[2025] KETAT 163 (KLR)

Reckitt Benckiser Services (Kenya) Limited v Commissioner of Customs and Border Control (Tax Appeal E471 of 2024) [2025] KETAT 163 (KLR) (28 February 2025) (Ruling)

Neutral citation: [2025] KETAT 163 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E471 of 2024

CA Muga, Chair, AK Kiprotich & T Vikiru, Members

February 28, 2025

Between

Reckitt Benckiser Services (Kenya) Limited

Applicant

and

Commissioner of Customs and Border Control

Respondent

Ruling

Background 1. The Applicant moved the Tribunal vide a Notice of Motion dated 24th January, 2025 and filed on 27th January, 2025 seeking the following Orders;a.Spent.b.That the Tribunal be pleased to direct that the Applicant is at liberty to file an amended supplementary statement of facts to corroborate the evidence submitted in the earlier filed statement.c.Cost of this Application to be in the intended appeal.

2. The Application was supported by a sworn affidavit of Maurice Mwaniki, the Applicant’s tax agent dated 24th January, 2025 and filed on 27th January, 2025 wherein the Applicant cited the following as its grounds for the Application:a.That the Applicant’s principal business is importing and distributing fast moving consumer goods in the Kenyan market.b.That in December 2023, the Applicant imported a consignment of pharmaceutical products under the brand name Gaviscon (described by the Applicant as a type of medicine called a reflux suppressant classified under HS code 3004. 49. 00) from Reckitt Benckiser Healthcare (UK) Ltd. The consignment was declared under import entry number 23MBAIM407481989 dated 23 December 2023 by the company’s customs agent, Africa Global Logistics Kenya Limited (“AGL”).c.That the Respondent subsequently raised a query in respect of the customs values declared by the Applicant for the consignment cleared through the port of Mombasa and proceeded to subject the goods to customs value uplifts.d.That the Applicant appealed the decision made by the Respondent and proceeded to apply for Alternative Dispute Resolution (“ADR”) in the interest of resolving the dispute amicably.e.That while engaging in the ADR process the Respondent requested the Applicant for documentation to support its ex-works costs that were incurred in bringing the consignment to Kenya. The documents requested included the freight invoices, and the marine insurance cover note. The Applicant subsequently provided these documents and their corresponding proofs of payment to the Respondent.f.That the Respondent had not requested these documents during the formative period of the dispute that is; during the application for review stage and in its review decision.g.That upon providing the evidence to the Respondent during the ADR process, the Respondent refused to consider the evidence.h.That the dispute was centred on whether the transaction value (“TV”) method is the most appropriate methodology in determining the customs value for the consignment in dispute.i.That the new evidence confirmed that the TV applied by the Applicant was indeed accurate.j.That should this application be allowed; the Respondent would suffer no prejudice because it already had an opportunity to interrogate the documents in question during the ADR discussions.k.That the Tribunal had in the past allowed evidence that was not considered by the Respondent during ADR. this was in the case of TAT 848 of 2022, KCSSA East Africa Limited vs Commissioner of Customs & Border Control.l.That there was immediate and imminent danger that the Applicant’s evidence may not be admitted by the Tribunal which would be prejudicial to the Applicant’s case.m.That unless the Tribunal intervened and certified this application as urgent and the orders sought granted, the Applicant stood to suffer irreparable loss.

3. In response to the Application, the Respondent filed an opposing replying affidavit sworn by Mr. Victor Chabala, an officer of the Respondent stating the following grounds:a.That under Part I of the First Schedule to the Kenya Revenue Authority Act, Cap 469 Laws of Kenya (hereinafter “the Act”) the Respondent is mandated to enforce the provisions of the Income Tax Act Cap 470 of the Laws of Kenya (hereinafter “ITA”), the Value Added Tax Act, CAP 476 of the Laws of Kenya, East African Community Customs Management Act, 2004 and the Excise Duty Act, CAP 472 of the Laws Kenya.b.That the Applicant should not be granted leave to file the additional documents for the following reasons:i.The Applicant would reasonably have been aware of and procured the further evidence before, an essential consideration to ensure fairness and due process.ii.That procedure is not there for no[sic] reason and parties ought to abide by it. Procedure is so closely intertwined with the substance of a case, that it befits not the attribute of mere technicality.iii.That procedure is the handmaiden of justice and should be adhered to and not disregarded.iv.That as an officer of the Respondent, it is evident that the documents intended to be adduced could easily be adduced during the objection by the Applicant before the Respondent made a decision on the matter in an attempt to settle the dispute.v.That the Respondent requested the same documents the Applicant to provide the same documents on 18th January, 2024 during the review stage and prior to the issuance of the Applicant with the review decision.vi.That section 13(6) of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) provides that that an Appellant shall, unless the Tribunal orders otherwise, be limited to the grounds stated in the Appeal or documents to which the decision relates.vii.That it would be unreasonable and not in the interest of justice to allow additional documents which were not present nor availed when the Respondent made its decision on the extra taxes payable.viii.That the Respondent adhered to all statutory timelines and performed its part of the obligations imposed by the EACCMA and it is only fair that the appellant/applicant be made to do the same.ix.That the additional documents would prejudice the Respondent's case.x.That courts and tribunals cannot aid in the bending or circumventing of rules and shifting of goal posts for, while it may seem to aid one side, it unfairly harms the innocent party who strives to abide by the rules.xi.That the additional documents would prejudice the Respondent's case and efficiency as it would force the Respondent to review the said documents and make a decision based on the new evidence disregarding the earlier documents used.xii.That litigation must come to an end and it is evident the Applicant at the slightest idea of defeat decided to entangle us all in a tedious cycle of litigation in the guise of seeking leave to adduce additional documents so as to prolong and delay the determination of the substantive suit by the Tribunal.xiii.That to ensure the maxim equity aids the vigilant and not the indolent is breathed into life this application which would prejudice the Respondent ought not to be allowed but struck out to give ample time and efficiency in determining the substantive suit.xiv.That the Applicant wanted to use this Application to delay the determination of the suit and essentially delay the collection of the tax in dispute.xv.That the application having failed to meet the threshold for granting leave to adduce additional documents lacks in merit and ought to be dismissed with costs to the Respondent.

4. The Applicant’s further replying affidavit sworn by Maurice Mwaniki, the Applicant’s tax agent was dated and filed on 12th February, 2025 wherein the Applicant outlined the following as its further grounds for making the Application:a.The Applicant was not aware of the further evidence requested by the Respondent:i.That the Respondent at paragraph 10 of its Replying Affidavit dated 4th February 2025 stated that it requested the documents the Applicant was seeking to adduce.ii.That the Respondent attached an electronic mail sent to Sachin Varma via electronic mail address sachin.varma@rb.com and copied to the Africa Global Logistics (AGL Group), the Applicant’s clearing agent via electronic mail ke014-tax.kenya@aglgroup.com.iii.That the said Sachin Varma is a former employee of the Applicant who left the business in 2022. iv.That the communication did not reach the Applicant as the electronic mail was sent to a former employee whose electronic mail address was no longer operational.v.That further, the Applicant’s clearing agent did not receive the electronic mail because the Applicant’s clearing agent had just transitioned from Bollore Transport and Logistics (BTL) to AGL and some of its new electronic mail addresses were not fully functional until May-June 2024 due to system migration.vi.That the Applicant’s clearing agent did not also receive the request for the documents.b.The Respondent will not be prejudicedi.That the Respondent suffers no prejudice because it already had an opportunity to interrogate the documents in question during the Alternative Dispute Resolution (ADR) discussions.ii.That the Applicant endeavoured to present this new evidence to the Respondent at the ADR deliberations. However, the Respondent declined to consider the evidence.iii.That the evidence indeed confirms that the Applicant used the correct transactional values while making its declaration.iv.That the Applicant should only pay taxes that are truly due and payable.v.That it is in the interest of justice for the Tribunal to allow the Application.

5. On 30th January, 2025, the Tribunal directed parties to file and serve upon each other their written submissions on or before 12th February, 2025 and since both parties complied with the Tribunal’s directions, the written submissions of both parties have been carefully considered by the Tribunal.

Analysis and Findings 6. The Tribunal notes that the Applicant herein was seeking the indulgence of the Tribunal to allow it to file an amended supplementary statement of facts to corroborate the evidence submitted in an earlier filed statement of facts. The Applicant filed an appeal against the review decision by the Respondent who decided that a different methodology ought to have been used to determine the import value of the Applicant’s imported consignment of medicine.

7. The Tribunal also notes that the Applicant stated that it was only whilst engaging in the ADR process that the Respondent requested the Applicant for documentation which had not been provided at the review stage nor at the point when the Respondent was making its review decision. The Applicant’s grounds in the instant application are that the Respondent refused to consider documentation during the ADR process in spite of the fact that it was the Respondent who requested the documents. The Respondent contested this position on the ground that it would be prejudiced as it did not sight the documents when making its review decision.

8. The Tribunal's power to determine an Application of this nature is anchored on the provisions of Rule 10 of the Tax Appeals Tribunal (Procedure) Rules 2015 which provides as follows:“10. Extension of time for submitting documents(1)Where the documents referred to in rule 3(2) are not filed within the time specified therein, the Tribunal may, upon application in writing, extend the time for submitting the documents.(2)An application for extension of time referred to in rule 10(1) shall be—(a)supported by an affidavit stating reasons why the applicant was unable to submit the documents in time;(b)served on the respondent by the applicant within two days of filing with the clerk.(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.(4)The respondent may respond to the application by filing an affidavit within fourteen days from the date of service of the application.(5)The Tribunal shall set down the hearing date for the application.”

9. The Tribunal also notes the following provisions of Section 13 (6) of the TATA:“The appellant shall, unless the Tribunal orders otherwise, be limited to the grounds stated in the appeal or documents to which the decision relates. " (Emphasis added)

10. The Tribunal is also guided by the following holding in the case of Commissioner of Income Tax-vs-Total Kenya Limited [2021] eKLR in making its determination on whether to allow the Applicant to file additional documents:“In Tarmohamed & Another v. Lakhani & Company [1958] EA 567, the Court of Appeal for Eastern Africa adopted the decision in Ladd v. Marshall [1954] WLR 1489 and stated: -Except in cases where the application for additional evidence is based on fraud or surprise: to justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given. it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.In Wanjie & Others v. Sakwa & Others {19841 KLR 275. in considering the need for restricting reception of additional evidence under Rule 29 of the Court of Appeal Rules, Chesoni JA observed at pg 280 thus: -“This rule is not intended to enable a party who has discovered fresh evidence to import it nor is it intended for a litigant who has been unsuccessful at the trial to patch up the weak points in his case and fill up omissions in the Court of Appeal. The Rule does not authorise the admission of additional evidence for the purpose of removing lacunae and filing in gaps in evidence. The appellate court must find it needful. Additional evidence should not be admitted to enable a plaintiff to make out a fresh case in appeal. There would be no end to litigation if the rule were used for the purpose of allowing the parties to make out a fresh case or to improve their case by calling further evidence. It follows that the power given should be exercised very sparingly and great caution should be exercised in admitting fresh evidence.”“From the foregoing, it is clear that the power to admit additional evidence is discretionally. However, it should be exercised restrictively. That the evidence should be needful and not meant to patch up an applicant's case on appeal. Finally, the power should be exercised sparingly but for the ends of justice. In the present case, the evidence was in the possession of the applicant during the trial before the tribunal. However, it was contended, and not controverted, that it was not produced at the trial because the parties knew or conducted themselves in a manner suggesting that it was not necessary. This is so because, the parties with knowledge that the mutual agreement process had collapsed, resorted to the appeal before the Tribunal before and without considering the Alternative Dispute Resolution required under Article 24 of the Double Taxation Agreement. This is the Article the Tribunal relied on to determine the matter against the applicant.”“The Court has considered that the evidence sought to be relied on is needful. This is so because there was no contention that the respondent had raised the issue of jurisdiction before the Tribunal. It was submitted that that was the case because the parties knew of the position of the MAP that there was no requirement for ADR before approaching the Tribunal.“The Court is persuaded that, if it be true that the Tribunal's decision was based on the unavailability of the intended evidence and reliance thereon was suo motto, that piece of evidence would have been crucial to the applicant's case. There would be no prejudice to be suffered if the said evidence is adduced at this stage. "

11. In the case of Mohamed Abdi Mahmud-vs-Ahmed Abdullahi Mohamed & 3 Others [2018] eKLR the Supreme Court expressed itself by holding as follows:“We therefore lay down the governing principles on allowing additional evidence in appellate courts in Kenya as follows:a.the additional evidence must be directly relevant to the matter before the court and be in the interest of justice;b.it must be such that. if given. it would influence or impact upon the result of the verdict. although it need not be decisive;c.it is shown that it could not have been obtained with reasonable diligence for use at the trial, was not within the knowledge of, or could not have been produced at the time of the suit or petition by the party seeking to adduce the additional evidence;d.Where the additional evidence sought to be adduced removes any vagueness or doubt over the case and has a direct bearing on the main issue in the suit;e.the evidence must be credible in the sense that it is capable of belief,f.the additional evidence must not be so voluminous making it difficult or impossible for the other party to respond effectively;g.whether a party would reasonably have been aware of and procured the further evidence in the course of trial is an essential consideration to ensure fairness and due process;h.where the additional evidence discloses a strong prima fade case of wilful deception of the Court;i.The Court must be satisfied that the additional evidence is not utilized for the purpose of removing lacunae and filling gaps in evidence. The Court must find the further evidence needful.j.A party who has been unsuccessful at the trial must not seek to adduce additional evidence to, make a fresh case in appeal, fill up omissions or patch up the weak points in his/her case.k.The court will consider the proportionality and prejudice of allowing the additional evidence. This requires the court to assess the balance between the significance of the additional evidence, on the one hand, and the need for the swift conduct of litigation together with any prejudice that might arise from the additional evidence on the other. " (Emphasis added)

12. Guided by statute and the principles outlined in the authoritative and persuasive precedents as outlined in the previous paragraphs, the Tribunal notes that the additional evidence that the Applicant seeks to adduce through this application was neither provided during the formative period, of the dispute, namely the Application for review stage nor during the time when the Respondent was making its review decision. The evidence was provided during the ADR process upon a request by the Respondent for documentation from the Applicant to support its Ex-work costs. The Applicant states that the Respondent then refused to consider the documents and the ADR process failed.

13. The view of the Tribunal is that the documents listed in the application which the Applicant seeks to adduce before the Tribunal are critical in supporting the Tribunal to clarify the facts of the dispute and in its final decision. The Tribunal is also of the view is that it has the discretion, pursuant to the provisions of section 13 (6) of the TATA, to limit whether or not it may consider any new documentary evidence that is adduced at any stage of the dispute. The fact that documents were to be provided to assist with the ADR process is not a basis for the Tribunal to refuse to admit the same into evidence.

14. The only limit to the discretion of the Tribunal as outlined in Section 13 (6) of the TATA is that outlined pursuant to the following provisions of Order 21 of the Tax Appeals Tribunal (Procedure Rules), 2015:“21. Amendment of pleadingsA party may at any time before the closure of the case, orally apply to amend its pleadings and the Tribunal may, at its discretion, allow such application on such terms and conditions including granting leave to the other party to amend its pleadings provided the amendments.”

15. The Tribunal is of the further view that the documents that the Applicant wishes to adduce as additional documentary evidence are at the core of the dispute which is the Applicant challenging the methodology used by the Respondent to determine the import value of its consignment. The additional documentary evidence will be interrogated by the Tribunal and will influence how the Tribunal will make its decision.

16. It is the view of the Tribunal that the tests prescribed in Mohamed Abdi Mahmud case [SUPRA] have been met to the extent that the additional evidence sought to be adduced will eliminate vagueness or doubt over the dispute and has a direct bearing on the main issue in the Appeal. The Tribunal has not found any evidence to suggest the Applicant’s additional documentary evidence are calculated to be utilized for the purposes of removing lacunae and filling gaps in evidence. The documents are relevant to the Appeal and it is in the interests of justice and fairness to allow the same to be admitted in evidence.

17. The Tribunal reiterates its holding in the case of Alliance TobaccoLimited vs Commissioner of Legal Services & amp; Border Control [TAT Appeal No. 42 of 2024] to support the position that the guiding principle in applications to amend pleadings is that the same will be liberally and freely permitted unless prejudice and injustice will be occasioned to the opposite party.

18. The Respondent did not prove the grave prejudice it is likely to suffer should the additional documentary evidence be admitted by the Tribunal.

Disposition 19. The Tribunal is inclined to exercise its discretion in favour of the Applicant and allow a similar latitude in filing any additional documents by the Respondent for the purposes of balancing out the competing interests of the parties in the Appeal.

20. The Orders that accordingly recommend themselves are as follows:a.The Applicant be and is hereby granted leave to file a Supplementary Statement of Facts and to file additional documents limited to the documents identified in the application.b.The Applicant to file and serve the Supplementary Statement of Facts and the additional documents within Seven (7) days of the date of delivery of this Ruling.c.The Respondent be and is hereby granted a corresponding leave to file and serve any Supplementary Statement of Facts and additional documents.d.The Respondent to file and serve the Supplementary Statement of Facts and additional documents (if necessary) within Seven (7) days of the date of being served by the Applicant.e.The Appeal is fixed for hearing on 18th March, 2025. f.No orders as to costs.

DATED AND DELIVERED AT NAIROBI ON THIS 28TH DAY OF FEBRUARY, 2025. ……………………………CHRISTINE A. MUGACHAIRPERSON……………………………ABRAHAM K. KIPROTICHMEMBER……………………………TIMOTHY V. VIKIRU (DR.)MEMBER