Gifan Enterprises Limited v Commissioner of Domestic Taxes [2024] KETAT 601 (KLR)

Gifan Enterprises Limited v Commissioner of Domestic Taxes (Miscellaneous Application E170 of 2023) [2024] KETAT 601 (KLR) (22 March 2024) (Ruling)

Neutral citation: [2024] KETAT 601 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application E170 of 2023

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

March 22, 2024

Between

Gifan Enterprises Limited

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Applicant moved the Tribunal vide a Notice of Motion application dated 26th October 2023 and filed on 30th October 2023 and supported by an Affidavit sworn by Eliud N. Mwaura, the Accountant for the Applicant, on the even date seeking the following Orders: -a.Time be extended for filing the Notice of Appeal and for submitting the documents relating to the taxpayer’s Objection.

2. The application is premised on the grounds, that: -i.The Applicant’s documents relating to the Objection were handed over to the Respondent around August 2021 at its premises in Nairobi within the prescribed timeframe.ii.The Respondent’s officer did not affix a receiving stamp on the aforesaid documents, nor did he revert to the Applicant with any comments or directions.iii.Subsequently, the Appellant applied for a Compliance Certificate and was then advised that its objection had been rejected.iii.It is fair and just under the circumstances of the matter to extend time for the Applicant to file its Notice of Appeal and documents for the matter to be determined on its merits.v.The Tribunal has discretionary powers to extend time based on the reasonable grounds given.vi.The Respondent will not suffer any prejudice which cannot be cured by an award of costs if this application is allowed.

3. The Respondent opposed the application through a Replying Affidavit sworn by Alfred Maritim, an officer of the Respondent, on 15th November 2023 and filed on 17th November 2023. The grounds of opposition as highlighted in the Affidavit were as follows: -i.That the Respondent issued the Applicant with assessments for Value Added Tax on 15th November 2019 for the period January 2018 to May 2018 premised on the inconsistencies noted between invoices declared by the Applicant and its suppliers.ii.That Applicant objected to the additional assessments on the iTax platform on 9th June 2021 for the months February 2018 and March 2018, and there were no Objections lodged for the other months of assessment and were deemed allowed by operation of the law pursuant to Section 51 of the TPA.iii.That the Applicant did not provide any documents in support of its Objection, subsequently the Respondent invalidated the Objections on 9th November 2021 as the same was unsupported.iv.That the Applicant was informed of the decision vide its registered email, however it did not appeal the decision within the period provided for in law and the Respondent confirmed the decision on iTax on the 4th August 2022. v.That the Applicant had access to the iTax platform and has been filing returns all along, the delay from the issuance of the Notice of Invalidation as well as confirmation of the assessment on iTax to the filing of this application is unexplained.vi.That the Applicant has not demonstrated that it had met the provisions of Section 13 (4) of the TAT Act.vii.The Respondent prayed for the application to be struck out.

Submissions by the Parties 4. The Applicant in its written submission dated the 23rd November 2023, submitted that the Tribunal has discretionary powers donated by Section 13

5. of the TAT Act whilst taking into account certain matters inter alia, the length of the delay, the reasons thereof, merits of the complained action, and degree of prejudice to the Respondent of the application is granted.

6. The Applicant submitted that the Respondent is not averse to it being able to file its Appeal as indicated by the Respondent’s Counsel at ADR and in the email of 3rd November 2023.

7. The Applicant submitted that the Respondent has not demonstrated that it would suffer any prejudice or irreparable harm if the orders sought are granted.

8. The Applicant submitted that the Respondent did not communicate the decision timeously or at all, to the Applicant’s detriment and the Respondent has not demonstrated proof of having discharged its responsibility to the Applicant as required under Section 51 (9) of the TPA.

9. The Applicant submitted that within reasonable time of learning of the invalidation in July 2023 the Applicant took steps to communicate with the Respondent in vain and subsequently filed this application.

10. The Respondent in its written submissions dated and filed on 16th November 2023 identified two issues for determination, namely;i.Whether the Applicant has met the criteria set out in Section 13 (4) of the TPA; andii.Whether the Applicant has given sufficient reason for the delay.

11. The Respondent while relying on Section 13 (3) and (4) of the TAT Act, the Respondent submitted that a valid Appeal is one that is filed within the confines of the law, in the absence of a valid Appeal, the Respondent is then entitled to collect the taxes due.

12. That under Section 13 (4) of TAT Act, the Respondent submitted that the Applicant is required to provide a reasonable cause, which may have prevented the Applicant from filing the Notice of Appeal or submitting documents within a specified period.

13. The Respondent submitted that the Applicant has cited the reason for its failure to file an Appeal within the statutory timelines is that it was not aware that the Commissioner has issued a decision concerning its Objection.

14. The Respondent submitted that the Applicant had access to the iTax platform and that it is not plausible that the Applicant was not aware of the confirmation of the assessment for more than one year.

15. The Respondent submitted that it has demonstrated two instances where the Commissioner informed the Applicant that the assessments forming the subject matter of this application were confirmed and that the Applicant has not brought forth adequate explanations for the delay.

16. The Respondent relied on the following case law;i.Jomusons Investment Limited vs. Commissioner of Domestic Taxes [2020] eKLR;ii.Income Tax Appeal No. 31 of 2017 Commissioner of Domestic Taxes vs. Mayfair Insurance Company Limited [2017] eKLR; andiii.Tax Appeals Tribunal Appeal No. 753 of 2021 Solar Innovation Limited vs. Commissioner of Customs and Border Control.

Analysis and Findings 17. The Applicant seeks for extension of time to file the Notice of Appeal together with the documents relating to the Applicant’s Objection out of time.

18. The Respondent’s decision was issued on 9th November 2021 and served via iTax portal, however, the Applicant submitted that it learnt of the same sometime in July 2023 when it applied for a Certificate of Tax Compliance.

19. Both parties to the application submitted that the power of the Tribunal to deal with an application of this nature is donated by Section 13 (3) and (4) of the Tax Appeals Tribunal Act, which 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.”

20. Accordingly, the Applicant’s application before the Tribunal is to be premised on the grounds stipulated under the provisions of Section 13 (4) of the TAT Act as cited herein above.

21. The Tribunal is guided by some of the principles laid out in the case of Charles N. Ngugi v ASL Credit Limited [2022] eKLR, where the Court observed as thus:-“The decision whether or not to grant leave to appeal out of time or to admit an appeal out of time is an exercise of discretion just like any other exercise of discretion by the court. Some of the factors that aid Courts in exercising the discretion whether to extend time to file an appeal out of time were suggested by the Court of Appeal in Thuita Mwangi Vs. Kenya Airways Ltd [2003] Eklr. They include the following:i.The period of delay;ii.The reason for the delay;iii)The arguability of the appeal;iv)The degree of prejudice which could be suffered by the if Respondent the extension is granted;v)The importance of compliance with time limits to the particular litigation or issue; andvi.The effect if any on the administration of justice or public interest if any is involved.”

22. It is noteworthy, that the Applicant cited the reason that it was not aware of the Respondent’s decision as the ground for failure to lodge its Appeal on time and/or make the present application sooner.

23. It was the Respondent’s submissions that it served its decision on the Applicant’s profile in the iTax platform and that the Applicant has always had access to the iTax portal.

24. The Applicant has not rebutted the assertion by the Respondent that it has not had access of its profile to iTax platform since the issuance of the notice of invalidation on 9th November 2021.

25. The Tribunal notes that the tax head subject of the present proceedings is VAT, which returns are made on a monthly basis on the iTax portal, the Applicant has a profound duty to make returns and pay taxes on VAT on a monthly basis. Further, the Applicant has not advanced any argument or evidence that it has been unable to file its monthly VAT returns from the 9th November 2021 to the 30th October 2023 when it lodged the instant application, period whereof spans over 23 months.

26. The Tribunal is persuaded that the reasons advanced by the Applicant are not reasonable and reconcilable to warrant the granting of the order sought, the Applicant’s conduct cannot be further from being lackluster.

27. Further, a reading of the Applicant’s application and submissions, it did not tender any explanations to the Tribunal relating to the delay stated herein above in the bringing of this application.

28. The Tribunal, in the absence of any reasonable explanation or any at all finds the delay as inordinate and intolerable.

29. The Tribunal having made the foregoing finding it was absolutely unnecessary to make a determination on any other factors ordinarily considered in an application of this nature.

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

Disposition 31. Anchored on the foregoing analysis, the Tribunal finds that the application dated 30th October 2023 is not merited and accordingly makes the following Orders: -a.That the application herein be and is hereby dismissed.b.Each party shall bear its own 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