M-Kopa Kenya Limited v Commissioner of Domestic Taxes [2023] KETAT 596 (KLR)

M-Kopa Kenya Limited v Commissioner of Domestic Taxes (Appeal 1237 of 2022) [2023] KETAT 596 (KLR) (Civ) (29 June 2023) (Ruling)

Neutral citation: [2023] KETAT 596 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Civil

Appeal 1237 of 2022

E.N Wafula, Chair, Cynthia B. Mayaka, Rodney Odhiambo Oluoch, E.N Njeru & AK Kiprotich, Members

June 29, 2023

Between

M-Kopa Kenya Limited

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The appellant moved the Tribunal by way of Notice of Motion dated the 4th day of April 2023 and filed on the April 5, 2023 and supported by an affidavit of Tabitha Mugyagia sworn on an even date, seeking for the following Orders;i.Spentii.That the appellant be granted leave to file additional documents.iii.That the appellant be granted leave to amend its Statement of Facts.iv.That there be no costs in relation to this application.

2. The application is anchored on the following grounds;i.That the Tribunal issued directions for the appellant to file written submissions by April 3, 2023. ii.That the appellant has information pertaining to the quantification of the costs of recovery of bad debts relating to the sale of products to its customers.iii.That the assessment as currently computed has an error that could not be resolved by the appellant providing full information.iv.That the information is necessary to allow the Tribunal have a full picture of the costs that would be incurred to pursue the bad debts and which will assist the Tribunal to determine this matter correctly.v.That the Tribunal has the power and discretion to admit additional evidence which is not contained in the Statement of Facts at the time of filing and hearing of an appeal.vi.That the respondent will not suffer any prejudice if the documents are admitted on record.vii.That the appellant has no objection to the respondent amending its pleadings and producing additional documents.

3. The respondent upon being served with the application, opposed the application by filing a replying affidavit sworn by David Omondi Okoth on the April 24, 2023and filed on the April 25, 2023, that is premised on the averments that;i.That on August 30, 2022 the appellant was requested to provide documentation in support of its objection.ii.That the intended documents are what the appellant is legally and statutorily required to maintain and avail so as to enable its tax liability to be readily ascertained by the respondent.iii.That subsequently the appellant failed to avail the requested documents.iv.That this Appeal having stemmed from the Objection stage, the appellant had an opportunity to produce documents, which it is required to keep in section 23 of the Tax Procedure Act, 2015. v.That the appellant further had an opportunity to present the said documents while attempting Alternative Dispute Resolution however it failed to.vi.That the appellant has not demonstrated why the information/additional documents were not availed when it ought to have been and by doing so now the respondent is being denied an opportunity to interrogate the same having rendered an objection decision.vii.That the application to adduce additional document is aimed at strengthening appellant case which if allowed will be prejudicial to the respondent.viii.That the respondent and the Tribunal ought not to be slowed down by the appellant’s internal affairs.ix.That the appellant has not given a cogent explanation for its failure to produce these documents at the objection stage which was done in July 2022. x.That the introduction of the documents not provided during the objection review stage should not be condoned as it will support the Appeal giving the appellant undue advantage.xi.That the application is calculated at unnecessarily delaying the hearing and determination of the matter pursuant to directions already issued by the Tribunal.xii.That the assessment disputed being for the year 2016 the appellant has not explained the delay in obtaining the documents and justification for the leave.xiii.That contrary to the allegations raised by the appellant in its Notice of Motion, it never reported any error on the assessment, in any event it proceeded and objected in line within the Tax Procedure Act.

Analysis and Determination 4. Following the directions of the Tribunal to the effect that the application was to be canvassed by way of written submissions, the parties in compliance therewith filed their respective submissions to the application that have been appropriately considered by the Tribunal in arriving at the findings hereinafter.

5. The Tribunal upon perusal of the application, affidavits in support and opposition thereto and submission filed by the parties, shall proceed to consider the application on its proper merits.

6. The Tribunal’s power in determining applications of this nature is anchored in Rule 21 of the Tax Appeals Tribunal (Procedure) Rules 2015, which provides that;“A party may at any time before the closure of the case, orally apply to amend its pleadings and the Tribunal may, at its discretion, allow such application on such terms and conditions including granting leave to the other party to amend its pleadings provided the amendments do not raise new issues”

7. Article 50(1) of the Constitution of Kenya 2010 seeks to ensure that each party is afforded an opportunity to present or defend its cases fairly. In addition, under article 159(2) of the Constitution of Kenya 2010 Courts mandated to administer justice without undue regard to technicalities.

8. The Tribunal notes that the Appeal has not proceeded for hearing and neither has any party closed its case. The Tribunal accordingly finds that the application has been made in a timeous manner.

9. It is the appellant’s argument that the additional documents shall assist the Tribunal whilst dispensing justice. The Tribunal has perused the additional documents and notes that the same are not voluminous and that the said documents were shared with the respondent vide an email dated February 23, 2023.

10. The respondent asserted that the documents shall place its case in a position of prejudice on account of the additional documents having not been previously reviewed by the Commissioner during the objection stage.

11. In the Tribunal’s view, the additional documents that the appellant seeks to include in its records and rely on at the hearing of the Appeal were shared with the respondent as per the aforesaid email extract. The respondent will not therefore be ambushed with documents that it has not already been furnished with.

12. There is no prejudice that may manifestly be visited upon the respondent’s case or grant the appellant undue advantage, if the Orders sought are granted. In the Tribunal’s view the respondent shall have an opportunity to review and interrogate the appellant if necessary on the said documents without any undue advantage being extended to any party to these proceedings.

13. Section 26 of the Tax Appeals Tribunal Act, provides as follows with regard to fair proceedings: -“The Tribunal shall ensure that every party to proceedings is given a reasonable opportunity to –a.present his case; andb.inspect any document in relation to the proceedings and make submissions”

14. The Tribunal is persuaded that the additional documents shall aid the Tribunal to have a clear picture of the issues, will also afford the parties a fair trial as well as shade more light to the issues in controversy.

15. The Tribunal notes that the appellant seeks for an Order to amend its Statement of Fact. The Statement of Fact is incapable of being amended but the alternative remedy available is to let the appellant file a Supplementary Statement of Facts.

Disposition 16. In view of the foregoing, the Tribunal finds the appellant has made out a case for the Orders sought in the application to be granted and accordingly makes the following Orders;-i.The appellant be and is hereby granted leave to file and serve the additional documents limited to the documents annexed and marked under Appendix A to the application and to file a Supplementary Statement of Facts relating to the additional documents within Fifteen (15) days of the date of delivery of this Ruling.ii.The respondent be and is hereby granted a corresponding leave to file a Supplementary Statement of Facts and to file any additional documents within Fifteen (15) days of being served.iii.There shall be no orders as to costs.

17. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 29TH DAY OF JUNE, 2023. ...........................................ERIC N. WAFULACHAIRMAN............................................CYNTHIA B. MAYAKA RODNEY O. OLUOCHMEMBER MEMBER............................................ELISHAH N. NJERU ABRAHAM K. KIPROTICHMEMBER MEMBER