[2024] KETAT 613 (KLR)

Heneken East Africa Company Limited v Commissioner of Investigations and Enforcement (Appeal 1575 of 2022) [2024] KETAT 613 (KLR) (22 March 2024) (Ruling)

Neutral citation: [2024] KETAT 613 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Appeal 1575 of 2022

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

March 22, 2024

Between

Heneken East Africa Company Limited

Applicant

and

Commissioner of Investigations And Enforcement

Respondent

Ruling

1. The Appellant moved the Tribunal vide a Notice of Motion application dated 31st October 2023 and filed under a certificate of urgency on 3rd November 2023 and supported by an Affidavit sworn on 18th October, 2023 by Corina Parsu, the Accounting and Reporting Manager of the Appellant, seeking the following Orders: -a.Spent.b.That the Appellant be granted leave to file an amended Memorandum of Appeal and Supplementary Statement of Facts to corroborate the earlier filed Statement of Facts and adduce new and relevant documentary evidence supporting its position.c.That the costs of this application be in the Appeal.d.Any other orders that the Honourable Tribunal may deem just and expedient to grant in the circumstances.

2. The application is premised on the grounds, that: -i.The Respondent vide a letter dated 13th September 2021 issued a notice of tax investigations and subsequently issued the Applicant with a notice of assessment dated 28th September 2022. ii.The Respondent issued a partial objection decision on 25th November 2022 confirming the assessment to the extent of the custom taxes and on 23rd December 2022 it issued an objection decision confirming the assessments in respect of CIT, WHT and VAT.iii.The Appellant lodged a Notice of Appeal on 16th December 2022 to the Respondent’s objection decision of 25th November 2022. iv.The Respondent’s assessment was based on a banking analysis done on the Appellant’s bank deposits, which considered numerous bank transactions done over the entire audit period of 2016 to 2020. v.Until recently the Appellant had been waiting for the Respondent to share import data that the Respondent relied upon in the assessment and the Appellant has now managed to prepare a detailed reconciliation incorporating detailed documents in support of its case.vi.There is imminent danger that the Appellant shall be prejudiced if this application is not allowed as the Tribunal shall not have the full visibility of the Appellant’s case.vii.The Appellant has approached the Tribunal at the earliest juncture and the Applicant is seeking leave to amend it Memorandum of Appeal and Supplement its Statement of Facts which have been brought without undue delay.viii.The Applicant’s proposed amendments do not introduce a new and inconsistent cause of action which would change the action into one of a substantially different character and the purpose is to facilitate the determination of the real questions in controversy between the parties in these proceedings.ix.The Respondent will not suffer any prejudice from the grant of orders sought.

3. The Respondent opposed the application through its Grounds of Opposition dated and filed 17th November 2023. The grounds as highlighted therein were as follows: -i.That the application is an afterthought since the Appellant did not disclose its intention to amend its Memorandum of Appeal or file Supplementary Statement of Facts on 26th June 2023 when the matter came up for pre-trial.ii.That the matter had already been fixed for hearing and the same could have been heard prior to the filing of this application were it not for the adjournment of the matter by the Tribunal.iii.That any documents introduced at this stage will prejudice the Respondent as it will not have had the benefit of that information contained in the documents that the Appellant alleges to have been in the possession of the Respondent.iv.The Appellant has not indicated the date that it received the import data from the Respondent or attached evidence to substantiate its allegations.v.The Appellant being an importer of its own products should ordinarily have the import data in its possession and cannot therefore front the excuse that it was waiting for data from the Respondent.vi.The pleadings have closed and this Honourable Tribunal has issued hearing directions and witness statement has been filed.

Appellant’s Submissions 4. The Appellant in its written submissions dated 15th November 2023 and filed on 16th November 2023, submitted as hereunder;

5. The Appellant was required to obtain bank statements, confirm nature of deposits and analyze the deposit transactions against the ledgers and returns, which detailed documents the Appellant has now managed to compile.

6. The Appellant submitted that the additional documents which it seeks to file are extremely relevant and vital to this matter and shall support the

Appellant’s case. 7. The Appellant submitted that the additional documents shall aid the Appellant in discharging its burden of proof as provided for in law.

8. The Appellant submitted that the Respondent shall not be prejudiced in any manner whatsoever if the orders are granted as the Tribunal may grant corresponding leave to the Respondent to file a Supplementary Statement of Facts in reply if need be.

9. The Appellant relied on the following case law;a.TAT Appeal No. 304 of 2019 Pevans East Africa vs. Commissioner of Domestic Taxes; andb.TAT Appeal No. 284 of 2019 Tullow Kenya BV vs. Commissioner of Domestic Taxes;

Respondent’s Submissions 10. The Respondent in its written submission dated and filed on 17th November 2023 submitted as hereunder;

11. The Respondent submitted that the Tribunal ought to take judicial notice that the Appellant being an importer of its own products, it should ordinarily have the import data in its possession and cannot therefore front the excuse that it was waiting for data from the Respondent. Further, there was no evidence to demonstrate the attempts by the Appellant to obtain the report.

12. The Respondent submitted that the timing of the application just before hearing is suspect, the Appellant never made any intention to file the additional documents when setting the matter down for hearing.

13. The Respondent submitted that the requirement for reasonable diligence is meant to discourage litigants from leaving, until the appeal stage, all sorts of material which should properly have been considered by the trial court or body.

14. The Respondent submitted that the additional evidence is an afterthought and an attempt to patch up the Appellant’s case and ought not to be allowed. The Appellant did not employ reasonable diligence to procure and produce the same for consideration.

15. The Respondent submitted that the additional evidence has no material evidence and if it did, the Appellant would have produced it during the objection stage since it had in it the import data of all its imports contrary to what it alleges.

16. The Respondent submitted that allowing the Appellant to submit further documents would be tantamount to stealing the show as the documents are irrelevant before the Tribunal.

17. The Respondent submitted that the Appellant’s application was filed on 31st October 2023 while the Memorandum of Appeal was filed on 23rd December 2022, that there is more than one year since the last request by the Respondent to submit the same, this amounts to inordinate delay.

18. The Respondent submitted that there was no reasonable explanation advanced before the Tribunal as to why the Appellant could not have filed the documents as required in law.

19. The Respondent submitted that the Appellant never availed the documents not communicated experiencing any challenges procuring the said evidence.

20. The Respondent submitted that the Appellant is estopped by its own conduct and/or waiver of right from going back against which it endorsed. Equity does not aid the indolent.

21. The Respondent submitted that there were no exceptional circumstances to warrant the Tribunal to admit the additional evidence at the Appeal as the evidence sought to be adduced was in the possession of the Appellant.

22. The Respondent relied on the following cases;a.Fibre Link Limited vs. Star Television Production Limited [2015] eKLR;b.Wanjie & Others vs. Sakwa & Others [1984] KLR 275;c.Rajnikanthkhetshi Shah vs. Habib Bank A.G. Zurich [2016] eKLR;d.McIlKenny vs. Chief Constable of West Midlands, [1980] All ER 228; andd.Banning vs. Wright (1972) 2 All ER 987.

Analysis And Findings 23. The Appellant in its application relied on Rule 21 of the Tax Appeal Tribunal (Procedure) Rules 2015 and Article 159 (2) of the Constitution of Kenya, 2010.

24. Article 159 (2) (d) of the Constitution of Kenya 2010, offers guidance to all Courts on how to administer justice and, it provides as thus;“justice shall be administered without undue regard to procedural technicalities;”

25. Further, Rule 21 of the Tax Appeals Tribunal (Procedure) Rules 2015, provides that;“A party may at any time before the closure of the case, orally apply to amend its pleadings and the Tribunal may, at its discretion, allow such application on such terms and conditions including granting leave to the other party to amend its pleadings provided the amendments do not raise new issues”

26. The Appellant further seeks to file additional documents to support its case, which application is governed under Rule 10 (1) of the Tax Appeals Tribunal (Procedure) Rules 2015, the Rule provides;“(1)Where the documents referred to in rule 3(2) are not filed within the time specified therein, the Tribunal may, upon application in writing, extend the time for submitting the documents.”

27. The Tribunal in exercise of its discretion in applications of this nature is guided by the provisions of Rule 10 (3) 21 of the Tax Appeals Tribunal (Procedure) Rules 2015, which provides for the grounds upon which the Tribunal may be may consider, which rule provides:“(3)The Tribunal may grant the extension of time if it is satisfied that the applicant was unable to submit the documents in time for the following reasons-a.absence from Kenya;b.sickness; orc.any other reasonable cause.”

28. The application sought for leave to file an amended Memorandum of Appeal, a Supplementary Statement of Facts and additional documents in support thereof, and from the foregoing the ground for consideration by this Tribunal is anchored under Rule 10 (3) (c) being any other reasonable cause.

29. The Appellant submitted that it had sufficient and reasonable grounds for the delay and outline the same as follows:a.That the Respondent assessment was based on the banking analysis done on the Appellant’s bank account and the consideration was for numerous transactions spanning from 2016 to 2020 and therefore the Appellant needed time to secure and analyse the bank statements.b.That the Appellant up until recently has been waiting for the Respondent to share import data that the Respondent relied upon in the assessment and the Appellant was provided with the import data after filing of the Appeal.

30. The Respondent, on the other hand, stated that the application was an afterthought and the Appellant had all the opportunities to present the same and file the additional evidence but failed to do so.

31. The Tribunal has considered the rival arguments and notes that the principles that guide the Tribunal in determining applications for leave to either amend the Memorandum of Appeal or files a Supplementary Statement of Facts can be analysed from the case of Elijah Kipngeno Arap Bii vs. Kenya Commercial Bank Limited [2013] eKLR, which principles include;a.The application should be made timeously that is before the conclusion on the matter;b.The amendments or supplementary Statement of Facts ought not introduce new issues to the Appeal or a new cause of action.c.No prejudice ought to be suffered by the other party if the application is granted.d.If granted, the Respondent ought to be given an opportunity to amend its pleadings in view of the Applicant’s amendments.

32. The Appellant advanced explanations to the cause of the delay as alluded hereinabove, which delay is about ten (10) months, upon evaluation of the grounds advanced by the Appellant in comparison with the time taken, the Tribunal is of the considered view that the delay is reasonable and excusable to warrant the granting of the orders sought.

33. The Respondent submitted that the additional documents had not submitted during the Objection review, however, the Tribunal is alive to the fact that the burden of proof in tax matters lies on the Appellant, and in this case, lies on the Appellant to prove at the hearing that the additional documents were provided to or were in the possession of the Respondent for consideration during the Objection stage, the Respondent therefore shall not be placed in a position of disadvantage.

34. The Tribunal has perused the record and notes that the application has been brought before the commencement of the hearing of the Appeal, the Tribunal in consideration of the above position, the period and the grounds advanced, is of the view that the application was made timeously and is in line with the provisions of Rule 21 of the Tax Appeals Tribunal (Procedure) Rules 2015. .

35. The Tribunal perused the Appellant’s Memorandum of Appeal and Statement of Fact filed on the 23rd December 2022, and noted that the Appellant in its proposed Statement of Facts does not seek to introduce any new cause of action in the Appeal. The supplementary averments seek to enhance the grounds in the Memorandum of Appeal and Statement of Facts. Further, it neither appears to alter the course of the Appellant’s arguments in this Appeal nor introduce any new prayer or new cause of action or issues for determination by the Tribunal.

36. The proposed averments in the proposed Supplementary Statement of Facts and documents thereof may assist the Tribunal in determining the real questions in issue and/or controversy in the Appeal.

37. The Respondent submitted that it is likely to irreparably suffer prejudice on account of the orders sought being granted, founded on the fact that Commissioner for Domestic Taxes has not reviewed the documents or scrutinized the documents.

38. The Tribunal observes that no prejudice will be suffered by the Respondent as it shall have an opportunity to peruse the documents well in time for the hearing of the Appeal and will be accorded an opportunity to respond to the Supplementary Statement of Facts and additional documents.

39. The Tribunal having considered rival submissions finds that there will be no prejudice to be suffered by the Respondent, as the Respondent shall have an opportunity to review and respond to the said amendments and documents.

Disposition 40. In view of the foregoing, the Tribunal makes a finding that the application is merited and accordingly makes the following Orders; -a.The Appellant be and is hereby granted leave to amend its Memorandum of Appeal and to file a Supplementary Statement of Facts and additional documentsb.The Appellant to file and serve the Amended Memorandum of Appeal, Supplementary Statement of Facts and additional documents within Fifteen (15) days of the date of delivery of this Ruling.c.The Respondent be and is hereby granted a corresponding leave to file a Supplementary Statement of Facts and additional documents within Fifteen (15) days of being served by the Appellant.d.No order as to costs.

41. It is so ordered.

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