Nyatangi v Commissioner of Domestic Taxes [2025] KEHC 3451 (KLR)

Nyatangi v Commissioner of Domestic Taxes (Miscellaneous Civil Application E283 of 2024) [2025] KEHC 3451 (KLR) (21 March 2025) (Ruling)

Neutral citation: [2025] KEHC 3451 (KLR)

Republic of Kenya

In the High Court at Eldoret

Miscellaneous Civil Application E283 of 2024

RN Nyakundi, J

March 21, 2025

Between

Benedict Simeon Ondieki Nyatangi

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Applicant moved the court vide the Notice of Motion dated 14. 10. 2024 expressed under Sections 1A, 1B and 3A of the Civil Procedure Act, Section 53 of the Tax Procedures Act, Art. 159(2)(d) and Art. 50 of the Constitution seeking reliefs as follows:a.Spent.b.That this court be pleased to grant the applicant leave to appeal out of time against the decision of the Tax Appeals Tribunal delivered on 19th October, 2023 in Misc. Application No. E096 of 2023. c.That the court be please to grant stay of any adverse action by the Respondent that may occasion disruption of his business or operations awaiting determination of the intended appeal.d.That there be stay of the Criminal Proceedings in Criminal case No. E4154 of 2021 awaiting the determination of the intended appeal.e.That corollary to the foregoing, the draft appeal filed by the appellant/applicant be deemed as properly and duly filed thus part of the record.

2. The application is based on grounds that:a.The Respondent assessed the Applicant’s tax liability at Kshs. 26,681,193/= and issued the Applicant with an amended assessment on 25th February, 2022 and 1st July, 2022. b.The Applicant subsequently lodged an objection on 6th April, 2022 to the Respondent’s decision to amend his self-assessments, which objection was invalidated for reasons that it failed to meet the requirements of Section 51(3) of the Tax Procedures Act, 2015. c.The Tax Appeals Tribunal delivered a ruling on 19th October, 2023 dismissing the Applicant’s application seeking extension of time to file an Appeal.d.That in dismissing the applicant’s objections and appeal, the Respondent acted Ultra Vires, in abuse of power and the whole process was tainted with unreasonableness and procedural impropriety.e.That in the meantime, the applicant was charged in Eldoret CMCR E415 of 2021 with 13 counts of tax fraud in a case that has not made much progress since the year 2021 and not even a witness has been called to establish the prosecution’s case. This is contrary to the provisions of the Constitution which requiresf.The Applicant approached this court vide Misc. Civil Application No. E121 of 2024 in which he sought orders without this court’s leave, an approach the court did not agree with.g.That the said suit was filed on 22nd April, 2024 and the court delivered its ruling on 10th July, 2024. h.That the reasons advanced at the Tribunal were that the applicant was sick all along and was unable to lodge an appeal within the required timelines.i.That the delay herein is not so inordinate or so great as to be inexcusable vis-a-vis the colossal amount involved of Kshs. 26,681,193/= as being due in the period between 2016 to 2020. j.That the applicant through his accountant have done an elaborate audit report for the period between 2016 to 2020 outlining the performance of the applicant’s business contrary to the assessment carried out by the Respondent.k.That as clearly shown form the financial statements, the amounts of money largely counted as sales by the Respondent are loan facilities that the applicant is still servicing.l.That the Applicant shall suffer prejudice if this appeal is not heard on merit and better still, the Respondent suffers no harm if the Appeal is heard and determined on merit.m.That the time allowed to file an appeal has run out.

3. In response to the application, the respondent through Mr. Abdub Matoye made averments which have been captured verbatim where relevant as hereunder:a.That I am aware that the Respondent carried out investigations against the Applicant which mainly covered the Applicant's tax declarations for income tax (Resident Individual) and Value Added Tax (VAT) for the period 2016 to December 2020. b.That upon conclusion of the investigations, the Respondent prepared the preliminary tax investigation's findings which were shared with the Applicant on 26th August 2021 and the Applicant was given seven (7) days to submit their responses and supporting documentation failure to which the Respondent would issue Amended Assessments.c.That I am aware that the Respondent, on 10th November 2021, wrote to the Applicant informing him of the updated tax investigation findings and granted the Applicant fourteen days to submit his response and the supporting documentation failure to which the Respondent would issue Amended Assessments.d.That I am aware that the Applicant failed to honor the Respondent's request or respond to the issues raised in the investigation report and based on the investigation findings, the Respondent suspected that the Applicant had committed several tax offences.e.That consequently, the Respondent prepared an investigation file and forwarded it to the Office of the Director of Public Prosecutions (ODPP) on 14th December 2021 with recommendation that the Applicant be charged with the offences under section 97 of the Tax Procedures Act, Chapter 469B Laws of Kenya.f.That I am aware that the Director of Public Prosecutions independently reviewed the Investigation File and made a decision on 17th December 2021 to charge the Applicant as per the Respondent's recommendation.g.That I am also aware that on 29th December 2021, the Applicant was arraigned and charged in the Magistrates Court at Eldoret with several counts of tax offences.h.That I know that on 4th January 2022, the Respondent and the Applicant had discussions relating to the tax dispute herein, however, nothing fruitful came out of it since the Applicant failed to provide the requested documents or respond substantively to the issues raised.i.That from the investigations which culminated to the criminal proceedings, I know that the Respondent assessed the Applicant's tax liability at Kshs. 26,681,193 and issued the Applicant with the amended assessment on 25th February 2022 and 1st July 2022 under section 31 of the Tax Procedures Act, Cap. 469B.j.That I am aware that the Applicant lodged an objection on 6th April 2022 to the Respondent's decision to amend his self - assessments.k.That upon review of the Applicant's objection, I noted that the Applicant neither supported his objection with documents/evidence nor provided the grounds of objection/proposed amendments to the tax assessment as required under section 51(3) of the Tax Procedures Act, Cap. 469B.l.That accordingly, I issued a notice to the Applicant under section 51(4) of the Tax Procedures Act, Cap. 469B on 25th April 2022, communicating the invalidity of the notice of objection for its failure to meet the requirements of section 51(3) of the said Act.m.That I am aware that the Applicant failed to validate his Notices of Objection despite being given an opportunity and consequently on behalf of the Respondent, I confirmed the taxes as due on 22nd July 2022. n.That I am also aware that the Applicant failed to appeal against the Respondent's decision of 22nd July 2022 within thirty days as per section 52(1) of the Tax Procedures Act, Cap. 469B and thus sought leave of the Tribunal to file an appeal out of time vide an Application dated 25th July 2023 in Nairobi TAT Misc. Application No. E096 of 2023 Benedict Simeon Ondieki vs Commissioner of Domestic Taxes.o.That I have been informed by the Counsel for the Respondent, the information of which I believe to be true that the Applicant failed to secure leave to file an appeal out of time since the Tribunal dismissed the Applicant's Application vide a Ruling delivered on 19th October 2023 in Nairobi TAT Misc. Application No. E096 of 2023. p.That I am aware that the Applicant has similarly failed to prefer an Appeal against the Tribunal's Ruling of 19th October 2023 within the statutory timelines of thirty (30) days as per section 53 of the Tax Procedures Act, Cap. 469B and section 32(1) of the Tax Appeals Tribunal Act, Chapter 469A Laws of Kenya and thus the present Application seeking leave of this Honorable Court.q.That in response to the Applicant's allegations at paragraph no. 4 of the Notice of Motion Application and paragraph No. 9 of the Affidavit in support and as advised by the Respondent's Counsel, I wish to state as follows:i.The Respondent acted within the confines of the law and thus the allegations of acting ultra vires, abuse of power, unreasonableness or procedural impropriety are unfounded; andii.It is not the Respondent who dismissed the Applicant's Application but the Tribunal, and in doing so, the Tribunal found that the Applicant failed to sufficiently explain the cause of the delay.r.That in response to the Applicant's allegations at paragraph no. 5 of the Notice of Motion Application and paragraph No. 4 of the Affidavit in support, I wish to state as follows:i.The proceedings before this Honourable Court are civil in nature and seek to recover taxes which have become due and payable whereas the proceedings at the Magistrates Court are criminal in nature and seek to punish the tax offences which have been committed;ii.The mere fact that there are pending civil proceedings on the same subject matter does not ipso facto bar the Magistrates Court from carrying on with the criminal proceedings against the Applicant or vice versa; andiii.Therefore, the Applicant's prayer for an order to stay the Criminal Proceedings in the Magistrate Court should not be granted.s.That as per the counsel of the Respondent's Advocate, which I believe to be correct, I would wish to respond to the Applicant's allegations at paragraph no. 6 - 11 of the Notice of Motion Application and paragraph No. 8 - 19 of the Affidavit in support as follows:i.The extension of time for filing of an appeal out of time can only be granted if the Applicant sufficiently proves to the Court that he was prevented by absence from Kenya, sickness, or other reasonable cause from lodging the appeal and that there here has been no unreasonable delay on his part;ii.Even though in this Application the Applicant has adduced a "Patient Treatment Card" dated 06/03/2022 (Annexure marked as "BSON 7(a)" in the Applicant's Affidavit) as evidence of sickness, the purported evidence does not address the delay for lodging an appeal before this Court;iii.The Tribunal delivered its Ruling on 19th October 2023 (decision sought to be appealed against) whereas the Application for leave herein was lodged on 28th October 2024;iv.Thus, it is apparent that there is no nexus between the purported Applicant's medical records and the delay in lodging an appeal against the Tribunal's Decision;v.The Applicant ought to have, but failed, to give reasons and account for the delay of one (1) year in lodging the Appeal before this Honorable Court;vi.The Applicant's argument that he was sick all along is not entirely true as the Applicant was able to file his Application dated 9th April 2024 in Eldoret High Court Miscellaneous Civil Application No. E121 of 2024 before this Honorable Court;vii.Had it been the intention of the Applicant to appeal against the Tribunal's Ruling, then the Applicant would have sought leave on 9th April 2024 when he filed his Application in Eldoret High Court Miscellaneous Civil Application No. E121 of 2024;viii.Further, the Applicant has unreasonably delayed in filing the current Application even after this Honorable Court delivered a Ruling on 16th July 2024 in Eldoret High Court Miscellaneous Civil Application No. E121 of 2024 reminding the Applicant that the right procedure is to appeal against the Ruling of the Tribunal;ix.From the history of this tax dispute, it is evident that the Applicant has not been keen on pursuing his rights considering that this is the second time the Applicant is seeking an extension of time to appeal against the Tribunal's Ruling and/or the Respondent's Decision;x.In view of the above, it is clear that the Applicant's delay is inordinate and thus should not benefit from the discretionary power of this Honorable Court; andxi.Contrary to the Applicant's allegations at paragraph 10 of his Affidavit, the Respondent reiterates that the Applicant's objection was invalid and thus it cannot benefit from section 51(11) of the Tax Procedures Act, Cap. 469B.t.That in response to paragraph no. 12 of the Notice of Motion Application and paragraph No. 18 - 19 of the Affidavit in support, I wish to further state that:i.Contrary to the Applicant's allegations, the Respondent stand to suffer greater and irreparable loss if the Applicant is entertained to hold further the revenue which have crystalized;ii.The Government of Kenya is in dire need of cash flows and unless the revenue is released, the Government is forced to seek external funding through loans which comes with exorbitant interest and penalties in case of default;iii.It is in the public domain, and this is a matter of fact which the Honourable Court can take judicial notice of, that the Government is currently in need of revenue to facilitate her render the services to the public; andiv.Therefore, justice demands that there should be an end to litigation and the revenue which have crystalized should be released to the Government.u.That in the circumstances, the orders sought in the Notice of Motion Application should be declined as they are without any merit.

4. The parties submitted their arguments on various dates, with the key contentions summarized as follows:

Applicant’s submissions 5. Learned Counsel Mr. Obinchu of Owuondo & Obinchu Company Advocates presented submissions in support of an application for leave to appeal out of time against the Tax Appeals Tribunal's ruling delivered on 19th October 2023. Providing context, learned counsel Mr. Obinchu explained that the Applicant is a businessman operating Benom Enterprises, a hardware shop in Eldoret. Following investigations covering 2016-2020, the Respondent assessed a tax liability of Kshs. 26,681,193. That simultaneously, the Applicant was charged with 13 counts of tax fraud in Criminal Case No. E4154 of 2021 before the Eldoret Chief Magistrate's Court.

6. Mr. Obinchu structured his submissions around four key issues:a.Whether sufficient cause exists for extension of timeb.Whether the applicant has satisfactorily explained the delayc.Whether the extension of time would occasion prejudiced.Whether It Is in the Interest of Justice to Stay Proceedings

7. Starting with the first issue, Mr. Obinchu argued that the Court's jurisdiction to extend time is unfettered, citing Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR, which established that extension of time is an equitable remedy available to deserving parties at the Court's discretion.

8. Mr. Obinchu highlighted that Section 51(7) of the Tax Procedures Act specifically recognizes sickness as grounds for extension, and submitted that the Applicant provided medical documentation evidencing illness during the material period.

9. Relying on Leo Sila Mutiso vs Rose Hellen Wangari Mwangi - Civil Application No. 255 of 1997, learned counsel outlined the principles guiding extension of time: length of delay, reason for delay, chances of appeal succeeding, and degree of prejudice to the respondent.

10. Mr. Obinchu criticized the Respondent's narrow interpretation of medical evidence, arguing that medical conditions don't always manifest in continuous hospital visits. He referenced Antony Mwau Wambua v Cooperative Bank of Kenya Ltd [2021] eKLR, where the court recognized illness as a valid explanation for delay.

11. As to whether the applicant has satisfactorily explained the delay, learned counsel argued that the delay must be evaluated against the totality of circumstances, including the Applicant's medical condition and the complexity of tax matters involving Kshs. 26,681,193. He emphasized that the Applicant demonstrated diligence by engaging professional auditors, Bace Partners LLP, to review the tax assessment.

12. Mr. Obinchu cited Edith Gichugu Koine v Stephen Njagi Thoithi [2014] eKLR, noting that courts should consider several factors: period of delay, reasons for delay, degree of prejudice, and public importance. He also referenced Muringa Company Ltd v Archdiocese of Nairobi Registered Trustees, Civil Application No. 190 of 2019 and Andrew Kiplagat Chemaringo v Paul Kipkorir Kibet [2018] eKLR, highlighting that there is no maximum or minimum period of delay set in law, but reasons must be reasonable and plausible.

13. On whether the extension of time would occasion prejudice, learned counsel posited that no demonstrable prejudice would affect the Respondent if extension were granted. The tax assessment remains documented and preserved, and the Respondent's ability to collect validated tax liability remains unimpaired. Conversely, refusing extension would substantially prejudice the Applicant by denying the opportunity to challenge a significant tax assessment.

14. Mr. Obinchu relied on Muchungi Kiragu v James Muchungi Kiragu and another [1998] eKLR, which held that extension should be granted where an intended appeal is arguable unless the delay was inexcusable and the opponent prejudiced. He also cited Athuman Nusura Juma v Afwa Mohamed Ramadhan CA No. 227 of 2015, noting that courts should not determine with finality whether an intended appeal has merit at this preliminary stage.

15. As to whether it is in the interest of justice to stay proceedings, learned counsel argued that the criminal proceedings in Eldoret CMCR No. E4154 of 2021 have remained dormant since institution, contravening the Applicant's constitutional right to expeditious trial. More fundamentally, the criminal charges arise from the same facts as the disputed tax assessment, creating risk of conflicting findings on similar issues.

16. Mr. Obinchu submitted that continuing parallel proceedings would prejudice the Applicant's constitutional rights by forcing simultaneous defense in multiple forums, potentially compromising the right against self-incrimination, straining resources, and risking inconsistent findings.

17. He cited Article 159(2)(d) of the Constitution and Macharia Mwangi Maina & 87 others v Davidson Mwangi Kagiri [2014] eKLR, emphasizing that courts should lean toward hearing matters on merit rather than shutting out parties on technical grounds where clear reasons for delay exist and no prejudice would be suffered.

18. In conclusion, learned counsel Mr. Obinchu prayed that the Court grant leave to appeal out of time, stay execution and adverse action pending determination of the intended appeal, and stay the criminal proceedings pending resolution of the tax dispute.

Respondent’s submissions 19. Learned Counsel Mr. Ngetich started by giving context of the case. That that the Respondent had conducted an investigation on the Applicant resulting in a tax assessment of Kshs. 26,681,193 (comprising Income Tax, Monthly Rental Income, and Value Added Tax) issued on 25th February 2022 for periods between 2016 and 2020.

20. The chronology outlined by learned counsel showed that the Applicant lodged an invalid notice of objection on 6th April 2022, which was rejected on 25th April 2022 for non-compliance with section 51(3) of the Tax Procedures Act. The assessment was subsequently confirmed on 22nd July 2022.

21. After failing to file an appeal within the statutory 30-day period, the Applicant sought leave from the Tax Appeals Tribunal to file an appeal out of time, which was declined on 19th October 2023. Parallel to these civil proceedings, the Respondent had also recommended prosecution to the Office of the Director of Public Prosecutions (ODPP) on 14th December 2021, resulting in the Applicant being charged with several counts of tax fraud in Eldoret Chief Magistrates Court Criminal Case No. E4154 of 2021.

22. Mr. Ngetich structured his submissions around three main issues:a.Whether the Applicant has satisfied conditions for granting stay of the Tribunal's decisionb.Whether the criminal proceedings should be stayedc.Whether the Applicant has satisfied conditions for granting leave to appeal out of time

23. On staying the tribunal’s decision, learned counsel submitted that the order dismissing the Applicant's application for leave at the Tribunal was not a positive order but rather a negative order. Citing Kaushik Panchamatia, Sunrise Hauliers Limited & Others v Prime Bank Limited & Garam Investment Auctioneers [2020] KECA 418 (KLR), Mr. Ngetich argued that negative orders are incapable of being stayed because there is nothing to stay.

24. He explained that by dismissing the application, the Tribunal merely restored parties to their position before the application was moved, and made no finding on whether taxes were due. Therefore, the Tribunal's ruling and consequential orders were incapable of being stayed.

25. Mr. Ngetich reinforced this position with Registered Trustees, Kenya Railways Staff Retirement Benefits Scheme v Millimo, Muthomi & Co. Advocates & 2 others [2022] KECA 491 (KLR), where the Court of Appeal reiterated that negative orders cannot be stayed.

26. On stay of proceedings, learned counsel argued that the Applicant had provided neither legal nor factual basis for seeking stay of criminal proceedings, noting that the Applicant mentioned these proceedings only superficially in paragraphs 4 and 5 of supporting documents.

27. Mr. Ngetich cited section 193A of the Criminal Procedure Code which expressly provides that matters in issue in criminal proceedings that are also in civil proceedings "shall not be a ground for any stay, prohibition or delay of the criminal proceedings." He also referenced section 108 of the Tax Procedures Act, which states that tax liability "shall not be abated by the prosecution" of a taxpayer.

28. Mr. Ngetich further submitted that an order staying criminal proceedings would contradict the very right to expeditious trial claimed by the Applicant.

29. Regarding the application for extension of time, learned counsel acknowledged the Court's jurisdiction to extend timelines but argued that the Applicant had not satisfied the conditions for such discretionary relief.

30. Mr. Ngetich referenced Rules 3 and 4 of the Tax Appeals Tribunal (Appeals to the High Court) Rules, 2015, which provide that the Court may extend time if satisfied that "owing to absence from Kenya, sickness, or other reasonable cause," the appellant was unable to file within the prescribed period and there was no unreasonable delay.

31. Citing Commissioner of Domestic Taxes v Mayfair Insurance Company Ltd [2017] KEHC 2516 (KLR) and Salat v Independent Electoral and Boundaries Commission & 7 others [2014] KESC 12 (KLR), learned counsel emphasized that extension of time is not a right but an equitable remedy available to deserving parties at the Court's discretion. The applicant bears the burden of providing sufficient explanation for the delay.

32. Mr. Ngetich critiqued the Applicant's medical evidence (a Patient Treatment Card dated 06/03/2022), arguing there was no nexus between the purported medical records and the one-year delay in filing the appeal. He noted that the Tribunal delivered its ruling on 19th October 2023, while the Application for leave was lodged on 28th October 2024.

33. Learned counsel highlighted that the Applicant had previously sought leave at the Tribunal and was declined, and that the Applicant had an opportunity on 9th April 2024 to seek leave when filing Eldoret High Court Miscellaneous Civil Application No. E121 of 2024 but did not do so. Citing Central Rift Valley Water Development Agency v Kenya Revenue Authority & another [2022] KEHC 16893 (KLR), Mr. Ngetich submitted that a delay of close to a year was inordinate and inexcusable.

34. Mr. Ngetich further noted that even after the Court's ruling of 10th July 2024 in Application No. E121 of 2024, which clarified that the Applicant's relief lay in appeal, no steps were taken until 28th October 2024, more than two months later.

35. Based on these arguments, learned counsel Mr. Ngetich submitted that the Applicant had not made a case for granting the orders sought. He therefore prayed that the Notice of Motion Application dated 14th April 2024 be dismissed with costs for want of merit.

Analysis and determination 36. Having carefully considered the submissions by both learned counsel and the evidence placed before this Court, I must now determine whether the Applicant has established sufficient grounds for this Court to exercise its discretion to grant leave to appeal out of time. This application raises several interconnected legal issues: the Court's jurisdiction to extend statutory timelines, the factors that constitute "reasonable cause" for delay under Section 51(7) of the Tax Procedures Act, the proper interpretation of medical evidence in such contexts, and the relationship between parallel civil and criminal proceedings in tax matters. These issues must be analyzed within the broader constitutional framework of access to justice, while balancing the competing interests of efficient tax administration and taxpayers' rights to fair adjudication.

37. The factual matrix of this case presents a tax dispute of considerable complexity and consequence. The Respondent has assessed a tax liability of Kshs. 26,681,193 against the Applicant for the period between 2016 and 2020, while simultaneously pursuing criminal charges for tax fraud in the Magistrates Court. The Applicant, having failed to secure leave to appeal out of time at the Tribunal level, now approaches this Court seeking relief some twelve months after the Tribunal's decision of 19th October 2023. The Respondent contends that this delay is inordinate and inexcusable, particularly given the Applicant's awareness of the proper legal process as evidenced by previous applications. The Applicant, conversely, attributes the delay to illness and the complexity of preparing an adequate response to the substantial tax assessment, including the engagement of professional auditors to review the financial implications.

38. The jurisprudence on extension of time requires this Court to consider several factors: the length of delay, the explanation provided, whether the intended appeal raises arguable issues, and the potential prejudice to either party. In tax matters specifically, Rules 3 and 4 of the Tax Appeals Tribunal (Appeals to the High Court) Rules, 2015 provide that the Court may extend time if satisfied that "owing to absence from Kenya, sickness, or other reasonable cause," the appellant was prevented from filing within the prescribed period and there was no unreasonable delay. The Court must therefore scrutinize the evidence presented by the Applicant to determine whether it meets these statutory and common law thresholds, while remaining mindful that procedural requirements, though important for the orderly administration of justice, should not unnecessarily impede access to substantive judicial review in matters of significant consequence.

39. The Supreme Court in Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 others [2014] eKLR set out the considerations to guide the court in exercising its discretion in cases seeking extension of time. It stated:“i.Extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party at the discretion of the Court;ii.A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court;iii.Whether the court should exercise the discretion to extend time, is a consideration to be made on a case-to-case basis;iv.Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the Court;v.Whether there will be any prejudice suffered by the respondents if the extension is granted;vi.Whether the application has been brought without undue delay; andvii.Whether in certain cases, like election petitions, public interest should be a consideration for extending time.”

40. Further, Section 53 of the Tax Procedures Act, 2015 (“the TPA”) which is an Act that consolidated the procedural rules for administration of tax laws in Kenya provides for a right of appeal to the High Court as follows:“53. A party to proceedings before the Tribunal who is dissatisfied with the decision of the Tribunal in relation to an appealable decision may, within thirty days of being notified of the decision or within such further period as the High Court may allow, appeal the decision to the High Court in accordance with the provisions of the Tax Appeals Tribunal Act, 2013 (No. 40 of 2013).”

41. I commence my analysis by examining whether the Applicant's delay of approximately one year in filing the appeal is justifiable. The Applicant contends that the delay was occasioned by his illness during the material period, as evidenced by the Patient Treatment Card dated 6th March 2022. The Respondent, however, argues that there is no nexus between the medical evidence presented and the period under consideration, noting that the Tribunal delivered its ruling on 19th October 2023, while the application for leave was only lodged on 28th October 2024.

42. While I acknowledge the Respondent's argument regarding the medical evidence, I must evaluate this evidence within the proper legal context. Medical documentation, though not contemporaneous with the entire delay period, may nonetheless be relevant when considered alongside other factors. The date of the Patient Treatment Card (6th March 2022) predates the period in question, and without additional medical evidence linking the condition to the relevant timeframe after October 2023, its probative value is limited. However, this does not end the inquiry as other factors must also be considered.

43. Beyond the Applicant's health concerns, I must also consider the complexity of the tax matters at issue. The disputed tax assessment of Kshs. 26,681,193 spans a period of five years (2016-2020) and involves intricate financial transactions that the Applicant claims were mischaracterized as taxable sales rather than loan facilities. This complexity constitutes a reasonable cause for delay that falls within the ambit of Rule 4 of the Tax Appeals Tribunal (Appeals to the High Court) Rules, 2015.

44. In Fakir Mohamed V. Joseph Mugambi & 2 Others CA NO. NAI 332 OF 2004 the court stated as follows:“The exercise of this Court’s discretion under rule 4 has followed a well-beaten path since the stricture of “sufficient reason” was removed by amendment in 1985. As it is unfettered, there is no limit to the number of factors the court would consider so long as they are relevant. The period of delay, the reason for the delay, (possibly) the chances of the appeal succeeding if the application is granted; the degree of prejudice to the respondent if the application is granted, the effect of the delay on public administration, the importance of compliance with time limits; the resources of the parties, whether the matter raises issues of public importance are all relevant but not exhaustive factors …”

45. And in Muchugi Kiragu V. James Muchugi Kiragu & AnotherCA NO. NAI. 36 OF 1996 the Court laid emphasis on the need, in deserving cases, to give intended appellants the opportunity to agitate their grievances, in the following terms:“Lastly, we would like to observe that the discretion granted under rule 4 of the Rules of this Court to extend the time for lodging an appeal, is, as is well known, unfettered and is only subject to it being granted on terms as the Court may think just. Within this context, this Court has on several occasions, granted extension of time, on the basis that an intended appeal is an arguable one and that it would therefore, be wrong to shut an applicant out of Court and deny him the right of appeal unless it can fairly be said that his action was in the circumstances, inexcusable and that his opponent was prejudiced by it.”

46. Guided by the principles enunciated in Fakir Mohamed V. Joseph Mugambi & 2 Others CA NO. NAI 332 OF 2004, wherein the Court articulated that the exercise of discretion under rule 4 is unfettered, with no limit to the number of factors the court may consider, so long as they are relevant. These factors include the period of delay, the reason for delay, prospects of success if the application is granted, degree of prejudice to the respondent, effect on public administration, importance of compliance with time limits, resources of the parties, and whether the matter raises issues of public importance. Applying these comprehensive considerations to the present case, I find that while the delay is substantial, the complexity and significant financial implications of the tax assessment provide sufficient reason within the context of Rule 4.

47. The next consideration is whether the intended appeal raises arguable issues. In the case of Dennis Mogambi Mang'are v Attorney General & 3 Others [2012] eKLR, this Court held that:“An arguable appeal is not one that must necessarily succeed, it is simply one that is deserving of the court’s consideration.”

48. The Court of Appeal in the case of Cabinet Secretary Ministry of Health v Aura & 13 others (Civil Application E583 of 2023) stated:“An arguable appeal is not one that must succeed and an applicant need not proffer a multiplicity of arguable points. One was sufficient. For a point to be arguable it needed merely to raise a bona fide point of law or fact sufficient to call for an answer from the respondent and was worthy of the court’s consideration.”

49. In the present case, the Applicant contends that the Respondent's tax assessment erroneously classified loan facilities as taxable sales, a contention supported by financial statements prepared by professional auditors. This raises substantive questions about the accuracy of the tax assessment that merit judicial scrutiny. Furthermore, the Applicant alleges procedural improprieties in the handling of his objection. These issues, if proven, could significantly impact the outcome of the appeal.

50. Regarding prejudice, I must balance the competing interests at stake. The Respondent argues that allowing the appeal would delay the collection of revenue that has already crystallized, forcing the Government to seek external funding through loans. While I acknowledge this concern, I must weigh it against the potential prejudice to the Applicant if he is denied the opportunity to challenge a substantial tax assessment that could significantly impact his business operations.

51. In Muchungi Kiragu v James Muchungi Kiragu and another [1998] eKLR, the court held that extension should be granted where an intended appeal is arguable unless the delay was inexcusable and the opponent prejudiced. Having found that the delay, though substantial, is explained by reasonable causes, and that the appeal raises arguable issues, I am inclined to find that the balance of prejudice favors the Applicant.

52. As submitted by the applicant’s counsel, the Respondent's ability to collect validated tax liability remains unimpaired, as the tax assessment is well-documented and preserved. Conversely, refusing extension would deny the Applicant the opportunity to challenge a significant tax assessment that he contends is erroneous, potentially leading to the closure of his business and irreparable financial harm.

53. On the question of staying the Tribunal's decision, the Respondent has raised a compelling legal argument. Citing Kaushik Panchamatia, Sunrise Hauliers Limited & Others v Prime Bank Limited & Garam Investment Auctioneers [2020] KECA 418 (KLR), the Respondent contends that negative orders, such as the dismissal of the Applicant's application for leave at the Tribunal, are incapable of being stayed because there is nothing to stay. This position is reinforced by Registered Trustees, Kenya Railways Staff Retirement Benefits Scheme v Millimo, Muthomi & Co. Advocates & 2 others [2022] KECA 491 (KLR), where the Court of Appeal reiterated that negative orders cannot be stayed.

54. I find merit in this legal argument. By dismissing the Applicant's application, the Tribunal merely restored the parties to their position before the application was moved and made no finding on whether taxes were due. Therefore, the Tribunal's ruling is not, strictly speaking, capable of being stayed.

55. The final issue concerns the prayer for stay of criminal proceedings. section 193A of the Criminal Procedure Code provides for concurrent criminal and civil proceedings. The Singapore High Court in a 2022 decision in Debenho Pte Ltd and another v Envy Global Trading Pte Ltd and another [2022] SGHC 7, though not binding to this court is worth quoting. It held that the existence of parallel criminal proceedings per se is not sufficient as a ground to obtain a stay of the civil proceedings.

56. Randy S. Eckers in an article entitled Unjust Justice in Parallel Proceedings: Preventing Circumvention of Criminal Discovery Rules, 1998, Hofstra Law Review, Volume 27, defines parallel proceedings as: “Parallel proceedings are independent, simultaneous investigations and prosecutions involving substantially the same matter and parties.” At page 112, he proceeds to elucidate circumstances under which a court can stop parallel civil and criminal proceedings. He states as follows:“…The courts only block parallel proceedings in special circumstances. A defendant may move for a stay to block parallel proceedings, which will be granted only if the defendant can prove either that the government is acting in bad faith and using malicious tactics to circumvent the strict criminal discovery rules, or that there is a due process or Fifth Amendment violation.' Even if a defendant meets one of these requirements, a stay is not guaranteed. The court takes many other factors into account in deciding whether a stay is appropriate in a specific situation. These factors include the commonality of the transaction or issues, the timing of the motion, judicial efficiency, the public interest, and whether or not the movant is intentionally creating an impediment." Absent special circumstances, both cases will probably proceed.”

57. Courts generally will not stay civil proceedings merely because parallel criminal proceedings exist concerning the same subject matter. This principle is codified in section 193A of the Criminal Procedure Code, which explicitly allows criminal and civil cases to proceed simultaneously.

58. To overcome this legal standard, an applicant must demonstrate that continuing the civil action would create a "real danger of prejudice" to their position in both proceedings. This threshold requirement was established by the Constitutional Bench of the Supreme Court of India in M. S. Sheriff v The State of Madras and others (AIR 1954 SC 379) in which the court stated:“No hard and fast rule can be laid down but we do not consider that the possibility of conflicting decisions in the civil and criminal courts is a relevant consideration. The law envisages such an eventuality when it expressly refrains from making the decision of one court binding on the other, or even relevant, except for certain limited purposes, such as sentence or damages. The only relevant consideration here is the likelihood of embarrassment.”

59. The Court of Appeal in Commissioner of Police and Director of Criminal Investigations Department v Kenya Commercial Bank and others Nairobi Civil Appeal No 56 of 2012 [2013] eKLR held that:“While the law (section 193A of the Criminal Procedure Code) allows the concurrent litigation of civil and criminal proceedings arising from the same issues, and while it is the prerogative of the police to investigate crime, we reiterate that the power must be exercised responsibly, in accordance with the laws of the land and in good faith. What is it that the company was not able to do to prove its claim against the bank in the previous and present civil cases that must be done through the institution of criminal proceedings" It is not in the public interest or in the interest of administration of justice to use criminal justice process as a pawn in civil disputes. It is unconscionable and travesty of justice for the police to be involved in the settlement of what is purely a civil dispute litigated in court. This is a case more suitable for determination in the civil court where it has been since 1992, than in a criminal court. Indeed, the civil process has its own mechanisms of obtaining the information now being sought through the challenged criminal investigations.”

60. From the foregoing analysis, the statutory provisions create a high threshold for staying criminal proceedings in parallel with civil tax disputes. While the Applicant has raised concerns about the potential for conflicting findings on similar issues and the strain of defending multiple proceedings simultaneously, these concerns must be evaluated against the clear legislative intent to allow parallel proceedings.

61. The Applicant has also argued that the criminal proceedings have remained dormant since institution, contravening his constitutional right to an expeditious trial under Article 50 of the Constitution. However, as the Respondent correctly points out, staying the criminal proceedings would actually contradict this right by further delaying the trial.

62. In the end, I make orders as follows:a.The Applicant is granted leave to appeal out of time against the decision of the Tax Appeals Tribunal delivered on 19th October 2023 in Misc. Application No. E096 of 2023. b.The memorandum of appeal annexed to the application is deemed as properly filed upon payment of the requisite filing fees within 14 days from the date of this ruling.c.The application for stay of criminal proceedings in Criminal Case No. E4154 of 2021 is declined.d.Each party shall bear its costs

63. It is so ordered.

SIGNED, DATED AND DELIVERED AT ELDORET THIS 21ST DAY OF MARCH 2025. …………………………………….R. NYAKUNDIJUDGE