[2024] KETAT 480 (KLR)

Transchem Pharmaceuticals Ltd v Commissioner of Domestic Taxes (Miscellaneous Application E002 of 2024) [2024] KETAT 480 (KLR) (19 April 2024) (Ruling)

Neutral citation: [2024] KETAT 480 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application E002 of 2024

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

April 19, 2024

Between

Transchem Pharmaceuticals Ltd

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Applicant moved the Tribunal vide the Notice of Motion application dated the 12th January, 2024 and filed under certificate of urgency on the even date and supported by an affidavit sworn on an even date by Lydiah Muthoni Wahome, a Director of the Applicant, seeking the following Orders:-a.Spent.b.That the Honourable Tribunal be pleased to enlarge time to the Applicant to lodge its Notice of Appeal, Memorandum of Appeal and Statement of Facts to challenge the Respondent’s Objection Decision issued on 16th June 2023. c.Spent.d.That the Honourable Tribunal do make a finding that there is no inordinate delay in bringing this application and thus the same is merited.e.That any other order that the Honourable Tribunal deem fit and proper to issue.f.That costs to this application be provided.

2. The application is premised on the grounds, that: -i.The Respondent issued an assessment to the Applicant covering the periods 2016 to 2020. ii.Due to the inadvertent mistake of the Applicant’s former Tax Agent, Njuguna Kioi Associates, the Applicant lodged an Appeal vide Memorandum of Appeal and Statement of Facts filed on 15th December 2022 in TAT Appeal No. 1525 of 2022. iii.The lodging of an Appeal against an assessment was erroneous and a mistake of the Applicant’s former tax agent since the proper procedure would have been to lodge a notice of objection against the assessment.iv.Whereas the Appeal was pending, the Applicant’s former tax agent lodged an objection to the assessment on 19th April 2023. v.The Respondent considered the objection and consequently issue an Objection decision to the assessment on 16th June 2023, disallowing the Applicant’s Objection.vi.The Honourable Tribunal delivered its judgement with respect to the Appeal filed on 15th December 2022 and accordingly struck out the Appeal on the basis that there was no disclosable appealable decision.vii.As shown at paragraph 5 herein, the Respondent had subsequently issued an appealable decision (Objection decision) on 16th June 2023 which the Applicant is desirous of challenging at the Tribunal.viii.Due to the inadvertent mistake of the Applicant’s former tax advisors/agents, the Applicant failed to lodge an Appeal on time against the Objection decision consequence of which the timelines for filing the Appeal had lapsed.ix.Were it not for the mistake of the Applicant’s former tax advisors/agents, the Appeal with respect to the Respondent’s Objection decision made on 16th June 2023, would have been accordingly filed on time.x.The Applicant has subsequently appointed the firm of Kamwara Law & Co. Advocates, on 8th January 2024 which upon discovering the mistake of the Applicant’s former tax agent has brought this application under certificate of urgency seeking the prayers sought in the motion.xi.It is clear that failure to file the substantive Appeal on time was not intentional but due to inadvertence mistake of the Applicant’s former tax advisors, which the Applicant had no control over.xii.From the above, there is discernable reasonable cause for delay in failing to file the Appeal on time which delay is excusable in the present circumstances and attributable to the mistake of the Applicant’s former tax advisors which mistake ought not be revisited upon the Applicant.xiii.In any case, the delay inordinate once the mistake of the previous tax advisor/agent was discovered.xiv.The Appellant therefore sought the intervention of the Honourable Tribunal to be allowed to file the Appeal out of time and further to stop all enforcement measures against the Applicant including the agency notices.xv.Unless this application is certified urgent and allowed as prayed, the Applicant stands to suffer irreparable harm and substantial loss as the Respondent will enforce the taxes, which are disputed and which are of substantial amount as the Applicant would have the opportunity to challenge the assessment before the Tribunal.xvi.There is no inordinate delay in bringing this application since the Objection decision was made and in any case the delay has been well explained.xvii.The Honourable Tribunal is clothed with jurisdiction to allow the application and prayed that the same be allowed as prayed in the Notice of Motion application.

3. The Respondent did not file any response or challenge to the instant application and therefore the application is deemed as unopposed.

4. The Tribunal noted that neither of the parties filed their respective written submissions relating to the application dated 12th January 2024, the Tribunal shall analyze and determine the application on the grounds outlined on the face of the application.

Analysis and Findings 5. It is noteworthy that the Applicant herein had lodged an application dated 19th January 2024 and filed on 22nd January 2024, seeking for orders to temporarily restrain the Respondent from enforcing the Objection decision vide the agency notices dated 17th January 2024 and issued to the Applicant’s bankers.

6. The Tribunal issued orders on 5th February 2024 and lifted the agency notices by consent of the parties, therefore the outstanding issue for determination relates to the leave to file the Appeal out of time.

7. The Respondent issued its Objection decision on 16th June 2023, however, the Applicant submitted that it had entrusted the matter to its former Tax advisors/agents and it later learnt that the said former tax agents did not lodge the Appeal within the stipulated timelines.

8. Pursuant to the discovery aforementioned, the Applicant appointed its current representatives on the 8th January 2024 who moved in haste and lodged the instant application.

9. The Tribunal noted that there was no evidence before it by the Respondent rebutting the Applicant’s assertions. Moreover, there was no evidence demonstrating to the satisfaction of the Tribunal when the Objection decision was served upon the Applicant.

10. Applications of this nature are predicated on the provisions of Section 13 (3) and (4) of the Tax Appeals Tribunal Act, which Sections provide that:“(3)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).”“(4)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.”

11. The application is premised on ground of “other reasonable grounds”, the Applicant founded its application on the reasons that;a.Due to the inadvertent mistake of the Applicant’s former tax advisors/agents, the Applicant failed to lodge an Appeal on time against the Objection decision, consequence whereof the timelines for filing the Appeal had lapsed.b.That the failure to file the substantive Appeal on time was not intentional but due to inadvertence mistake of the Applicant’s former tax advisors, which the Applicant had no control over.c.The delay is excusable in the present circumstances and attributable to the mistake of the Applicant’s former tax advisors, which mistake ought not be revisited upon the Applicant

12. The Tribunal is invited to test whether the grounds advanced by the Applicant were reasonable. In the exercise of its discretion, the Tribunal is guided by the case of Njoroge vs. Kimani (Civil Application Nai E049 of 2022) [2022] KECA 1188 (KLR), in which the Court of Appeal held;“Equally important is that an application for condonation must be filed without delay and/or as soon as an applicant becomes aware of the need to do so. Thus, where the applicant delays filing the application for condonation despite being aware of the need to do so, or despite being put on terms, the court may take a dim view, absent a proper and satisfactory explanation for the further delays.”

13. The Tribunal has evaluated the grounds advanced by the Applicant in support of the delay and finds that the delay is not unreasonable, inexcusable and inordinate under the circumstances.

14. Similarly, the grounds advanced by the Applicant for the delay are reasonable and satisfactory to warrant the Tribunal to grant the order sought therein.

15. The Tribunal further, has noted that the Respondent shall not suffer any prejudice if leave to appeal out of time is granted to the Applicant. The Respondent shall have the opportunity to defend the Applicant’s claims before the Tribunal.

16. Consequently, the application is merited and therefore succeeds.

Disposition 17. Based on the afore analysis, the Tribunal finds that the application is merited and accordingly makes the following Orders: -a.The Applicant be and is hereby granted leave to file an appeal out of time.b.The Applicant to file and serve its Notice of Appeal, Memorandum of Appeal, Statement of Facts and the Objection decision upon the Respondent within Fifteen (15) days of the date of delivery of this Ruling.c.The Respondent to file and serve its Statement of Facts in response to the Appeal within thirty (30) days of the being served with the Appeal documents.d.No orders as to costs.

18. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY APRIL, 2024ERIC NYONGESA WAFULA - CHAIRMANMUTISO MAKAU ELISHAH N. NJERU - MEMBER MEMBEREUNICE N. NG’ANG’A ABRAHAM K. KIPROTICH - MEMBER MEMBER