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Court of AppealDismissedCivil Appeal No. 224 of 2015· [2017] KECA 659 (KLR)

Boss Freight Terminal Limited v Commissioner of Domestic Taxes [2017] KECA 659 (KLR)

Court of Appeal
24 March 2017
ASAsike-MakhandiaWilliam OukoW. OukoKMK. M'Inoti
2,449 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that tax appeals filed after the 30-day deadline are dead unless you first apply for an extension of time.

What this practically means

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Executive summary

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The Court of Appeal (Makhandia, Ouko and M'Inoti, JJ.A.) dismissed the appellant's challenge to a High Court ruling of 13th July 2015 in which Ochieng, J. struck out its income tax appeal as time-barred. The dispute concerned fringe benefit tax of Kshs.756,182 assessed on loans the appellant advanced to its directors for the period 2008-2010. The Nairobi Income Tax Local Committee upheld the assessment, and the appellant appealed to the High Court but filed its memorandum on 16th January 2014, well beyond the 30 days prescribed by rule 3 of the Income Tax (Appeal to the High Court) Rules. The Commissioner raised a preliminary objection on limitation. The appellant relied on Order 50 rule 4 of the Civil Procedure Rules, which excludes the period 21st December to 13th January from computation of time, but the High Court held that rule inapplicable to income tax appeals and struck out the appeal. On appeal, the Court of Appeal affirmed. It held that rule 20 of the Income Tax Rules imports only specified Civil Procedure provisions into income tax appeals and Order 50 rule 4 is not among them. The appellant had also made no application for extension of time under rule 3, whose proviso permits extension only on limited grounds. Critically, the court reiterated that whether an appeal is filed on time is a jurisdictional issue, not a mere technicality, and that Article 159(2)(d) of the Constitution and the overriding objective cannot validate an incompetent appeal. At the hearing the court also declined an adjournment sought on the basis of an alleged withdrawal of instructions, and proceeded without the appellant's submissions. The appeal was dismissed with costs to the respondent.

Key legal issues

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01

Applicability of Order 50 rule 4 of the Civil Procedure Rules to income tax appeals

Holding

Order 50 rule 4 does not apply to income tax appeals to the High Court; the Civil Procedure Rules apply to such appeals only to the extent specifically imported by rule 20 of the Income Tax (Appeal to the High Court) Rules, and Order 50 rule 4 is not among the imported provisions.

Reasoning

The court examined the Income Tax Rules and found no provision applying Order 50 rule 4 to income tax appeals. Rule 20 of the Income Tax (Appeal to the High Court) Rules specifies a closed list of Civil Procedure orders and rules imported into income tax appeals, covering matters such as recognized agents, affidavits, execution and enlargement of time. Order 50 rule 4, which omits the December-January vacation period from computation of time, is not on that list, so it cannot be invoked to compute limitation time in income tax appeals.

p. 4
02

Whether the appeal to the High Court was filed out of time and the consequence

Holding

The appeal was filed out of time: the local committee decided on 4th November 2013, notice was served on 26th November 2013, giving 30 days, yet the memorandum was filed on 16th January 2014 without leave; the appeal was therefore incompetent.

Reasoning

The Income Tax Rules give a party dissatisfied with a local committee determination 30 days to appeal to the High Court. Counting from the date of the decision and service of notice, the filing on 16th January 2014 was beyond the permitted 30 days. Extension of time could only be granted on an application under the proviso to rule 3 on limited grounds, and no such application was made. The High Court therefore correctly upheld the preliminary objection and struck out the appeal.

p. 4
03

Whether Article 159(2)(d) of the Constitution and the overriding objective could save the incompetent appeal

Holding

No. Time limits for filing appeals go to jurisdiction and cannot be overridden by Article 159(2)(d) of the Constitution, Articles 22 and 159 generally, or sections 1A and 1B of the Civil Procedure Act.

Reasoning

Following Raila Odinga & 5 others v IEBC & 3 Others, the court reiterated that Article 159(2)(d) should not be invoked in a manner that ousts other equally or more important provisions of the law. An appeal filed out of time and without leave is not a mere technicality; the question of time is jurisdictional. A party unable to file within time must apply for extension on the circumscribed grounds in rule 3; having failed to do so, the appellant could not rely on the overriding objective.

p. 4

Legal principles established

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  • Order 50 rule 4 of the Civil Procedure Rules does not apply to income tax appeals to the High Court; only the orders and rules expressly imported by rule 20 of the Income Tax (Appeal to the High Court) Rules apply
  • Whether or not an appeal is filed on time is a jurisdictional issue, not a mere technicality curable by Article 159(2)(d) of the Constitution or the overriding objective
  • A party who fails to file an appeal within the prescribed time must apply for extension of time on the limited grounds in the proviso to rule 3; in the absence of such an application the appeal is incompetent

Court orders

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  1. 1.Appeal dismissed with costs to the respondent

Authorities

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Legislation

  • Kenya Revenue Authority ActFirst Schedule, Part 1
  • Income Tax Actsection 12B(1); section 86(2)
  • Income Tax (Appeal to the High Court) Rulesrule 3; rule 20
  • Civil Procedure RulesOrder 50 rule 4
  • Civil Procedure Actsections 1A and 1B
  • Constitution of Kenya, 2010Articles 22; 159(2)(d)

Cases cited (4)

  • Raila Odinga & 5 others v IEBC & 3 Others
    (2013) eKLR
  • Ramji Devji Vekaria v Joseph Oyula
    (2011) eKLR
  • David Ochieng v SDA Church
    (2012) eKLR
  • Patrick Kiruja Kithinji v. Victor Mugira Marete
    (2015) eKLR
On appeal from
High Court of Kenya, Commercial & Admiralty Division, at Nairobi
Income Tax Appeal No. 1 of 2014
Jurisdiction invoked
First appellate jurisdiction over appeals from the High Court under the Income Tax Act and the Income Tax (Appeal to the High Court) Rules

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Boss Freight Terminal Limited v Commissioner of Domestic Taxes [2017] KECA 659 (KLR)", Case Analysis (2017). Civil Appeal No. 224 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/659/eng@2017-03-24

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.