[2023] KETAT 515 (KLR)

Ndungi v Commissioner of Domestic Taxes (Tax Appeal 326 of 2023) [2023] KETAT 515 (KLR) (Civ) (18 August 2023) (Ruling)

Neutral citation: [2023] KETAT 515 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Civil

Tax Appeal 326 of 2023

E.N Wafula, Chair, AK Kiprotich, E Komolo, E.N Njeru & GA Kashindi, Members

August 18, 2023

Between

Muema Ndungi

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Appellant vide a Notice of Motion dated the 18th April, 2023 filed under certificate of urgency on 5th May 2023 and supported by an Affidavit sworn by Muema Ndungi, the Applicant himself, on the 18th day of April, 2023 sought for the following Orders:-i.Spentii.That the intended Appellant/Applicant be granted leave to file Notice of Appeal, Memorandum of Appeal, Statement of Facts plus all other supporting documents to the Tribunal out of time.iii.That the cost of this application be in the cause.iv.That the Tribunal be pleased to issue any such orders as it deems just and expedient.

2. The application is premised on the following grounds:-i.That due to factors beyond the control of the intended Appellant/Applicant missed the statutory deadline for filing the Notice of Appeal and Memorandum of Appeal to the Tribunal.ii.That the objection decision was issued on 10th June 2021 for the period January 2018 of amount of Ksh 2,082,326. 43, February 2018 of amount of Kshs 326,864. 31, March 2018 of amount of Kshs 455,264. 12, April 2018 of amount Kshs 191,611. 84 and May 2018 of Kshs 294,172. 56 via email address of the Applicant.iii.That the Applicant could not access the email registered on iTax as the accountant left without handing over and he was the sole person handling and having the login particulars.iv.That the intended Appellant/Applicant has approached the Tribunal at the earliest juncture and failure to file the Notice of Appeal within the stipulated timelines was as a result of factors beyond the Applicants control as he is located upcountry and was unable to access iTax emails.

3. The Respondent opposed the application through its grounds of opposition dated 11th May 2023 and filed on the same date. The grounds of opposition as highlighted were as follows:-i.That the application is incompetent, bad in law, fatally defective and is an abuse of the Tribunal’s process.ii.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.iii.That an application of this nature requires an Applicant to prove his/her absence from Kenya, sickness and other reasonable cause.iv.That equity aids the vigilant and not the indolent. That the Applicant ought to have acted swiftly to preserve its rights. That the Applicant is guilty of laches.v.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.vi.That the taxes demanded herein became due on confirmation of the assessments. That the taxes now continue to accrue interest and penalties as provided under the various tax laws as there is no valid Appeal before the Tribunal thus the Applicant ought to pay 50% on account to show commitment in the matter/for the Tribunal to consider granting the orders sought.vii.That the Applicant has not demonstrated it deserves favorable discretion of the Tribunal and the application should be dismissed with costs to the Respondent.

Analysis and Findings 4. In compliance with the directions of the Tribunal to the effect that the application was to be canvassed by way of written submissions, the Appellant’s did not file any submissions while the Respondent filed its submissions on 24th May 2023. The Tribunal has duly considered the written submissions in arriving at its determination in this Ruling.

5. The Appellant is primarily praying to the Tribunal for his Appeal to be admitted late.

6. 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).”It is therefore a discretionary power and not a right to be granted to the Applicant.

7. In determining whether to 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 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 appealsucceeding if the application is granted and fourthly the degree of prejudice to the respondent if the application is granted.”

8. The court in WasikevSwala [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.

9. 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 Section 13 of the Tax Appeals Tribunal Act 2013 used the following criteria to consider the application:a.Whether there is a reasonable cause for the delay.b.The merits of the complained action.c.Whether there will be prejudice suffered by the Respondent if the extension is granted.

a. The merits of the complained action. 10. The Tribunal considered whether the matter under dispute was frivolous to the extent that it would be a waste of the Tribunal’s time, or it was material to the extent that it deserved its day in the Tribunal.

11. 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 stated that:-“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.”

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

13. Similarly, in Kenya Commercial Bank Limited Vs Nicholas Obija (2009) eKLR it was stated that “an arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court” that was also the position held in Stanley Kangethe Kinyanjui Vs Tony Keter & others (2013) eKLR where the court held that “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.”

14. In the instant case, the Appellant stated that it was issued with an VAA assessment on various dates in 2018 which he objected. That the objection decision was issued on 10th June 2021 for the period January 2018 of amount of Ksh 2,082,326. 43, February 2018 of amount of Kshs 326,864. 31, March 2018 of amount of Kshs 455,264. 12, April 2018 of amount Kshs 191,611. 84 and May 2018 of Kshs 294,172. 56 which the Applicant disputes and wishes to challenge through an appeal process.

15. Ngugi J in Samuel Mwaura Muthumbi V Josephine Wanjiru Ngugi & Another (2018) eKLR as regards to a meritorious appeal stated:-“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..”

16. Looking at the Memorandum of Appeal on record , filed by the Appellant on the 5th, the Tribunal noted that the Appellant had raised one substantive ground of Appeal that requires rebuttal by the Respondent.

17. Going by the standards set out in the Stanley Kangethe Kinyanjui Vs Tony Keter & others (2013) case the Tribunal finds that the Appellant has an arguable case which requires to be canvassed and considered on its full merits.

b. Whether there is a reasonable cause for the delay. 18. 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 that: “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”.

19. It was the Respondent’s contention 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.

20. That an application of this nature requires an Applicant to prove his/her absence from Kenya, sickness and other reasonable cause.

21. The powers to extend time is donated to the Tribunal by section 13(3) & (4) of the Tax Appeals Tribunal Act which provides as follows;“(3)The Tribunal may, upon application in writing, extend the time 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 giving notice of appeal within the specified period.”

22. The Appellant had stated that the objection decision was communicated through the Appellant’s iTax email which was not accessible as its accountant had left without handing over the credentials for it.

23. The Tribunal noted that the Appellant was seeking extension of time under other reasonable cause.

24. Although there were no documents that could support such averments by the Appellant, the Tribunal was of the view that the Appellant be given the benefit of doubt since the application has been found to be meritorious.

25. The Tribunal’s in its finding is persuaded by the Ugandan Case of Ojara v Okwera (Miscellaneous Civil Application-2017/23) [2018] UGHCCD 42 it was stated that;“An order for enlargement of time to file the appeal should ordinarily be granted unless the applicant is guilty of unexplained and inordinate delay in seeking the indulgence of the Court”

b.Whether there will be prejudice suffered by the Respondent if the extension is granted. 26. On whether there would be prejudice suffered by the Respondent if the application was granted, it is common parlance that the term “prejudice” as used in civil matters refer to injury, loss, damnification or substantial loss. Thus, a party claiming that it would suffer prejudice must demonstrate the likelihood of suffering substantial loss, such a loss need not be in pecuniary terms.

27. 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 finding in United Arab Emirates V Abdel Ghafar & Others 1995 IR LR 243 in finding that:“…….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………”

28. The test, therefore, as set out in the case above is whether the Respondent will suffer irreparable prejudice if the application is granted.

29. In the case at hand, the Respondent did not demonstrate how it would suffered irreparable prejudice if an expansion of time were granted for the Appellant to file its Memorandum of Appeal and Statement of Facts before the Tribunal.

30. It was the view of the Tribunal that the Appellant’s recourse to justice lies in an appeal to the Tribunal. The Appellant on the other hand would suffer prejudice if he is not granted leave to file his appeal. In any event, the Respondent would still collect the taxes inclusive of penalties and interest should it be found to be due and payable.

31. Consequently, the Tribunal finds that the Respondent will not suffer prejudice if the extension is granted.

Disposition 32. Based on the foregoing, the Tribunal finds that the application is merited and proceeds to make the following Orders:i.The application be and is hereby allowed.ii.That the Appellant is hereby granted leave to file an appeal out of time.iii.The Notice of Appeal, the Memorandum of Appeal and the Statement of Facts filed on 5th May, 2023 are hereby deemed as duly filed and served.iv.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 18TH DAY OF AUGUST, 2023. ERIC NYONGESA WAFULA - CHAIRMANABRAHAM KIPROTICH - MEMBERERICK KOMOLO - MEMBERELISHA NJERU - MEMBERGEORGE KASHINDI - MEMBER