[2024] KETAT 608 (KLR)

Nyenjeri v Commissioner of Domestic Taxes (Appeal E187 of 2023) [2024] KETAT 608 (KLR) (22 March 2024) (Ruling)

Neutral citation: [2024] KETAT 608 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Appeal E187 of 2023

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

March 22, 2024

Between

Benson M Nyenjeri

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The application which was by way of a Notice of Motion dated and filed under a certificate of urgency on 19th December 2023 is supported by an Affidavit sworn by the Applicant, himself, on the even date, sought for the following Orders:-a.Spentb.This Honourable Tribunal be pleased to grant leave to the Intended Appellant/Applicant herein to file the Notice of Appeal, Statement of Facts, Memorandum of Appeal, and other documentation out of time against the erroneous and illegal actions by the Respondent.c.The costs of and incidentals to this application be costs in the Appeal

2. The application is premised on the following grounds that:-a.On diverse dates to wit 28th October 2018, 26th February 2018, 7th July 2021, 22nd February 2022, and 25th August 2022, the intended Appellant was served with demand notices by the 1st Respondent citing alleged default in honouring his tax obligations relating to various strange companies.b.The intended Appellant responded to all the demand notices that he is not in any way affiliated to the said companies whether as a Director, a shareholder, a promoter or a representative by attaching various CR12 forms for the respective companies.c.Despite the Intended Appellant response to the said demand notices, the Respondent went on a rampage issuing demand notices either by way of email, letters, and telephone calls relating to companies erroneously linked to the intended Appellant which had otherwise been clarified.d.On or about 22nd December 2020, the intended Appellant/Applicant received a debit alert from NCBA Bank PLC for a colossal sum of money to the tune of Kshs. 1,150,000. 00 channeled towards settling an illegal tax obligation relating to Akham Construction Company Limited purportedly linked to the intended Appellant.e.Owing to the magnitude of the decision of the Respondent demonstrated above, the intended Appellant recorded a statement with the Directorate of Criminal Investigations on 1st March 2021 and was assured that investigations would be launched over the matter and most importantly a refund of the Kshs. 1,150,000. 00. f.The foregoing notwithstanding, the Respondent has not taken any steps to delist the intended Appellant’s PIN from numerous companies not in any way affiliated with the intended Appellant and the same is seen in the latest erroneous demand notices dated 22nd February 2022 relating to Alma Turner Enterprises for the sum of Kshs. 20,000. 00 and a subsequent one dated 25th August 2022 for Kshs 2,294,589. 00 relating to Jimpexx Company Limited erroneously linked to the intended Appellant’s PIN.g.Among other countless companies linked to the intended Appellant’s PIN the intended Appellant has received demand notice in relation to the following companies:i.Morgan Solutions (K) Limitedii.Dijan Investments Limitediii.Nova General Trading Company Limitediv.Prime Timber Yard Limitedv.Luton Ventures Limitedvi.Borderless Tracking Limitedvii.Nasoil (K) Limitedviii.Intertropical Timber Trading Limitedh.It is imperative to note that the intended Appellant is neither a director, shareholder, nor a promoter of the aforesaid companies as alleged and all the other companies linked to the intended Appellant rendering the actions of the Respondent erroneous, punitive, and illegal deserving to be evaluated by this Honourable Tribunal.i.The delay to timeously lodge an appeal was based on the complaint filed in paragraph 5 above wherein the intended Appellant was assured that the matter would be resolved in finality by the Respondent through the Department of Criminal Investigation.j.Despite the intended Appellant following up with the Investigation Department through numerous office visits and phone calls, the Respondent is yet to conclude the matter and does not seem to be in a hurry to do so.k.Unless the Honourable Tribunal intervenes, the intended Appellant will suffer great financial loss noting.l.The foregoing has occasioned the intended Appellant to seek leave to file an intended appeal out of time and unless the application is heard and determined expeditiously, the intended Appellant shall continue to suffer great prejudice that cannot be remedied.m.The intended appeal raises serious triable issues with high chances of success which necessitates this Honourable Tribunal to grant the extension of time within which the appeal should be allowed.n.If the application herein is not certified as urgent and the orders sought herein granted, the intended Appellant shall continue to suffer substantial financial loss and damage.o.Unless the application is heard and determined expeditiously, the intended Appellant shall be denied his Constitutional right to be heard on appeal.p.Such extreme and highly prejudicial consequences before the hearing and determination of the appeal shall subvert the ends of justice and render the appeal nugatory and a mere academic exercise.q.The delay occasioned is not so inordinate so as to be inexcusable by the Honourable Tribunal.

3. The Appellant in its written submissions dated 16th January, 2024 averred as hereunder.

4. The Appellant submitted that he had at all times demonstrated willingness to prosecute his case and timeously seek redress. That the unintentional delay was occasioned by the promise by both Director of Criminal Investigation and the Respondent to investigate and take action against erroneous linking of his PIN number to third parties.

5. That the procedural technicality occasioned by the Respondent’s delay to timeously investigate can be cured by this Honourable Tribunal by allowing the Appellant to file an appeal out of time.

6. The Respondent filed its Grounds of Opposition dated 5th January, 2024 on the even date citing the following as the grounds for opposition, that:-a.There is no appealable decision capable of being appealed per Section 3 of the Tax Procedures Act.b.The Appeal is premature as there is no Objection decision.c.The Appellant has not specified what is being appealed against and has attached demand notices without a specific decision being appealed against.d.The intended appeal offends the provisions of Section 52(1) of the Tax Procedures Act.e.The Appellant has not demonstrated by way of CR12s that he is not associated with the companies or any association at all within the meaning of Section 42 of the Tax Procedures Act.f.The application be dismissed with costs.

7. The Respondent on its written submissions dated 15th January, 2024 that there exists no appealable decision by the Respondent from which the Appellant can proffer an appeal and that the application, being anchored on the Respondent’s demand letters dated 28th October 2018, 26th February 2018, 7th July 2021, 22nd February 2022, and 25th August 2022 which do not constitute an appealable decision and as such the Tribunal is divested of the jurisdiction to pronounce itself on the application.

8. It contended that the Tribunal is divested of jurisdiction to entertain the application on the basis that the Respondent has not made any Objection decision or any tax decision which the Appellant could appeal against per Section 3 of the Tax Procedures Act’s definition of “appealable decision” and also on the basis that the Appellant has failed to utilize and exhaust the available remedies before approaching the Tribunal.

9. It asserted that the Appellant only Responded to the Respondent’s demand letters by stating that he was neither a director nor shareholder in the alleged companies and instead of lodging proper objections to the demand notices the Appellant chose to lodge the instant application to the Tribunal.

10. It argued that lodging the instant application without lodging a proper objection offends the doctrine of exhaustion of administrative remedies and Section 51(1) and (2) of the Tax Procedures Act.

11. It cited the cases of Speaker of the National Assembly v James Njenga Karume (1992) eKLR and Geoffrey Muthinja Kabiru & Another v Samuel Munga Henry & 1756 Others and argued that there exists an administrative process which the Appellant ought to invoke but has failed to properly invoke by filing an Objection pursuant to Section 51(1) of the Tax Procedures Act thus the Appellant has breached the doctrine of exhaustion of remedies.

12. It maintained that the Tribunal lacks jurisdiction as a result of there being no appealable decision the application to file an appeal out of time cannot be entertained by the Tribunal as entertaining the same would be in contravention of the decision in the case of Owners of the Motor Vessel Lillian S” v Caltex Oil (Kenya) Ltd (1989) eKLR.

13. The Respondent submitted that the Appellant has brought the instant application seeking an extension of time on the ground that the appeal was not filed within the statutorily required timelines because he was assured that the matter would be resolved with finality by the Respondent through the Department of Criminal Investigation but no evidence has been produced by the Appellant of the said assurance.

14. It asserted that reporting the matter to the Department of Criminal Investigations does not act as a stay to objecting any tax decision by the Respondent or appealing the same to the Tribunal in case the Tribunal possesses the requisite jurisdiction.

15. It relied on Section 139(3) and (4) of the Tax Appeals Tribunal Act and contended that the Appellant has not established the criteria to be met before the orders for extension of time are granted but has instead sat on his rights for almost 5 years and only seemed rattled by the latest demand in August 2022 which took the Appellant another one year and 5 months before any action.

16. It further relied on the case of Mombasa County Government v Kenya Ferry Services & Another [2019] eKLR and maintained that the application is brought with undue delay and there has been no reasonable cause for the delay which are the underlying principles which ought to be satisfied before the Tribunal issues such orders.

17. It was submitted that the Appellant’s delay in complying with the statutory timelines within which to lodge an appeal to the Tribunal has been intentional to buy time and deny the Respondent the much-needed revenue.

18. It asserted that the Appellant’s delay will likely cause great prejudice if the application is granted as this will delay the collection of taxes which is the Respondent’s main mandate.

Analysis and Findings 19. The Respondent asserted in the grounds of opposition that the Tribunal lacks jurisdiction to entertain the instant application as there was no appealable decision issued to the Appellant to invoke the Tribunal’s jurisdiction. It added that the Appellant only responded to the Respondent’s demand letters by stating that he was neither a director nor a shareholder in the alleged companies and instead of lodging proper objections to the demand notices the Appellant chose to lodge the instant application to the Tribunal.

20. Section 51(3) of the Tax Procedures Act states as follows with regard to validly lodged notices of objection:-“A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if—a.the notice of objection states precisely the grounds of objection, the amendments required to be made to correct the decision, and the reasons for the amendments;b.in relation to an objection to an assessment, the taxpayer has paid the entire amount of tax due under the assessment that is not in dispute or has applied for an extension of time to pay the tax not in dispute under section 33(1); andc.all the relevant documents relating to the objection have been submitted.”

21. A keen perusal of the Appellant’s documents annexed to the application, there seems to be no valid Objection lodged by the Appellant as the emails sent to the Respondent claiming that the Appellant is neither a Director nor a shareholder of the different companies do not qualify as valid objections per Section 51(3) of the Tax Procedures Act.

22. Section 3 of the Tax Procedures Act defines an appealable decision and tax decision as follows:“appealable decision” means an objection decision and any other decision made under a tax law other than—a.a tax decision; or(b)a decision made in the course of making a tax decision;“tax decision” means—a.an assessment;(b)a determination under section 17(2) of the amount of tax payable or that will become payable by a taxpayer;c.a determination of the amount that a tax representative, appointed person, director or controlling member is liable for under section 15, section 17 and section 18;(d)a decision on an application by a self-assessment taxpayer under section 31(2);(e)a refund decision;(f)a decision under section 48 requiring repayment of a refund; or(g)a demand for a penalty;”

23. To that end, the Tribunal in concurrence with the Respondent’s argument finds that there is no valid objection lodged by the Appellant as against the Respondent’s tax demands.

24. Having found as above, the Tribunal is however alive to the fact that the Respondent has also moved to the Appellant’s bankers in a bid to recover Kshs 1,150,000. 00 of unpaid taxes from the Appellant’s bank accounts.

25. In the absence of a valid objection lodged as against any tax demands raised on the part of the Respondent the tax demands and assessment raised crystallized with the taxes accruing for collection.

26. In the absence of an appealable decision there is no appeal capable of being pursued by the Appellant before the Tribunal.

Disposition 27. The Tribunal in the circumstances finds that the application lacks merit and accordingly proceeds to make the following Orders:-a.The application be and is hereby dismissed.b.The Appeal be and is hereby struck out.SUBPARA c. No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 22ND DAY OF MARCH, 2024ERIC NYONGESA WAFULACHAIRMANELISHAH N. NJERU MUTISO MAKAU

MEMBER MEMBER

EUNICE N. NG’ANG’A ABRAHAM K. KIPTROTICH

MEMBER MEMBER

RULING – TAT NO. E187 OF 2023 BENSON M. NYENJERI VS. COMMISSIONER OF DOMESTIC TAXES Page 10