[2024] KETAT 1074 (KLR)

Richard Kiplangat Kirui t/a Kiboe Uperhill Academy v Commissioner of Legal Services & Board Coordination (Tax Appeal E369 of 2024) [2024] KETAT 1074 (KLR) (19 July 2024) (Ruling)

Neutral citation: [2024] KETAT 1074 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E369 of 2024

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

July 19, 2024

Between

Richard Kiplangat Kirui t/a Kiboe Uperhill Academy

Appellant

and

Commissioner of Legal Services & Board Coordination

Respondent

Ruling

1. The Appellant brought this application vide a Notice of Motion dated 27th March 2024 and filed under a Certificate of urgency on 30th March 2024 and which is supported by an Affidavit sworn by the Appellant himself on the 27th March, 2024 seeking for the following Orders:a.Spent.b.This Tribunal be pleased to extend the time for filing the Notice of Appeal, Memorandum of Appeal, Statement of Facts and tax decision.c.The costs be in the intended appeal.

2. The application is based on the following grounds:a.That the Respondent issued Assessment Orders to the Appellant dated 4th October 2022, requiring him to pay the sum of Kshs. 1,494,720. 00, Kshs 3 19,121,00, Kshs 850, 161. 00 and Kshs 704,584. 00 being tax arrears on Income tax resident individual for the periods 2021, 2020, 2019 and 2017, respectively.b.That the Appellant lodged late objection to the assessments on 22nd March 2023 owing to the grounds of sickness and that the same was acknowledged by the Respondent.c.That the Appellant had, in its application, requested for an allowance in time to lodge a late notice of objection to the Respondent's assessment orders.d.That the Respondent communicated via email on 23rd March 2023 requiring the Appellant to provide supporting materials/records in support of his grounds of late objection.e.The Appellant failed to respond to the Respondent's email owing to sickness as he was seeking for medical attention and was neither in position to respond to the emails nor receive any calls due to the nature of illness.f.That the Appellant was not in a position of reaching his tax representative/auditors to engage the matter on behalf as the same could not have proper communication at the time when the Respondent sent its email.g.That the Respondent in turn, went ahead to issue its decision by declining to allow the Appellant to lodge late objection and confirmed the additional assessments vide the letter dated 5th April 2023. h.The Appellant stands to suffer substantial loss and damage if the Respondent's objection decision is enforced owing to the fact that it did not get the opportunity to defend itself due to reasons beyond its control.i.That the Appellant did not deliberately delay in lodging the appeal to the Respondent's objection decision but was occasioned by the adverse health condition of the Managing Proprietor as evidenced by the appended medical reports.j.That the Appellant, in the interest of justice, prays that it be allowed to file a late Notice of Appeal, Memorandum of Appeal and Statement of Facts out of time. The Appellant prays that this Honorable Tribunal have mercy on him as he has recovered from his long illness and has managed to prepare his supporting documents in the help of his tax representative/auditors and is willing to defend his case.k.That unless the prayer for extension of time for filing the Appeal is allowed, the Applicant will suffer substantial loss as it will be compelled to pay a colossal sum of money on taxes which is not lawfully due and for not getting an opportunity to defend itself in the interest of justice.l.That it shall be just and fair that this application is allowed.

3. In further support of the application, the Applicant lodged written submissions dated 17th April 2024 wherein the Appellant submitted that his application is legal and lawful and that the same should be allowed as it is based on the ground of sickness and that the Appellant did not inordinately delaying in lodging the appeal against the Respondent’s objection decision. The Appellant argued that the delay to file the appeal was not deliberate.

4. The Appellant also submitted that he has an arguable case and that the Respondent’s assessment was extremely unfair and excessive, based on the documents and records that he intends to share with the Tribunal.

5. The Appellant submitted that the Respondent’s late objection invalidation notice is appealable before the law as it contains the Respondent’s communication in regards to the Appellant’s objection to the Respondent’s tax decision.

6. Further, the Appellant submitted that the Respondent’s invalidation decision succeeded the Appellant’s late objection application which was lodged according to Section 51(7) of the Tax Procedures Act 2015 and the same lawfully done and hence such as decision is appealable.

7. The Appellant submitted that the Respondent will not be prejudiced if the application is allowed. The Appellant cited the case of Thenducat Enterprises Ltd vs Commissioner of Domestic Taxes [2024] eKLR where the court held as follows:-“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 Applicant’s recourse to justice now lies in an appeal to the Tribunal. Thus, the applicant would suffer prejudice if it is not granted leave to file its 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.”

8. The Appellant also submitted that it would suffer irreparable financial loss in terms of exorbitant tax payment which could have actually been unfairly and unjustly been imposed on it by the Respondent.

Response to the Application 9. In response to the application, the Respondent filed a Replying Affidavit sworn by Cherurich Ismael Kibet, an officer of the Respondent on the 14th April, 2024 and filed on the 17th April, 2024, wherein the Respondent stated that:-a.The Appellant has not provided sufficient reason to warrant extension of time to file an appeal subject to Section 13(4) of the Tax Appeals Tribunal Act.b.That the Appellant's conduct is one of an indolent and disinterested litigant, who has taken an inordinate delay in not only filing the intended appeal, but also the late objection.c.That the Appellant has not demonstrated why it deserves a favourable discretion of this Honourable Tribunal and the application should be dismissed with costs to the Respondent.d.That the Respondent did not flout any procedure or acted contrary to the law. That it followed due process in assessing, demanding and enforcing collection of taxes from the Applicant.e.That it is in the interest of the public for the Respondent to recover tax in order to finance the growth and development of the nation which is very important public duty and for which the public have an immense interest.

10. In further support of its case, the Responded relied on its written submissions dated 16th April 2024 and filed on 17th April 2024.

11. The Respondent raised a preliminary point that the present application is incompetent, frivolous and otherwise an abuse of process as the Tribunal does not have the jurisdiction to entertain a challenge on a decision issued under Section 51 (7) of the Tax Procedures Act. The Respondent cited the case of the Commissioner of Investigations & Enforcement v Maulik Vyas t/a Rocon Enterprises Limited HCITA E144 OF 2021 wherein Justice Mabeya when dismissing a taxpayer's appeal on a similar issue held that:-“The letter of January 13, 2020 declined the application for a late objection by the respondent under Section 51(7) of the TPA. He did not make or communicate his decision in relation to any assessment under section 52 of the Act. The same having not been an objection decision. It could only be challenged. by way of judicial review and not appeal to the tribunal. Definitely, the Tribunal had no jurisdiction to entertain the appeal before it. On this ground alone, I find the appeal to be meritorious and allow the same. I hereby set aside the judgment of the tribunal dated June 4, 2021 and uphold the appellant’s decision dated January 13, 2020. ”

12. The Responded submitted that the present intended appeal that the Appellant is seeking to appeal against the decision issued on 5th April 2023 which decision was issued under Section 51 (7) of the Tax Procedures Act. The Respondent reiterated that this Tribunal lacks jurisdiction to here and determine the same question therefore the Tribunal should strike out and/or dismiss this application for want of jurisdiction. The Respondent cited the famous case of The Owners of Motor Vessel “Lilian S” V Caltex Oil (K) Limited (1989) eKLR, which is a locus classicus case on matters of jurisdiction.

13. Turning away from the question of jurisdiction, the Respondent submitted that the Appellant had not given sufficient reasons for the delay. It cited the Supreme Court decision in Nicholas Kiptoo Arap Korir Salat V Independent Electoral and Boundaries Commission And 7 Others [2014] eKLR, wherein the court stated that:-“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.”

14. The Respondent also relied on the case of Commissioner Of Domestic Taxes V Mayfair Insurance Company Limited (2017) eKLR, where the High Court while dealing with a similar issue held 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.”

15. Apart from the foregoing, the Respondent submitted that it raised assessments on 15th December 2020. That the Appellant failed to lodge an objection to the assessments within the statutory timelines and made an application for extension of time to lodge a notice of objection dated 22nd March 2023.

16. The Respondent further submitted that the Appellant failed to file a substantive appeal within the timelines specified in Section 13(2) of the Tax Appeals Tribunal Act. Based on these facts, the Respondent submitted that the Appellant waited for more than 6 months to move the Tribunal seeking to file an appeal out of time. That the delay is inordinate.

17. The Respondent relied on the case of Yussuf Mohamed Salat V Idris Ali Ahmed [2009] eKLR where the Court held that justice is a doubled edged sword and equity aids the vigilant not the indolent. That the Appellant is clearly guilty of laches and has been sitting on its laurels up until when it rushed to Court to seek interim reliefs in the present application.

18. Finally, the Respondent relied on the case of Mwangi S. Kimenyi V Ag & Another [2014] eKLR where the Court held that:-“Nevertheless, inordinate delay should not be difficult to ascertain once it occurs; the litmus test being that it should be an amount of delay which leads the court to an inescapable conclusion that it is inordinate and therefore, inexcusable.”

19. Based on the above, the Respondent urged the Tribunal to dismiss the application.

Analysis and Findings 20. The Applicant’s application is primarily praying to the Tribunal for extension of time to file an appeal out of time.

21. The power to expand time for filing an Appeal is donated by Section 13(3) of the Tax Appeals Tribunal Act which provides that:“The Tribunal may, upon application in writing, extend the time for filing the Notice of Appeal and for submitting the documents referred to in subsection (2).”It is therefore a discretionary power and not a right to be granted to the Applicant.

22. In determining whether the to expand time, courts have in the past considered a number of factors. These factors were discussed in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 where the Judge held that:“It is now settled that the decision whether to extend the time for appealing is essentially discretionary. It is also well stated that in general the matters which this court takes into account in deciding whether to grant an extension of time are, first the length of the delay, secondly the reasons for the delay, thirdly (possibly) the chances of the appeal succeeding if the application is granted and fourthly the degree of prejudice to the respondent if the application is granted.”

23. The court in Wasike V Swala [1984] KLR 591 provided the hierarchy of the 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.”

24. The Tribunal, guided by the principles set out in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997, Wasike V Swala [1984] KLR 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.The merits of the complained action.c.Whether there will be prejudice suffered by the Respondent if the extension is granted.a.Whether there is merit in the appeal

25. Regarding the delay, the Appellant intimated that he was unable to address the Respondent’s request for documents in support of his late notice of objection. The Respondent made a request on the 23rd March, 2023 and upon default on the part of the Appellant to provide the documents requested it proceeded to reject the application for the lodging of a late notice of objection on the 5th April, 2023.

26. It is manifestly clear that the Appellant failed to avail to the Respondent an opportunity to appropriately determine the application for late notice of objection. The Appellant did not even attempt to revisit the matter with the Respondent prior to or subsequent to the issuance of the Respondent’s decision of 5th April, 2023.

27. The application for lodging a late notice of objection having not been determined on its merit by reason of default on the part of the Appellant himself there is no appealable decision capable of being pursued in an appeal before the Tribunal.

28. The Tribunal in the circumstances finds that there is no cause of action available to the Appellant to found any appeal that could be determined by the Tribunal.

29. The Tribunal having made the foregoing finding does not have to delve into the other factors ordinarily considered when dealing with such similar application as they have been rendered moot.

30. The Tribunal notes that simultaneously with the present application the Appellant lodged a Notice of Appeal and Appeal documents on the 30th March, 2024 and with the foregoing finding in respect of the application the Appeal stands rendered incompetent and thus unsustainable in law.

Disposition 31. On the basis of the foregoing analysis, the Tribunal finds that the application lack merit and the Appeal before it is incompetent and the Tribunal accordingly proceeds to make the following Orders:a.The application be and is hereby dismissed.b.The Appeal be and is hereby struck out.c.No orders as to costs.

32. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF JULY, 2024. ERIC NYONGESA WAFULA - CHAIRMANELISHAH N. NJERU - MEMBERMUTISO MAKAU - MEMBEREUNICE N. NG’ANG’A - MEMBERABRAHAM K. KIPTROTICH- MEMBER