[2024] KETAT 1343 (KLR)

Jambostar Properties Limited v Commissioner of Domestic Taxes (Miscellaneous Application E062 of 2024) [2024] KETAT 1343 (KLR) (20 September 2024) (Ruling)

Neutral citation: [2024] KETAT 1343 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application E062 of 2024

RM Mutuma, Chair, M Makau, T Vikiru, D.K Ngala & Jephthah Njagi, Members

September 20, 2024

Between

Jambostar Properties Limited

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Appellant moved the Tribunal vide a Notice of Motion application dated 10th July 2024 and filed on an even date under certificate of urgency that is supported by an Affidavit sworn on 24th May 2024 by Dr. Ali Maalim, a Director of the Applicant’s seeking for the following Orders, that: -a.Spent.b.Leave be granted to the Applicant to lodge the Notice of Appeal, Memorandum of Appeal, Statement of Facts and other accompanying documents out of time.c.Pending the lodging, hearing and determination of the substantive Appeal and other applications filed by the Applicant, the Respondent, its agents and/or officers be barred from accessing, interfering and/or withdrawing and/or issuing Agency Notices against the Applicant.d.Pending the lodging, hearing and determination of the substantive Appeal and other applications filed by the Applicant, the Respondent, its agents and/or officers be barred from attaching any moveable and immovable assets of the Applicant.e.The Applicant be at liberty to apply for further orders and the Honourable Tribunal do give any directions it deems fit and just to grant in the circumstances.f.That costs of this application be provided for.

2. The application is premised on the grounds, that: -i.The Respondent assessed the Applicant for Income Tax and Value Added Tax, to which the Applicant Objected to vide the Notice of Objection dated 14th September 2022, 15th September 2022 and 13th October 2022. ii.The Respondent issued its Objection Decision on 12th December 2022 and confirmed the assessments amounting to Kshs. 76,733,331. 00. iii.The Applicant was able to lodge the Notice of Appeal, Memorandum of Appeal, Statement of Facts and other accompanying documents within the statutory timeline, due to the negligent conduct of the Applicant’s tax agents in filing an improper Appeal and failing to provide the required documents to support its pleadings, leading to the Honourable Tribunal sticking out the Appeal on 26th April 2024. iv.This application has been made within reasonable time since the information of the decision of the Tribunal was brought to its attention.v.The Applicant has at no point admitted to the Additional Income Tax Assessment being demanded by the Respondent.vi.The Respondent will not suffer any prejudice should the Applicant be allowed to file its Appeal out of time.vii.The Tribunal has the powers to extend time of filing the pleadings as granted by Section 13 (3) and (4) of the Tax Tribunal Act 2013 and Rule 10 of the Tax Appeals Tribunal (procedure) Rules 2015. viii.It is in the interest of justice that this application be allowed as prayed.

3. The Respondent upon being served with the instant application filed grounds of opposition to the application, which response raised the following grounds, that;i.The Tribunal is functus officio thus lacks jurisdiction to hear and determine the instant application.ii.The Tribunal delivered judgement on 26th April 2024 (NBI TAT No. 82 of 2023 Jambostar Properties Limited vs. The Commissioner of Domestic taxes) dismissing the Appeal.iii.The Applicant has not given grounds for the late filing as provided for under Section 13 (4) of the TAT Act.

Parties Submissions 4. The parties herein, despite being directed to file their respective submissions to the application, neither party complied with the said directions and the Tribunal shall consider the application based on the grounds in support of the application and the response thereof.

Analysis and Determination 5. The Tribunal is enjoined to determine the application for leave to extend time for the filing of an Appeal out of time.

6. In opposition to the application, the Respondent raised three issues, particularly that the Tribunal is functus officio and that the Tribunal dealt with the Applicant’s grievances in Appeal No. 82 of 2023. The Tribunal shall address the issues distinctly as herein below;

7. Firstly, functus officio is doctrine in law which in the English translation would translate to “having performed the office”. The import of the doctrine connotes that the mandate of the office holder has become extinguished or expired upon delivery of a decision and the holder of such an office cannot re-examine the matter again. In the instant case that the mandate of the Tribunal has ceased and therefore it is precluded to hear and determine matters such as these.

8. In essence the doctrine is applicable under circumstances where the dispute has been determined substantially and/or on merit. It would therefore, not proper to examine and determine if the Tribunal was functus officio without analyzing the manner and import of the decision made by the Tribunal.

9. It is not in dispute that the Applicant had commenced proceedings before this Tribunal in TAT Appeal No. 82 of 2023 Jambostar Properties Limited vs. The Commissioner of Domestic Taxes, which Appeal was struck out on the 26th April 2024.

10. The courts have in many instances made pronouncements on the issue relating to a judgement being struck out, in the instant case the Tribunal in exercise of its jurisdiction struck out and/or terminated the Appellant’s Appeal for the non-compliance with the law.

11. In instances where the Tribunal strikes out an Appeal for non-compliance, the party affected by the decision, upon regularization of the issue may lodge its Appeal afresh and the Tribunal shall hear and determine the Appeal as though the same were never filed before the Tribunal.

12. The above position was reinforced in the case of Enock Kirao Muhanji vs. Hamid Abdalla Mbarak [2013] eKLR, in which Angote J. stated that;“18. It is true, as argued by the Applicant that when a suit is dismissed, one might not be allowed to file a fresh suit unlike in a situation where a suit has been struck out.19. The words “dismissed” and struck out” are terms of art and are not supposed to be used interchangeably in a Ruling or Judgment. However, more often than not, the terms are used interchangeably by the litigants and the courts.”

13. It is therefore the Tribunal’s position that the Appellant’s Appeal in TAT Appeal No. 82 of 2023 was not determined substantially or on merits, the Applicant is thus permitted in law to lodge a fresh Appeal.

14. The Tribunal is therefore finds that it is not functus officio in so far as the Applicant being able to lodge a fresh Appeal extends.

15. Having determined that the Tribunal is not functus officio in this matter and the Applicant is permitted in law to lodge a fresh Appeal, its previous Appeal having been struck out, the Tribunal shall analyse whether the Applicant has met the threshold to warrant the Tribunal to exercise its discretion in the Applicant’s favour.

16. The Applicant’s application is mounted pursuant to Sections 13 (3) and (4) of the Tax Appeals Tribunal Act, Section 52 (1) of the Tax Procedures Act and Rule 10 of the Tribunal (Procedure) Rules 2015.

17. The orders sought by the Applicant are not automatic as of right to the Applicant, rather are discretional, which discretion ought to be exercised by the Tribunal judiciously.

18. Section 13 (4) of the Tax Appeals Tribunal Act makes provisions for the reasons and/or grounds that the Tribunal may consider in regards to the delay, which are as follows;“(4)An extension of time under subsection (4) may be granted owing to absence from Kenya, or sickness, or other reasonable cause that may have prevented the Applicant from filing the notice of appeal or submitting the documents within the specified period.”

19. Similarly, Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015, 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; or(c)any other reasonable cause.”

20. Flowing from the above, the Applicant is obligated in law, within the confines of Section 13 (4) of the Tax Appeals Tribunal Act and Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015 to demonstrated the grounds upon which its application is mounted.

21. The Respondent posited that the Applicant did not advance any reasonable grounds why it could not lodge its Appeal within time.

22. The Tribunal has perused the Applicant’s grounds set forth on the face of the application as well as the averments contents of the affidavit in support thereof, it noted that the Applicant advanced the grounds that its representative acted negligently by filing an improper Appeal and failing to provide the requisite documents.

23. The Tribunal has perused the judgment alluded to by the Applicant and noted that the same as struck out for failure to present the Objection dated 13th October 2022 in demonstration that taxes in dispute were settled, despite numerously occasions alluding to the existence of the document.

24. It is trite law that mistakes of a legal representative ought not be visited on an innocent litigant. Examining the reason advanced by the Applicant in seeking for leave to file an Appeal out of time and in contrast with the Judgement in TAT Appeal 82 of 2023, we noted that indeed the said document had not been filed and thus resulting to the Applicant’s Appeal being struck out. In the view of the Tribunal, the ground advanced by the Applicant was reasonable as envisaged under Section 13 (4) of the Tax Appeals Tribunal Act.

25. The Tribunal is guided by the High Court case of Leo Sila Mutiso vs. Rose Hellen Wangari Mwangi, Civil Application Nai 251 of 1997 where the judge held that:“It is now settled that the decision whether to extend the time for appealing is essentially discretionary. It is also well stated that in general the matters which this court takes into account in deciding whether to grant an extension of time are, first the length of the delay, secondly the reasons for the delay, thirdly (possibly) the chances of the appeal succeeding if the application is granted and fourthly the degree of prejudice to the respondent if the application is granted.”

26. The Tribunal therefore finds that the grounds advanced by the Applicant for delay are not reasonable, are inexcusable and deems the delay not to be inordinate under the circumstances.

27. Consequently, the Applicant’s application is merited and therefore succeeds.

Disposition 28. In view of the foregoing, the Tribunal makes the following Orders; -a.The Applicant be and is hereby granted leave to file its Appeal out of time.b.The Applicant to file and serve its Notice of Appeal; Memorandum of Appeal, Statement of Facts, Objection Decision and documents thereto with fifteen (15) of the date hereof.c.The Respondent to file and serve its response to the Appeal within thirty (30) days of the date of being served.d.Each party to bear its own costs.

29. It is so ordered.

SIGNED AND DELIVERED AT NAIROBI THIS 20TH DAY SEPTEMBER 2024. ROBERT M. MUTUMA - CHAIRMANMUTISO MAKAU - MEMBERDR. TIMOTHY - MEMBERB. VIKIRU - MEMBERDELILAH K. NGALA - MEMBERJEPHTHAH NJAGI - MEMBER