https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/116

Kayser Investments Ltd v Commissioner of Domestic Taxes (Tax Appeal E910 of 2025) [2026] KETAT 116 (KLR) (29 June 2026) (Ruling) Neutral citation: [2026] KETAT 116 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E910 of 2025 RM Mutuma, Chair, JM Malla, G Ogaga & T Vikiru, Members June 29, 2026 Between Kayser Investments Limited Appellant and Commissioner of Domestic Taxes Respondent Ruling 1.The Applicant filed a Notice of Motion dated 16th April 2026 and filed on 20th April 2026 seeking the following Orders: -a.That leave be and is hereby granted to the Appellant to file and serve a Supplementary Statement of Facts together with the specific documents annexed thereto in terms of the draft Supplementary Statement of Facts and documents annexed herewith.b.That corresponding leave be and is hereby granted to the Respondent to file and serve a further Statement of Facts in reply and documents if they so wish such time as this Tribunal deems expedient.c.That this Honourable Tribunal be pleased to issue any other/further order as it considers just and fit to grant.d.That the costs of this Application be provided for. 2.The Application, which is supported by an Affidavit sworn by Washib Abdul, the Applicant’s Director dated 16th April 2026 and filed on 20th April 2026, is premised on the following grounds: -A.That the Respondent has mischaracterized the Dispute.a.That in its Statement of Facts dated 30 September 2025, the Respondent deliberately and materially recast the nature of this dispute from one concerning the legality and correctness of its tax assessments to one alleging the Appellant's non-compliance with filing obligations. This recharacterisation is factually false and legally untenable.b.That the Respondent's assertion that the Appellant failed to file income tax returns for 2019 and 2020 is not merely inaccurate it is a conscious inversion of the truth. The Appellant's inability to file those returns arises directly, exclusively, and as a matter of systemic necessity from the Respondent's own failure to implement a valid, final, and binding Judgment of the High Court.B.The Respondent used an unlawful Assessment type to deny the Appellant due process.c.That the Respondent did not raise the impugned assessment through the lawful assessment mechanism. Instead of issuing an additional assessment under Section 29 or 31 of the Tax Procedures Act - which would have triggered the full due process chain of audit, objection, and objection decision — the Respondent deliberately categorised the assessment as a self-assessment. A self-assessment is, by definition, an act of the taxpayer: it is the taxpayer's own voluntary declaration of liability under Section 26 of the Tax Procedures Act. The Respondent has no legal authority to file a self-assessment in the taxpayer's name. Ву doing so, the Respondent arrogated to itself a power it does not possess.d.That the consequence of this deliberate mislabeling was to deny the Appellant the due process rights that would have been available under the correct assessment type. Had the Respondent raised a proper additional assessment or default assessment, the Appellant would have been entitled to: receive notice of the assessment; lodge a formal objection; present its documentation and arguments during the objection process; receive а reasoned objection decision; and then appeal that decision to this Honourable Tribunal on properly canvassed grounds. None of this occurred. The assessment type chosen by the Respondent was designed to bypass all of these protections.e.That it is therefore wrong to ask why the Appellant did not produce documentation at the objection stage. The objection stage as it properly should have existed was eliminated by the Respondent's own choice of assessment type. The documents which the Appellant now seeks to introduce are precisely the documents it would have produced during a proper audit and objection process, had the Respondent followed the law. The absence of those documents from any prior formal process is a direct consequence of the Respondent's denial of due process, not of any failure on the Appellant's part.C.The Respondent is in continuing contempt of High Court judgementf.That on 18 August 2023, the High Court delivered Judgment in Kayser Investments Limited v Commissioner of Domestic Taxes, Income Tax Appeal No. E112 of 2021, nullifying the Respondent's Objection Decision and the underlying additional assessment for the years 2016-2018. That Judgment is valid, final, and binding.g.That the Respondent has failed, refused, and/or neglected to give effect to that Judgment. The nullified assessment for the tax period 2016-2018 remains active on the iTax system to this day. The Respondent is in continuing and deliberate breach of a High Court Judgment and is the subject of pending contempt proceedings instituted by the AppellantD.The Respondent’s own conduct has made compliance technically impossible.h.That the continued presence of the nullified 2016-2018 assessment on Respondent's iTax platform has created a systemic inconsistency specifically, a loss carry-forward mismatch - which prevents the Appellant from validating and filing its income tax returns for 2019 and 2020. This is matter of choice or neglect. It is a technical impossibility caused by the Respondent's own conduct.i.That the Appellant has made repeated bona fide attempts to file the said returns and has been blocked each time by the Respondent's own system. The Appellant has brought this to the Respondent's attention through formal correspondence. The Respondent has failed to act.E.The Respondent cannot benefit from its own wrongj.That it is a principle of universal application in law and equity that no party may rely on a state of affairs created by its own unlawful conduct to assert а claim or defence against the party it has wronged. The maxim nemo ex suo delicto meliorem suam conditionem facere potest - no one may improve their position through their own wrong —— applies with full force to this case.k.That the Respondent's entire case of non-compliance is founded upon a state of affairs which the Respondent itself created by disobeying a High Court Judgment. A tribunal of justice cannot be permitted to become an instrument through which a party derives advantage from its own contempt of court.F.The Respondent’s position is internally contradictory and self-defeating.l.That the Respondent simultaneously alleges non-filing of returns while acknowledging that it itself proceeded to file returns on the Appellant's behalf pursuant to Section 29 of the Tax Procedures Act. This is a direct and irreconcilable contradiction. The Respondent's invocation of Section 29 constitutes a formal statutory determination that the Appellant had failed to file. That determination is itself an admission confirming that the Appellant was unable to file independently - which is the precise position the Appellant has always maintained.m.That the Respondent cannot in law, in logic, or in equity assert failure to file as а ground of non-compliance against the Appellant while simultaneously acknowledging that it intervened under Section 29 to file on the Appellant's behalf. Furthermore, if returns have been filed by the Respondent under Section 29, the premise that no returns exist is factually wrong. Respondent's case is internally self-defeating on this point alone.G.The Respondent was fully apprised of all these matters during ADR and cannot claim prejudice.n.That the Appellant engaged in good faith in the ADR process provided for under the Tax Procedures Act. During those proceedings, the Appellant placed before the Respondent the very matters, arguments, and documents that are now sought to be formally introduced by way of this Supplementary Statement. The Respondent was made fully aware of the illegality of the assessment type; the system blockage caused by its failure to implement the High Court Judgment; the Appellant's inability to file returns; and the documentation underlying the Appellant's tax position. The Respondent refused to engage honestly with those matters and maintained its position despite the evidence presented.o.That the Respondent cannot now claim prejudice or surprise in respect of any document or argument contained in the Supplementary Statement. Every element of this application was presented to the Respondent during the ADR process. The Respondent chose to reject it. The Respondent has had full notice of, and full opportunity to consider, everything that the Appellant now seeks to place before this Honourable Tribunal. There is no ambush, no new material, and no prejudice — there is only the Respondent being required to answer, before an independent Tribunal, for conduct it was already confronted with and chose to persist in.H.This Application does not seek to fill evidentiary gaps – the supervening nature of the material distinguishes it entirely.p.That the power of this Honourable Tribunal to receive additional material is not engaged here to cure any omission or deficiency in the Appellant's original case. The Appellant was not invited to produce these documents at any prior stage, did not fail to produce them when required, and is not seeking a second opportunity to make a case it failed to make before the Commissioner. Those concerns have no application to this case.q.That Further, this application does not engage Section 56(3) of the Procedures Act, which restricts a taxpayer to the grounds stated in the original objection unless the Tribunal grants leave to add new grounds. The Appellant is not adding new grounds of appeal. The grounds of appeal remain precisely as pleaded in the Memorandum of Appeal. What the Appellant seeks to introduce are supervening facts that respond to new factual allegations raised by the Respondent in its own Statement of Facts -allegations that did not exist and could not have been addressed in the original grounds of objection. Section 56(3) governs grounds of appeal; it has no application to responsive factual material introduced to rebut the Respondent's own pleaded case.I.The supplementary Statement of facts is necessary, proportionate and admissible.r.That this Honourable Tribunal has wide discretionary jurisdiction under Rule 10 of the Таx Appeals Tribunal (Appeals to the Tribunal) Rules, 2015 to permit a party. at any stage of the proceedings, to file additional material and/or amend its pleadings on such terms as it considers just.s.That the present application is brought before the commencement of the hearing and is therefore properly before the Tribunal. The Supplementary Statement of Facts does not introduce any new or inconsistent cause of action but is strictly confined to responding to factual matters raised by the Respondent in its Statement of Facts and to placing before the Tribunal material necessary for the fair and complete determination of the Appeal.t.That the Respondent will suffer no prejudice. Every matter introduced arises from the Respondent's own conduct, of which it has full and detailed knowledge. The Respondent cannot claim surprise about the consequences of its own deliberate actions.J.The interests of justice and the constitution compel this application to be allowed.u.That unless this Honourable Tribunal is apprised of the true factual position, this Appeal risks being determined on the false premise of taxpayer default -when the evidence will demonstrate that compliance was made technically and systemically impossible by the Respondent's own deliberate noncompliance with a binding High Court Judgment. That outcome would be a manifest miscarriage of justice.v.That the Respondent's conduct - asserting non-compliance against the Appellant for failing to do that which the Respondent's own unlawful system configuration made impossible — itself constitutes unfair administrative action contrary to Article 47 of the Constitution of Kenya 2010. Article 50 guarantees a fair hearing. Article 159(2)(d) requires justice to be administered without undue regard to procedural technicalities. All of these provisions require this application to be allowed.w.That this Honourable Tribunal is a creature of statute established to administer tax justice. It cannot and must not be made an instrument through which a party derives advantage from its own contempt of a superior court.to permit the Respondent's case to proceed on its current false premise would be to subordinate the authority of the High Court's Judgment to the convenience of the party that chose to disobey it.x.That it is in the overriding interests of justice, fairness, and the rule of law that this Application be allowed. 3.The Respondent filed a Notice of Preliminary Objection by Ibrahim Said Mutua, Advocate of the Respondent dated 21st April 2026 and filed on 29th April 2026 citing the following as the grounds of opposition to the Application: -y.That this Honourable Tribunal lacks jurisdiction to grant Orders staying its own proceedings.z.That the jurisdiction of this Honourable Tribunal is statutory and limited to powers expressly conferred by the Tax Appeals Tribunal Act No. 40 of 2013 and that no provision of the said Act grants this Tribunal powers to stay its own proceedings.aa.That this Hounourable Tribunal being a creature of statute can only act within the four corners of its establishing Act. To grant the orders sought would be ultra vires the Tax Appeals Tribunal Act 2013. Analysis and Findings 4.The Tribunal has carefully considered the Applicant’s Notice of Motion dated 16th April 2026 and filed on 20th April 2026, the Supporting Affidavit by Washib Abdul and the Respondent's Preliminary Objection. 5.The Tribunal notes that the Notice of Motion is primarily for the Appellant/Applicant seeking leave to file a Supplementary Statement of Facts together with the particular documents annexed thereto. The Applicant further seeks corresponding leave for the respondent to file and serve a further Statement of Facts and documents in reply, should the Respondent wish to do so. 6.The Appellant/Applicant contended that the Respondent, in its Statement of Facts, deliberately and materially recast the nature of this dispute from one concerning the legality and correctness of its tax assessment to one alleging the Appellants' non-compliance with filing obligations. 7.It further contended that its inability to file returns for 2019 and 2020 arises directly, exclusively and as a matter of systemic necessity from the Respondent’s own failure to implement a valid, final and binding judgement of the High Court. 8.The Respondent opposed the Application through a Preliminary Objection on the grounds that the Tribunal lacks jurisdiction to grant orders staying its own proceedings, that the jurisdiction of the Tribunal is statutory, and that no provision of the Tax Appeals Tribunal Act empowers the Tribunal to stay its own proceedings. 9.The law on preliminary objections is settled. In Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, the Court held that a preliminary objection consists of a pure point of law which is argued on the assumption that all facts pleaded by the other side are correct. A preliminary objection should not be raised where facts have to be ascertained or where the Tribunal is called upon to exercise discretion. 10.The Respondent’s Preliminary Objection is premised on the argument that the Applicant seeks a stay of proceedings and that the Tribunal lacks jurisdiction to stay its own proceedings. 11.The Tribunal has perused the Notice of Motion dated 16th April 2026. The principal prayer before the Tribunal is for leave to file and serve a Supplementary Statement of Facts together with documents annexed thereto. The Applicant does not seek an order staying the Tribunal’s proceedings. 12.The Respondent’s objection therefore proceeds on a misapprehension of the nature of the Application. The Tribunal is not being invited to stay its proceedings. It is being invited to exercise its discretion to allow the Applicant to place additional pleadings and documents on record before the substantive hearing. 13.Consequently, the issue raised by the Respondent does not arise from the Application before the Tribunal. The Preliminary Objection is therefore not properly taken as it attacks a prayer that is not before the Tribunal. 14.The Tribunal observes that the dispute raised in the Application touches on the nature of the impugned assessment, the effect of a High Court judgment, the iTax treatment of prior assessments, the Applicant’s inability to file returns for 2019 and 2020, and whether the Respondent’s pleadings introduced factual matters which require a response. 15.These are not matters that can be conclusively determined at this interlocutory stage. However, they are matters that appear relevant to the fair and complete determination of the substantive Appeal. 16.The Tribunal is guided by the general principle that amendments and supplementary pleadings should be freely allowed where they are necessary for determining the real question in controversy, provided that they do not introduce a wholly new cause of action, do not occasion irremediable prejudice to the opposing party, and are sought in good faith. 17.This principle was well elucidated in the case of Harrison C. Kariuki v Blueshield Insurance Company Ltd [2006] eKLR in which the Court referred to the Court of Appeal decision in Central Kenya Ltd v Trust Bank Ltd [2003] EALR 365 and held that:-“The guiding principle in applications to amend pleadings is that the same will be liberally and freely permitted unless prejudice and injustice will be occasioned to the opposite party. There will normally be no injustice if the other party can be compensated by an appropriate award of costs for any expense, delay or bother occasioned to him. The main reason for this is that it be in the interests of justice that the amendments sought be permitted in order that the real question in controversy between the parties be determined.” 18.In the present matter, the Application has been brought before the substantive hearing of the Appeal. The Respondent will therefore have an opportunity to examine the Supplementary Statement of Facts and accompanying documents, file a Further Statement of Facts, and respond to the matters raised therein. 19.The Tribunal is not persuaded that the Respondent will suffer prejudice that cannot be cured by granting corresponding leave to respond. On the contrary, declining the Application may result in the substantive Appeal being heard without material that may assist the Tribunal in determining the real issues in dispute. 20.Accordingly, the Tribunal finds that the Applicant has established a sufficient basis for the grant of leave to file and serve a Supplementary Statement of Facts and accompanying documents. Disposition 21.Based on the foregoing, the Tribunal finds that the Application is meritorious and accordingly proceeds to issue the following Orders: -a.The Notice of Motion Application dated 16th April 2026 and filed on 20th April 2026 be and is hereby allowed.b.The Respondent’s Preliminary Objection dated 21st April 2026 and filed on 29th April 2026 be and is hereby dismissed.c.Leave be and is hereby granted to the Applicant to file and serve a Supplementary Statement of Facts together with the specific documents annexed thereto within 7 days of the date of this Ruling.d.The Respondent shall be at liberty to file and serve a Further Statement of Facts and any documents in response within fourteen (14) days of service.e.No Orders to costs It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 29TH DAY OF JUNE 2026.……………………………..….ROBERT M. MUTUMACHAIRMAN……………………………… ……..….……..……………..JIMMY M. MALLAMEMBER……………………………… ……..….……..……………..GLORIA A. OGAGAMEMBER……………………………..….DR. TIMOTHY B. VIKIRUMEMBER