[2023] KETAT 591 (KLR)

Mburu v Commissioner of Domestic Taxes (Miscellaneous Appeal E105 of 2023) [2023] KETAT 591 (KLR) (19 October 2023) (Ruling)

Neutral citation: [2023] KETAT 591 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Appeal E105 of 2023

E.N Wafula, Chair, EN Njeru, M Makau, E Ng'ang'a & AK Kiprotich, Members

October 19, 2023

Between

John Njoroge Mburu

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The application which was by way of a Notice of Motion dated 28th July 2023 and filed under a certificate of urgency on 15th August 2023 is supported by an Affidavit sworn by the Appellant, John Njoroge Mburu, sought for the following Orders:-a.Spentb.The Applicant be granted an extension of time with regard to filing the Notice of Appeal and Memorandum of Appeal and Statement of Facts of this Honourable Tribunal out of time.c.The Honourable Tribunal do issue an order lifting, staying, vacating and/or setting aside the Respondent’s Agency Notices dated 27th April 2022 issued to Absa Bank, Co-operative Bank of Kenya Limited, Family Bank Limited, Kenya Commercial Bank, and Equity Bank Limited and any other of the Appellant’s bankers requiring them to pay Kshs 1,291,098. 00 pending the hearing and determination of this application and the intended Appeal herein.d.The Notice of Appeal dated 4th November 2022 and filed on July 2022 be deemed as duly filed and served.e.The cost of this application be in the cause.

2. The application is premised on the following grounds, that:-a.On 27th April 2023, the Respondent issued Agency Notices to the Applicant’s bankers Absa Bank, Co-operative Bank of Kenya Limited, Judicial Department, Family Bank Limited, Kenya Commercial Bank, and Equity Bank Limited under Section 42 of the Tax Procedures Act, 2015 in the enforcement of alleged taxes due amounting to Kshs 1,291,098. 00 without notice to the Applicant. As a result, the Applicant is unable to access its funds to its detriment.b.Being dissatisfied with the Respondent’s assessments raised on 27th April 2022, the Applicant filed its objections on 24th June 2022 and the Respondent acknowledged the Objections on 24th June 2022. c.Upon subsequent engagements, the Respondent finally issued its objection decision dated 23rd August 2022. d.The Applicant delayed in the compilation of the relevant supporting documents due to the fact that the registered email in use and Narok address were not in its email address and that, limited access to its correspondences.e.The prescribed statutory time to lodge the Appeal with the Tribunal has since lapsed/expired.f.The Applicant did not lodge the appeal in good time and only became aware of the Agency Notices issued to its banks.g.The Applicant has urgently approached this Honorable Tribunal to preserve its right to appeal against the objection decision. That should this application not be certified and heard on a priority basis, the Applicant stands to lose its right of access to justice and be heard on its appeal due to circumstances that are not of its doing.h.If this application is not allowed, the Applicant will suffer irreparable loss and damage if the orders sought herein are not issued because the taxes being demanded are erroneous as the sales in returns disallowed have been adequately supported in the form of documentary evidence and the intended Appeal is merited and stands high chances of success.i.The delay in approaching this Honourable Tribunal for redress has not been inordinate as the Applicant had no access to the email and box office address in use that made the Appellant/Applicant were issued by the Respondent against the Appellant/Applicant’s bank accounts.j.The Appellant/Applicant is desirous of pursuing its Appeal with the Tribunal by availing all the documents requested for further review by this Honourable Tribunal or the ADR department as may be directed.k.The tax assessments by the Respondent are not only excessive and unreasonable but also fail to reflect the actual trading position of the Applicant.l.The application will not prejudice the Respondent in any way but will provide an opportunity to this Honourable Tribunal to decide the issues in dispute on merit and ensure dispensation of justice.m.The Respondent will not suffer any prejudice if the Orders sought are granted.n.The Applicant stands to suffer irreparable loss and damage if the orders sought in this Application are not granted as the Respondent may proceed to enforce the Agency Notices.

The Applicant’s Submissions 3. The Appellant in its written submissions dated 15th August, 2023 and filed on the 28th August, 2023 made submissions as hereunder.

4. He submitted that the thirty days’ statutory period lapsed before he could file his Appeal and there has been no unreasonable delay in bringing the Application.

5. He urged that the application is premised on the reason that he was not able to file within time due to the fact that the registered emailtwinselectricallitd@gmail.com is not his email address and he had limited access to his correspondences.

6. He asserted that due to inaccessibility to his email he was unable to routinely check correspondences from the Respondent and would only learn of the developments when agency was issued to all his bankers and customers.

7. He stated that it would be unfair to deny him the right to appeal the Respondent’s decision as the documents provided clearly attested to the Applicant’s argument.

8. He further stated that the Respondent has failed to appreciate that the Applicant provided all the required documents as requested and only came to be aware of the decision once agency notices had been executed and cited Section 51(1) and (2) of the Tax Appeals Tribunal Act.

Response to the Application 9. The Respondent filed a Replying Affidavit sworn by Cherutich Ismael Kibet, its officer, on 18th August 2023 and filed on 24th August 2023 citing the following as the grounds for opposition.a.That the Respondent raised assessments on 27th April 2022 of Kshs 729,433. 12 for Value Added Tax for December 2016. That the assessment was issued based on a variance between the income tax turnover and sales declared in the Applicant’s VAT returns.b.That the Applicant lodged an objection to the assessments on 24th June 2022. c.That the Respondent issued an objection decision on 23rd August 2022 fully rejecting the Objection lodged.d.That on 4th November 2022 the Respondent lodged a Notice of Appeal to the Tribunal indicating that it intended to dispute the objection decision issued on 23rd August 2022. e.That the Applicant failed to file a substantive appeal within the timelines specified in Section 13(2) of the Tax Appeals Tribunal Act.f.That the Applicant has not provided a reason to warrant an extension of time to file an Appeal subject to Section 13(4) of the Tax Appeals Tribunal Act.g.That the Applicant has not demonstrated why it deserves a favourable discretion of this honourable Tribunal and the application should be dismissed with costs to the Respondent.h.That the provisions of Section 9 of the Tax Procedures Act obligates a taxpayer to supply information to the Commissioner upon a change of particulars and the objection decision was shared to the registered email address of the Applicant’s email and there has been no change in particular submitted by the Applicant.i.That the Respondent upon the Applicant’s failure to lodge an appeal issued agency notices to various financial institutions with a view to enforcing collection of the taxes due.j.That the Respondent has not flouted any procedure or acted contrary to the law. That due process has been followed by the Respondent in assessing, demanding and enforcing collection of taxes from the Applicant.k.That it is in the interest of the public for the Respondent to recover tax in order to finance the growth and development of the nation which is a very important public duty and for which the public must have an immense interest.l.That the application as filed is incompetent, bad in law, fatally defective and is otherwise an abuse of this Honourable Tribunal’s process and should be struck out.

Respondent’s submissions On whether the Applicant has met the threshold for an extension of time to file an appeal. 10. The Respondent cited Section 13(3) and (4) of the Tax Appeals Tribunal Act and submitted that the grant of an application for an extension of time to file an Appeal is discretionary and conditional on demonstrable reasonable grounds by an Applicant seeking refuge under the provisions such as absence from Kenya, sickness, or other reasonable cause.

11. It relied on the case of Nicholas Kiptoo Arap Korir Salat v. Independent Electoral and Boundaries Commission and 7 Others [2014] eKLR where it was held that:-“It is incumbent upon the applicant to explain the reasons for delay in making the application for extension and whether there are any extenuating circumstances that can enable the Court to exercise its discretion in favour of the applicant.”

12. It further relied on the case of Commissioner of Domestic Taxes v Mayfair Insurance Company Limited (2017)eKLR where the court opined:“Effectively, the court’s powers and discretion to extend time is unlimited. It is however not to be capriciously exercised. Time, in other words, is not to be extended as a matter of right. Each case is to be viewed sui generis and on its own circumstances and facts. The starting point is that the Applicant ought to advance sufficient and reasonable grounds for any delay on its part.”

13. It submitted that the Applicant has not met the threshold for the grant of reliefs sought.

14. It contended that the Applicant filed a Notice of Appeal on 4th November 2022 indicating its intention to appeal against the decision of the Commissioner.

15. It asserted that the Applicant is obligated by law under the provisions of Section 9 of the Tax Procedures Act to update its records including its contact information and update the Respondent upon such change of contact information.

16. It argued that Applicant having failed to submit any change in particulars, is undeserving of the Tribunal’s discretion as the Respondent communicated to the Applicant’s last known address which precipitated in the Applicant filing a Notice of Appeal in November 2022.

17. The Respondent submitted that the Applicant is being disingenuous and is attempting to mislead the Tribunal by misstating facts and the Applicant having filed the Notice of Appeal is a clear indication that the Applicant has all along been aware of the Objection decision despite any purported challenges accessing its email and is guilty of laches, having no desire to progress the appeal any further.

18. It reiterated that the Applicant is guilty of non-disclosure of material facts and is therefore undeserving of the Tribunal’s discretion, as it has not disclosed that it filed a Notice of Appeal prior to the filing of the present application.

19. It relied on the case of Jomusons Investment Limited v Commissioner of Domestic Taxes (2020)eKLR where the Tribunal cited with agreement the decision in the case of Nicholas Kiptoo Arap Korir Salat (supra) where the Supreme Court held that:-“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;”

20. It further relied on the case of Wild Lion Investments Limited v Commissioner of Domestic Taxes (Nairobi TAT Misc. App. No. 7 of 2002 where the Tribunal stated that:-“The Tribunal is unconvinced by the Appellant’s explanations for the delay, which are not supported by not any evidence, and is thus of the view that there was inordinate and unreasonable delay on the part of the Appellant. The Tribunal having made the above conclusion deems it a moot exercise to discuss the remaining tests.”

21. It asserted that the Applicant has not set out any material in its present motion to demonstrate any grounds as prescribed in the law and the Applicant has not been vigilant as there has been an inordinate delay that has not been explained to the satisfaction of the Tribunal in both filing the Memorandum and further the present application.

22. It contended that the Applicant was not interested in settling the outstanding taxes and rather than validate its objection chose to bury its head in the sand until the very last moment when the Respondent moved to collect the outstanding taxes that the Applicant rushed to the Tribunal seeking to appeal.

23. It maintained that the Applicant’s failure to file an appeal in time despite being aware of all the Respondent’s objection decision gave it the right to confirm the assessment as it has been close to one year since the Respondent issued the objection decision.

24. It reiterated that it did not operate outside the law as the taxes claimed are still owing and due, and it is therefore in the interest of justice and the general public to disallow the present application with costs to the Respondent.

25. The Respondent contended that the Applicant is guilty of laches as he dragged his feet without reasonable cause and the same is an afterthought and a gross abuse of the court process.

Analysis and Findings 26. The Tribunal is enjoined to determine the length and reason for the delay when considering an application for the extension of time to appeal out of time. The power to extend time is discretionary and unfettered but the same must be exercised judiciously and it is not a right to be granted to the Applicant.

27. In determining whether to extend time, the Tribunal was guided by the decision in the case of Leo Sila Mutiso -vs- Rose Hellen Wangari Mwangi - Civil Application No. Nai. 255 of 1997 (unreported), the Court expressed itself thus:-“It is now well settled that the decision whether or not to extend the time for appealing is essentially discretionary. It is also well settled 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 reason 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.”

28. The Tribunal, guided by the principles set out in John Kuria v Kelen Wahito, Nairobi Civil Application Nai 19 of 1983 April 10, [1984] where the court used the following criteria to consider the application:-a.Whether there is a reasonable cause for the delay?b.Whether the appeal is merited?c.Whether the application for extension has been brought without undue delay?d.Whether there will be prejudice suffered by the Respondent if the extension is granted?

Whether there is a reasonable cause for the delay? 29. In considering what constitutes a reasonable reason for the delay, the court in Paul Wanjohi Mathenge v Duncan Gichane Mathenge [2013] eKLR, held that:-“...it is clear that the discretion to extend time is indeed unfettered. It is incumbent upon the applicant to explain the reasons for delay in making the application for extension and whether there are any extenuating circumstances that can enable the Court to exercise its discretion in favour of the applicant.”

30. The Applicant submitted that the delay in approaching this Honourable Tribunal for redress has not been inordinate as the Applicant had no access to the email and the registered email twinselectricallitd@gmail.com is not his email address therefore he had limited access to his correspondences and box office address.

31. He asserted that due to inaccessibility to his email he was unable to routinely check correspondences from the Respondent and would only learn of the developments when Agency was issued to all his bankers and customers.

32. The Respondent contended that the Applicant filed a Notice of Appeal on 4th November 2022 indicating its intention to appeal against the decision of the Commissioner and asserted that the Appellant is obligated by law under the provisions of Section 9 of the Tax Procedures Act to update his records including his contact information and update the Respondent upon such change of contact information.

33. The Respondent further argued that Applicant having failed to submit any change in particulars, is undeserving of the Tribunal’s discretion as the Respondent communicated to the Applicant’s last known address which precipitated in the Applicant filing a Notice of Appeal in November 2022 and the Applicant is being disingenuous and attempting to mislead the Tribunal by misstating facts since the Applicant’s filing of the Notice of Appeal is a clear indication that the Appellant was aware of the objection decision despite any purported challenges in accessing his email and is guilty of laches.

34. The Tribunal has perused the Applicant’s pleadings and documentary evidence and has found that whereas the Applicant argued that the email address used was not his and that he could not access any correspondence from the Respondent, there is no evidence to show that the Applicant had a different email address or that the one he used was changed.

35. It is therefore the Tribunal’s finding that the reason tendered by the Applicant has not been satisfactorily established to be a reasonable cause for the delay to the Tribunal.

36. Having found as above, the Tribunal finds no need to lend itself to the remaining criterion for extension of time as the same is rendered moot.

Disposition 37. The Tribunal in the circumstances finds the application is not meritorious and finds it in favour of the Respondent and accordingly proceeds to make the following Orders:-a.The application for the extension of time is hereby dismissed;b.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF OCTOBER, 2023ERIC NYONGESA WAFULACHAIRMANELISHAH N. NJERUMEMBERMUTISO MAKAUMEMBEREUNICE N. NG’ANG’AMEMBERABRAHAM K. KIPTROTICHMEMBER