[2024] KETAT 491 (KLR)

Mwangi v Commissioner of Legal Services & Board Co-ordination (Tax Appeal E928 of 2023) [2024] KETAT 491 (KLR) (22 March 2024) (Ruling)

Neutral citation: [2024] KETAT 491 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E928 of 2023

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

March 22, 2024

Between

Francis Njoroge Mwangi

Applicant

and

Commissioner of Legal Services & Board Co-ordination

Respondent

Ruling

1. The Appellant filed this application vide a Notice of Motion dated the 4th day of December 2023 and filed on the 15th December, 2023 supported by Affidavit sworn by Juma Kangutu, on the 13th December, 2023 seeking for the following Orders:a.This honorable Tribunal be pleased to grant leave to file Applicant to file an appeal for VAT additional assessment objection rejection decision out of time;b.That the Notice of Appeal and appeal documents herein annexed be deemed duly filed and served.c.Costs of this application.

2. The application is based on the grounds, that:-a.The applicant herein did not get objection rejection decision on time for e mail send via itax got held in Mails spam.b.The Applicant did notice the Respondent’s tax objection rejection decision too late on November 2023. c.The Applicant had submitted all original purchases invoices and their copies thereto to KRA Commissioner at Machakos office who after verification of original documents and took safe custody of original purchases invoices for Month of January 2018 and all copies of purchases invoices for the Month of January 2018, February 2018, March 2018, April 2018 and May 2018.

3. The Respondent in opposition to the application, filed Grounds of Opposition dated 16th January, 2024 raising the following grounds:-a.That the application is incompetent, bad in law, fatally defective and is an abuse of this Honourable Tribunal’s process.b.That no credible reason has been advanced by the Applicant to warrant extension of time to file appeal as provided at Section 13(4) of the Tax Appeals Tribunal Act.c.That an application of this nature requires an Applicant to prove his/her absence from Kenya, sickness or other reasonable cause.d.That equity aids the vigilant and not the indolent. The Applicant ought to have acted swiftly to preserve its rights. It is guilty of laches.e.That the application is an afterthought and a delay tactic by the Applicant meant to delay the conclusion of the matter, which holds substantial Government revenue.f.That the taxes demanded herein became due on confirmation of the assessments on. They now continue to accrue interest and penalties as provided under the various tax laws

] Analysis and Findings 4. The Tribunal directed that the Appeal was to be determined by way of written submissions and in compliance with the directions the Respondent filed its written submissions on the 169th January, 2024. The Tribunal has duly considered the submissions in its findings hereinafter.

5. The power to expand time for filing an appeal is donated by Section 13(3) of the Tax Appeals Tribunal Act which provides that:“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)”.

6. Conditions that the Applicant has to satisfy are stipulated under Section 13(4) of the Tax Appeals Tribunal Act which provides that:-‘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.’

7. Similarly, Rule 10 of the Tax Appeals Tribunal (Procedure) Rules reiterates the foregoing statutory provision in the following terms: -“(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; orc.any other reasonable cause.”

8. From the Applicant’s Affidavit it appears that the Applicant is seeking leave under Section 13(4) of the Tax Appeals Act and Rule 10 (3)(c) of the Tax Appeals Tribunal (Procedure) Rules on ‘‘other reasonable cause’’ although the Applicant has not expressly stated as such.

9. From the provisions of Section 13 (3) and Rule 10 of the Tax Appeals Tribunal (Procedure) Rules, the power to extend time is discretionary and not a right to be granted to the Applicant.

10. The Supreme Court in Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 others [2014] e KLR set out general considerations to guide the court in exercising its discretion in cases of this nature. It stated that: -i.‘‘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;ii.A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court;iii.Whether the court should exercise the discretion to extend time, is a consideration to be made on a case-to-case basis;iv.Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the court;v.Whether there will be any prejudice suffered by the respondents if the extension is granted;vi.Whether the application has been brought without undue delay; andvii.Whether in certain cases, like election petitions, public interest should be a consideration for extending time."

11. In determining whether to enlarge time, the court in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 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, first 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.”

12. In addition, the court in Wasike v Swala [1984] KLR 591 provided the hierarchy of the factors to consider when it stated that:“an applicant must now show, in descending scale of importance, the following factors: -a.That there is merit in his appeal.b.That the extension of time to institute and/or file the appeal will not cause undue prejudice to the respondent; andc.That the delay has not been inordinate.”

13. This Tribunal is therefore guided by the provisions of Section 13 (4) of the Tax Appeals Tribunal Act, and principles as set in Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 others [2014] e KLR, Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 and Wasike v Swala [1984] KLR 591. Some of those principles are analysed below.

a. Whether there is a reasonable cause for the delay 14. The statutory timelines and provisions to file an appeal have been clearly set out in the Tax Appeal Tribunal Act under Section 13 (3) Section 13(4) and Rule 10 (3)(c) of the Tax Appeals Tribunal (Procedure) Rules.

15. Examination of the Applicant’s Affidavit reveals that the Applicant is seeking leave under Section 13(4) of the Tax Appeals Act and Rule 10 (3)(c) of the Tax Appeals Tribunal (Procedure) Rules on ‘‘other reasonable cause’’ although the Applicant has not expressly stated as such.

16. In Abdul Aziz Ngoma vs. Mungai Mathayo [1976] Kenya LR 61, 62, the court stated as follows with regards to ‘sufficient reason’:-“We would like to state once again that this Court’s discretion to extend time under rule 4 only comes into existence after ‘sufficient reason’ for extending time has been established and it is only then that other considerations such as the absence of any prejudice and the prospects or otherwise of success in the appeal can be considered.”

17. Further, the court in National Union of Mineworkers v Council for Mineral Technology[1998] ZALAC 22 at paragraph 10, held that: -‘‘…There is a further principle which is applied and that is that without a reasonable and acceptable explanation for the delay, the prospects of success are immaterial, and without prospects of success, no matter how good the explanation for the delay, an application for condonation should be refused.”

18. In its supporting affidavit, the Applicant argued that he did not get objection decision on time because he got the email in Mails spam and that he got it on 9th September 2023 when the Appellant through its agent got demand letter through the bank.

19. Under the circumstances, the Tribunal finds that there exists a reasonable cause for the delay.

b. Whether there is merit in his appeal 20. To arrive at justified reasoning, the Tribunal has to test whether the matter under dispute is frivolous or whether there are material facts that deserve to be heard by the Tribunal. In other words, the Tribunal has to be satisfied that the intended appeal is arguable and not its likelihood of success. In the case of Samuel Mwaura Muthumbi v Josephine Wanjiru Ngungi & Another (2018) eKLR the court stated as follows:“Looking at the draft Memorandum of Appeal filed, I am unable to say that the intended Appeal is in arguable. Of course, all the Applicants have to show at this stage is arguability- not high probability of success. At this point the Applicant is not required to persuade the Appellate court that the intended or filed appeal has a high probability of success. All one is required to demonstrate is the arguability of the Appeal, a demonstration that the Applicant has plausible grounds of either facts or law to overturn the original verdict. The Applicants have easily met that standard. I believe that the Applicant has discharged this burden.”

21. Apart from the foregoing, the court in Stanley Kangethe Kinyanjui Vs Tony Keter & others (2013) eKLR had the following to say about arguabilty of appeal:“On whether the appeal is arguable, it is sufficient if a single bonafide ground of appeal is raised, an arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court: one which is not frivolous.”

22. The Tribunal has examined the applicant’s supporting affidavit wherein the applicant argued that he submitted all original purchases invoices and their copies thereto to KRA commissioner at Machakos office on 12th November 2019 who after verification of original documents and took safe custody of Original Purchases invoices for Month of January 2018 and all copies of purchases invoices for the month of January 2018, February 2018, March 2018, April 2018 and May 2018. The Applicant argued that the Respondent did not duly verify all original and copies of duly stamped purchases invoices provided. This allegation is also captured in the intended Memorandum of Appeal and the Respondent has to respond to it.

23. Under the circumstances, the Tribunal is of the view that the Applicant has an arguable case.

c) Whether the Respondent will be prejudiced if time is enlarged. 24. To address this issue, the test is whether the Respondent will suffer irreparable prejudice if the application is granted. Courts have held severally that in considering whether to extend time, due regard must be given to whether the extension will prejudice the opponent. In Patrick Maina Mwangi v Waweru Peter [2015] eKLR the Court quoted the finding in United Arab Emirates v Abdel Ghafar & Others 1995 IR LR 243 and stated as follows:-“a plaintiff should not in the ordinary way be denied an adjudication of his claim on its merits because of a procedural default, unless the default causes prejudice to his opponent for which an award of cost cannot compensate.”

25. Further, in Edith Gichungu Koine Vs Stephen Njagi Thoithi [2014] eKLR the court held that, ‘…the degree of prejudice to Respondent if the application is granted should be considered.’’

26. The Tribunal has perused the pleadings and notes that there is no evidence indicating that the Respondent would be prejudiced if time is extended.Therefore, the Tribunal is of the view that the Respondent will not be prejudiced if time is extended.

d. Whether the delay is inordinate 27. In regards to delays in filing appeals, the High Court Joseph Odide Walome v. David Mbadi Akello [2022] eKLR, stated as follows:-“Where a party is aggrieved and wishes to pursue an appeal, it would be fair to exercise discretion in his favour and especially where the delay in filing the appeal is not inordinate or even if the delay is inordinate, it is explained to the satisfaction of the court and the adverse party will not be prejudiced in any way.”

28. The Applicant stated that the Objection decision was issued on 18th November 2021. The Applicant also stated that he did notice the Respondent’s tax objection rejection decision too late on November 2023. He argued that He did not get objection rejection decision on time for email send via iTax got held in mails spam.

29. Section 13 of the Tax Appeal Tribunal Act provides for the Procedure for appeal. It provides as follows:-“(1)A notice of appeal to the Tribunal shall—a.be in writing or through electronic means;b.be submitted to the Tribunal within thirty days upon receipt of the decision of the Commissioner.”

30. The Applicant stated that he received decision too late in November 2023 in the spam folder. The timeframe under Section 13(1)(b) of the Tax Appeal Tribunal Act starts running upon receipt of the decision of the Commissioner. It then follows that time started running from November 2023 in light of section 13(1)(b). However, since the decision was issued on 18th November 2021, the Applicant had an obligation to obtain leave before filing the appeal. The Applicant discharged this obligation.

31. In Martha Wangari Karua –VS- IEBC Nyeri Civil Appeal No.1 of 2017 it was held as follows:-“The Rules of Natural Justice require that the court must not necessarily drive any litigant from the seat of justice without a hearing, however weak his or her case may be...”

32. The Tribunal is persuaded that the Applicant has been able to demonstrate why he delayed to file the appeal and ought to be granted a hearing.

33. Due to the foregoing analysis, the Tribunal is persuaded to grant leave to the Applicant to file the appeal.

Disposition 34. In the circumstances, the Tribunal proceeds to make the following Orders:i.That leave be and is hereby granted to the Applicant to file its Notice of Appeal, Memorandum of Appeal, Statement of Facts and Tax Decision out of time.ii.The Notice of Appeal dated 6th December 2023, Memorandum of Appeal dated 14th day of December 2023 and Statement of Facts dated 6th December 2023 are hereby deemed dully filed and served;iii.The Respondent to file and serve Statement of Facts within the statutory period upon being served with the appeal documents; andiv.No orders as to costs.

35. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 22ND DAY OF MARCH, 2024ERIC NYONGESA WAFULA - CHAIRMANELISHAH N. NJERU - MEMBERMUTISO MAKAU - MEMBEREUNICE N. NG’ANG’A - MEMBERABRAHAM K. KIPTROTICH - MEMBER