[2025] KETAT 142 (KLR)

Skillman Construction Limited v Commissioner of Domestic Taxes (Tax Appeal E311 of 2023) [2025] KETAT 142 (KLR) (21 February 2025) (Ruling)

Neutral citation: [2025] KETAT 142 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E311 of 2023

RM Mutuma, Chair, M Makau, T Vikiru, D.K Ngala & Jephthah Njagi, Members

February 21, 2025

Between

Skillman Construction Limited

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Respondent/Applicant vide a Notice of Motion dated and filed on 27th January 2025 which is supported by an Affidavit sworn by Leparan Lemiso Counsel for the Respondent/Applicant, on 27th January 2025 sought for the following Orders:a.That the appellant’s Memorandum of Appeal and Statement of Facts dated 5th December 2024 and filed on 8th January 2025 be dismissed for being filed late and without leave of the Tribunal contrary to the provisions of Sections 13 (1), (2), (3), (4), (5) and 26 of the Tax Appeals Tribunal Act 2015; and,b.That there be no orders as to costs.

2. The application is premised on the following grounds, that;a.The Memorandum of Appeal and Statement of Facts dated 5th December 2024, filed and served on 8th January 2025 was filed late and without leave of the Honourable Tribunal.b.The Appellant in its application dated 18th July 2023 sought for leave to file its appeal out of time, the Tribunal vide its ruling of 1st December 2023 deemed the Appellant’s Memorandum of Appeal and Statement of Facts filed on 16th June 2023 as properly filed and served.c.The Respondent/Applicant upon perusal of the pleadings filed physically and electronically and could not trace the Memorandum of Appeal and Statement of Facts, thus wrote to the Appellant/Respondent on 11th December 2023 and 22nd December 2023 requesting for the same, unfortunately the Appellant/Respondent did not respond to the request nor did it serve the pleadings.d.When the matter came up for hearing on 13th November 2024, the Tribunal noted that the Memorandum of Appeal and Statement of Facts were not on record or on the E-Filing system and directed the Appellant to avail copies of the same to the Tribunal and Respondent.e.The Appellant failed to avail the copies that were deemed as properly filed vide the order of 1st December 2023, instead it filed the Memorandum of Appeal and Statement of Facts dated 5th January 2025.

3. Upon being served with the application, the Appellant/Respondent filed its Replying Affidavit sworn by Bernard Ratemo a Director of the Appellant, sworn on 4th February 2025, raising the following grounds, that;a.The application is misguided, frivolous, vexatious, brought in bad faith and now purposely raised in order to waste the precious Tribunal’s time and while at it vex the Appellant into abandoning the seat of justice to which it is seeking refuge.b.The Appellant’s Advocates appeared before the Tribunal on the 9th January 2025 for purposes of hearing the main Appeal and confirming service of the Memorandum of Appeal, the Statement of Facts and the Submissions upon the Tribunal and the Respondent, to which indeed the same had been filed and served and it was when the Respondent's Counsel raised an issue of the same being filed and served late into the day without leave and in turn sought for their dismissal. The Respondent was directed to make a formal application in relation to the late filing.c.It is factual that the Appellant made an application seeking leave to file an Appeal out of time and the same upon consideration, the Tribunal did exercise its discretion in its favour by granting leave to file an Appeal out of time through its Ruling delivered on the 1st December 2023, which Notice of Appeal, Memorandum of Appeal and the Statement of Facts and the same were undeniably adopted as being formally on record and all that remained was compliance on the part of the Respondent in filing its Statement of Facts, to the contrary, such decision only created confusion as it was to be noted at a later date that we could not trace the documents so referred to by the Tribunal from our office file despite the incessant efforts made to trace them.d.The Appellant’s Advocates on record having failed to trace the initial documents and being considerate of the passing time, have put all their documents on record, to wit filed and served physically the Notice of Appeal, Memorandum of Appeal and the Statement of Facts and all that is outstanding is the determination of the instant Appeal by this Honourable Tribunal.e.The fact that failure to adduce and supply the Memorandum of Appeal and Statement of Facts on time as directed was as a result of an oversight which was involuntary and inadvertent, and thus call upon this Tribunal to keep in mind that this is a court of justice rather than one bent on relying on technicalities.f.The prescribed time limits are not just targets to be aimed at but requirements to be met strictly, to which presently the said time limits have faced procedural lapses in the nature of non-compliance through inadvertence.g.A perusal of both the Memorandum of Appeal and Statement of Facts so filed, disclose both legal, factual triable and arguable issues that call for an appropriate determination of the Appeal to be made on its proper merits and with finality.h.This Honourable Tribunal is thus called upon to weigh in on the prejudice that is likely to be suffered by the innocent party herein vis-à-vis prejudice to be suffered by the offending party if the pleadings are dismissed with the end result of driving the Appellant off the seat of justice unheard.i.In the exercise of discretion, a party 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 costs cannot compensable.j.Equally, there is no evidence tendered or demonstrated by the Applicant herein of any likely prejudice to be suffered if the Appeal is allowed to be prosecuted on merit and with finality.

Parties Submissions 4. The parties in compliance with the directions by the Tribunal to the effect that the application was to be canvassed by way of written submissions, the Appellant duly filed its written submissions, while the Respondent/Applicant did not.

5. In opposition to the application, the Appellant/Respondent submitted that the issue for determination is“whether the Applicant has met the threshold for dismissing the Appeal, if so, can the same be exercised in its discretion?”

6. The Applicant submitted that the Tribunal in deciding to exercise its discretion in favour of a party as sought in the present circumstances, it referred the Honourable Tribunal to the guiding authority in the case of Joseph Ondiek Tumbo v. Sony Sugar Co Ltd [2014] eKLR.

7. The Appellant/Respondent submitted that it is not in dispute that the Appellant filed an Appeal dated the 5th December 2024 before this Tribunal, the same as can be discerned from the grounds enumerated therein is meritorious and contains legal and factual issues that are arguable in nature. The only issue standing on the way as to the determination of the same is the present application which seeks its dismissal for being filed late without leave. The decision to supply the Memorandum of Appeal and Statement of Facts has been dully explained by the Appellant.

8. The Appellant/Respondent submitted that the Applicant/Respondent on the other hand is determined to have the Appeal dismissed without consideration as to its merits. The Appeal ought to be heard on merits and relied on Kenya Commercial Bank Limited v. Nicholas Ombija [2009] eKLR.

9. The Appellant/Respondent beseeched this Honourable Tribunal to have bear in mind that the decision of the Appellant to file and supply the its Notice of Appeal, Memorandum of Appeal and the Statement of Facts out of time was through inadvertence and confusion created in the ruling even after the same had been recognized as being formally on record. We call upon the Tribunal in exercising its discretion not to strike out and/or dismiss the present Appeal to be guided by the jurisprudence coming out of the Court of Appeal in the case of Abdirahman Abdi v Safi Petroleum Products Ltd & 6 Others 2011 eKLR where it has been held that in exercise of discretion to strike out a pleading or document, in this case, record of appeal, the court has to weigh the prejudice that is likely to be suffered by the innocent party against the prejudice to be suffered by the offending party if his pleading or document is struck down.

Analysis and Findings 10. The Tribunal is enjoined to determine the Respondent’s/Appellant’s application dismiss the Appellant’s Memorandum of Appeal and Statement of Facts dated 5th December 2024 and filed on 8th January 2025 for being filed out of time.

11. From the record, the Tribunal noted that the Appellant/Respondent filed two (2) distinct applications dated 8th June 2023 and 18th July 2023, while the Respondent herein filed an application dated 26th July 2023, the Tribunal directed that the three (3) applications be heard simultaneously.

12. Of immediate interest is the Appellant’s application dated 18th July 2023 which sought leave to lodge its Appeal out of time, leave whereof was granted by the ruling delivered on 1st December 2023 and directed that the Notice of Appeal, the Memorandum of Appeal and Statement of Facts filed on 16th June 2023, be deemed as properly filed and served.

13. When the Appeal was listed for hearing on 12th November 2024, the Respondent raised the issue of not having been served with the Appellant’s Memorandum of Appeal and Statement of Facts, similarly the said documents could not be traced on record, thus the Appellant was directed to place on record and serve the Respondent with the said Memorandum of Appeal and Statement of Facts within five (5) days, for the avoidance of doubt the ones filed on 16th June 2023, the Respondent was granted leave to respond within 30 days upon service.

14. The Appeal having been fixed for hearing on 9th January 2025, the Respondent brought to the Tribunal’s attention of the Appellant’s act of having filed the Memorandum of Appeal and Statement of Facts dated 5th December 2024 on the 8th January 2025.

15. It was argued by the Appellant/Respondent that there was a confusion in the Appeal engineered by the Tribunal pursuant to its ruling of 1st December 2023, as a consequence whereof the Appellant filed the Memorandum of Appeal and Statement of Facts dated 5th December 2024.

16. The premise upon which the Respondent’s/Applicant’s application is mounted is that, the Appellant’s Memorandum of Appeal and Statement of Facts filed on 8th January 2025 were filed without leave of the Tribunal, therefore the same offend the provisions of Section 13 of the Tax Appeals Tribunal Act.

17. The Tribunal noted from the record that, the Appellant was granted leave to lodge its Appeal out of time and its Notice of Appeal, Memorandum of Appeal and Statement of Facts filed on 16th June 2023 were deemed as properly filed. It remains the duty of any party filing documents, and in the instant case the Appellant to effect service of the same upon the other party, the Appellant then ought to have served the Respondent with the Memorandum of Appeal and Statement of Facts that were deemed as properly filed.

18. It was the Tribunal’s expectation that the Appellant would have confirmed having served the Respondent with its Memorandum of Appeal and Statement of Facts filed on 16th June 2023 at the first instance the Respondent raised this issue, however this was not the case despite the Respondent raising the issue on 12th November 2024 and 5th December 2024, thus the Tribunal is persuaded that service of the Memorandum of Appeal and Statement of Facts had not been effected.

19. Whereas the Appellant/Respondent attempted to plead inadvertency and confusion on one hand and on the other it admitted not being in a position to trace the documents (Memorandum of Appeal and Statement of Facts) so referred to by the Tribunal from our office file despite the incessant efforts made to trace them.

20. The issue at hand is whether the Memorandum of Appeal and Statement of Facts filed on 8th January 2025 and dated 5th December 2024 have been filed out of time? The Appellant submitted that it was aggrieved by the Commissioners decision of 16th November 2022 and communicated on 12th January 2023, thus in compliance with the provisions of Section 12 of the Tax Appeals Act as read together with Section 52 of the Tax Procedures Act, ought to have lodged it’s appeal within thirty (30) days of the Commissioner’s decision.

21. A reading of the Tribunal’s ruling of 1st December 2023, the Appellant was granted leave and its Memorandum of Appeal and Statement of Facts dated 16th June 2023 were deemed as properly filed, in the directions made on 12th November 2024 the Tribunal was clear to the extent that the Appellant was expected to avail a copy to the Tribunal and serve the Respondent with the Memorandum of Appeal and Statement of Facts filed on 16th November 2023 and not file a fresh Appeal documents.

22. To our mind, there could not have been any confusion as to the directions made as the same were put in black and white.

23. The Memorandum of Appeal and Statement of Facts dated 5th December 2024 and filed on 8th January 2025 were filed over two (2) beyond the statutorily time lines and no leave was sought, thus the same are without leave.

24. Additionally, the filing of the Memorandum of Appeal and Statement of Facts dated 5th December 2024 and lodged on 8th January 2025 is fundamentally unprocedural as the Appellant had place on record Memorandum of Appeal and Statement of Facts filed on 16th June 2023.

25. Furthermore, following the lodging of the Memorandum of Appeal and Statement of Facts on 8th January 2025 amounts to the Appellant having two sets of pleadings in the same cause, which in our view is unprocedural and unnecessary.

26. It is to be understood that, the effect of the Applicant’s/Respondent’s prayer is to have the Memorandum of Appeal and Statement of Facts dated 5th December 2024 and 8th January 2025 to be expunged from the record and not to have the Appeal struck out, it is a cardinal rule that each part to any dispute ought to have is day in Court and so shall it be.

27. The Tribunal therefore finds that the Memorandum of Appeal and Statement of Facts dated 5th December 2024 and filed on 8th January 2025 were filed out time and without leave, the same struck off and expunged from the record.

28. Our directions of 9th January 2025 remain in force, for the avoidance of doubt, the Appellant shall place on record and serve upon the Respondent the Memorandum of Appeal and Statement of Facts filed on 16th June 2023 as directed in the order herein below.

29. Consequently, the Applicant’s application is merited and therefore succeeds.

Disposition 30. Based on the foregoing analysis, the Tribunal finds that the application is merited and accordingly proceeds to make the following Orders. that: -a.The the Memorandum of Appeal and Statement of Facts dated 5th December 2024 and filed on 8th January 2025 be and are hereby expunged from the record;b.The Appellant/Respondent be and is hereby directed to place on record and serve upon the Respondent the Memorandum of Appeal and Statement of Facts filed on 16th June 2023 not later than the 24th February 2025;c.The matter shall be mentioned on 25th February 2025 for further directions as to the hearing of the Appeal; and,d.No orders as to costs.

31. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 21ST DAY OF FEBRUARY 2025ROBERT M. MUTUMA - CHAIRPERSONMUTISO MAKAU - MEMBERDR. TIMOTHY B. VIKIRU - MEMBERDELILAH K. NGALA - MEMBERJEPHTHAH NJAGI - MEMBER