Galaxy Company Limited v Commissioner of Domestic Taxes [2024] KETAT 600 (KLR)

Galaxy Company Limited v Commissioner of Domestic Taxes (Miscellaneous Application E149 of 2023) [2024] KETAT 600 (KLR) (22 March 2024) (Ruling)

Neutral citation: [2024] KETAT 600 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application E149 of 2023

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

March 22, 2024

Between

Galaxy Company Limited

Applicant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The Applicant moved the Tribunal vide the application dated 11th September 2023 and filed under a certificate of urgency on 28th September 2023 and supported by an Affidavit and a Supplementary Affidavit sworn by Rakesh Mitter, a Director of the Applicant, on the 11th September, 2023 and 24th October, 2023, respectively, seeking the following Orders: -a.Spentb.That the intended Appellant/Applicant be granted an extension of time with regard to filing a Notice of Appeal and Memorandum of Appeal- to this Honourable Tribunal.c.That the Honourable Tribunal do issue an order restraining the Respondent either by itself, its agents, employees, servants or through any other person at its behest, from issuing any other Agency notices against the referred bank accounts, or any account held and/or owned by the Applicant in any other company, and/or lift, vacate and set aside any Agency notice issued against any other bank or other account owned or held by the Applicant in any other company until this application and main Appeal is heard and determined.d.That the cost of this application be in the cause.e.That this Honourable Tribunal be pleased to issue any such orders as it deems just and expedient.

2. The application is premised on the grounds, that: -i.Due to factors beyond the control of the intended Appellant/Applicant missed the statutory deadline for filing the Notice of Appeal and Memorandum of Appeal.ii.The objection decision was issued on 4th July 2022 via email address of the Appellant on which the Appellant being located upcountry was not able to access the emails due to unavailability to have access to email created at the cyber cafe.iii.The Managing Director of the Applicant was also battling health problems and was under home care-based remedy for some months, the Managing of the Applicant later learnt of the same later he was able to access the Appellant’s emails and iTax ledger.iv.The intended Appellant/Applicant has approached this Honourable Tribunal at the earliest juncture.v.That the Director of the Applicant was diagnosed with a heart problem and admitted at Eldoret Heart Centre and later transferred to Aga Khan Hospital and later transferred to Delhi Max Centre in India on January 2020 and is still under their care and treatment.v.The Director is to date unwell and was unable to appoint a tax agent to handle the tax dispute.v.That the Applicant has an arguable Appeal with high chances of probability of success.v.The Applicant shall stand to suffer irreparable loss and damage if the order sought are not granted.v.The Respondent has not demonstrated that it will suffer any prejudice apart from the delay in collection of taxes.v.That the Honourable Tribunal has powers to grant the orders sought.

3. The Respondent opposed the application through a Notice of Preliminary Objection dated and filed on 25th October 2023. The grounds highlighted therein were as follows: -i.That the Tribunal lacks jurisdiction to entertain the application and intended Appeal as there is no appealable decision as defined under Section 3 of the Tax Procedures Act.ii.That there is no proper Appeal as contemplated by Section 13 of the Tax Appeals Tribunals Act.iii.That there was no Objection decision as contemplated by Section 13 of the Tax Appeals Tribunal and Section 51 of the Tax Procedures Act.iv.That the application is therefore fatally defective for want of compliance with the law.v.That the appeal is therefore an abuse of the process of the Tribunal and a waste of resources.

Submissions of the Parties 4. The Applicant in its written submission dated 11th October 2023, submitted as hereunder.

5. The Applicant submitted that the Respondent issued system generated Corporate tax assessments orders for the years 2016, 2017 and 2018 and VAT assessment orders for December 2017 and 2018 on 10th March 2020.

6. The Applicant submitted that it objected the entire assessments and the Respondent disregarded the grounds of objection and issued the Objection decision.

7. The Applicant submitted that the Respondent did not take into consideration the explanation given by the Applicant.

8. The Applicant submitted that the Respondent actions resulted to unproportionate, unjust and unfair and excessive punishment to the Appellant.

9. The Respondent in its written submissions dated and filed on 1st November 2023 submitted as hereunder.

10. The Respondent whilst relying on Section 13 (2) of the TAT Act, submitted that there was no proper Appeal before the Tribunal.

11. The Respondent further submitted that in the instant case, the Applicant failed to attach the Objection decision as contemplated by Section 51 of the TPA and therefore the Appeal is fatally defective and an abuse of the Tribunal’s time and resources.

12. The Respondent submitted that the Tribunal lacks jurisdiction to entertain the application and the intended Appeal as there is no appealable decision as defined under Section 3 of the TPA.

13. The Respondent relied on the decision in TAT Appeal No. 107 of 2022Sawa Sawa Company Limited vs. Commissioner of Domestic Taxes;

Analysis and Findings 14. The Applicant in its application seeks for extension of time to file the Notice of Appeal together with the Memorandum of Appeal and for an order restraining the Respondent from issuing any other Agency notices to the Applicant’s bankers.

15. The Tribunal is invited to analyze the Respondent’s Preliminary Objection on the points of law in the first instance.

16. It was the Respondent’s position that the Applicant’s application and intended Appeal is anchored on a fatal premise for want of an appealable decision as defined by Section 3 of the TPA.

17. It was the Respondent’s contention that the Tribunal is not ceased of jurisdiction to hear and entertain the instant application and intended Appeal as the is no proper Appeal as contemplated by Section 13 of the Tax Appeal.

18. Section 3 of the TPA, provides;“appealable decision” means an objection decision and any other decision made under a tax law other than—a.a tax decision; orb.a decision made in the course of making a tax decision;”

19. Similarly, Section 52 (1) of the TPA, provides that;“A person who is dissatisfied with an appealable decision may appeal the decision to the Tribunal in accordance with the provisions of the Tax Appeals Tribunal Act, 2013”

20. Further, Section 13 (1) and (2) of the Tax Appeals Tribunal Act, which provides as follows with regard to filing of appeals before the Triunal:-“(1)A notice of appeal to the Tribunal shall—a.be in writing or through electronic means;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 appealable decision; andd.such other documents as may be necessary to enable the Tribunal to make a decision on the appeal.”

21. Accordingly, the Tribunal’s jurisdiction can only be invoked in the existence of an appealable decision being made by the Respondent and upon distasfaction by the Applicant, a valid Appeal can only be lodged in accordance with the provisions of Section 13 of the TAT Act.

22. It is worth noting that the Applicant was directed by an order of the Tribunal on 12th October 2023 to file a Supplementary Affidavit and place the Objection decision on record.

23. The Tribunal upon perusal of the Supplementary Affidavit filed by the Applicant notes that the same did not address the issue of the Objection decision let alone introduce any decision issued by the Respondent.

24. To any Appeal, the Respondent’s decision is pertinent to the life of such an Appeal, without an appealable decision there cannot be a valid Appeal for ventilation by the parties and determination by the Tribunal.

25. The Respondent reiterated that there was no appealable decision upon which any Appeal can be anchored. In tax matters the burden of proof rests upon the Applicant/Appellant in accordance to Section 56 (1) of the TPA.

26. The Tribunal is guided by the case of Primarosa Flowers Limited vs. Commissioner for Domestic Taxes [2019] eKLR, where Makau J, while quoting the case of Mulherin vs. Commissioner of Taxation [2013] FCAFC 115 the Federal Court of Australia, observed;“in tax disputes, the tax payer must satisfy the burden of proof to successfully challenge income tax assessments. The onus is on the taxpayer in proving that assessment was excessive by adducing positive evidence which demonstrates the taxable income on which tax ought to have been levied.”

27. Accordingly, the onus was on the Applicant to demonstrate and avail the appealable decision before the Tribunal, which burden the Applicant did not discharge.

28. The Tribunal takes notice there was no appealable decision placed on record on which an Appeal can flow from, it would be of no value, legal or otherwise, for the Tribunal to issue the orders sought, even when the same are deserved, under the circumstance as the Tribunal does not issue orders in vain.

29. In view of the foregoing, the Respondent’s Preliminary Objection dated and filed on 25th October 2023 is merited and thus upheld.

30. Consequently, the Applicant’s application is devoid of merits and therefore fails the test of law.

Disposition 31. Based on the foregoing analysis, the Tribunal finds that the application lacks merit and accordingly makes the following orders:-a.The application herein be and is hereby dismissed.b.No orders as to costs.

32. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 22ND DAY OF MARCH, 2024. ERIC NYONGESA WAFULA - CHAIRMANMUTISO MAKAU - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBERABRAHAM K. KIPROTICH - MEMBER