appellant submitted that the Respondent has not offered any explanations for the delay and has made a false statement indicating that it only became aware of its omission on 6th September 2023.

20. The Appellant submitted that the Respondent stated that it was under the mistaken belief that the Statement of Facts was served via email but due to connectivity issues, the email did not go through, which is unsubstantiated and is clearly an excuse conveniently curated to subvert the provisions of Section 15 (4) of the TAT Act as well as the Tribunal’s directions.

21. The appellant relied on the following cases:-a.Republic vs. Council of Legal Education & Another Ex parte Sabiha Kassamia & Another [2018] eKLR.b.Joseph Odide Walome vs. David Mbadi Akello [2022] eKLR.c.Dilpack Kenya Limited vs. William Muthama Kitonyi [2018] eKLR.

22. The Appellant prayed for the Respondent’s application to be dismissed with costs to the Appellant.

Analysis and Findings 23. The Respondent’s application is premised on Sections 15 and 29 (3) (c) of the Tax Appeals Tribunal Act and Rule 17 of the Tribunal (Procedure) Rules 2015.

24. Upon perusal of the record the Tribunal noted that the Appeal having been instituted on 24th March 2023, came up before the Tribunal on several occasions when the Appellant indicated through its Advocates on record that it had not been served with the Statement of Facts by the Respondent. It is noteworthy that in all instances the Respondent was represented by Counsel.

25. From the proceedings of 1st August 2023, the Respondent was directed by the Tribunal to file and serve its Statement of Facts by 22nd August 2023. That on the 6th September 2023, the Applicant had not served its Statement of Facts and the same had not been placed on record prompting the Tribunal to issue the directions on 6th September 2023.

26. The Orders sought by the Respondent herein are premised on the discretion of the Tribunal which is to be exercised judiciously, in plain and obvious cases.

27. Section 15 (3) of the TAT Act provides as follows: -“The Commissioner shall serve the appellant with a copy of the statement of facts and other documents required under this section within two working days from the date of submission to the Tribunal.”

28. It follows that the Respondent was obligated by the above statutory provisions to have served the Appellant with the Statement of Facts within two (2) days.

29. The Respondent stated that having filed its Statement of Fact within the statutory timelines, that is on 24th April 2023, it ought to have served the Appellant by close of business on 26th April 2023.

30. Both parties bear concurrence on the date of service of the Respondent’s Statement of Facts upon the Appellant was effected on 11th September 2023.

31. The Respondent stated that it was under the mistaken belief that it had effected service of the Statement of Facts upon the Appellant via email and only became aware on 6th September 2023 that service had not been effected due to poor connectivity.

32. The Tribunal upon perusal of the Respondent’s documents annexed thereto, it did not sight the evidence in support of the assertions by the Respondent, the email extract would have gone a long way in support the avowal by the Respondent.

33. The Tribunal upon further perusal takes the position that the Respondent cannot be heard to state that it took note that service had not been affected upon the Appellant on 6th September 2023, when the issue had been previously raised by the Appellant on two occasions in the presence of the Appellant’s Counsel.

34. The law makes provision for a remedy to the Respondent under the ambit of Section 15 (4) of the TAT Act, for the Applicant to seek leave to file the Statement of Facts out of time, 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 the 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.”

35. The application under Section 15 (4) of the TAT Act was filed on the 3rd October 2023 close to a month upon making of the orders by the Tribunal that the Appeal was deemed unopposed.

36. The Tribunal is therefore invited to interrogate whether the Respondent has met the conditions as provided under Section 15 (4) of the TAT Act to warrant the application to be allow, being;a.Whether the delay is not inordinate; orb.Whether there are other reasonable cause that may have prevented the commissioner from submitting and serving the Statement of Facts.

37. The Tribunal notes that the Respondent ought to have filed its Statement of Facts by the 24th April 2023 and served that same on 26th April 2023, but admitted to have served the same on 11th September 2023, which was 137 days beyond the period provide in statute.

38. The Tribunal notes from the record that the failure of service of the Statement of Facts was brought to the Respondent’s attention on the 1st August 2023, yet service was effected on 11th September 2023 without leave of the Tribunal and leave sought vide the present application filed on 3rd October 2023, which was 64 days later from the date when absence of service was brought to its attention.

39. From the Respondent’s documents there is no explanation or evidence that had been tendered as regards the grounds and reasons for the delay cited herein above.

40. The Tribunal’s is persuaded that the delay was inordinate and is not excusable, as no explanations or evidence in support of the assertions has been tendered.

41. Further the ground upon which the Respondent relied on is unsupported, the Respondent could have provided evidence of any attempts to effect service of the Statement of Facts upon the Appellant, but failed to do so.

42. It is the Tribunal’s finding that the Respondent has not advanced any bonafide reasonable cause to the its satisfaction to warrant the issuance of the orders sought.

43. The Tribunal in the circumstances minded not to interfere or vacate or vary the orders issued on the 6th September 2023 with regard to the Appeal proceeding unopposed and proceeding by way of submissions.

44. Consequently, the application dated 29th September 2023 and filed on the 3rd October 2023 does not meet the legal threshold for the Tribunal to exercise its discretion in favour of the Respondent.

Disposition 45. The upshot of the foregoing analysis, the Tribunal finds that the Respondent’s application lacks merit and accordingly proceed to make the following Orders; -a.The application be and is hereby dismissed.b.The parties to comply with the directions issues on the 6th September, 2023 by the 28th March, 2024. c.Mention on 15th April, 2024 for Pre-trial directions of submissions.d.Each party to bear its own costs.

46. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 22ND DAY MARCH, 2024ERIC NYONGESA WAFULA CHAIRMANMUTISO MAKAU - MEMBERABRAHAM K. KIPROTICH - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBER