[2023] KETAT 991 (KLR)

Seal Towers Limited v Commissioner of Investigations and Enforcement (Miscellaneous Application E127 of 2023) [2023] KETAT 991 (KLR) (1 December 2023) (Ruling)

Neutral citation: [2023] KETAT 991 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application E127 of 2023

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

December 1, 2023

Between

Seal Towers Limited

Applicant

and

Commissioner of Investigations And Enforcement

Respondent

Ruling

1. The application which was by way of a Notice of Motion dated September 11, 2023 and filed under a Certificate of urgency on 1September 2, 2023 is supported by an Affidavit sworn by the Applicant‘s Chief Financial Officer, Jackson Ndung’u Gathi, on the 11th day of September, 2023 sought for the following Orders:-a.Spentb.The Honourable Tribunal be pleased to grant leave for the Applicant to lodge the appeal against the confirmation assessment notices made on March 4, 2022, of which the Applicant’s Objection should have been allowed given that the Respondent’s decision is coming way beyond the 60 days as provided in the Tax Procedures Act Section 51. c.Such other or further direction be made as this Honourable Tribunal may deem fit and just.d.The costs of this application be provided.

2. The application is premised on the following grounds, that:-a.Failure to lodge the appeal on time was not deliberate but was occasioned by circumstances beyond the Applicant’s control.b.The implementation of the objection decision was done wringly in the iTax system and this took some time to be implemented in the system thus leading to subsequent follow ups and recently being advised to make an application through Tax Appeals Tribunal for the correction of the implementation of the Objection decision. The Respondent did double assessments by aggregating monthly assessments (which the Applicant had accepted and even paid) in the months of December in each corresponding years of 2017, 2018, and 2019. c.The Respondent took some time to understand the Applicant’s argument, and on agreeing that the Applicant has a case that needs to be addressed. The Respondent argued that it could not do a correction on a decision it have implemented itself, thus advising the Applicant to litigate through the Honourable Tribunal. The Applicant therefore makes this late tax appeal application to be allowed to lodge a valid appeal.d.The intended appeal is meritorious with very high chances of success.e.In the interest of justice, leave be granted to lodge the appeal.f.The Applicant will suffer irreparably if leave is not granted.

3. The Applicant in its written submissions dated September 27, 2023 and filed before the Tribunal stated as hereunder.

4. The Applicant submitted that it needs to be allowed to file a valid appeal to review the Objection decision implementation for the specific months of December 2017 to 2019.

5. It contended that it needs to file the Memorandum of Appeal and Statement of Facts and engaged the ADR process.

6. It maintained that the Respondent was not sincere as the Respondent referred the matter for Independent review and advised accordingly that the Applicant has a valid case.

7. It reiterated that it’s application is not an afterthought nor does it abuse the Honourable Tribunal’s process and the Applicant is seeking justice for a review of the Objection decision implementation for three months.

8. The Respondent filed a Replying Affidavit sworn by Esther Rintari, an officer of the Respondent, on October 5, 2023 citing the following as the grounds for opposition:-a.That the parties engagements culminated in reconciliation meetings on February 18, 2022 and February 24, 2022 in which dates the Applicant availed bank reconciliations, VAT schedules and reconciliations for the period under review.b.That the Respondent validated the Applicant’s Objection on February 24, 2022 and issued an Objection decision on March 4, 2022 making adjustments to the tax assessments based on the Applicant’s Objection.c.That the Applicant failed to file a substantive appeal within the timelines specified in Section 13(2) of the Tax Appeals Tribunal Act.d.That the Applicant had sufficient time to lodge a Notice of Appeal, having been issued with the Objection decision on 4th March 2022 after several engagements with the Respondent and the same is late by more than one year and 5 months.e.That the Applicant after the issuance of the Objection decision even conceded to disputed taxes and even requested for a 15-month payment plan.f.That the Applicant has not demonstrated why it deserves a favourable discretion of this Honourable Tribunal and the application should be dismissed with costs to the Respondent.g.That the Respondent has not flouted any procedure or acted contrary to the law. Due process has been followed by the Respondent in assessing, demanding and enforcing collection of taxes from the Applicant by making the correct adjustments in the iTax system in line with the Objection decision.h.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 a very important public duty and for which the public must have an immense interest.

9. Seeing as the Respondent did not file its submissions, the Tribunal shall rely on the pleadings filed by the Respondent to determine the entirety of its case.

Analysis and Findings 10. The Tribunal is enjoined to determine the length and reason for the delay when considering an application for the extension of time to appeal out of time. The power to extend time is discretionary and unfettered but the same must be exercised judiciously and it is not a right to be granted to the Applicant.

11. In determining whether to extend time, the Tribunal was guided by the decision of the court in the case ofLeo Sila Mutiso -vs- Rose Hellen Wangari Mwangi - Civil Application No. Nai. 255 of 1997 (unreported), where the Court expressed itself thus:-“It is now well settled that the decision whether or not to extend the time for appealing is essentially discretionary. It is also well settled 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 reason 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.”

12. The Tribunal is guided by the principles set out inJohn Kuria v Kelen Wahito, Nairobi Civil Application Nai 19 of 1983 April 10, [1984] where the court used the following criteria to consider the application:-a.Whether there is a reasonable cause for the delay?b.Whether the appeal is merited?c.Whether the application for extension has been brought without undue delay?d.Whether there will be prejudice suffered by the Respondent if the extension is granted?

Whether there is a reasonable cause for the delay? 13. In considering what constitutes a reasonable reason for the delay, the court in Paul Wanjohi Mathenge v Duncan Gichane Mathenge [2013] eKLR, held that:“...it is clear that the discretion to extend time is indeed unfettered. 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 Applicant contended that it did not file the appeal on time because it was in ADR with the Respondent and the Respondent advised it after issuing the objection decision had been issued.

15. It reiterated that the Respondent had advised that its case was meritorious and that it needed to file an appeal with the Honourable Tribunal as the Respondent did not have the power to change its Objection decision.

16. The Respondent contended that the Applicant has not given any reasonable cause as to why it failed to file the Appeal on time in contravention of Section 13 of the Tax Appeals Tribunal Act.

17. It reiterated that it corresponded with the Applicant which correspondences culminated in meetings held between the parties wherein the Applicant conceded to some tax being owed

18. The Tribunal finds that the timelines stipulated under Section 13 of the Tax Appeals Tribunal Actare not optional or dependent upon further communication between the parties. It is clear that once an objection decision has been properly issued, the time within which to file an appeal begins to run, as such, the Appellant has to file its appeal within the timelines.

19. It is therefore the Tribunal’s finding that the Applicant’s cause for delay is not reasonable as the law is very clear on the procedure and timelines to be adhered to. Ignorance of the law is not an excuse.

20. Following the determination of absence of reasonable cause for the delay the consideration of the other criteria for dealing with the application has been rendered moot.

21. The Tribunal is in the circumstances not persuaded to exercise its discretion in favour of the Respondent.

Disposition 22. The Tribunal accordingly proceeds to make the following Orders:-a.The application be and is hereby dismissed;b.No orders as to costs.

23. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 1ST DAY OF DECEMBER, 2023. ERIC NYONGESA WAFULACHAIRMAN..............MUTISO MAKAUMEMBER..............ELISHAH N. NJERUMEMBER..............EUNICE N. NG’ANG’AMEMBER..............ABRAHAM K. KIPROTICHMEMBER..............