Zehneria Hotel Limited v Commissioner of Domestic Taxes [2024] KETAT 1271 (KLR)

Zehneria Hotel Limited v Commissioner of Domestic Taxes (Tax Appeal E204 of 2024) [2024] KETAT 1271 (KLR) (9 August 2024) (Ruling)

Neutral citation: [2024] KETAT 1271 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E204 of 2024

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

August 9, 2024

Between

Zehneria Hotel Limited

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Ruling

1. The Appellant vide a Notice of Motion dated the 13th day of February, 2024 filed under a Certificate of urgency on the 20th February, 2024 and which is supported by an Affidavit sworn by Karim Jeja, a Director of the Appellant, on the 13th day of February, 2024 sought for the following Orders:-a.Spentb.That the Tribunal be pleased to grant the Appellant leave to file a Notice of Appeal, Memorandum of Appeal and Statement of Facts out of time.c.That the Notice of Appeal, Memorandum of Appeal and Statement of Facts filed herewith be deemed as duly filed with leave of this Honourable Tribunal.d.That the Appellant be granted costs of this application.

2. The application is premised on the following grounds:-a.That the Respondent raised additional assessment for corporate tax in respect of the Appellant for the years 2013 to 2014. b.That these assessments came as a surprise to the Appellant considering that the Respondent had conducted a compliance check on the Appellant then trading as Pro-Dema Limited in 2015 and the resultant findings did not have any tax liability.c.That being dissatisfied with these assessment the Appellant filed a Notice of objection with the Respondent on 24th April, 2019. That the Appellant was not notified of the outcome of the objection until January, 2020. d.That upon being served with the objection decision the Appellant realized that the same was dated 14th October, 2019 which is over 5 months after the objection was filed.e.That upon perusal of the confirmation notices, the Appellant realized that no reasons were supplied in support of the Respondent’s decision to confirm the additional assessment and decline the Appellant’s objection in totality.f.That the Appellant’s agents wrote to the Respondent on diverse dates between 2020 and 2023 requesting for reasons in support of the Respondent’s objection decision supplied and the schedule of workings in line with the provisions of Sections 4 and 6 of the Fair Administrative Action Act.g.That despite the numerous requests for reasons in support of the objection decision, the Respondent has failed, declined or neglected to issue reasons in support of its objection decision to enable the Appellant timely appeal the same before this Honourable Tribunal.

3. The Respondent upon being served with the application filed Grounds of Opposition to the application in which it stated as follows, that:-a.The application is incompetent, bad in law, fatally defective and is an abuse of this Honourable Tribunal’s process.b.No credible reason has been advanced by the Appellant to warrant extension of time to file appeal as provided under Section 13(4) of the Tax Appeals Tribunal.c.An application of this nature requires an Applicant to prove his/her absence from Kenya, sickness or other reasonable cause.d.Equity aids the vigilant and not the indolent. The Appellant ought to have acted swiftly to preserve its rights. It is guilty of laches.e.The application is an afterthought and delay tactic by the Appellant meant to delay the conclusion of the matter, which holds substantive Government revenue.f.The taxes demanded became due on confirmation of the assessments on 14th October, 2019. They now continue to accrue interest and penalties as provided under the various tax laws as there is no valid Appeal before the Tribunal thus the Appellant ought to pay 50% on account to show commitment in the matter for the Tribunal to consider granting the orders sought.g.The Appellant has not demonstrated it deserves favourable discretion of this Honourable Tribunal and the application should be dismissed with costs to the Respondent.

Analysis and Findings 4. In compliance with the directions of the Tribunal to the effect that the application was to be canvassed by way of written submissions, both parties duly filed their respective submissions that were adopted by the Tribunal on the 18th April, 2014. The Tribunal has been appropriately guided by the submissions and the authorities cited by the parties in reaching at its findings hereinafter.

5. In determining whether to extend time, the Tribunal was guided by the decision in the case of Leo Sila Mutiso -vs- Rose Hellen Wangari Mwangi - Civil Application No. Nai. 255 of 1997 (unreported), where the Court expressed itself thus:-“It is now well settled that the decision whether or not to extend the time for appealing is essentially discretionary. It is also well settled 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 reason for the delay; thirdly (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.”

6. The Tribunal, guided by the principles set out in John Kuria v Kelen Wahito, Nairobi Civil Application Nai 19 of 1983 April 10, [1984] where the court used the following criteria to consider the application:-a.Whether there is a reasonable cause for the delay?b.Whether the appeal is merited?c.Whether the application for extension has been brought without undue delay?d.Whether there will be prejudice suffered by the Respondent if the extension is granted?

a.Whether there is a reasonable cause for the delay? 7. In considering what constitutes a reasonable reason for the delay, the court in Paul Wanjohi Mathenge v Duncan Gichane Mathenge [2013] eKLR, held that:-“...it is clear that the discretion to extend time is indeed unfettered. It is incumbent upon the applicant to explain the reasons for delay in making the application for extension and whether there are any extenuating circumstances that can enable the Court to exercise its discretion in favour of the applicant.”

8. The Appellant intimated that the delay in filing an appeal as against the Respondent’s Notices of Confirmation of additional tax assessments issued on the 14th October, 2019 was occasioned by the fact that the Appellant was following up with the Respondent to be supplied with the reasons for its decision and for the schedule of workings on how the amount of the liability had been determined.

9. It is interesting that whilst the Appellant reiterated that it followed up for the reasons and the schedule of workings between 2020 and 2023 there is no indication on what finally prompted the Appellant, after the lapse of over 4 years, to seek to file the Appeal in the absence of the Respondent’s response to its incessant requests. The delay in the filing of the Appeal is obviously inordinate and with no reasonable explanation thereof.

10. The Tribunal in its finding is persuaded by the Ugandan case of Ojara vs. Okwera (Miscellaneous Civil Application 2017/23) [2018] VGHCCD 42 where it was stated as thus:-“An order for enlargement of time to file the appeal should ordinarily be granted unless the applicant is guilty of unexplained and inordinate delay in seeking the indulgence of the court.”

11. It is therefore the Tribunal’s finding that the Appellant has not established any reasonable cause for the delay.

12. Having found as above, it is the Tribunal’s finding that there is no need in analysing the remaining factors for consideration as doing so would be an exercise in futility and a waste of the Tribunal’s time.

13. The Tribunal in the circumstances finds that the application lacks merit and finds in favour of the Respondent.

14. With the application for leave to file an appeal out of time having failed the Notice of Appeal and the Appeal documents filed simultaneously with the application have no legal foundation and the Appeal is thus unsustainable in law.

Disposition 15. The Tribunal in the circumstances finds that the application lacks merit and the Appeal filed therewith is incompetent and the orders that accordingly recommend themselves to the Tribunal are as follows:-a.The application for extension of time be and is hereby dismissed.b.The Appeal be and is hereby struck out.c.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF AUGUST, 2024ERIC NYONGESA WAFULACHAIRMANELISHAH N. NJERU MUTISO MAKAUMEMBER MEMBEREUNICE N. NG’ANG’A ABRAHAM K. KIPROTICHMEMBER MEMBER