[2024] KETAT 1346 (KLR)

Nes Foods Limited v Commissioner of Domestic Taxes (Tax Appeal E623 of 2024) [2024] KETAT 1346 (KLR) (Civ) (6 September 2024) (Ruling)

Neutral citation: [2024] KETAT 1346 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Civil

Tax Appeal E623 of 2024

CA Muga, Chair, BK Terer, D.K Ngala, GA Kashindi & SS Ololchike, Members

September 6, 2024

Between

Nes Foods Limited

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

Background 1. The Appellant moved the Tribunal vide a Notice of Motion Application dated 10th June 2024 and filed under a Certificate of Urgency dated on even date seeking the following Orders:i.Spent.ii.That the Tribunal be pleased to issue an order unconditionally vacating, suspending and or lifting the enforcement of the distress order notice issued against the Appellant dated 27th May 2024 pending the hearing and determination of this application.iii.That costs for this Application be in the cause.

2. The Application was supported by an Affidavit dated 10th June 2024 sworn by Farhia Jama, the Appellant’s Advocate, on the following grounds:i.That the Appellant sought orders of stay pending hearing of the application since the Respondent had already instructed auctioneers who were supposed to conduct an auction on 11th June 2024. ii.That the Tribunal did not pronounce itself on the interim orders to protect the proceedings of 13th June 2024 whereas the auction was slated for 11th June 2024. iii.That if the Tribunal does not intervene and the auction left to proceed, the Appellant was bound to suffer irreparable loss and damage which may not be compensated in monetary terms.iv.That no prejudice would be meted upon the Respondent as they would have their day in court.

3. The Respondent upon being served with the Application filed an opposing Replying Affidavit sworn by its officer, Hellen Njoroge, on 20th June 2024 citing the following as the grounds:i.That the orders sought by the Appellant was underserving of reliefs sought and should not be granted as they are an abuse of the Court.ii.That the Respondent was aware that it raised additional assessments against the Appellant in relation to Income Tax Company obligation in July 2018 vide i-Tax.iii.That the Appellant did not raise any objection to the assessments on the iTax platform and consequently the taxes raised became due and owing.iv.That the Appellant despite stating that an objection to the assessments was made on 20th September 2018, it attached a purported letter to the Respondent dated 20th September 2019 which was an attempt at misleading the Tribunal by providing false dates of objection and failing to attach the alleged objection of 2018. v.That the Appellant did not lodge a valid objection within the 30-day period as provided for under Section 51(2) of the Tax Procedures Act meaning the taxes in question were deemed due and payable without further dispute and there being no objection decision from the Respondent, the Tribunal cannot therefore issue an order to extend time since the Appellant also failed to lodge an appeal within the legal timeframe of 30 days as couched under the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”).vi.That the Appellant failed to raise triable issues or credible reason to warrant extension of time as provided for by Section 13(4) of the TATA. Further, that the jurisdiction of the Tribunal is invoked where a person disputing the decision of the Respondent files an Appeal within statutory time.vii.That the application was an afterthought brought in bad faith and meant to delay the Respondent from collecting taxes that were due and payable and should not be entertained as doing so would offend the equitable maxim of equity aids the vigilant not the indolent and ultimately create bad precedence. The same ought to be dismissed in the public interest.viii.That the Indolence and negligence of the Appellant should not bar the Respondent from collection of revenue which is key to the economic development of the Country.

Analysis And Findings 4. On 13th June 2024 the Tribunal directed the matter to be canvassed by way of written submissions. The Tribunal notes that whereas the Appellant never filed its submissions, the Respondent’s written submissions dated 12th July 2024 were filed on 15th July 2024. The Tribunal duly considered the Respondent’s written submissions in arriving at its determination in this Ruling.

5. The Tribunal notes that the Appellant’s application was seeking the intervention of the Tribunal to expand time to file an Appeal out of time and that pending the hearing and determination of the Appeal conservatory orders be issued against the Respondent from enforcing measures to collect additional taxes assessed on 17th July 2018.

6. The Tribunal notes that while establishing whether to allow an application for extension of time to appeal out of time, the length and reason for the delay should be considered. Additionally, the power to extend time by the Tribunal is discretionary and unfettered and must be exercised judiciously. It is not a right to be granted to the Appellant. The Tribunal notes that Section 13(4) of the TATA provides as follows in regard to grounds under which an Appellant can be granted leave to file an appeal out of time:“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. In this instance, the Tribunal is guided by the decision of the Court in Charles Karanja Kiiru v Charles Githinji Muigwa [2017] eKLR, where the learned Judge stated as follows:“It is trite that 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..”

8. The Tribunal notes that the Appellant was seeking to be allowed time to file their Appeal out of time against Respondent’s additional assessments in relation to Corporate tax dated 17th July 2018. The Appellant stated that it had objected to the assessment on 20th September 2018 which was contested by the Respondent who stated that the Appellant adduced an objection dated 20th September 2019 an assertion that was not rebutted by the Appellant.

9. The Tribunal takes cognisance of the Appellant’s claim of having corrected the anomaly that led to striking off the earlier application on 23rd February 2024 and was inviting the Tribunal to determine the Appeal based on its merit. The Tribunal however notes that the said application had been dismissed on the due to absence of an appeal before it thus unsustainable in law. In this instance, the Tribunal places reliance on Section 18 of TATA which provides as follows:“18. Order to stay or affect the implementation of the decision under review

Where an appeal against a tax decision has been filed under this Act, the Tribunal may make an order staying or otherwise affecting the operation or implementation of the decision under review as it considers appropriate for the purposes of securing the effectiveness of the proceeding and determination of the appeal.”

10. Additionally, the Tribunal notes the criteria as opined in the case of Wasike V Swala [1984] KLR 591 where the Court laid a hierarchy of factors to consider when granting an extension to file an appeal out of time. It was 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; and c) That the delay has not been inordinate.”

11. The Tribunal notes that the Appellant was seeking to be allowed to appeal against a decision made by the Respondent in July 2018 and to which the Appellant never appealed within the legal time frame of 30days and equally failed to adduce the alleged objection dated 20th September 2018. In the absence of an appealable decision or even evidence late objection, the Tribunal finds that the Application herein fails the first test as set out in the case of Wasike v Swala [1984] KLR 591[Supra].

12. Additionally, the Tribunal associates with the criteria laid out by the Court in Edith Gichugu Koine v Stephen Njagi Thoithi [2014] eKLR where Odek, JJ. A held as follows:“Nevertheless, it ought to be guided by consideration of factors stated in many previous decisions of this Court including, but not limited to, the period of delay, the reasons for the delay, the degree of prejudice to the respondent if the application is granted, and whether the matter raises issues of public importance, amongst others...”

13. Further, the Tribunal is guided by the Court holding in Sammy Mwangi Kiriethe & 2 others v Kenya Commercial Bank Ltd [2020] eKLR, the court held as follows:“The Court considers the length of the delay; the reason for the delay; the chances of success of the intended appeal, and the degree of prejudice that would be occasioned to the respondent if the application is granted.”

14. The Tribunal was not accorded cogent reasons why the Appellant failed to lodge its objection as couched under Section 51(2) of the Tax Procedures Act, CAP 469B of the Laws of Kenya (hereinafter “TPA”) which provides as follows:“(2)A taxpayer who disputes a tax decision may lodge a notice of objection to the decision, in writing, with the Commissioner within thirty days of being notified of the decision.”

15. In the circumstances, the Tribunal finds that it lacks powers to issue the orders as sought by the Appellant due to the absence of an appealable decision before it.

Disposition 16. The upshot of the foregoing is that 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.

17. It is so Ordered.

DATED AND DELIVERED AT NAIROBI THIS 6TH DAY OF SEPTEMBER, 2024. CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERDELILAH K. NGALA - MEMBERGEORGE KASHINDI - MEMBEROLOLCHIKE S. SPENCER - MEMBER