[2023] KETAT 631 (KLR)

Mwasame v Commissioner of Investigation & Enforcement Department (Appeal 335 of 2023) [2023] KETAT 631 (KLR) (3 November 2023) (Ruling)

Neutral citation: [2023] KETAT 631 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Appeal 335 of 2023

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

November 3, 2023

Between

Purity Mwasame

Applicant

and

Commissioner of Investigation & Enforcement Department

Respondent

Ruling

1. The application which was by way of a Notice of Motion dated 26th June 2023 and filed under a certificate of urgency on 27th June 2023 is supported by an Affidavit sworn by the Appellant on the 26th June, 2023 seeks for the following Orders:-a.Spentb.That the Honourable Tribunal be pleased to enlarge the time within which the Applicant is to file Memorandum of Appeal, Statement of Facts and tax decision by Fourteen (14) days.c.That the Honourable Tribunal be pleased to refrain the Respondent from issuing any tax demands and any agency notices against the Appellant pending hearing and determination of this application and Appeal.d.That the Appellant be at liberty to apply for further orders as the Honourable Tribunal may deem just to grant.

2. The application is premised on the following grounds, that:-a.The Respondent issued additional assessments dated 17th May, 2022 which demanded taxes amounting to Kshs 10,739,729. 00 inclusive of penalties and interest.b.The Appellant objected to the said additional assessments vide acknowledgment receipts dated 1st June, 2022. This is due to lack of involvement in decision making by the Respondent.c.The Appellant was not informed about the actions not until she received a telephone call from the bank that there are agency notices in the Appellant’s bank accounts.d.That the Appellant upon receipt of this information, hurriedly rushed to Kisumu station wherein she was apprised by on the goings.e.That the agency notices be lifted as the Appellant is suffering with the daily maintenance.f.That the Respondent erred in law and fact in issuing an unfair decision without any involvement of the Appellant.g.That it is unfair and unjust to demand such amounts that the Appellant has not received as income.h.That the Respondent ought to have engaged meaningfully and request for the Appellant’s reconciliation in order to make its decision.i.That the banking method used by the Respondent is wrong and its contravenes the law.j.That the Respondent has acted unprocedurally which action the Appellant relied on to its detriment.k.That it is important for the Honourable Tribunal to intervene and issue the orders sought.l.The Respondent will not suffer any prejudice if the orders sought herein are granted.m.It is in the interest of justice and fairness that the application is allowed to pave way for hearing and determination of the appeal on merit.

Response to the Application 3. The Respondent filed a Replying Affidavit sworn by Cynthia Opiyo, an officer of the Respondent on the 14th July, 2023 and filed on the17th July, 2023 raising the following as the grounds for opposition:-a.That the Appellant was issued with notices of assessment on 24th May, 2022 and 17th May, 2022, respectively.b.That the Appellant filed objection to the assessment on 1st June, 2023. c.That the Respondent issued the Appellant with a tax investigations findings and tax demand vide a letter dated 22nd April, 2022. d.That the Respondent issued an objection acknowledgment and review on 6th June, 2022. e.That the Respondent further invalidated the Appellant’s objection and confirmed the raised assessments.f.That the Appellant did not appeal to the Tribunal within thirty (30) days of the invalidation of the objection as required and only sought to file the instant application on 27th June, 2023. g.That a delay of more than 8 months is inordinate delay by the Appellant.h.That no credible reason has been advanced by the Appellant to warrant extension of time to file appeal as provided under section 13(4) of the Tax Appeals Tribunal Act.i.That an application of this nature requires an applicant to prove his reasonable cause.j.That the application as filed is incompetent, bad in law, fatally defective and is an abuse of this Honourable Tribunal’s Process.k.That the application discloses no reasonable cause of action and is totally unfounded and ought to be dismissed with costs to the Respondent.l.That the application is an afterthought and a delay tactic by the Appellant, meant to delay the conclusion of the matter, which holds substantial Government revenue.

Analysis and Findings 4. The parties in due compliance with the directions of the Tribunal to the effect that the application was to be canvassed by way of written submissions duly filed their respective written submissions and which submissions have been duly considered by the Tribunal in arriving at the findings hereinafter.

5. 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.

6. In determining whether to extend time, the Tribunal is guided by the decision in the case of Leo Sila Mutiso v Rose Hellen Wangari Mwangi - Civil Application No. Nai. 255 of 1997 (unreported), where the Court expressed itself as 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.”

7. The Tribunal is further 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 there will be prejudice suffered by the Respondent if the extension is granted?d.Whether the application for extension has been brought without undue delay?

a.whether There Is A Reasonable Cause For The Delay? 8. In considering what constitutes a reasonable cause 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.”

9. The Appellant in the affidavit in support of the application indicated that she did not receive the objection decision and other correspondences from the Appellant for the reason that being unfamiliar with accounts and issues she engaged an accountant who changed her e-mail credentials and subsequently left employment without handing over.

10. The Respondent contended that the Appellant lodged her notice of objection on the 1st June, 2023 and that the objection was on the 6th June, 2022 invalidated by the Appellant with the consequence of having the raised assessments confirmed.

11. The Tribunal has perused the Affidavits of both parties and the documentary evidence and has found that the Respondent does not appear to contest any changes in the Appellant’s e-mail credentials on itax and has not indicated the manner in which the notice invalidating the objection was served upon the Appellant.

12. It is therefore the Tribunal’s finding that the reason tendered by the Applicant has been satisfactorily established to be a reasonable and plausible cause for the delay in commencing an appeal process before the Tribunal as against the Respondent’s decision of invalidating the Appellant’s notice of objection.

b.Whether The Appeal Is Merited? 13. The Tribunal examined whether the actions complained of by the Appellant were merited and whether there is an arguable appeal before the Tribunal or the appeal is frivolous to the extent that it would only result in a waste of the Tribunal’s time.

14. An appeal being merited does not mean that it should necessarily succeed rather it is arguable. The Tribunal was guided by the findings of the court in George Boniface Mbugua v Mohammed Jawayd Iqbal (Personal representative of the Estate of the late Ghulam Rasool Jammohamed) [2021] eKLR where it was held that:-It must be remembered that the question whether an appeal is arguable, does not call for the interrogation of the merit of the appeal, and the Court, at this stage must not make any definitive findings of either fact or law. An arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully by the Court.”

15. The Tribunal notes that the Appellant has through its Memorandum of Appeal filed simultaneously with the application raised some grounds of appeal and to that extent the Appellant has demonstrated presence of some trial issues.

16. It is the Tribunal’s finding that these are issues only capable of being interrogated in a trial. As such, there is an arguable Appeal and the same has triable issues that can only be gleaned in an evidentiary hearing before it.

c.Whether There Will Be Prejudice Suffered By The Respondent If The Extension Is Granted? 17. The Respondent did not demonstrate how it would suffer prejudice if the prayer for expansion of time was granted. The Respondent only pointed out the fact that allowing the Appeal after such an inordinate period will be prejudicial to it and since the Respondent’s mandate of collection of revenue is key to the economic development of the Country, the public and all the arms of the Government specifically the Tribunal are called upon to assist the Respondent in carrying out its mandate so long as the same is within the law.

18. The Tribunal however observes that the Appellant’s recourse to justice lies in an appeal to the Tribunal. Thus, the Appellant would suffer prejudice if it is not granted leave to file its appeal considering that the amount of money claimed is of significant value.

19. It is the view of the Tribunal that the Respondent would otherwise still collect the taxes together with penalties and interest should the Applicant be found to be at fault.

20. The Tribunal, therefore, finds that the Respondent will not suffer prejudice if the extension is granted.

d.Whether The Application For An Extension Has Been Brought Without Undue Delay? 21. The Tribunal noted from the submissions and documents presented that the Appellant’s bank was issued with an agency notice that prompted the filing of the Appeal and the current application.

22. The Appellant contended that it did not become aware of the notice of invalidation of the Objection until she visited the Respondent’s offices.

23. The Tribunal, consequently finds the Appellant has satisfactorily proven to it that she filed the application at the earliest convenient time after she found out about the notice of invalidation of the objection and the same has been brought without undue delay.

24. The Tribunal in the circumstances finds the application is meritorious and accordingly finds in favour of the Appellant.

Disposition 25. The Tribunal accordingly proceeds to make the following Orders:-a.The application for the extension of time is hereby allowed;b.The Appellant is hereby granted leave to file an appeal out of time;c.The Notice of Appeal and the appeal documents filed on the 27th June, 2023 be and are hereby deemed as duly filed and served;d.The Respondent agency notices issued to the Appellant’s bankers be and are hereby lifted; ande.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF NOVEMBER, 2023ERIC NYONGESA WAFULACHAIRMAN..............................ELISHAH N. NJERUMEMBER..............................MUTISO MAKAUMEMBER..............................EUNICE N. NG’ANG’AMEMBER..............................ABRAHAM K. KIPTROTICHMEMBER