[2023] KETAT 161 (KLR)

Jofro Investment Limited v Commissioner of Domestic Taxes (Miscellaneous Application 296 of 2022) [2023] KETAT 161 (KLR) (10 March 2023) (Ruling)

Neutral citation: [2023] KETAT 161 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application 296 of 2022

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

March 10, 2023

Between

Jofro Investment Limited

Applicant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The Applicant vide a Notice of Motion application dated November 24, 2022 filed under a certificate of urgency on the November 25, 2022 sought for the following Orders:a.Spent.b.Spentc.That the Agency Notices dated July 23, 2021 issued to NCBA Bank, Kenya Commercial Bank and National bank of Kenya and any other agency notice issued on any of the Applicant’s bankers, be lifted, vacated and/or set aside and the Respondent whether by itself, its officers, employees and/or agents, be stopped from taking any steps or other enforcement action founded on the said assessments.d.That the intended Appellant/ Applicant be granted an extension of time with regard to filing Notice of Appeal and Memorandum of Appeal to this Honourable Tribunal.e.That the intended Appellant/ Applicant’s Notice of Appeal dated November 24, 2022 be admitted into the record of this Honorable Tribunal as having been filed within time.f.That the cost of this application be in the cause.g.That this Honorable Tribunal be pleased to issue any such orders as it deems just and expedient.

2. The application which is supported by an Affidavit sworn by John Mwaura Kamau, the Applicant’s Director, on the 24th day of November, 2022 is based on the following grounds:-a.That the Applicant received assessment orders from the Respondent claiming taxes amounting to Kshs 3,388,400. 03 on the October 24, 2018. b.That the Applicant filed an Objection to the said assessments and requested for the same to be reviewed.c.That through an objection decision dated March 5, 2021 the Respondent rejected the Objection and confirmed the same.d.That the Applicant had travelled out of the Country by the time the objection decision was being issued and was not informed of the same by the former tax agent handling his books of accounts as well as ITS email and iTax portal.e.That the Applicant came to learn of the objection issued after being unable to access its bank account due to agency notices issued.f.That the Applicant immediately gave instructions to the former tax agent to follow up on the processes to which he was informed by the tax agent that the same has been dealt with.g.That the Applicant being away from the Country at around this period had always thought that an Appeal was filed by the tax agent and the issue handled, only for it to visit the KRA offices whereupon it discovered that the tax agent never filed a case before this Honorable Tribunal within the stipulated timelines in law.h.That Section 13(4) of the Tax Appeal Tribunal Act grants this Honorable Tribunal the power to extend the time within which a Notice of Appeal could be lodged if the delay was occasioned by absence from Kenya, or sickness, or other reasonable cause that may have prevented the Applicant from filing the Notice of Appeal and appeal documents.i.That it is in the interest of justice and the rules of natural justice that this Honorable Tribunal grants the orders sought herein and the Applicant given an opportunity to file its Notice of Appeal, Memorandum of Appeal and Statement of Facts as chances of its success are overwhelming and the Respondent will not suffer any prejudice.j.That it urges the Honourable Tribunal to exercise its discretion and enlarge time to allow it file its Notice of Appeal, Memorandum of Appeal and Statement of Facts out of time.

3. The Respondent objected to the application through its Replying Affidavit sworn by Victor Chabala, an Advocate with the Respondent, on the 1st day of December 2022 and filed on the same date in which he stated that:a.That consequently, the Respondent issued the Objection Decisions informed by the reasons that: -i.The Applicant failed to provide the relevant documentary evidence as requested.ii.The Applicant did not give a valid reason for objecting out of time as stipulated under Section 51(2) of the Tax Procedures Act, 2015. b.That the Applicant has now lodged its Notice of Appeal on November 24, 2022 over 1 year and 7 months after the statutorily prescribed time for lodging an appeal contrary to the provisions of Section 13(1)(b) of the Tax Appeals Tribunal Act. This delay is not only inordinate but it has also not been satisfactorily explained.c.That the objection decision issued on the March 5, 2021 was sent to the Applicant’s email address being wanyeri2001@yahoo.com,which should have been accessible to it even if any of its directors were out of the country.d.That the dates stamped on the Applicant’s director Passport are irrelevant taking into consideration that the objection was issued on March 5, 2021 vide advance email copy.e.That it is therefore evident that the Appellant has been indolent since it only sought to file an appeal out of time one year after being aware of the objection Decision.f.That the Applicant failed to satisfy the principles of extension of time as as set out in the case of Nicholas Kiptoo Arap Korir Salat V Independent Electoral and Boundaries Commission & 7 Others [2014]

4. The Respondent also filed written submissions dated the December 14, 2022 and filed on December 15, 2022 where it stressed that:a.The Applicant inordinately delayed in filing the present application by a period of 1 year and 7 months. This fit within the description of inordinate delay as was explained in the case of Utalii Transport Company Limited & 3 Others Vs Bank Limited & Another [2014] eKLR.b.The intended appeal was out of time and in contravention of the mandatory provisions of Section 13 of the Tax Appeals Tribunal Act.c.The Respondent was required to channel its communication to the Applicant and /or their tax agent, including the objection decision, via email pursuant to Section 74 of the Tax procedures Act which provides as thus;“Except as otherwise provided in a tax law, a notice or other document required to be served on, or given to, a person by the Commissioner under a tax law may be served or given by-(c)Transmitting it in electronic form.

5. The Respondent concluded by praying that the instant application be dismissed.

Analysis and Findings 6. The Applicant’s seeks for leave to be allowed to file its appeal out of time. The power to expand time for filing an Appeal out of time is contained in Section 13(3) and (4) of the Tax Appeals Tribunal Act.

7. The said Section 13(3) of the TAT Act provides as follows:-“The Tribunal may, upon application in writing, extend the time for filing the Notice of Appeal and for submitting the documents referred to in subsection (2).”

8. Further Section 13(4) of the Tax Appeals Tribunal Act provides that:-“An extension under subsection (3) 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”

9. The Applicant’s primary reason for the delay was that its principal director had travelled out of the Country by the time the objection decision was being issued and that its tax agents also never informed it about the objection decision.

10. It is not in dispute that the objection decision was issued on the 5th of March 2021. The present application was filed on the November 25, 2022. Meaning that the time for filing the appeal had lapsed by about 1 year and 7 months by the time this application was lodged.

11. The Applicant has provided a Passport which confirms that the Director was out of the Country intermittently in the months of May and April 2021. No reason has been provided on why he did not take any action to file this appeal in the months of June to December 2021 and a greater part of 2022 when he was back in the Country. This was never done.

12. The Tribunal has also noted that the email address that was used by the Applicant in filing this application is the same one that the Respondent affirms that it used to send the objection decision, being wanyeri2001@yahoo.com. On the face of it, therefore, the objection decision sent to the Applicant must have been sighted in good time. This is more so because the Tribunal takes judicial notice of the fact that absence from the Country would not stop anyone from accessing its active email address.

13. It is discernible from the foregoing analysis that the Applicant’s excuse that absence from the Country stopped from filing this appeal in time has not been proved. No other plausible reason or reasonable cause has been provided by the Applicant for its tardiness in filing the appeal 1 year and 7 months out of time. A period of 19 months is indeed inordinate and would have required a reasonable and cogent explanation from the Applicant for the delay if the Tribunal was to exercise its discretion in its favour.

14. The superior court observed as follows in regard to extension of time in the case of Kenya Revenue Authority & 2 others v Mount Kenya Bottlers & 4 others(Application 12 (E021) of 2021) [2022] KESC 3 (KLR) (10 February 2022) (Ruling)‘Extension of time was an equitable remedy, the grant of which involved the exercise of judicial discretion. Equity aided the vigilant and not the indolent. From the numerous infractions and omissions identified, the appellants had not taken the processes of the court and their own appeal with the seriousness deserved.’

15. The Tribunal finds and holds that the Applicant in this matter has been indolent. It slept on its laurels and hoped that the objection decision would be the end of this tax dispute. It never took this tax dispute/issue seriously. Consequently, its infractions, omissions and indolence led it to suffer its current statutory fate.

16. The Tribunal also refers to Joseph Ondiek Tumbo v Sony Sugar Co Ltd [2014] eKLR, where the learned Judge quoted Sir Thomas Bingham M R in Costellow V Somerset County Council (1993)1 All ER 952 where he stated that:“Further, an extension of time is an indulgence from the court by a party in default. He is not entitled to an extension. He has no reasonable or legitimate expectation of receiving one. His only reasonable or legitimate expectation is that the discretion relevant to his application to extend time will be exercised judicially in accordance with established principles of what is fair and reasonable. In those circumstances, it is incumbent on the applicant for an extension of time to provide the court with a full, honest and acceptable explanation of the reasons for the delay. He cannot reasonably expect the discretion to be exercised in his favour, as a defaulter, unless he provides an explanation for the default.”

17. In consistence with the foregoing case law, the Tribunal finds that the Applicant has not provided a reasonable cause for its delay. The discretion sought cannot therefore, be exercised in its favour.

Disposition 18. On the basis of the foregoing, the application lacks merit and the Tribunal accordingly makes the following Orders:-i.The application be and is hereby dismissed.ii.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 10TH DAY OF MARCH, 2023…………………………ERIC N. WAFULA CHAIRMANCHAIRMAN……………………………ABRAHAM KIPROTICHMEMBER……………………………RODNEY OLUOCHMEMBER…………………………ELISHAH NJERUMEMBER…………………………CYNTHIA MAYAKAMEMBER