[2023] KETAT 513 (KLR)

Handy Aircargo Limited v Commissioner of Customs & Border Control (Tax Appeal 192 of 2023) [2023] KETAT 513 (KLR) (4 August 2023) (Ruling)

Neutral citation: [2023] KETAT 513 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal 192 of 2023

E.N Wafula, Chair, Cynthia B. Mayaka, RO Oluoch, EN Njeru & AK Kiprotich, Members

August 4, 2023

Between

Handy Aircargo Limited

Appellant

and

Commissioner of Customs & Border Control

Respondent

Ruling

1. The appellant vide a notice of motion dated the 2nd day of March, 2023 and filed under a certificate of urgency on the March 3, 2023 sought for the following Orders:-a.That this honourable tribunal be pleased to certify this application and Appeal as extremely urgent and proceeds to hear it exparte at the first instance.b.That pending the hearing of the appeal filed herein the respondent be directed to unblock the appellant’s customs systems operating passwords to allow them to operate and prevent irreparable hurt to their business.c.That pending the hearing of the appeal herein the respondent be directed to renew the appellant’s customs license so that it can continue operations to prevent irreparable harm to its business.d.That pending the hearing and determination of this application, the decision and all other consequential orders delivered on January 13, 2023 be and are hereby stayed.e.That the costs of this application be provided for.

2. The application which is supported by an affidavit sworn by David Mutua Mbithi, a Director of the appellant, on the 2nd day of March, 2023 is premised on the following grounds:-a.That the appellant’s principal business activity is that of clearing and forwarding.b.That the respondent delivered a decision on January 13, 2023 dismissing the appellant’s appeal to have its customs license renewed on grounds of unsatisfactory efforts to address outstanding tax liabilities as at the time of the appeal.c.That the decision of the respondent dated January 13, 2023 refusing to renew the license was indicated to have been as a consequence of the tax liability of the appellant’s Director, David Mutua Mbithi of Kes 287,004. 00 and the tax liability of the associated company, Parcelwise Express Limited) of Kes 220,000. 00d.That the reason for refusing to renew the customs license are false as the said appellant’s Director had no tax liabilities and was issued with a tax compliance certificate on the February 2, 2023. e.That the claim that an associated company by the name, Parcelwise Express Limited, had tax liabilities is not only false but also unfounded as that company is a separate legal entity as per the law distinct from the appellant.f.That vide the respondent’s notice published in the Daily Nation of March 16, 2018, the appellant was not listed amongst companies that were invited to formally process the customs license for the year 2018. g.That this was an anomaly as the appellant had submitted all the documents for vetting vide a letter dated June 23, 2017 and was to appear for vetting on July 6, 2017 at 4:00 pm.h.That the appellant though having been informed of the postponement of the meeting was never called for vetting as promised.i.That vide a letter dated July 15, 2019 the appellant wrote to the respondent requesting to be issued with the license since the appellant had lost time and money with its suppliers terminating contracts with it.j.That vide a letter dated July 19, 2019 the respondent indicated that no application for renewal were being received but the appellant was to be notified for the next cycle of vetting.k.That the appellant was unfairly discriminated since it was a mistake not to have been vetted and/or rescheduled for vetting in the first place thereby occasioning untold damage.l.That on the July 23, 2023 the appellant wrote an appeal letter to the respondent to allow for vetting interview to happen so that it can have its license renewed to continue in business.m.That the respondent replied to the appeal on January 13, 2023, which was more than a year later communicating its rejection of the appeal.n.That the respondent’s decision violated section 229(4) of the East African Community Customs Management Act, 2004 for having been issued outside the statutory period of 30 days from the date of receipt of the appeal.o.That the respondent did not accord the appellant a fair hearing leading to the decision not to renew the custom agent license which is contrary to the dictates of natural justice.p.That if stay is not granted substantial loss may result to the Appellant since its substantive Appeal was not heard and determined and execution of the erroneous and contestable tax objection decision by the Respondent would leave it insolvent.q.That the appeal has reasonable chances of success and if execution is carried out the appeal will be rendered nugatory.r.That there has been no delay in bringing this application.s.That the appellant is willing to abide by any conditions and terms as to security as the court may deem fit to impose.

3. The respondent in reply to the application filed a replying affidavit sworn by Joab Omole, an officer of the respondent, on the 16th day of March, 2023 and filed on the March 17, 2023, in which it raised the following grounds of opposition to the application:-a.That in the year 2016 the respondent put up a notice for vetting of all customs agents in the SIMBA system.b.That the applicant was invited for a customs agents vetting vide a letter dated June 23, 2017 but the applicant was listed as a no- show and hence the license was not renewed in the subsequent year.c.That the appellant was invited in the later cycle in the year 2021 and appeared before the customs vetting panel on September 22, 2021. d.That the appellant was not successful for the issuance of the customs license and the same was communicated to the appellant videa letter of rejection dated March 28, 2022. e.That one of the requirements for one to acquire a license as a customs agent is submitting Form C20 which provides for one to state any other business currently being run by the Applicant.f.That upon due diligence by the respondent, the respondent discovered that one of the companies associated with the Directors of the Appellant, Parcelwise Express Limited, had an outstanding VAT liability of Kes 220,000. 00. g.That as per the Customs Agents Vetting Guidelines an applicant must demonstrate sound knowledge of customs laws and procedures to the vetting panel in addition to production of professional certificates and that the appellant’s Director who appeared for the interview failed to succifiently demonstrate that they possess such knowledge as required by the said guidelines.h.That the respondent exercised reasonable discretion in rejecting to renew the appellant’s renewal application and that the actions of the respondent were not impulsive but justified, reasonable and anchored in law.i.That the appellant has not met the conditions to be granted stay, as the appellant has not demonstrated what substantial loss it would suffer if stay was not granted.j.That the appellant has similarly failed to demonstrate how the proceedings will be rendered nugatory should the orders of stay be declined.k.That the orders sought by the appellant are frivolous, vexatious and an abuse of the due process of the tribunal and that the appellant is underserving of the orders.

Analysis and Determination 4. The parties in due compliance with the directions of the tribunal to the effect that the application was to be canvassed by way of written submissions duly filed and served upon each other with their respective written submissions, which were adopted by the Tribunal on the March 24, 2023. The tribunal has duly considered the elaborate submissions as filed by both parties in arriving at its determination hereinafter.

5. The tribunal upon perusal of both the memorandum of appeal and the statement of facts dated March 2, 2023 that were simultaneously filed with the present application noted that the orders being sought by the appellant reflect substantively the reliefs being sought in the appeal.

6. The orders being sought in the present application being drastic in nature and to the extent that they mirror the reliefs sought in the substantive appeal have the effect of determining the appeal in its entirety at this interlocutory stage. This does not seem to be a tidier and attractive situation to contemplate in a matter that has a complex web of history as the present appeal.

7. The appellant was denied a renewal of its customs agent license since 2018, though the respondent appears to have taken a little more than usual time to consider its application for appeal as against the rejection of the application for the renewal of the license, and to that extent the substantive and larger interests of justice will be better served by having the main appeal set down for hearing and determined with expedition with a view of having the dispute between the parties being conclusively determined on its full merits.

Disposition 8. Based on the foregoing observations, the orders that recommend themselves to the tribunal are as follows:-a.The application be and is hereby dismissed.b.The main appeal to be heard and determined on priority basis.c.The appeal is hereby set down for mention for purposes of issuance of pre-trial directions on August 10, 2023. d.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 4TH DAY OF AUGUST, 2023ERIC NYONGESA WAFULA..............CHAIRMANCYNTHIA MAYAKA......................MEMBERDR. RODNEY O. OLUOCH................MEMBERELISHAH NJERU.......................MEMBERABRAHAM K. KIPROTICH.................MEMBER