[2024] KETAT 1246 (KLR)

Ngatia v Commissioner of Domestic Taxes (Tax Appeal E389 of 2024) [2024] KETAT 1246 (KLR) (9 August 2024) (Ruling)

Neutral citation: [2024] KETAT 1246 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E389 of 2024

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

August 9, 2024

Between

John Nderitu Ngatia

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Appellant vide a Notice of Motion application dated the 19th day of April, 2024 filed under a certificate of urgency on the 13th June, 2024 sought for the orders that:-a.Spentb.The Court be pleased to Order immediate lifting of Agency Notices against the Appellant’s Bank Accounts No.116181xxxx at Kenya Commercial Bank and Account No.033029040xxxx at Equity Bankc.The Tribunal be pleased to give orders and directions as it may deem fit and just.d.That the costs of this application be costs in the main Appeal.

2. The application which is supported by an Affidavit sworn by John Nderitu Ngatia, the Appellant, on the 19th April 2024 is premised on the following grounds: -a.That the Appellant has an Appeal pending hearing and determination before the Tribunal.b.That the Respondent has nevertheless placed Agency Notices upon the Appellant's Bank Accounts No. 116181xxxx at Kenya Commercial Bank and Account No.033029040xxxx at Equity Bank to the prejudice the Applicant's business.c.That the interests of justice would be better served by allowing the Orders herein.d.That the Respondent will suffer no prejudice if this application is granted.e.That unless the matter herein is immediately placed before the Tribunal and appropriate directions/ Orders issued, the continued execution by the Respondent will render the proceedings before this Tribunal academic.

3. The Appellant prior to this application had on 8th April 2024 filed an application to be allowed to lodge an Appeal at the Tribunal out of time. The application was supported by an affidavit sworn by John Nderitu Ngatia, the Appellant himself on the even date.

4. The Appellant stated that he was unwell and therefore was not able to lodge the Appeal on time.

5. The Respondent in opposition to the application filed a Replying Affidavit sworn by Amos Oeta, an officer of the Respondent, on the 24th April, 2024 and filed on the same date in which the Respondent raised the following grounds: -a.That the Respondent issued its objection decision to the Appellant vide its letter dated 19th June 2023, confirming an income tax liability of Kshs.10,640,750 inclusive of penalty and interest.b.That the Appellant only filed and served its Appeal on 5th April 2024, almost 10 months upon issuance of the objection decision.c.That the Appellant has not obtained any order from the Tribunal extending time to file its Appeal out of time.d.That the taxes subject to the objection decision herein have crystallized, in view of the fact that there is no proper appeal.e.That there is no proper appeal on record, in accordance with the provisions of Sections 13(3) of the Tax Appeals Tribunal Act.f.That in view of the fact that there is no proper appeal, no orders can be issued by this Tribunal regarding the improper Appeal.g.That with regard to the application herein, there is no Agency notice adduced before this Court for quashing.h.That in view of the fact that the Tribunal has no sight of the alleged Agency Notice, the Tribunal cannot issue orders against a document that is not before it.i.That the Appellant has failed to prove that the Respondent indeed placed agency notices on its bank accounts at Kenya Commercial Bank and Equity Bank.j.That the Appellant ought to discharge its burden of proof in accordance to Section 56 of the Tax Procedures Act, 2015 and he has failed to do so.

Analysis and Determination 6. The parties in compliance with the directions of the Tribunal that the application be conversed by way of written submission the Appellant filed its submissions which were adopted on 9th May, 2024. The Respondent did not file any submissions. The Tribunal has considered the Appellant's submissions in arriving at its findings hereinafter.

7. The Tribunal perused through the chronology leading to this application and established as follows;a.The Appellant was issued with the Respondent’s decision on 19th June 2023. b.The Appellant lodged an application to file an Appeal out of time on 8th April 2024. c.The Appellant further filed an application dated 19th April 2024 seeking orders to lift Agency Notices to its bankers.

8. The jurisdiction for the Tribunal to consider an application for stay of enforcement of any demand or actions on the part of the Respondent that is likely to adversely impact on the proper determination of a matter before the Tribunal is founded under Section 18 of the Tax Appeals Tribunal Act which provides as follows; -‘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 proceedings and determination of the appeal.’

9. The Tribunal in consideration of the above provision of the law shall first determine the Appellant’s application for leave to file an appeal out of time filed on 8th April 2024.

10. The Tribunals’ jurisdiction for the enlargement of time in the commencement of an appeal process is found under Section 13 of the Tax Appeals Tribunal Act which provides as thus: -“(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.”

11. 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 an Applicant.

12. In determining whether to extend time, the Tribunal was guided by the court in Joseph Ondiek Tumbo v Sony Sugar Co Ltd [2014] eKLR, where the learned Judge quoted Sir Thomas Bingham M R in Costellow V Somerset County Council (1993)1 All ER 952 where he stated that:“The first principle is that the rules of court and the associated rules of practice, devised in the public interest to promote expeditious dispatch of litigation, must be observed. The prescribed time limits are not targets to be aimed at or expressions of pious hope but requirements to be met. The second principle is 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 costs cannot compensate…. Further, an extension of time is an indulgence from the court by a party in default. He is not entitled to an extension. He has no reasonable or legitimate expectation of receiving one. His only reasonable or legitimate expectation is that the discretion relevant to his application to extend time will be exercised judicially in accordance with established principles of what is fair and reasonable. In those circumstances, it is incumbent on the applicant for an extension of time to provide the court with a full, honest and acceptable explanation of the reasons for the delay. He cannot reasonably expect the discretion to be exercised in his favour, as a defaulter, unless he provides an explanation for the default.”

13. 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 case of Wasike V Swala [1984] KLR 591 where the Court laid a hierarchy of 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.”

14. The Tribunal, guided by the principles set out in Wasike V Swala [1984] KLR 591, Joseph Ondiek Tumbo v Sony Sugar Co Ltd [2014] eKLR 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 there will be prejudice suffered by the Respondent if the extension is granted?

a. Whether there is a reasonable cause for the delay? 15. 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”.

16. The statutory timelines and provisions to file an appeal have been clearly set out in the Tax Appeal Tribunal Act. Section 13 (3) of the Act provides as follows with regard to the statutory timelines in commencing an 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.”

17. From the chronology of events, the Tribunal notes the Respondent decision was issued on 19th June 2023 and therefore the Appellant ought to have filed its Notice of Appeal on or before 19th July 2023. This application for enlargement of time was filed on 8th April 2024 which is more than 8 months delay .

18. The Tribunal noted from the Appellant’s pleadings that the Appellant had cited illness. The Appellant however did not demonstrate in any way with documentary evidence the nature and length of the illness.

19. However, the Tribunal did not find, this casual explanation without any form of evidence, sufficient to trigger it to exercise its discretion as provided for under Section 13(3) of the Tax Appeals Tribunal Act. The Tribunal in the circumstances is of the considered view that the Appellant has not advanced reasonable cause of delay to approach the Tribunal to vindicate its right to appeal against the tax demands by the Respondent.

20. The Tribunal therefore found it unnecessary to analyze the other issues for its determination on extension of time.

21. The Tribunal notes that the Appellant filed the Appeal on the 8th April, 2024 simultaneously with the application for enlargement of time. The Appeal in the light of the foregoing finding on the application for the enlargement of time is incompetent and thus unsustainable in law.

22. On whether the Tribunal could issue stay orders in relations to the agency notices, the Tribunal hereby determines that its powers donated by Section 18 of the Tax Appeals Tribunal Act are limited to preservation of a matter pending before it. Having determined that there is no proper Appeal pending before it, the Tribunal finds that the prayer for orders to lift the Agency Notices cannot be sustained.

Disposition 23. Consequently, the Tribunal finds that the application lack merits and the Appeal filed therewith is incompetent and the Orders that recommend themselves are as follows;a.The both applications dated 8th April, 2024 and 19th April, 2024 be and are hereby dismissed.b.The Appeal be and is hereby struck out.c.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF AUGUST, 2024ERIC NYONGESA WAFULA - CHAIRMANABRAHAM K. KIPROTICH - MEMBERELISHAH NJERU - MEMBERMUTISO MAKAU - MEMBEREUNICE N. NG’ANG’A- MEMBER