[2024] KETAT 1097 (KLR)

Merry Chem Company Limited v Kenya Revenue Authority (Tax Appeal E347 of 2024) [2024] KETAT 1097 (KLR) (5 July 2024) (Ruling)

Neutral citation: [2024] KETAT 1097 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E347 of 2024

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

July 5, 2024

Between

Merry Chem Company Limited

Appellant

and

Kenya Revenue Authority

Respondent

Ruling

1. The Appellant moved the Tribunal vide a Notice of Motion application dated 19th March 2024 that was filed on 24th March 2024 and which is supported by an Affidavit sworn on 19th March 2024 by Thomas N. Maosa, an Advocate for the Appellant, seeking for the following Orders: -a.That the Appellant be granted leave to lodge its Notice of Appeal and Memorandum of Appeal out of time and/or the statutory time for lodging the Memorandum of Appeal be extended.b.That the annexed Memorandum of Appeal be deemed as filed subject to the payment of the requisite filing fees.c.Any other Orders(s) which the Tribunal may be pleased to grant in the circumstances.

2. The application is premised on the grounds, that: -i.The Appellant lost its objection to the assessment by the Respondent.ii.The Appellant had 14 days within which to lodge the Memorandum of Appeal.iii.The liability on part of the Applicant was assessed in the sum of 15,563,087. 00. iv.The Appellant’s bank accounts had been frozen by the Respondent hence its efforts to raise the requisite sum required for the appeal process was hampered.v.The Appellant has however been able to raise the required funds for the appeal process, hence the prayer that leave be granted to lodge the Memorandum of Appeal out of time.vi.The prosecution of the Appeal is central to the Appellant’s surviving in business when taking into account present economic hardships being a spill-over from the Covid-19 pandemic.vii.The Appellant is desirous to prosecute the Appeal to its logical conclusion, which may entail resolution through Alternative Dispute Resolution.

3. The Respondent upon being served with the instant application filed a Replying Affidavit sworn on 3rd April 2024 and filed on an even date by Sharlyne Risper Omido, an officer of the Respondent, which response raised the following grounds, that;i.The Respondent generated assessments on 11th November 2022 and 16th November 2022 for VAT purposes to which the Appellant objected on 9th December 2022. ii.The Respondent requested the Appellant to provide supporting document to the objection vide the email dated 14th December 2022 with a reminder dated 23rd December 2022, the Appellant failed to provide the documents subsequently the Respondent issued notices of confirmation of assessment on 1st February 2023. iii.The Appellant did not appeal the confirmed assessment notices within thirty (30) days and only filed the instant application on 25th March 2024. iv.The delay of more than 2 years is inordinate as no credible reason has been advanced by the Applicant to warrant extension of time to file an appeal. Further, an application of this nature requires an Applicant to prove a reasonable cause.v.The application as filed is incompetent, bad in law, fatally defective, an abuse of the Honourable Tribunal’s process, discloses not reasonable cause of action, is totally unfounded and ought to be dismissed with costs to the Respondent.

Parties Submissions 4. The parties despite being directed by the Tribunal to file and exchange with each other their respective written submissions, the Appellant did not file its submissions.

5. The Respondent in its written submissions dated and filed on 9th April 2024, submitted that the Appellant did not comply with Section 13 of the Tax Appeals Tribunal Act.

6. The Respondent reiterated that the Appellant had not advanced any viable reason for the late filing of the intended Appeal. That the delay was inordinate and inexcusable.

7. The Respondent placed reliance on Rule 10 of the Tax Appeals Tribunal (Procedure) Rules 2015, which the Respondent submitted fortifies Section 13 of the Tax Appeals Tribunal Act.

8. The Respondent further relied on the case of Income Tax Appeal No. 31 of 2017 Commissioner of Domestic Taxes vs. Mayfair Insurance Company Limited [2017] eKLR.

Analysis and Findings 9. The application seeks, an order for the extension of time for filing of the appeal out of time and that the annexed Memorandum of Appeal be deemed as properly filed.

10. The Tribunal draws its direction on applications of this nature from Section 13 of the Tax Appeals Tribunal Act, Section 13 (3) and (4) provide as thus:-“(3)The Tribunal may, upon application in writing or through electronic means, extend the time for filing the notice of appeal and for submitting the documents referred to in subsection (2).(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.”

11. Similarly, Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015, provides that:-“(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.”

12. From the above, the Appellant is obligated in law within the confined of Section 13 (4) of the TAT Act to demonstrated the grounds upon which its application is mounted.

13. The Respondent posited that the Appellant did not advance any reasonable ground why it could not lodge its Appeal, noting that its decision was issued on 1st February 2023.

14. The Tribunal has perused the Applicant’s grounds set forth on the face of the application as well as the averments in the contents of the Affidavit in support thereof, it noted that the Appellant advanced the grounds that its bank accounts were frozen by the Respondent and that it suffered the spill-over effects of the Covid-19 pandemic.

15. From the documents presented by the parties, there was no evidence in support of the fact that the Respondent issued any agency notices or that the Appellant’s bank account was frozen.

16. Further, there was neither a prayer sought to lift any agency notices in the application nor an explanation tendered by the Appellant as to how the freezing of its account would have prevented it from lodging the Appeal for a period spanning over one (1) year.

17. The converse of it is true, that indeed immediately upon the placing of an agency notice, it would have been prudent and for good measure of business operation and continuity for the Appellant to have moved the Tribunal instantaneously with a view of having orders to afford such a reprieve. The Appellant did not act with haste.

18. Suffice it to state, that the Appellant did not advance or support its application with any ground(s) for delay that occasioned an inhibition in the timeous lodging of its Appeal to the confirmed assessments.

19. It is the Tribunal’s view that any party who seeks an order for enlargement of time is duty bound to demonstrate to the Tribunal’s satisfaction of the cause of such delay and to account for the entire period of delay in lodging the Appeal.

20. The Tribunal is guided by the High Court case of Leo Sila Mutiso vs. Rose Hellen Wangari Mwangi, Civil Application Nai 251 of 1997 where the Judge held that:-“It is now settled that the decision whether to extend the time for appealing is essentially discretionary. It is also well stated that in general the matters which this court takes into account in deciding whether to grant an extension of time are, rst the length of the delay, secondly the reasons 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.”

21. Further, the Tribunal reiterates its position as cited above in the case of Jurgen Construction Co Limited vs. Commissioner of Domestic Taxes (Miscellaneous Application 269 of 2022) [2023] KETAT 221 (KLR). The Tribunal having determined that there was no reasonable cause shown to have occasioned in the delay, there is no need to consider the other factors to be applied in dealing with such applications.

22. The Tribunal therefore finds that the grounds advanced by the Appellant for delay are not reasonable, are inexcusable and as such the Tribunal deems the delay to be inordinate under the circumstances.

23. Consequently, the application is not merited and therefore fails.

Disposition 24. Founded on the foregoing analysis, the Tribunal finds that the application is not merited and accordingly proceeds to make the following Orders: -a.The application be and is hereby dismissed.b.No orders as to costs.

25. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 5TH DAY OF JULY, 2024ERIC NYONGESA WAFULA - CHAIRMANMUTISO MAKAU - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBERABRAHAM K. KIPROTICH - MEMBER