[2025] KETAT 165 (KLR)

Mwatela v Commissioner of Domestic Taxes (Miscellaneous Application E064 of 2025) [2025] KETAT 165 (KLR) (28 February 2025) (Ruling)

Neutral citation: [2025] KETAT 165 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application E064 of 2025

CA Muga, Chair, AK Kiprotich & T Vikiru, Members

February 28, 2025

Between

Halima Kauchi Mwatela

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Applicant filed a Notice of Motion filed under certificate of urgency on 23rd January 2024 seeking the following Orders:a.Spent.b.That the Tribunal be pleased to extend the time allowed for the Applicant to file a Notice of Appeal, Memorandum of Appeal, Statement of Facts and all other supporting documents.c.That the Notice of Appeal, Memorandum of Appeal and Statement of Facts dated 9th October, 2024 filed herewith to be deemed as properly filed and served.d.That costs of this Application be provided for.

2. The Application was supported by an affidavit sworn by Halima Kauchi Mwatela based on the following grounds:a.That the Respondent issued the Applicant with a notice to carry a compliance check on her operations for the period 2020 under Section 59 of the Tax Procedures Act, CAP 469B of the Laws of Kenya ( hereinafter “TPA”).b.That the Respondent issued the Applicant with income assessments for the period 1st January,2020 to 31st December, 2020 for Ksh. 2,802,738. 00. c.That the Applicant objected to the said assessments on 21st February, 2020. d.That the Respondent issued the Applicant with confirmation of assessment notice dated 19th April, 2024 for Ksh. 2,802,738. 00. e.That the Applicant was indisposed having been diagnosed with an illness on 14th February, 2024 and has been unwell to date rendering her unable to attend to any business.f.That as a result the Applicant was unable to file her Notice of Appeal and Appeal documents to the Tribunal within time pursuant to the provisions of the Tax Appeal Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) and TPA.g.That the Applicant has an arguable Appeal with high probability of success.h.That 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 an erroneous assessment.

3. Upon filing of this motion, the Tribunal directed the Respondent to file and serve its response to the Application by 4th February 2025 and further both parties were to file their respective submissions by 12th February 2025. The Tribunal however notes that the Respondent did not file any response and further both parties did not file any submissions within the timelines given. The Tribunal will therefore rely on the pleadings as filed by the Applicant.

Analysis and Findings 4. The Tribunal can infer that the Respondent was not opposed to this Application and though it will interrogate the Applicant’s grounds, it finds that the same are uncontroverted by the Respondent. The Applicant ought to demonstrate that she meets the criteria as set out by the law for extension of the time for her to file its Appeal. The Tribunal has the power to expand time for filing an Appeal out of time pursuant to the following provisions of Section 13(3) of the TATA:“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).”

5. The following provisions of Section 13(4) of the TATA outline the conditions under which a taxpayer may be granted, by the Tribunal, extension of time to file an appeal:“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”

6. In determining whether the expand time, courts have in the past considered a number of factors. These factors were discussed in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 where the judge held as follows:“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.”

7. The court in Wasike V Swala [1984] KLR 591 provided the hierarchy of the factors to consider when it stated as follows:“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.”

8. The Tribunal, guided by the principles set out in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997, Wasike V Swala [1984] KLR and provisions of Section 13 of TATA used the following criteria to consider the application:i.The merits of the complained action;ii.Whether there is a reasonable cause for the delay; andiii.Whether there will be prejudice suffered by the Respondent if the extension of time is granted.

i. Merits of the complained action 9. The Tribunal has considered whether the matter under dispute was frivolous to the extent that it would be a waste of the Tribunal time, or it was material to the extent that it deserved its day in the Tribunal. The test is not whether the case is likely to succeed. Rather, it is whether the case is arguable. This was the finding in Samuel Mwaura Muthumbi v Josephine Wanjiru Ngungi & Another (2018) eKLR where the court held 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 Appellant 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.”

10. The Tribunal is further guided by the findings of the court in Kenya Commercial Bank Limited Vs Nicholas Ombija (2009) eKLR where it was held as follows:“An arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court.”

11. This was also the holding in the case of Stanley Kangethe Kinyanjui vs Tony Keter & others (2013) eKLR where the court held as follows:“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.”

12. The Tribunal notes the Applicant’s averment that she has an arguable appeal with high probability of success as well as the fact that the Respondent vide a letter dated 19th April 2024, issued its objection decision which the Applicant seeks to challenge by way of an appeal. The Tribunal having reviewed the draft Memorandum of Appeal attached to the Application notes that the Applicant has raised four grounds of Appeal that require rebuttal by the Respondent.

13. In view of the standard set in the case of Stanley Kangethe Kinyanjui Vs Tony Keter & others (2013) as cited above the Tribunal is of the view that the Applicant had an arguable case which required to be canvassed and considered on its full merits. Consequently, the Tribunal finds that the Applicant has an arguable appeal.

Whether there is a reasonable cause for the delay. 14. In considering what constitutes as a reasonable reason for delay, the court in Balwant Singh v Jagdish Singh & Ors (Civil Appeal No.1166 of 2006), held as follows:“The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention”.

15. The statutory timelines and provisions to file an appeal have been clearly set out in the TATA. More particularly Section 13 (3) of the TATA provides as follows with regard to the statutory timelines in commencing appeal process:“A notice of appeal to the Tribunal shall—(a)be in writing;(b)be submitted to the Tribunal within thirty days upon receipt of the decision of the Commissioner.(2)The appellant shall, within fourteen days from the date of filing the notice of appeal, submit enough copies, as may be advised by the Tribunal, of—(a)a memorandum of appeal;(b)statements of facts; and(c)the tax decision.”

16. A taxpayer who has not met the statutorily mandated timelines to file an Appeal has a remedy pursuant to the following provisions of Section 13(4) of the TATA which outlines conditions that a taxpayer must meet to enable the Tribunal exercise its discretion to extend time to appeal:“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 giving notice of appeal within the specified period.”

17. The Applicant cited illness as the reason for the delay in filing her Appeal. The Applicant submitted that in view of the fact that she is the director she was indisposed having been diagnosed with an illness on 14th February, 2024 and had been unwell since then rendering her unable to attend to any business. As a result, the Applicant was unable to file her Notice of Appeal and Appeal documents to the Tribunal within time pursuant to the provisions of the TATA and TPA.

18. The Tribunal notes that the Applicant in support of this averment attached medical documents showing that she had been hospitalized and discharged in September 2024. It is the view of the Tribunal that although the date the Applicant fell ill was unclear, the explanation given and documents attached were persuasive given that the objection decision was issued in April 2024, In any case, the Applicant’s averments were uncontroverted by the Respondent who failed to respond to the Application.

19. Consequently, the Tribunal finds that the Applicant demonstrated reasonable cause for the delay.

(iii) Whether there will be prejudice suffered by the Respondent if the extension is granted. 20. The courts have held that in considering whether to extend time, due regard must be given to whether the extension will prejudice the opponent. In determining this, the Judge in Patrick Maina Mwangi v Waweru Peter [2015] eKLR quoted the following finding in United Arab Emirates V Abdel Ghafar & Others 1995 IR LR 243:“…….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………”

21. The test, therefore, as set out in the case above is whether the Respondent will suffer irreparable prejudice if the instant Application is granted. Having however found that the subject matter is arguable, it is the view of the Tribunal that the Applicant’s recourse to justice now lies in an appeal to the Tribunal. Thus, the Applicant would suffer prejudice if she is not granted leave to file her appeal. The Respondent on the other had will not suffer prejudice since it will still be able to collect the taxes plus interest and penalties should the Applicant be found to be at fault.

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

Disposition 23. The Tribunal accordingly finds that the Application has merit and proceeds to make the following Orders:i.The Application be and is hereby allowed.ii.Leave be and is hereby granted for the Applicant to file her Notice of Appeal, Memorandum of Appeal and Statement of Facts out of time.iii.The Notice of Appeal, Memorandum of Appeal and the Statement of Facts filed before the Tribunal on the 23rd January 2024 are deemed as having been duly filed and served.iv.The Respondent to file its Statement of Facts within 30 days from the date of the delivery of this Ruling.v.Each party to bear its own costs.

24. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 28TH DAY OF FEBRUARY, 2025. …………………………………CHRISTINE A. MUGACHAIRPERSON…………………………ABRAHAM K. KIPROTICHMEMBER…………………………DR. TIMOTHY VIKIRUMEMBER