[2023] KETAT 577 (KLR)

Sports Station Limited v Commissioner of Legal Services and Board Coordination (Miscellaneous Case E069 of 2023) [2023] KETAT 577 (KLR) (19 October 2023) (Ruling)

Neutral citation: [2023] KETAT 577 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Case E069 of 2023

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

October 19, 2023

Between

Sports Station Limited

Applicant

and

Commissioner of Legal Services and Board Coordination

Respondent

Ruling

1. The Applicant vide a Notice of Motion filed on 23rd June, 2023 and supported by an Affidavit sworn by Tony Gichu Wahome, a Director of the Applicant, sought for the following Orders:-i.That the Applicant be granted leave to file an appeal out of time.ii.That the Applicant be allowed to file and serve herewith all documents set out under the Tax Appeals Tribunal Act.iii.That the Commissioner to lift the Agency Notices sent to its banks

2. The application is premised on the grounds, that:-i.The Appeal is fully merited considering the amount claimed is significant and in the event the application is declined the Applicant will suffer prejudice.ii.It is in the interest of justice and fairness that the application is allowed to pave way for hearing and determination.iii.The Respondent will not suffer any prejudice if the orders sought are granted.iv.The Applicant has an arguable case and it can only see the light of the day only if the Tribunal inclines the orders sought.v.The Applicant was not able to access the registered email address on Itax where the communication from the Respondent were delivered, it is until when the Applicant applied for the TCC and could not get one due to pending liability. The Applicant enquired on the same from the Respondent and was notified that the objection was already disallowed and the objection decision sent via email.

3. The Respondent opposed the application through a Replying Affidavit sworn by Mercy Mutisya, an officer of the Respondent, on the 6th July, 2023 and filed on the same date. The grounds of opposition as highlighted in the Affidavit were as follows:-i.That the application lacks merit, specifically, Section 13 of the Tax Procedures Act does not contemplate an application to stay enforcement action but deals with grant of orders for extension of time to file a late appeal.ii.That no credible reason has been advanced by the Applicant to warrant extension of time, and the said application has been brought inordinately late, over 34 months after the issuance of the Respondent‘s objection decision.iii.That an application of this nature requires an Applicant to prove his/her absence from Kenya, sickness, or other reasonable cause, none of which the Applicant has attempted to show in its affidavit in support of the application.iv.That under Section 5(2) (a)(i) of the Kenya Revenue Authority Act, the Respondent is empowered to enforce and administer all provisions of the written laws set out in Part 1 and 11 of the First Schedule to the Act, among them the Income Tax Act.v.That for the Applicant to succeed in its application for stay, it must satisfy that its appeal is arguable, it is likely to suffer substantial loss if stay of extension is not granted and therefore the appeal would be rendered nugatory.vi.That the Applicant has not demonstrated compliance with the condition and are therefore least deserving of the prayers for stay of execution.vii.That the Applicant has not demonstrated by way of evidence through a bank statement or audited accounts that it is likely to suffer substantial loss if stay of execution is not granted.viii.That to the contrary, it is the Respondent and by extension the Kenya public, who stand to be prejudiced on account of any further delay in collection of the taxes due and owing.ix.That the Applicant has not demonstrated that the appeal would be rendered nugatory should its appeal succeed and that it would not be able to recover the demanded sum in taxes from the Respondent in the unlikely event it succeeded in its appeal.x.That the Respondent being the principal revenue collecting agency is not only capable of reimbursing the Applicant but can apply any amount found to have been unduly levied for future taxes.xi.That this Tribunal at the point of the Respondent‘s issuance of agency notices had not issued an order for stay of execution.xii.That the issuance of agency notices to the Applicant‘s bankers or persons owing the Applicant or holding monies on behalf of the Applicant is a recognized mode of enforcement under Section 42 of the Tax Procedures Act.xiii.That the right of stay pending appeal ought to be balanced with the right of the decree holder to enjoy the fruits of judgement.xiv.That the Application is misconceived, bad in law and is gross abuse of the Tribunal‘s process.

Analysis and Findings 4. In compliance with the directions of the Tribunal to the effect that the application was to be canvassed by way of written submissions, the Applicant filed its submissions on 5th July 2023 and the Respondent filed its written submissions on 6th July 2023. The Tribunal has duly considered the written submissions in arriving at its determination in this Ruling.

5. The application is primarily praying to the Tribunal for extension of time to file an appeal out of time.

6. 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.

7. In determining whether 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.‖

8. 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.

9. 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.

Whether there is a reasonable cause for the delay. 10. In considering what constitutes as a reasonable reason for delay, the court in Balwant Singh v Jagdish Singh & Ors (Civil Appeal No.1166 of 2006), held that: ―The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention‖.

11. The statutory timelines and provisions to file an appeal have been clearly set out in the Tax Appeal Tribunal Act. Section 13 (3) of the Tax Appeals Tribunal Act provides as follows with regard to the statutory timelines in commencing appeal process:-―A notice of appeal to the Tribunal shall—a.be in writing;b.be submitted to the Tribunal within thirty days upon receipt of the decision of the Commissioner.(2)The appellant shall, within fourteen days from the date of filing the notice of appeal, submit enough copies, as may be advised by the Tribunal, of—a.a memorandum of appeal;b.statements of facts; andc.the tax decision.‖

12. For a taxpayer who has not met the timelines as provided in the above provision of the law, Section 13(4) of the Tax Appeals Tribunal Act provides the conditions that the taxpayer ought to meet to enable the Tribunal to exercise its discretion to extend time to appeal. The Section provides as follows;―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 giving notice of appeal within the specified period.‖

13. The Respondent stated that no credible reason had been advanced by the Applicant to warrant extension of time, and the said application had been brought inordinately late, over 34 months after the issuance of the Respondent‘s objection decision.

14. That an application of this nature requires an applicant to prove his/her absence from Kenya, sickness, or other reasonable cause, none of which the Applicant had attempted to show in its affidavit in support of their application.

15. The Appellant had explained that it was not able to access the registered email address on Itax where the communication from the Respondent were delivered. That it was until when the Applicant applied for the TCC and could not get one due to pending liability. That the Applicant enquired on the same from the Respondent and was notified that the objection was already disallowed and the objection decision sent via email.

16. However, the Tribunal did not find this as sufficient explanation given that the Appellant provided to the Respondent its contacts on Itax at the time of registration as provided for under Section 8 of the Tax Procedures Act. The Section provides as follows:―8. Registration of taxpayers1. A person who—

a.has accrued a tax liability or who expects to accrue a tax liability under the Income Tax Act or the Value Added Tax Act, 2013;b.expects to manufacture or import excisable goods; orc.expects to supply excisable services; shall apply to the Commissioner to be registered.

2. An application for registration under subsection1. shall be—a.made in the prescribed form;b.accompanied by documents that the Commissioner may require, including documents of identity; andc.made within thirty days of the applicant becoming liable for that tax.‖ 17. The Tribunal is of the considered view that the Applicant has not advanced reasonable cause of delay to approach the Tribunal to vindicate its right to appeal against the tax demands by the Respondent.

18. The Tribunal therefore finds that the Applicant has not advanced any reasonable cause of delay of more than two years to approach the Tribunal to vindicate its right to appeal against the tax demands by the Respondent.

19. The Tribunal in its decision is further persuaded by the decision in Abdul Aziz Ngoma vs. Mungai Mathayo [1976] Kenya LR 61, 62, where the court stated that:―We would like to state once again that this Court‘s discretion to extend time under rule 4 only comes into existence after ‗sufficient reason‘ for extending time has been established and it is only then that other considerations such as the absence of any prejudice and the prospects or otherwise of success in the appeal can be considered.‖

20. The Applicant therefore has in the circumstances substantively failed to meet the statutory and judicially established threshold for the grant of anapplication for the enlargement of time to file an appeal. The Tribunal therefore found it unnecessary to delve into the other issues that fell for its determination as they had been rendered moot.

Disposition 21. Based on the foregoing analysis, the Tribunal finds that the application lacks merit and the Tribunal accordingly proceeds to make the following orders:-i.The application be and is hereby dismissedii.No orders as to costs

22. It is so ordered.

DATED and DELIVERED at NAIROBI this 19th day of October, 2023. ERIC NYONGESA WAFULA CHAIRMANELISHAH N. NJERU MUTISO MAKAU MEMBER MEMBEREUNICE N. NG‘ANG‘A ABRAHAM K. KIPTROTICH MEMBER MEMBER