[2023] KETAT 570 (KLR)

Tarzan Limited v Commissioner of Legal Services & Board Coordination (Tax Appeal 1268 of 2022) [2023] KETAT 570 (KLR) (19 October 2023) (Ruling)

Neutral citation: [2023] KETAT 570 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal 1268 of 2022

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

October 19, 2023

Between

Tarzan Limited

Appellant

and

The Commissioner of Legal Services & Board Coordination

Respondent

Ruling

1. The appellant vide a notice of motion application dated June 29, 2023 filed under certificate of urgency on July 4, 2023 and supported by an Affidavit of Stephen Yego, sought for the following orders: -i.Spentii.That the Tribunal be pleased to grant leave to the Appellant to amend its Memorandum of Appeal and Statement of Facts.

2. The application is premised on the hereunder grounds: -i.That the Appellant inadvertently forgot to raise matters of law relating to section 31(4) and section 51 of the Tax Procedures Act. That the assessment for the period 2016 and 2017 for both Income tax and VAT is outside the statutory limitation period of five years and the Respondent included it as part of its findings and demand. That this period is out of time and ought to have been excluded by the Respondent in its demand.ii.That if the matter proceeds to full trial without dealing with the issues of law, may render the entire process an illegality.iii.That the Appellant stands to suffer irreparable loss and damage if the orders sought in this application are not granted by the Tribunal.iv.That this application has not been brought after undue delay.v.That the Respondent will not suffer any prejudice if the orders sought herein are granted.vi.That it is in the interest of justice and fairness that the application is allowed to pave way for hearing and determination of the Appeal on the merits.

3. The respondent objected to the application through a replying affidavit sworn by Margaret Maina, its officer, and filed on the July 13, 2023. The affidavit laid the following grounds of opposition:-a.That the legal issues sought to be raised by the Appellant is immaterial since they are already raised under paragraph 4 of the Memorandum of Appeal dated 15th September 2022 and further the issue can be disposed of without the need for further evidence being adduced.b.That further the respondent in paragraph 32 of its Statement of Facts responded to the said Appellant’s paragraph asserting that the additional assessments were raised beyond the 5 year limit as the Respondent had witnessed wilful and gross neglect on the part of the Appellant.c.That the Appellant is merely abusing the Court process by attempting to circumvent orders of the court dated June 12, 2023, granting it an opportunity to further prosecute through filing of submissions by 26th June 2023, which it failed to do.d.That the application has been brought late in the day, just before the matter was set down for hearing, and is clearly an afterthought, considering the timing of the instant application, the same cannot be said to have been brought timeously.e.That the application is made in bad faith and will prejudice the expeditious disposal of the matter and its aimed at aiding a negligent Appellant and hence the Respondent stands to suffer an injustice by the proposed amendments.f.That without prejudice to the foregoing, the proposed amended Memorandum of Appeal was not attached to the application to enable the Respondent to defend its case.

Analysis and Findings 4. The appellant and the respondent in compliance with the directions of the Tribunal duly filed written submissions that were appropriately considered by the Tribunal in arriving at its findings in this Ruling.

5. The Appellant is seeking to amend its Memorandum of Appeal in order to raise matters of law which it averred that it had inadvertently forgot to raise. Although the Respondent had stated that the legal issues the Appellant wished to raise in the amended pleadings were already covered in the pleadings filed, it is not available for the Tribunal at this stage to determine the merits and the value addition the amendments sought are likely to impact on the pending Appeal.

6. The principles governing the exercise of discretion in dealing with the applications for amendment of pleadings are generally well settled and with the rule of the thumb being that such applications are to be freely allowed unless injustice is likely to be visited upon the opposite party by allowing any amendment as sought. This principle was well elucidated in the case of Harrison C. Kariuki vs. Blueshield Insurance Company Ltd[2006] eKLR in which the court referred to the Court of Appeal decision in Central Kenya Ltd vs. Trust Bank Ltd [2003] EALR 365 and held that:-“The guiding principle in applications to amend pleadings is that the same will be liberally and freely permitted unless prejudice and injustice will be occasioned to the opposite party. There will normally be no injustice if the other party can be compensated by an appropriate award of costs for any expense, delay or bother occasioned to him. The main reason for this is that it be in the interests of justice that the amendments sought be permitted in order that the real question in controversy between the parties be determined.”

7. There has been no disclosed prejudice and/or discernible injustice manifested that is likely to be suffered and/or occasioned to the Respondent if the amendments sought on the part of the Appellant are allowed.

Disposition 8. In the circumstances of the foregoing analysis, the Orders that commend themselves are as follows:-i.The appellant be and is hereby granted leave to amend the Memorandum of Appeal and to file a Supplementary Statement of Facts.ii.The appellant to file and serve the Amended Memorandum of Appeal and the Supplementary Statement of Facts within Fourteen (14) days of the date of delivery of this Ruling.iii.The Respondent is hereby granted a corresponding leave and will be at liberty to filed any Supplementary Statements of Facts within Fourteen (14) days of the date of being served by the Appellant.iv.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF OCTOBER, 2023. ERIC NYONGESA WAFULACHAIRMANELISHAH N. NJERUMEMBERMUTISO MAKAUMEMBEREUNICE N. NG’ANG’AMEMBERABRAHAM K. KIPTROTICHMEMBER