[2023] KETAT 220 (KLR)

Netasam Enterprises Limited v Commissioner of Domestic Taxes (Miscellaneous Application 36 of 2023) [2023] KETAT 220 (KLR) (5 May 2023) (Ruling)

Neutral citation: [2023] KETAT 220 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application 36 of 2023

E.N Wafula, Chair, Cynthia B. Mayaka, Rodney Odhiambo Oluoch & E.N Njeru, Members

May 5, 2023

Between

Netasam Enterprises Limited

Applicant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The Application which was by way of a notice of motion dated march 20, 2023 and filed under a certificate of urgency on March 21, 2023 is supported by an affidavit sworn by Dennis Kavili on behalf of the appellant, on the 20th day of March, 2023 seeks for the following orders:-a.Spent;b.The Honourable 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 accompanying documents.c.The Respondent be restrained from taking any enforcement measures in regards to the assessments dated April 1, 2022 or the Objection decision dated July 15, 2022 pending hearing and determination of this application;d.The Respondent lifts the Agency Notice dated March 2, 2023;e.Costs to this Appeal be provided for.

2. The application is premised on the following grounds:-a.That the Respondent issued the Appellant with an assessment dated April 1, 2022. b.That the Appellant objected to the said assessment on July 15, 2022. c.That the Respondent issued the Objection decision on 28th July 2022. d.That the Applicant’s Objection ought to be allowed by operation of the law.e.That the Applicant has a right to be heard on merit.f.That it is in the interest of justice and pursuant to article 159 of the Constitution that this Honourable Tribunal ignores procedural technicalities and determines this dispute on merit.g.That the Honourable Tribunal has the power to extend the time of filing the pleadings as granted by section 13(3) and (4) of the Tax Appeals Tribunal Act 2013 and rule 10 of the Tax Appeals Tribunal Rules2015. h.That in the premise, it is only fair and in the interest of justice that the orders sought herein be granted.

3. The Respondent in response to the application filed a Replying Affidavit sworn by Violet Tananko, an officer of the Respondent on the 28th day of March, 2023 and filed on the even date in opposition to the application statting as follows:-a.That the Respondent issued additional assessments for Value Added Tax (VAT) for the period of October 2021 in the sum of Kshs. 815,172. 41 on 1st April 2022. b.That the Applicant ignored, refused, and/or failed to pay the confirmed taxes or lodge an objection against the assessments within 30 days of the date of the decision as stipulated under section 51(2) of the Tax Procedures Act.c.That the applicant subsequently filed an objection against the additional assessments on July 15, 2022 which is beyond the statutory timelines set out in the Act.d.That the Respondent wrote to the applicant on July 20, 2022 seeking for the Applicant to validate its late objection by providing grounds for the late objection as prescribed in section 51(7) of the Tax Procedures Act.e.That the Applicant failed to support its application for an extension of time to file an Objection and hence the Respondent confirmed the assessments in its decision of July 28, 2022. f.That the Applicant has not set out and/or demonstrated any solid grounds that would warrant this Honourable Tribunal to exercise its discretion in favour of the Applicant.g.That the fact that the Applicant failed to follow up on the decision of the Respondent for more than six months is a demonstration that the Applicant has not been vigilant and does not warrant the exercise of the Tribunal in its favour.h.The delay is unreasonable and not excusable because the Applicant had no intention of settling the outstanding tax liability and only woke up after the agency notices.i.That the application is an afterthought, brought in bad faith, meant to delay the Respondent from collecting taxes that are due and payable and should not be entertained by this Honourable Tribunal as doing so would offend the equitable maxim of equity aids the vigilant and not the indolent and ultimately creates bad precedence.j.That the Applicant is not deserving of the orders sought in the application as the whole period of delay has not been sufficiently explained satisfactorily to the Tribunal thus the application ought to be dismissed.k.That the Respondent is merely carrying out its statutory duty under the law by issuing enforcement notices and consequently prays that its actions be upheld by this Honourable Tribunal.l.That the Respondent’s mandate of collection of revenue is key to the economic development of the Country and consequently, the public and all the arms of the Government and specifically the Tribunal is called upon to assist the Respondent in carrying out its mandate so long as the same is within the law.m.That in the circumstances, it is in the public interest that this Honourable Tribunal dismisses the Applicant’s Notice of Motion application dated March 20, 2023 to pave the way for the Respondent to collect taxes due from the Applicant which are key to the economic development of the country.n.That the indolence and negligence of the Applicant should not bar the Respondent from fulfilling its mandate of collecting taxes that are still due and payable.o.That the Applicant has failed to satisfy the principles set out in the case of Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7others[2014] eKLR.

4. In its written submissions dated and filed on 12th April 2023, the Respondent presented its case as hereunder.

5. The Respondent quoted Section 13 (3) and (4) of the Tax Appeals Tribunal Act and submitted that the grant of an application for an extension of time to file an appeal is discretionary and conditional on demonstrable reasonable grounds by an Applicant seeking refuge under the provisions of such as absence from Kenya, sickness, or other reasonable cause.

6. The Respondent cited the case of Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR where it was held as thus:-“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.”

7. The Respondent urged the Tribunal to consider the case of Commissioner of Domestic Taxes v Mayfair Insurance Company Limited [2017] eKLR where the court stated that:-“One of the reasons stated under the Rule is that the court may extend time where there is reasonable cause for the delay. Effectively, the court’s powers and discretion to extend time is unlimited. It is however not to be capriciously exercised. Time, in other words, is not to be extended as a matter of right. Each case is to be viewed sui generis and on its own circumstances and facts. The starting point is that the Applicant ought to advance sufficient and reasonable grounds for any delay on its part.”

8. It submitted that the Applicant has not met the threshold for the grant of the reliefs sought.

9. In maintaining its position that the Applicant has not presented any reason or set out any material to demonstrate any of the grounds as per the law, the Respondent relied on the case of Wild Lion Investments Limited v. Commissioner of Domestic Taxes (Nairobi TAT Misc. App. No. 7 of 2022) where the Tribunal stated that:-“the Tribunal is unconvinced by the Appellant’s explanations for the delay, which are not supported by not any evidence, and is thus of the view that there was inordinate and unreasonable delay on the part of the Appellant. The Tribunal having made the above conclusion deems it a moot exercise to discuss the remaining tests.”

10. It reiterated that the Applicant was not interested in settling the outstanding taxes, and rather than validate its Objection chose to bury its head in the sand until the last moment when the Respondent moved to collect the outstanding taxes and rushed to the Tribunal seeking to appeal.

11. It argued that it was well within its rights to confirm the assessment as it has been six months since the Respondent issued the request for supporting documentation to the Objection.

12. It further argued that the Applicant is guilty of laches as it dragged its feet without reasonable cause.

Analysis and Findings 13. 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.

14. In determining whether to extend time, the Tribunal was guided by the decision of the court in Charles Karanja Kiiru v Charles Githinji Muigwa [2017] eKLR, where the learned Judge stated that:-“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”

15. On the criteria of the issues to be considered when granting an extension to file an appeal out of time, the Tribunal referred to the decision of Odek, JJ. A in Edith Gichugu Koine vs. Stephen Njagi Thoithi[2014] eKLR, where the Court laid out the factors as thus:-“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...”

16. Further, in Sammy Mwangi Kiriethe & 2 others v Kenya Commercial Bank Ltd [2020] eKLR, the court held that;-“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.”

17. The Tribunal, guided by the principles set out in John Kuria v Kelen Wahito, Nairobi Civil Application Nai 19 of 1983 April 10, 1984, referred to by the judges in the case of Wasike V Swala [1984] KLR 591, Sammy Mwangi Kiriethe & 2 others v Kenya Commercial Bank Ltd(supra) 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.Whether the appeal is merited?c.Whether the application for extension has been brought without undue delay?d.Whether there will be prejudice suffered by the Respondent if the extension is granted?

a. Whether there is a reasonable cause for the delay? 18. In considering what constitutes a reasonable reason for the delay, the court in Silas Kanyolu Mwatha v Josephine Kavive James [2021] eKLR, held that:-“The time stipulation is a requirement of the law as clearly stated ... In short, parties cannot, either unilaterally or by agreement between them, metaphorically, waive away the rules of the court. The rules of the Court are meant to achieve timely and orderly commencement, progress, and proper determination of litigation of proceedings. Given the statutory limit, principally, the delay is inexcusable unless the applicant shows sufficient cause to justify the delay and that any such extension shall not prejudice the respondent.” (Emphasis added).

19. The Applicant argued that it has the right to be heard on merit and that it is in the process of lodging an Alternative Dispute Resolution procedure with the Respondent.

20. The Respondent reiterated that the Applicant has not advanced any reasonable cause for its delay or any evidence to support its case to warrant the Tribunal to exercise its discretion in favour of the Applicant.

21. The Tribunal has gleaned through the documents tabled by the parties herein and arguments proffered in their pleadings and finds no reason raised by the Applicant as to why it took it more than 6 months to bring an appeal before the Tribunal or even seek an extension of time to file the same.

22. It is therefore apparent to the Tribunal that the Applicant has not proffered any triable issue in support of its application or any argument for the Tribunal to consider its plight and therefore there’s no reasonable cause for delay advanced.

23. Having examined the first test and found as above the Tribunal does not see any need to analyse the remaining tests as the same as such determination is rendered moot.

Disposition 24. The Tribunal in the circumstances is inclined to agree with the Respondent and accordingly makes the following Orders:-a.The application for the extension of time is hereby dismissed;b.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 5TH DAY OF MAY, 2023. ………………………….ERIC N. WAFULACHAIRMAN………………………….CYNTHIA B. MAYAKAMEMBER………………………….ABRAHAM KIPROTICHMEMBER………………………….RODNEY O. OLUOCHMEMBER………………………….ELISHAH NJERUMEMBER