Nesek Africa Limited v Commissioner of Domestic Taxes [2024] KETAT 1618 (KLR)

Nesek Africa Limited v Commissioner of Domestic Taxes (Miscellaneous Case E1009 of 2024) [2024] KETAT 1618 (KLR) (18 November 2024) (Ruling)

Neutral citation: [2024] KETAT 1618 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Case E1009 of 2024

RO Oluoch, Chair, AK Kiprotich, G Ogaga & Cynthia B. Mayaka, Members

November 18, 2024

Between

Nesek Africa Limited

Applicant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The Applicant vide a Notice of Motion dated the 11th September 2024 and supported by an Affidavit sworn by Daniele Sakayian Kayiao sought the following Orders:-i.That this Tribunal do consider the Applicant's reasons for late filing of the appeal and grant the Applicant an extension of time to allow the Applicant to file its appeal.ii.That pending the hearing and determination of this Application, the Tribunal do issue an order temporarily restraining the Respondent from the implementation, execution and enforcement of the tax demand of Kshs.11,971,795 from the Applicant.iii.That the Applicant be granted the costs of this Application.

2. The application is premised on the following grounds:-i.The Applicant stated that vide various assessments, the Respondent issued additional assessments on the Applicant with respect to Corporation Tax and Value Added Tax for the years 2017 and 2021. That in the assessment, the Respondent proceeded to demand settlement of the resulting taxes totalling to Kshs. 11,971,795. ii.That in its objection letter dated 26th May 2022, the Applicant objected to the said assessment in its entirety accounted for the purported inconsistencies cited by the Respondent and requested for the withdrawal of the said assessments together with alleged accrued interest and penalties.iii.That on 2nd September 2022, the Respondent issued the Applicant with its objection decision affirming the additional assessments and demanding the payment of Kshs.11,971,795. iv.That despite the issuance of the objection decision in September 2022, the Applicant was not able to file its appeal within the statutory timelines on grounds of being unwell and being hospitalized. That with the sickness, the Applicant was placed on appropriate management and treatment, self-isolation and bed rest prescribed from 1" October 2022 for a period of two months. That during the following months, the Applicant had been in and out of hospital due to illness.v.That the Applicant is apprehensive that unless the orders sought herein are granted, the Respondent will proceed to enforce the tax demand to the detriment of the Applicant's business as well as its recourse of appeal.vi.That the Applicant's intended appeal raises several arguable issues that should be argued before the Tribunal and determined on merit.vii.That the Respondent will not suffer any prejudice if the orders sought are granted.viii.That it is in the interest of justice and fairness that the orders sought by the Applicant are granted.

3. The Respondent opposed the application through its grounds of opposition, dated 18th September 2024. The grounds of opposition were as follows:-i.The Respondent submitted that the subject objection decision was issued on 2nd September 2022 and the Applicant lodged the Application on 11th September 2024. That the delay of 2 years is inordinate.ii.That the Applicant's reason for the delay in filing the Appeal is a medical letter dated 14th December 2022 and fails to explain the reason for further delay from then.iii.That the Applicant is guilty of laches and no sufficient reason has been given by the Applicant to warrant the exercise of this Tribunal's discretion to grant the orders sought.iv.That consequently, the application dated 10th March 2022 is ripe for striking out.

4. In compliance with the directions of the Tribunal to the effect that the application was to be canvassed by way of written submissions, the Appellant filed their submissions dated 30th September 2024 and the Respondent filed their submissions dated 18th September 2024. The Tribunal has duly considered the written submissions in arriving at its determination in this Ruling.

Analysis and Findings 5. The Applicant's application is primarily praying to the Tribunal for an extension of time to file an appeal out of time.

6. The power to expand the time for filing an Appeal is donated by Section 13(3) of the Tax Appeals Tribunal Act which provides that:“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).”It is therefore a discretionary power and not a right to be granted to the Applicant.

7. In determining whether to expand time, courts have in the past considered a number of factors. These factors were discussed in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 where the judge held that:“It is now settled that the decision whether to extend the time for appealing is essentially discretionary. It is also well stated that in general the matters which this court takes into account in deciding whether to grant an extension of time are, first the length of the delay, secondly the reasons for the delay, third (possibly) the chances of the appeal succeeding if the application is granted and fourthly the degree of prejudice to the respondent if the application is granted."

8. The court in Wasike V Swala [1984] KLR 591 provided the hierarchy of the factors to consider when it stated that:“an applicant must now show, in descending scale of importance, the following factors: -a)That there is merit in his appeal.b)That the extension of time to institute and/or file the appeal will not cause undue prejudice to the respondent; andc)That the delay has not been inordinate.

9. The Tribunal, guided by the principles set out in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997, Wasike V Swala [1984] KLR and Section 13 of the Tax Appeals Tribunal Act 2013 used the following criteria to consider the application:a.Whether there is a reasonable cause for the delay.b.The merits of the complained action.c.Whether there will be prejudice suffered by the Respondent if the extension is granted.

Whether there is a reasonable cause for the delay. 10. Regarding delay, the Applicant stated that its failure to file the appeal on time was as a result of illness.

11. That despite the issuance of the objection decision in September 2022, the Applicant was not able to file its appeal within the statutory timelines on grounds of being unwell and being hospitalized. That with the sickness, the Applicant was placed on appropriate management and treatment, self-isolation and bed rest prescribed from 1st October 2022 for a period of two months. That during the following months, the Applicant had been in and out of hospital due to illness.

12. The Respondent on its part contended that the subject objection decision was issued on 2nd September 2022 and the Applicant lodged the Application on 11th September 2024. That the delay of 2 years is inordinate.

13. That the Applicant's reason for the delay in filing the Appeal is a medical letter dated 14th December 2022 and fails to explain the reason for further delay from then.

14. The statutory timelines and provisions to file an appeal have been set out in the Tax Appeal Tribunal Act. Section 13 (3) of the Tax Appeals Tribunal Act provides as follows with regard to the statutory timelines for commencing appeal process:-“A notice of appeal to the Tribunal shall—(a)be in writing;(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; and(c)the tax decision.”

15. In addition, Section 13(4) of the TAT Act provides as follows in regard to grounds under which an Applicant can be granted leave to file sits Appeal out of time:“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”

16. It was not in dispute that the assessments were confirmed by the Respondent on 2nd September 2022. It follows therefore that the Appellant ought to have filed a Notice of Appeal on or before 2nd October 2022. This Application was brought up by the Applicant on 11th September 2024 which is close to two years later.

17. The Tribunal noted that the Appellant averred that he was unwell during the time. The Appellant further provided a hospital discharge letter dated 14th December 2022 to explain its case. However, the Appellant did not provide any further evidence in support or any proof to cover the subsequent periods despite alleging that he was in and out of hospital given that it was aware of the issuance of the objection decision by the Respondent in September 2022. The entire period of delay has thus not been explained by the Applicant.

18. The Tribunal’s position is that for it to exercise its discretion to expand time, the Applicant ought to have provided justifiable reason(s) for the delay of more than two years for consideration by the Tribunal as provided for under Section 13(4) of the Tax Appeals Tribunal Act.

19. The Tribunal in the circumstances finds that the Applicant has not advanced any reasonable cause of delay of more than two years to approach the Tribunal to vindicate its right to appeal against the objection decision by the Respondent.

20. The Tribunal is further persuaded by the decision in Abdul Aziz Ngoma vs. Mungai Mathayo [1976] Kenya LR 61, 62, where the court stated that:“We would like to state once again that this Court’s discretion to extend time under rule 4 only comes into existence after ‘sufficient reason’ for extending time has been established and it is only then that other considerations such as the absence of any prejudice and the prospects or otherwise of success in the appeal can be considered.”

21. Having entered the above finding and guided by the above case law, the Tribunal did not find it necessary to delve into the other issues for its determination as they had been rendered moot.

Disposition 22. Based on the foregoing analysis, the Tribunal finds that the application lacks merit and proceeds to make the following orders:i.The application be and is hereby dismissed.ii.The Memorandum of Appeal and Statement of Facts filed with this Application be and are hereby struck out.iii.Each party is to bear its own costs.

DATED AND DELIVERED AT NAIROBI THIS 18TH DAY OF OCTOBER, 2024. DR. RODNEY O.OLUOCHPRESIDING CHAIRMANABRAHAM K. KIPROTICH GLORIA A. OGAGAMEMBER MEMBERCYNTHIA B. MAYAKAMEMBERRULING – MISC APPL E1009 OF 2024 NESEK AFRICA LIMITED VS. COMMISSIONER OF DOMESTIC TAXES Page 8