[2025] KETAT 212 (KLR)

Jomaki Investments v Commissioner Domestic Taxes (Tax Appeal E252 of 2025) [2025] KETAT 212 (KLR) (10 April 2025) (Ruling)

Neutral citation: [2025] KETAT 212 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E252 of 2025

CA Muga, Chair, T Vikiru & BK Terer, Members

April 10, 2025

Between

Jomaki Investments

Applicant

and

Commissioner Domestic Taxes

Respondent

Ruling

1. The application before the Tribunal is by way of a Notice of Motion dated 11th March 2025 and filed under Certificate of urgency on the 13th March 2025 and supported by an affidavit of John Mariga Kigecha sworn on 12th March 2025 seeking the following Orders:a.Spent.b.That pending the hearing and determination of the application inter parties, a temporary order be issued staying and/or suspending the Agency Notice dated 26th June,2024 issued to KCB Bank Kenya Limited requiring the Applicant's bankers to pay the sum of Kshs 43. 214. 052. 15 or any other enforcement action taken by the Respondent which the Applicant may have not been aware of at the time of making this application be stayed and the Respondent whether by itself. its officers. employees and/or agents be stopped from taking any steps to collect any money pursuant to the said Agency Notice.c.That the Agency Notice dated 26th June 2024 issued to KCB Bank Kenya Limited 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 of Notice of Appeal and Memorandum of Appeal to the Tribunal.e.That the intended Appellant/Applicant's Notice of Appeal dated 11th March 2025 be admitted into the record of the Tribunal as having been filed within time.f.That the cost of this Application be in the cause.g.That the Tribunal be pleased to issue any such orders as it deems just and expedient.

2. The Application was premised on the following grounds:a.That the Applicant is a Company based in Nairobi County and carrying out business within the Republic of Kenya.b.That the Respondent issued a Notice of Assessment dated 9th April 2021 on the basis of identified discrepancies in the Applicant's corporation tax and value added tax declarations.c.That the Applicant objected to the assessment on 18th June 2021 and issued its detailed reasons for the objection however the Respondent rejected and issued its objection decision out of the statutory deadline on 29th August 2022 which was 14 months later.d.That the Applicant has in its possession Agency Notice dated 26th June 2024 and the same copied to its Bankers, the KCB Bank Kenya Ltd.e.That the net effect of the said Agency Notice has crippled the Applicant's operations since it can no longer honor its financial obligations nor be at a position to operate.f.That the said objection decision is an appealable tax decision since the Applicant is not in any way indebted to the Respondent as indicated in the tax decision it arrived at.

3. The Application was supported by the affidavit of John Mariga Kigecha , the Applicant’s director which he swore on 12th March 2025 wherein he deponed as follows:i.That the Respondent issued a Notice of Assessment dated 9th April 2021 on the basis of identified discrepancies in the Applicant’s corporation tax and value added tax declarations.ii.That the Applicant objected to the assessment on 18th June 2021 and issued its detailed reasons for the objection.iii.That the Respondent had sixty (60) days from the date of the objection to either allow or reject the said objection which would have not been later than the 18th August, 2021 failure to which the objection stood allowed by the operation of law.iv.That the Respondent issued its objection decision out of the statutory deadline, on 29th August 2022 which was 14 months late.v.That the Applicant has in its possession Agency Notice dated 26th June 2024 and the same copied to its Bankers KCB Bank Kenya Ltd.vi.That the said Agency Notice is unlawful, unreasonable, unfair and was issued in bad faith whose net effect has crippled the Applicant's operations since it can no longer honor its financial obligations nor be at a position to operate thus frustrated its suppliers and employees.vii.That his health started failing sometimes in September 2022 and since then he has been on continuous treatment in several hospitals and remained under the doctor's watch where he’s not been able to attend to nor execute any Applicant's related matters owing to his condition and the strict doctor’s advice to refrain from company's exigencies in his recovery journey.viii.That he was statutorily locked out from contesting the said taxes nor object to the issuing of the objection decision which was statute barred and subsequent issuance of the Agency Notice owing to his state of health, a fact that is beyond his control.ix.That contemporaneously with a prayer for lifting the Agency Notice the Applicant prayed Tribunal do extend time to allow the Applicant file a Notice of Appeal and Memorandum of Appeal to the Tribunal.x.That the Applicant contended that it intends to appeal against the entire assessment since it is frivolous and not based on any material facts as stipulated in the tax laws.xi.That the Applicant has approached the Tribunal at the earliest possible juncture and failure to file the Notice of Appeal and Appeal documents within the stipulated timelines is as a result of factors beyond the Applicant's control.xii.That this application was brought without undue delay under the circumstances and the Respondent will suffer no prejudice if orders sought herein are granted.xiii.That it was in the interest of justice that the Tribunal grants the orders for lifting the Agency Notice placed in the KCB Bank Kenya Limited account and allow the Notice of Appeal be filed out of time as sought herein.xiv.That unless the Application was heard on a priority basis and the orders sought herein granted the Applicant will be highly prejudiced and will suffer substantial and irreparable loss.xv.That the Applicant's recourse to justice lies in an appeal to the Tribunal, thus the Applicant would suffer prejudice if it is not granted leave to file its Appeal. That in any event the Respondent would still collect the taxes inclusive of penalties and interest should they be found to be due and payable.xvi.That further the Applicant is constitutionally protected and its right of access to justice must not be extinguished by the Respondent’s illegal means of collection of taxes since the Applicant is not in any way indebted to the Respondent as per the tax decision it arrived at.xvii.That the Applicant prayed that the Agency Notice placed against the Applicant be lifted to allow resumption of operations.

4. The Respondent upon being served challenged the instant application by way of a replying affidavit sworn on 26th March 2025 by Victor Chabala an officer of the Respondent raising the following grounds:a.That on 9th April 2021, the Respondent issued the Applicant herein with an assessment.b.That consequently, the Applicant herein lodged their notices of objection dated 18th June 2021 challenging the assessments in their entirety.c.That the Respondent issued its decision on 29th August 2022 whereby it confirmed the assessments as demanded.d.That the Applicant has now lodged its Notice of Appeal on 20th March 2025 over 2 years 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, CAP 469A of the Laws of Kenya (hereinafter “TATA”). That this delay is not only inordinate but it has also not been satisfactorily explained.e.That the Applicant postulated that he has been sick from September 2022 and has been on continuous treatment and has not been able to attend to the company's matters and that he has strict advice from the doctor to refrain from company's exigencies in his recovery journey.f.That upon a cursory perusal of the Applicant's copies of various treatment notes annexed, the last notes are dated 20th April 2023. g.That it has been over 1 year since the Applicant visited the doctor to the date he filed the Appeal.h.That the Applicant has not demonstrated by way of evidence the reasons for not filing the Appeal within the 1 year.i.That the Agency Notices are lawful, reasonable and fair as the Applicant has not filed a proper appeal to warrant the lifting of the Agency Notices.j.That the failure to provide a valid reason for the late appeal does not warrant this Tribunal to exercise its discretion in favor of the Applicant. That the Applicant has failed to lay a basis to the satisfaction of the Tribunal for extension of time to file an Appeal.k.That the Application was an afterthought, brought in bad faith, meant to delay the Respondent from collecting taxes that are due and payable and should not be entertained by this Tribunal.l.That the Applicant is not deserving of the orders sought in the Application as the whole period of delay has not been declared and explained satisfactorily to the Tribunal thus the Application ought to be dismissed.m.That in the circumstances, it is in the interests of justice that this Tribunal dismisses the Applicant's Notice of Motion application dated 11th March 2025 to pave way for the Respondent to collect taxes due from the Applicant which are key to the economic development of the Country.n.That the indolence of the Applicant should not bar the Respondent from fulfilling its mandate of collecting taxes that are due and payable.o.That the Applicant has failed to satisfy the principles as set out in the case of Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] Eklr hence the prayer for the Tribunal to dismiss the Application.

Parties’ Submissions 5. In compliance with the direction of the Tribunal to the effect that the Application was to be canvassed by the way of written submissions, the Respondent filed its submissions on the 27th March 2025 whilst the Appellant failed to comply with the Tribunal’s directions.

6. The Respondent in its submissions filed on 27th March submitted the following:a.That in determining whether the delay is inordinate, the Tribunal to peruse the case of Utalii Transport Company Limited & 3 Others Vs. Nic Bank Limited & Another [2014] Eklr wherein it held thus:“Whereas there is no precise measure of what amounts to inordinate delay. And whereas what amounts to inordinate delay will differ from case to case depending on the circumstances of each case; the subject matter of the case; the nature of the case; the explanation given for the delay; and so on and so forth. Nevertheless, inordinate delay should not be difficult to ascertain once it occurs; the litmus test being that it should be an amount of delay which leads the Court to an inescapable conclusion that it is inordinate and therefore, inexcusable. On applying Court's mind on the delay, caution is advised for Courts not to take the word 'inordinate' in its dictionary meaning, but in the sense of excessive as compared to normality."b.That particularly, the intended Appeal is out of time and in contravention of the mandatory provisions of Section 13 of the TATA. That there is an inordinate delay of 2 years 7 months in lodging an Appeal against the decision, which was rendered on 29th August 2022. c.That subsequently, the power to extend the time to file an Appeal before the Tribunal is discretionary, it is primarily governed by the provisions of Section 13 (3) and (4) of the TATA reproduced hereunder:“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).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.”d.That in addressing whether the prayers sought by the Applicant herein should be granted, the Tribunal should be guided by the case of Nicholas Kiptoo Arap Korir Salat v Independent Electoral And Boundaries Commission & 7 Others (2014) Eklr where it was held as follows:“Extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party at the discretion of the court.A party who seeks for extension of time has the burden of laying the basis to the satisfaction of the court.Whether the court should exercise the discretion to extend time is a consideration to be made on a case-to-case basisWhether there is a reasonable reason for delay, the delay should be made to the satisfaction of the court.”e.That the Applicant postulated that he had been sick from September 2022 and has been on continuous treatment and has been unable to attend to the company's matters and that he has strict advice from the doctor to refrain from Company's exigencies in his recovery journey.f.That upon a cursory perusal of the Applicant's copies of various treatment notes, the last notes are dated 20th April 2023. That it has been over 1 year since the Applicant visited the doctor to the date he filed the Appeal.g.That the Applicant has not demonstrated by way of evidence the reasons for not filing the Appeal within 1 year.h.That the Agency Notices are lawful, reasonable and fair as the Applicant has not filed a proper appeal to warrant the lifting of the Agency Notices.i.That the Applicant has not demonstrated any reason whatsoever in accordance with Section 13(4) of the TATA which states as follows:“(4)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.”j.That the Tax Procedures Act, CAP 469B of the Laws of Kenya (hereinafter “TPA”) stipulates that a taxpayer should file an Appeal 30 days from the dated of the Respondent's decision.k.That in this instant case the Applicant should have filed the Appeal by 29th September 2022, the reason for the inordinate delay has not been demonstrated at all. That it is therefore evident that the Applicant has been indolent since it only sought to file an appeal out of time 2 years 7 months after being aware of the decision of 29th August 2022. l.That equity aids the vigilant and not the indolent. That there was inordinate delay in seeking extension of time to lodge an appeal, evidently, the Appellant herein has not been keen with this matter.m.That if the prayers sought herein are granted it will be prejudicial to the Respondent since the taxes are due and their recovery and enforcement has already commenced.n.That the Applicant has not satisfied the provisions of Section 13 (3) and (4) of the TATA and this Tribunal should decline to exercise its discretion in the Applicant's favour. That if anything, this Application is incurably defective and an abuse of the court process.o.That the Applicant herein has utterly failed to discharge its burden of proof pursuant to the provisions of Section 56 (1) of the TPA.p.That the threshold for grant of conservatory orders was established by the Supreme Court in the case of Gatirau Peter Munya v Dickson Mwenda Kithinji & 2 Others [2014] Eklr as follows:“(86)"Conservatory orders "bear a more decided public-law connotation: for these are orders to facilitate ordered functioning within public agencies, as well as to uphold the adjudicatory authority of the Court, in the public interest. Conservatory orders, therefore, are not, unlike interlocutory injunctions, linked to such private-party issues as "the prospects of irreparable harm" occurring during the pendency of a case; or "high probability of success" in the supplicant's case for orders of stay. Conservatory orders, consequently, should be granted on the inherent merit of a case, bearing in mind the public interest, the constitutional values, and the proportionate magnitudes, and priority levels attributable to the relevant causes.”q.That further, in Centre For Rights Education and Awareness (Creaw) & Another v speaker of The National Assembly & 2 Others (2017) Eklr the Court was emphatic that:-“A party who moves the court seeking conservatory orders must show to the satisfaction of the Court that his or her rights are under threat of violation; are being violated or will be violated continue unless a conservatory order is granted. This is so because the purpose of granting a conservatory order is to prevent violation of rights and -fundamental freedom and preserve the subject matter pending the hearing and determination of a pending case or Petition."r.That in the instant case, the Applicant herein had not demonstrated the threatened/actual infringement and/or violation of any of their constitutional rights to warrant the grant of conservatory orders.s.That further, there is no appeal pending determination and therefore these orders should not be granted since they are ancillary in nature.t.That the Applicant having failed to demonstrate the reason for the inordinate delay of 2 years 7 months, the Respondent prayed for the Tribunal to dismiss the Applicant's Application with costs to the Respondent.

Analysis And Findings 7. Tribunal has carefully considered the parties’ grounds for the application and proceeds to analyze the matter before it as hereinunder.

8. The Tribunal’s jurisdiction is drawn from the provisions of Section 13 (3) of the TATA. Further, the grounds upon which the Tribunal can entertain an application of this nature are provided for under the provisions of Section 13 (4) of the TATA which provides as follows:“(4)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. Additionally, Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015, provides as follows:“(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.”

10. Following from the above, the Applicant was behooved to demonstrate the ground which hindered it from lodging its Appeal within the statutory timelines as envisaged under Section 12 of the TATA.

11. In the instant case, the Applicant attributed its delay in lodging an Appeal at the Tribunal to the health condition of its director. The Applicant’s director in his affidavit stated that he had been sick from September 2022 and was on continuous treatment since then hence he was unable to attend to the company's matters and that he was under strict advice from the doctor to refrain from the company's exigencies in his recovery journey.

12. The Applicant provided medical records showing that he attended Maragua District hospital on various occasions between 10th September 2022 and 21st May 2023. The view of the Tribunal the Tribunal, the ground advanced by the Applicant is provided for under the provisions of Section 13 (4) as read together with Rule 10 (3) (b) of the Tax Appeals Tribunal (Procedure) Rules, 2015, being “sickness.”

13. The Respondent opposed the application on the ground that the last treatment notes provided by the Applicant were dated 20th April 2023 which indicated that the last time the Applicant’s director had visited the hospital for treatment was more than one year to the date of lodging this Application.

14. The Respondent contended that the Applicant had not demonstrated by way of evidence the reasons for not filing the Appeal within the intervening 1 year.

15. The Tribunal observed that of the attached medical reports the most recent is dated 21st May 2023, the impugned objection decision was issued on 29th August 2022, while the instant application was filed on 11th March 2025 more than 19 months after the last visit to the doctor.

16. Whereas the Applicant’s director averred that he was under the doctor’s strict instruction not to engage in the company’s exigencies, he did not provide any explanation or documentation to justify why it took more than 19 months after the last visit to the doctor to make this application for leave to appeal out of time. The Tribunal’s view is that the delay between May 2023 and March 2025 was not satisfactorily explained.

17. The Tribunal in its finding is persuaded by the Ugandan case of Ojara vs. Okwera (Miscellaneous Civil Application 2017/23) [2018] VGHCCD 42 where it was stated thus:“An order for enlargement of time to file the appeal should ordinarily be granted unless the applicant is guilty of unexplained and inordinate delay in seeking the indulgence of the court.”

18. It is therefore the Tribunal’s finding that the Applicant has not established any reasonable cause for the delay and with the Application for leave to file an appeal out of time, having failed the Notice of Appeal and the Appeal documents filed simultaneously with the application have no legal basis and the Appeal is therefore unsustainable in law.

Disposition 19. The Tribunal in the circumstances finds that the application lacks merit and the Appeal filed therewith is incompetent and the Orders that accordingly recommend themselves to the Tribunal are as follows:a.The Application be and is hereby dismissed.b.The Notice of Appeal , Memorandum of Appeal and Statement of Facts filed by the Appellant be and are hereby struck out.c.No orders as to costs.

20. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 10TH DAY OF APRIL, 2025. ………………………………….CHRISTINE A. MUGA - CHAIRPERSONDR. TIMOTHY B. VIKIRU - MEMBERB ONIFACE K. TERER - MEMBER