Jojen Butchery v Commissioner of Domestic Taxes [2024] KETAT 603 (KLR)

Jojen Butchery v Commissioner of Domestic Taxes (Miscellaneous Application E139 of 2023) [2024] KETAT 603 (KLR) (Civ) (19 April 2024) (Ruling)

Neutral citation: [2024] KETAT 603 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Civil

Miscellaneous Application E139 of 2023

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

April 19, 2024

Between

Jojen Butchery

Applicant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The application which was by way of a Notice of Motion dated 9th September 2023 and filed under a certificate of urgency on the 20th September 2023 is supported by an Affidavit sworn by the Applicant‘s Chief Executive Officer, Jonah Kipchumba Tanui on the 19th September, 2023 and sought for the following Orders:-a.Spentb.This Honourable Tribunal do by way of an Order of Prohibition, prohibit the Respondent, its servants, agents, staff, employees, and persons acting through it from issuing, claiming, or demanding any further or other additional assessments and with respect to the period of 2015 to 2018, the Objection to the additional VAT for that period after having been deemed to have been allowed pursuant to the provisions of Section 51(11) of the Tax Procedures Act.c.Pending the inter-partes hearing and determination of this application, the Honourable Tribunal be pleased to issue a temporary order to the Respondent to stop charging further interest on the additional tax assessments that are the subject of this application.d.The Honourable Tribunal be pleased to issue a temporary order to the Respondent to issue a tax compliance certificate to enable the Applicant to continue trading pending the determination of this application.e.Consequent to the grant of the prayers above, the Honourable Tribunal be pleased to issue such further directions and orders as may be necessary to give effect to the foregoing orders and or favour the cause of justice.f.The costs of this application be provided for.

2. The application is premised on the following grounds:-a.That the Applicant on 19th November 2019 received Assessment orders from the Respondent demanding additional payment of VAT (total incremental tax Kshs. 77,135,023. 60 plus interest of Kshs. 25,589,306. 80).b.That the Applicant entered into correspondence and submitted documents to object to the additional assessment and to ask the Respondent to vacate the assessments.c.That the Respondent has up to now not issued an objection decision as required by Section 51(11) of the Tax Procedures Act and has affirmed the High Court’s decision in Rongai Tiles & Sanitary Wares Limited v Commissioner of Domestic Taxes (TAT Appeal E011 of 2020) [KEHC 18546 (KLR) (Commercial Tax)(16 June 2021)(Judgment)].d.That the Respondent has on the basis of the liability arising from the additional assessments denied the Applicant a Tax Compliance Certificate, which continues to cause severe distress to the trading activities of the Applicant.e.That the Respondent has continued to charge interest on the liability that is the subject of this application. The total interest as at 9th September, 2023 is Kshs. 60,921,786. 70. f.That the matter is extremely urgent since the Applicant continues to suffer distress occasioned by the lack of a Tax Compliance Certificate.g.That the Applicant has established a prima facie case.h.That the Respondent will suffer no prejudice if the orders are granted.i.That the Honourable Court has unfettered powers to make the orders sought.

3. The Applicant did not file any submissions with the Tribunal. As such, the Tribunal shall rely on its pleadings and documents filed therewith to determine the totality of its case.

4. The Respondent did not file any response or submissions in opposition to the current application. Therefore, the Tribunal is left with no option but to pronounce itself on the merits of the case from the Applicant’s position.

Analysis and Findings 5. For determination by the Tribunal is the issue of the Applicant’s Tax Compliance certificate which the Applicant claims not to have been issued by the Respondent despite having objected to additional assessments and producing all the necessary documents requested by the Respondent without getting any objection decision despite the timelines for the same having long expired.

6. It maintained that the Respondent has further been charging interests and penalties to the tax deemed to be owed despite not issuing an objection decision to the same and prayed for the Tribunal to prohibit the Respondent from doing the same.

7. Section 72 of the Tax Procedures Act provides as follows.“(1)Any person may apply to the Commissioner for a Tax Compliance Certificate.(2)The Commissioner may issue a Tax Compliance Certificate, which shall be valid for the period specified in the certificate, upon the applicant fulfilling conditions that the Commissioner may impose.(3)The Commissioner may revoke a Tax Compliance Certificate issued under sub-section (2) if the Commissioner finds that the person has failed to honour a demand for tax issued by the Commissioner or has violated the provisions of a tax law.”

8. The Tribunal was guided by the decision in the case of Ujenzi Supplies Ltd v Commissioner of Domestic Taxes [2020]eKLR, where the Tribunal expressed itself as thus:-“...although the issuance of a Tax Compliance Certificate is an administrative function of the Respondent, this Tribunal, if it deems fit, can order the issuance of the same. It therefore disagrees with the Respondent that this Honourable Tribunal is not vested with the jurisdiction to compel it to issue a Tax Compliance Certificate… Moreover, a Tax Compliance Certificate alone cannot be conclusive evidence of complying with one’s tax obligations. The same can be withdrawn by the Commissioner upon sufficient evidence to the contrary…”

9. Given the foregoing and the fact that the Respondent did not put up a defense against the current application and upon perusal of the documents provided, the Tribunal observes that there was an assessment order issued by the Respondent on November 19th 2019 which was objected to on the 18th December, 2019. There is no proof of any objection decision having been issued by the Respondent.

10. In the absence of the Respondent’s position in the matter, the Tribunal has no option but to find that the application is uncontested and thus agreed to by the Respondent.

Disposition 11. The Tribunal was in the circumstances persuaded to exercise its discretion in favour of the Applicant.

12. The Tribunal accordingly makes the following Orders:-a.The application be and is hereby allowed;b.The Respondent be and is hereby directed to issue a Tax Compliance Certificate to the Applicant within Thirty (30) days of the delivery of this Ruling;c.The Respondent is hereby restrained from instituting any recovery proceedings for the collection of any taxes, inclusive of penalties and interest in relation to Assessment Order of 19th November, 2019. d.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF APRIL, 2024ERIC NYONGESA WAFULACHAIRMANELISHAH N. NJERU MUTISO MAKAUMEMBER MEMBEREUNICE N. NG’ANG’A ABRAHAM K. KIPTROTICHMEMBER MEMBER