[2024] KETAT 1488 (KLR)

Nyutu v Commissioner of Domestic Taxes (Miscellaneous Appeal E095 of 2024) [2024] KETAT 1488 (KLR) (31 October 2024) (Ruling)

Neutral citation: [2024] KETAT 1488 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Appeal E095 of 2024

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

October 31, 2024

Between

Eunice Wambui Nyutu

Applicant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

Background 1. The Appellant by way of a Notice of Motion dated and filed on 26th September, 2024 sought the following Orders:i.That the Application be certified urgent and heard ex parte in the first instance.ii.That the Applicant be granted an extension of time with regard to the filing the Notice of Appeal, Memorandum of Appeal and the Statement of Facts herein.iii.That the Applicant be granted leave to file its Notice of Appeal, Memorandum of Appeal and the Statement of facts out of time against the Respondent’s decision issued on 17th November 2020. iv.That the Tribunal be pleased to deem the annexed Notice of Appeal. Memorandum of Appeal and Statement of facts as being properly on record.v.That the tax decision dated 17th November 2020 and any other consequent tax demands be stayed pending the hearing and determination of this application.vi.That the costs of this Application be in the main Appeal.

2. The Application which was supported by an Affidavit sworn by the Applicant, Ms. Eunice Wambui Nyutu on the 26th day of September, 2024 was premised on the following grounds:a.That on 23rd March 2020 the Applicant was issued with additional assessments with respect to VAT for May 2019. b.That on 23rd July 2020 the Applicant filed an objection to said assessments. The objection was rejected.c.That on 17th November 2020 the Respondent issued the objection decision confirming the assessments.d.That the annexed Notice of Motion sought for extension of time to file a Notice of Appeal, Memorandum of Appeal and Statement of Facts in respect of the aforementioned tax decision issued by the Respondent.e.That the Applicant had previously engaged another tax representative to handle her tax affairs who failed to respond on time as stipulated in law.f.That the lapse on the part of the previous tax representative to follow up with the Appeal came to the Applicant's attention after receipt of a tax demand from the Respondent.g.That upon follow up with the Respondent's office, the Applicant was informed of the failure on the part of the previous tax representative to execute the appeal and as such advised to institute this Appeal afresh for the matter to be resolved.h.That any further delays in filing the Notice of Appeal, Memorandum of Appeal and Statement of Facts will cause the Applicant to suffer irreparable loss.

3. The Respondent, indicated during the hearing on 3rd October, 2024 that it was opposed to the Application. The Tribunal directed the Respondent to file and serve its response on or before 7th October, 2024 and the Respondent did not comply.

Analysis And Findings 4. The Tribunal directed parties to file their respective written submissions on or before 14th October, 2024. Neither party complied.

5. The power to expand time for filing an Appeal is donated by Section 13 (3) of the TATA which provides as follows:“(3)The Tribunal may grant the extension of time if it is satisfied that the applicant was unable to submit the documents in time for the following reasons—(a)absence from Kenya;(b)sickness; or(c)any other reasonable cause.”

6. The Tribunal’s power to grant extension of time is discretionary and not a right to be granted to the Appellant. In determining whether to extend time, 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. “

7. On the criteria of the issues to be considered when granting an extension to file an appeal out of time, the Tribunal refers to the case 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...”

8. Further, 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.”

9. The Tribunal, guided by the principles as set out in John Kuria v Kelen Wahito, Nairobi Civil Application No. 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 TATA used the following criteria to consider the application:

(a) Whether there is a reasonable cause for the delay. 10. In considering what constitutes a reasonable cause for delay, the court in Balwant Singh v Jagdish Singh & Ors (Civil Appeal No.1166 of 2006), held as follows:“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.”

11. The statutory timelines and provisions to file an Appeal have been clearly set out in the Section 13 (3) of the TATA which provides as follows with regard to the statutory timelines to be adhered to 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.statement of facts; andc.the tax decision….”

12. For a taxpayer who has not met the timelines as provided in the above provision of the law, Section 13(4) of the TATA provides the conditions that the taxpayer ought to meet to enable the Tribunal to exercise its discretion to extend time to appeal. The Section provides as follows:“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.”

13. Regarding the reasons for delay, the Appellant averred that the tax representative that she had engaged to handle her tax affairs failed to respond on time as stipulated by law. The lapse of her previous tax representative was raised by the Respondent’s officers. She was then advised to institute this Appeal afresh for the matter to be resolved.

14. The Tribunal finds that the Appellant’s demonstration that the tax representative failed to respond on time is a sufficient explanation for and a reasonable cause for delay.

(b) Whether the Appeal is merited. 15. 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.

16. 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 Ngugi & Another (2018) eKLR where the court stated as follows:“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.”

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

18. Similarly, in Kenya Commercial Bank Limited Vs Nicholas Ombija (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.”

19. The Tribunal noted that the Respondent’s decision dated 17th November, 2020 was a late objection rejection notice. Upon a perusal of the Memorandum of Appeal of the Appellant, the Tribunal noted that the Appellant had raised a single ground of Appeal that required rebuttal by the Respondent. Pursuant to the standards set out in the Stanley Kangethe Kinyanjui Vs Tony Keter & others case, the Tribunal finds that the Appellant has an arguable case which required canvassing and considered on its full merits.

(c) Whether there will be prejudice suffered by the Respondent if the extension is granted. 20. 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 as follows:“…….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………”

21. The test, therefore, as set out in the case above is whether the Respondent will suffer irreparable prejudice if the Application is granted. However, having found that the subject matter was arguable, it is the view of the Tribunal that the Appellant’s recourse to justice now lies in an appeal to the Tribunal. Thus, the Appellant would suffer prejudice if she is not granted leave to file her appeal. The Respondent on the other hand will not suffer prejudice since it will still be able to collect the taxes plus interest and penalties should the Applicant be found to be at fault.

22. The Tribunal therefore finds that the Respondent will not suffer prejudice if the extension is granted.

Disposition 23. Based on the foregoing analysis, the Tribunal finds that the Application succeeds and accordingly proceeds to make the following Orders:a.The Application be and is hereby allowed.b.Leave be and is hereby granted for the Appellant to file its Notice of Appeal, Memorandum of Appeal and Statement of Facts out of time.c.The Appellant’s Notice of Appeal, Memorandum of Appeal, Statement of Facts and tax decision are deemed as having been duly filed and served on 26th September, 2024. d.The Respondent to file and serve its response to the Appeal within 30 days of the date of this Ruling.e.No orders as to costs.

23. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 31ST DAY OF OCTOBER, 2024. ………………………………….CHRISTINE A. MUGA - CHAIRPERSON…………………………BONIFACE K. TERER - MEMBER…………………………ELISHAH N. NJERU - MEMBER…………………………EUNICE N. NG’ANG’A - MEMBER…………………………OLOLCHIKE S. SPENCER - MEMBER