[2024] KETAT 1489 (KLR)

Rihab Investment Limited v Kenya Revenue Authority (Miscellaneous Tax Appeal E080 of 2024) [2024] KETAT 1489 (KLR) (31 October 2024) (Ruling)

Neutral citation: [2024] KETAT 1489 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Tax Appeal E080 of 2024

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

October 31, 2024

Between

Rihab Investment Limited

Applicant

and

Kenya Revenue Authority

Respondent

Ruling

Background 1. The Applicant lodged an Notice of Motion Application under section 13 (3) and (4) of the Tax Appeals Tribunal Act CAP 469A Laws of Kenya, (hereinafter “TATA”) and Rule 10(4) of the Tax Appeals Tribunal (Procedure) Rules, 2015) dated 28th August 2024 and filed on 30th August 2024 seeking the following Orders:a.Spent.b.That the Applicant be granted leave to file its Notice of Appeal, Memorandum of Appeal and Statement of Facts out of time against Respondent's decision issued on 29th August 2022. c.That the Tribunal be pleased to deem the annexed Notice of Appeal, Memorandum of Appeal and Statement of Facts dated 26th August 2024 as being properly on record.d.That the tax decision dated 29th August 2022 and any other consequent tax demands be stayed pending the hearing and determination of this application.e.That the costs of this Application be in the main Appeal.

Grounds for the Application 2. The Applicant’s notice of motion was supported by an affidavit dated 28th August 2024 sworn by Adirashid Mohamed Osman and filed on 30th August 2024 predicated on the following grounds:a.That the Applicant was issued with an assessment by the Respondent on 21st June 2022 for the period 2016 where after he raised an objection against the assessments.b.That the Applicant’s objection was rejected vide an objection decision dated 29th August 2022 confirming additional taxes totalling to Kshs 8,389,329. 00. c.That the annexed Notice of Motion application seeks 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.d.That the Applicant was late in filling the notice of intention to Appeal and submitting the substantive appeal on grounds of technicality since the matter was under TAT No: 1013 of 2022 but left out.e.That the delay in filing a notice of intention to appeal was not intentional.f.That the Applicant seeks to have on record its Notice of Appeal, Memorandum of Appeal and the Statement of Facts dated 26th August 2024 to be deemed as duly filed within the statutory timelines.g.That the Applicant has a meritorious Appeal and the same ought to be heard on merit.h.That any further delays in filing the Notice of Appeal, Memorandum of Appeal and Statement of Facts will cause the Applicant to suffer an irreparable loss.i.That the Applicant wishes to appeal against the objection decision of the Respondent.j.That the Respondent will not suffer any prejudice.k.That in the circumstances therefore, it is necessary that the applicant be heard on priority basis.

Response to the Application 3. In response to the Application, the Respondent filed a replying affidavit sworn by Elisha Nyapara on 9th September 2024. The Respondent’s response is as follows:a.That the objection decision subject to this Application had previously been considered by the Tribunal in TAT No. 1013 of 2022 and the judgement delivered on 13th October 2023 dismissing the appeal.b.That the purpose of this Application is to relitigate a dispute which in the legal terms have been rendered ‘res judicata’ with the sole purpose of reopening the case and having the Applicant have a second bite of the cherry, a scenario that the law frowns upon.c.That subsequent to the judgement being delivered by the Tribunal dismissing the appeal, parties entered into a consent with a view to settling and concluding the issues in dispute, the terms of the consent which are apparent on the face of the record.d.That without prejudice to the forgoing, having read the grounds upon which the Application of time has been lodged, the same fails to meet the threshold for grant of orders sought as the Applicant has failed to satisfy this Tribunal with the reason why there has been an inordinate delay of over 2 years since the Objection Decision was made before preferring an appeal.e.That the Applicant’s assertion that the delay is occasioned by a technicality as a result of omission of VAT taxes in the filed consent by parties does not in any way explain the reasons for the delay of over 2 years since the objection decision was made on 29th August 2022. f.That in any case, any omission in the consent/ ADR agreement or errors thereof is cured through amendment of the consent/ agreement as the case may be and the same cannot explain the reasons for delay in proffering an appeal over 2 years after rendering of an objection decision.g.That the Applicant has therefore not demonstrated why it deserves a favourable discretion of this Honourable Tribunal and the Application should be dismissed with costs to the Respondent.h.That the Application is therefore misplaced and thus ripe for dismissal.

Analysis and Findings 4. The authority to expand time for filing an appeal is donated by Section 13(3) of the TATA, 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)”.

5. Further, section 13(4) of the TATA provides thus:“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 filing the notice of appeal or submitting the documents within the specified period.”

6. Rule 10 of the Tax Appeals Tribunal (Procedure) Rules reiterates the foregoing statutory provision in the following terms:“(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.”

7. The power to extend time is discretionary and not a right to be granted to the Applicant. The Supreme Court in Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 others [2014] e KLR set out general considerations to guide the court in exercising its discretion in cases of this nature. It guided as follows:“i.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;ii.A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court;iii.Whether the court should exercise the discretion to extend time, is a consideration to be made on a case-to-case basis;iv.Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the court;v.Whether there will be any prejudice suffered by the respondents if the extension is granted;vi.Whether the application has been brought without undue delay; andvii.Whether in certain cases, like election petitions, public interest should be a consideration for extending time."

8. The jurisprudence from the case of Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 is instructive. The court in the said case held as follows in determining whether to enlarge time:“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.”

9. Apart from the foregoing, 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; and(c)That the delay has not been inordinate.”

10. Pursuant to the provisions of section 13 (4) of the TATA, and principles as set in Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 others [2014] e KLR, Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 and Wasike v Swala [1984] KLR 591. These principles are analyzed in relation to the Application are as follows.a.Whether there is a reasonable cause for the delay?

11. An examination of the Applicant’s pleadings reveals that the Applicant is seeking leave under section 13(4) being ‘other reasonable cause.’

12. The Applicant’s main ground for seeking leave is that it was late in filing the notice of intention to appeal and submitting the substantive appeal on grounds of technicality since the matter was under TAT NO: 1013 of 2022 but had been left out. The Respondent opposed this ground on the basis that the matter was heard and determine by this Tribunal.

13. The Tribunal perused judgement issued under TAT NO: 1013 of 2022 wherein the parties were Rihab Investment LTD vs Commissioner of Domestic Taxes. The objection decision in issue was dated 29th August 2022. Upon perusing the proposed memorandum of appeal, the Applicant seeks to file an appeal concerning the objection decision dated 29th of August 2022.

14. The Applicant in the proposed memorandum of appeal stated as follows:‘‘The decision on these objections was subsequently communicated on the 29th of August 2022 confirming the assessment. The taxpayer being dissatisfied with the commissioners decision, filed an appeal at the Tax Appeals Tribunal; TAT No. 1013 of 2022 on 16th September 2022 and subsequently applied for the dispute to be resolved through Alternative Dispute Resolution (ADR) on 16th September 2022. An agreement was reached on 13th October 2023 on account of Income tax company. However, the VAT element was left out inadvertently, yet the dispute was on the basis of inconsistencies between total VAT declarations and turnover for the year of income 2016. This is an offshoot from a partial implementation of an ADR agreement.’’

15. The Tribunal heard and delivered its judgment TAT No 1013 of 2022 on 13th October 2023 dismissing the appeal. Therefore, the matter that the Applicant seeks to litigate upon was heard and determined by the Tribunal and now the matter is res judicata.

16. The doctrine of res judicata applies to both suits and applications as was held in Abok James Odera vs. John Patrick Machira Civil Application No. Nai. 49 of 2001. In the said suit, for the doctrine to apply, the following conditions must be met:i.A previous suit in which the matter was in issue;ii.The parties were the same or litigating under the same title;iii.A competent court heard the matter in issue; andiv.The issue had been raised once again in a fresh suit.

17. The rationale of the doctrine of res judicata was explained in the decision of the Court of Appeal in Independent Electoral & Boundaries Commission –vs- Maina Kiai & 5 Others (2017) eKLR as follows:“The rule or doctrine of res judicata serves the salutary aim of bringing finality to litigation and affords parties closure and respite from the spectre of being vexed, haunted and hounded by issues and suits that have already been determined by a competent court. It is designed as a pragmatic and common-sensical protection against wastage of time and resources in an endless round of litigation at the behest of intrepid pleaders hoping, by a multiplicity of suits and fora, to obtain at last, outcomes favourable to themselves. Without it, there would be no end to litigation, and the judicial process would be rendered a noisome nuisance and brought to disrepute and calumny. The foundations of res judicata thus rest in the public interest for swift, sure and certain justice.”

18. The parties in TAT NO: 1013 of 2022 and those in the proposed memorandum of appeal are the same. The Appellant seeks to appeal against the same objection decision that was in issue in TAT No 1013 of 2022 in this Tribunal. The matters in the TAT No 1013 of 2022 revolved around VAT which is the same issue that the Applicant seeks leave to appeal against. There is no doubt that the intended appeal is res judicata. The Applicant ought to have appealed against the Tribunal’s decision or could have applied for review. The Applicant failed to pursue any of the remedies.

19. The Tribunal finds that there was no reasonable cause for the delay and accordingly, having established that the principle of res judicata applies to the intended appeal, the Tribunal finds that the intended Appeal is not arguable.

20. In Independent Electoral & Boundaries Commission –vs- Maina Kiai & 5 Others (Supra) found that the foundations of res judicata is a matter of public interest for swift, sure and certain justice and to bring the matter to a conclusion. It would be prejudicial to the Respondent to continue litigating endlessly.

21. Due to the foregoing findings, the Tribunal is not persuaded to grant leave to the Applicant to file the appeal because doing so will be prejudicial to public interest.

Disposition 22. In the circumstances, the Tribunal proceeds to make the following orders:i.The Application dated 28th August 2024 and filed on 30th August 2024 be and is hereby dismissed.ii.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 - CHAIRPERSONBONIFACE K. TERER - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBEROLOLCHIKE S. SPENCER - MEMBER