[2025] KETAT 14 (KLR)

Kamahuha Limited v Commissioner for Domestic Taxes (Miscellaneous Tax Appeal E444 of 2023) [2025] KETAT 14 (KLR) (17 January 2025) (Ruling)

Neutral citation: [2025] KETAT 14 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Tax Appeal E444 of 2023

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

January 17, 2025

Between

Kamahuha Limited

Applicant

and

Commissioner For Domestic Taxes

Respondent

Ruling

1. The Applicant filed a Notice of Motion dated and filed on 21st August 2024 under certificate of urgency and supported by affidavit sworn by Stephen Kingori seeking the following Orders:a.Spent.b.That the Tribunal be pleased to review, vacate and/or set aside the summary Judgement dated 19th July 2024. c.That the Tribunal be pleased re-instate the Appeal herein for hearing.d.Costs of the Application be awarded to the Applicant.

2. The Application was supported by an Affidavit sworn by Mr. Thomas Mr. Stephen Kingori premised on the following grounds:i.That the Tribunal rendered a summary judgement in the Appeal herein citing the fact that the Appeal was not competently before the Tribunal as the Applicant had not paid the undisputed taxes prior to filing of the Appeal.ii.That the Applicant has cured its procedural malfeasance by paying the undisputed taxes.iii.That the Applicant has a right to be heard on merit on the substantive issues raised in the Appeal.iv.That the parties had already filed submissions on the substantive matters and there will be no prejudice if the submissions are considered.v.That the Application herein has been made timeously and without unreasonable delay.vi.That the Respondent will not suffer any prejudice if the orders sought are granted.

3. The Applicant relied on its written submissions dated 28th November 2024. The Applicant cited the cases of Salsa Global Investment Co Ltd v Commissioner of Domestic Taxes (Appeal 254 of 2021) [2023] KETAT 164 (KLR) and VoghjiyaniEnterprises Limited v Commissioner of Domestic Taxes (Appeal 417 of 2023) [2024] KETAT 1305 (KLR) to submit that the Tribunal has powers to decline making findings on substitutive issues if the appeal is irregular.

4. The Applicant submitted that after regularising the appeal, a tax payer can file an application to reinstate an appeal where the same is struck out. In this regard, the Applicant relied on the cases of Salsa Global Investment Co ltd v the Commissioner for Domestic Taxes TAT MISC No. E016 of 2023; Registered Trustees of the Agricultural Society of Kenya v Commissioner of Domestic Taxes TAT No. 411 of 2018; and Stecol Corporation Limited v Susan Awuor Mudemba [2021] eKLR.

5. The Applicant submitted that whereas it filed this Appeal without first paying the undisputed taxes or making payment arrangement with the Respondent, it had regularised the matter by paying undisputed taxes, a fact acknowledged by the Respondent. Among other case laws, the Applicant cited the case of Stecol Corporation Limited v Susan Awuor Mudemba [2021] eKLR where the Court observed that it is a matter of judicial notoriety that litigants are at times victims of wrong legal counsel and that the same should not be visited upon the litigants.

6. The Applicant submitted that the Respondent in its replying affidavit has not demonstrated the prejudice it would suffer if the Appeal herein was re-instated and heard on merit. It submitted that both parties have already submitted on the substantive aspect of the Appeal and all the Tribunal needs to do is to consider the submissions as filed and that no further delay will be occasioned to the Respondent.

7. It submitted that the orders sought are to vacate, vary or set aside the decision of this Tribunal. It relied on Rule 19 of the Tax Tribunal Rules to submit that the Rules expressly grant this Tribunal jurisdiction to set aside or vary or review its own decisions to meet the ends of justice. The Applicant also submitted that although there is no express provisions for re-instatement of the Appeal for hearing under the rules, Rule 27 grants the Tribunal wide latitude to frame up its own rules in deciding on how to proceed with Applications not expressly provided for by the rules.

8. The Applicant further relied on Article 159 of the Constitution of Kenya 2010 (hereinafter “the Constitution”) to submit that substantive justice should not be sacrificed at the altar of procedural technicalities.

9. In response to the Application, the Respondent filed its replying affidavit sworn by Hellen Njoroge dated 27th November 2024 wherein the Respondent opposed the application on the following grounds:a.That the Tribunal rendered judgment on 19th July 2024 striking out the Applicant’s Appeal based on Section 52(2) of the Tax Procedures Act, Cap 469B of the Laws of Kenya (hereinafter “TPA”).b.That failure by the Applicant to comply with this mandatory statutory requirement rendered the Appeal incompetent from the outset. That this Tribunal acted within its powers under Rule 20 of the Tax Appeals Tribunal (Procedure) Rules, 2015, which empowers the Tribunal to strike out matters that are not properly before it.c.That while the Applicant asserted that it has since paid the undisputed taxes, that belated action cannot cure the procedural default, as compliance with statutory timelines and obligations under Section 51 of the TPA, Article 47 of the Constitution and Section 9(4) of the Fair Administrative Action Act, CAP 7L of the Laws of Kenya (hereinafter “FAAA”) is critical.d.That the Applicant has not provided compelling reasons to warrant a review, vacating, or setting aside of the Tribunal’s judgment.e.The Applicant’s claim that the Appeal is now competently before the Tribunal is misconceived as procedural lapses, particularly on jurisdictional grounds, cannot be rectified retrospectively. The Tribunal’s jurisdiction was ousted at the time of filing due to the Applicant's non-payment of undisputed taxes.f.That while the Applicant asserted a right to be heard under Article 50 of the Constitution, this right must be exercised within the confines of procedural and substantive law, including compliance with mandatory statutory prerequisites.g.That the filing of submissions by the parties did not confer jurisdiction where the same is lacking. The Tribunal’s judgment was based on the law, not the stage of pleadings or submissions.h.That the Respondent will suffer prejudice if the orders sought are granted, as it will result in unnecessary delays and increased costs of litigation contrary to the principle of expeditious resolution of disputes under Article 159(2)(b) of the Constitution.i.That the Applicant did not demonstrate any sufficient cause or exceptional circumstances to justify the invocation of the Tribunal’s review powers under Rule 19 of the Tax Appeals Tribunal (Procedure) Rules, 2015. j.That in light of the foregoing, the Respondent prayed that the Tribunal dismisses the Applicant’s Notice of Motion dated 21st August 2024 in its entirety with costs.k.That revenue collection is vital to the country’s economic development, and it is in the public interest for this Tribunal to dismiss the application and enable the Respondent to collect due taxes.l.The Respondent’s statutory mandate must not be obstructed by the Applicant's negligence, and public interest calls for the dismissal of this application.

10. The Respondent also filed written submissions dated 16th December 2024 wherein it submitted that the Tribunal rightly struck out the appeal because the Applicant failed to comply with the provisions of the law. The Respondent relied on the case of Speaker of the National Assembly v Karume [1992] eKLR to submit that litigants ought to adhere to statutory provisions.

11. Whereas the Applicant asserted that the payment of undisputed taxes after filing the appeal cures the procedural lapse. This assertion is flawed, as jurisdiction cannot be conferred retroactively. It cited the Supreme Court in Samuel Kamau Macharia & Another v Kenya Commercial Bank Limited & 2 others [2012] eKLR (Restated in DPL Festive Limited v Okuny (Civil Appeal E219 of 2024) [2024] KEHC 13403 (KLR) (31 October 2024) where it held as follows:“A court’s jurisdiction flows from either the Constitution or legislation or both. A court of law cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law."

12. The Respondent submitted that at the time of filing, the Tribunal lacked jurisdiction due to the Applicant’s non-compliance with Section 52(2) of the TPA and that this jurisdictional defect cannot be cured post hoc.

13. The Respondent also submitted that Rule 19 of the Tax Appeals Tribunal (Procedure) Rules, 2015 permits review only in exceptional circumstances but the Applicant has not demonstrated sufficient cause, as required under the rule. It relied on the case of National Bank of Kenya Limited v Ndungu Njau [1997] eKLR to support the passion that a review may be granted whenever the court considers that it is necessary to correct an apparent error or omission on the part of the court.

14. The Respondent further submitted that Article 159(2) (b) of the Constitution emphasizes the expeditious resolution of disputes. Granting the Applicant’s prayers would result in undue delays contrary to this principle.

15. The Respondent prayed that this Application be dismissed with costs to the Respondent as the same is devoid of any merit.

Analysis And Findings 16. The Tribunal issued the judgement dated 19th July 2024 wherein it struck out the Applicant’s appeal on grounds that the Applicant failed to pay undisputed tax prior to filing the appeal as required under section 52(2) of the TPA which provides as follows:‘‘52(2)A notice of appeal to the Tribunal relating to an assessment shall be valid if the taxpayer has paid the tax not in dispute or entered into an arrangement with the Commissioner to pay the tax not in dispute under the assessment at the time of lodging the notice.’’

17. The Tribunal notes that the Applicant had four prayers one of which was spent. The Applicant’s second prayer to the Tribunal was to ‘‘review’’, ‘‘vacate’’ and/or ‘‘set aside’’ the judgment and ‘‘re-instate’’ the appeal; neither of the remedies prayed for are available to the Applicant on the basis that an application for review would be out of time pursuant to provisions of Section 29A (1) of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) as the application for review was filed beyond the seven(7) day statutory requirement.

18. The Tribunal does not have jurisdiction to grant the prayer of the Applicant to vacate and or set aside the its Decree or Orders pursuant to provisions of Section 29A (2) of TATA as the Applicant did not demonstrate that there is an apparent mistake or error on the face of the Decree or Orders.

19. The Tribunal’s view is that the Applicant can only prosecute this Appeal by filing its notice of appeal de novo pursuant to the relevant statutory provisions since the Appeal was struck out pursuant to the provisions of section 52(2) of the TPA. Accordingly, the Tribunal is lacks jurisdiction to make any of the Orders sought.

Disposition 20. Based on the foregoing analysis, the Tribunal finds that the Application lacks merit and accordingly proceeds to make the following Orders:a.The Application dated 21st August 2024 be and is hereby dismissed; andb.No orders as to costs.

21. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 17TH DAY OF JANUARY, 2025. CHRISTINE A. MUGACHAIRPERSON.. ……………………………………….……………..BONIFACE K. TERER ELISHAH N. NJERUMEMBER MEMBER………….…..…………… ……….……..…………….EUNICE N. NG’ANG’A OLOLCHIKE S. SPENCERMEMBER MEMBERRULING -MISC TAT APPEAL NO. E444 OF 2023 -KAMAHUHA LIMITED V COMMISSIONER OF DOMESTIC TAXES Page 5 of 5