Reckitt Benckiser Services (Kenya) Limited v Commissioner of Customs and Border Control (Tax Appeal E471 of 2024) [2025] KETAT 163 (KLR) (28 February 2025) (Ruling)
Neutral citation:
[2025] KETAT 163 (KLR)
Republic of Kenya
Tax Appeal E471 of 2024
CA Muga, Chair, AK Kiprotich & T Vikiru, Members
February 28, 2025
Between
Reckitt Benckiser Services (Kenya) Limited
Applicant
and
Commissioner of Customs and Border Control
Respondent
Ruling
Background
1.The Applicant moved the Tribunal vide a Notice of Motion dated 24th January, 2025 and filed on 27th January, 2025 seeking the following Orders;a.Spent.b.That the Tribunal be pleased to direct that the Applicant is at liberty to file an amended supplementary statement of facts to corroborate the evidence submitted in the earlier filed statement.c.Cost of this Application to be in the intended appeal.
2.The Application was supported by a sworn affidavit of Maurice Mwaniki, the Applicant’s tax agent dated 24th January, 2025 and filed on 27th January, 2025 wherein the Applicant cited the following as its grounds for the Application:a.That the Applicant’s principal business is importing and distributing fast moving consumer goods in the Kenyan market.b.That in December 2023, the Applicant imported a consignment of pharmaceutical products under the brand name Gaviscon (described by the Applicant as a type of medicine called a reflux suppressant classified under HS code 3004.49.00) from Reckitt Benckiser Healthcare (UK) Ltd. The consignment was declared under import entry number 23MBAIM407481989 dated 23 December 2023 by the company’s customs agent, Africa Global Logistics Kenya Limited (“AGL”).c.That the Respondent subsequently raised a query in respect of the customs values declared by the Applicant for the consignment cleared through the port of Mombasa and proceeded to subject the goods to customs value uplifts.d.That the Applicant appealed the decision made by the Respondent and proceeded to apply for Alternative Dispute Resolution (“ADR”) in the interest of resolving the dispute amicably.e.That while engaging in the ADR process the Respondent requested the Applicant for documentation to support its ex-works costs that were incurred in bringing the consignment to Kenya. The documents requested included the freight invoices, and the marine insurance cover note. The Applicant subsequently provided these documents and their corresponding proofs of payment to the Respondent.f.That the Respondent had not requested these documents during the formative period of the dispute that is; during the application for review stage and in its review decision.g.That upon providing the evidence to the Respondent during the ADR process, the Respondent refused to consider the evidence.h.That the dispute was centred on whether the transaction value (“TV”) method is the most appropriate methodology in determining the customs value for the consignment in dispute.i.That the new evidence confirmed that the TV applied by the Applicant was indeed accurate.j.That should this application be allowed; the Respondent would suffer no prejudice because it already had an opportunity to interrogate the documents in question during the ADR discussions.k.That the Tribunal had in the past allowed evidence that was not considered by the Respondent during ADR. this was in the case of TAT 848 of 2022, KCSSA East Africa Limited vs Commissioner of Customs & Border Control.l.That there was immediate and imminent danger that the Applicant’s evidence may not be admitted by the Tribunal which would be prejudicial to the Applicant’s case.m.That unless the Tribunal intervened and certified this application as urgent and the orders sought granted, the Applicant stood to suffer irreparable loss.
3.In response to the Application, the Respondent filed an opposing replying affidavit sworn by Mr. Victor Chabala, an officer of the Respondent stating the following grounds:a.That under Part I of the First Schedule to the Kenya Revenue Authority Act, Cap 469 Laws of Kenya (hereinafter “the Act”) the Respondent is mandated to enforce the provisions of the Income Tax Act Cap 470 of the Laws of Kenya (hereinafter “ITA”), the Value Added Tax Act, CAP 476 of the Laws of Kenya, East African Community Customs Management Act, 2004 and the Excise Duty Act, CAP 472 of the Laws Kenya.b.That the Applicant should not be granted leave to file the additional documents for the following reasons:i.The Applicant would reasonably have been aware of and procured the further evidence before, an essential consideration to ensure fairness and due process.ii.That procedure is not there for no[sic] reason and parties ought to abide by it. Procedure is so closely intertwined with the substance of a case, that it befits not the attribute of mere technicality.iii.That procedure is the handmaiden of justice and should be adhered to and not disregarded.iv.That as an officer of the Respondent, it is evident that the documents intended to be adduced could easily be adduced during the objection by the Applicant before the Respondent made a decision on the matter in an attempt to settle the dispute.v.That the Respondent requested the same documents the Applicant to provide the same documents on 18th January, 2024 during the review stage and prior to the issuance of the Applicant with the review decision.vi.That section 13(6) of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”) provides that that an Appellant shall, unless the Tribunal orders otherwise, be limited to the grounds stated in the Appeal or documents to which the decision relates.vii.That it would be unreasonable and not in the interest of justice to allow additional documents which were not present nor availed when the Respondent made its decision on the extra taxes payable.viii.That the Respondent adhered to all statutory timelines and performed its part of the obligations imposed by the EACCMA and it is only fair that the appellant/applicant be made to do the same.ix.That the additional documents would prejudice the Respondent's case.x.That courts and tribunals cannot aid in the bending or circumventing of rules and shifting of goal posts for, while it may seem to aid one side, it unfairly harms the innocent party who strives to abide by the rules.xi.That the additional documents would prejudice the Respondent's case and efficiency as it would force the Respondent to review the said documents and make a decision based on the new evidence disregarding the earlier documents used.xii.That litigation must come to an end and it is evident the Applicant at the slightest idea of defeat decided to entangle us all in a tedious cycle of litigation in the guise of seeking leave to adduce additional documents so as to prolong and delay the determination of the substantive suit by the Tribunal.xiii.That to ensure the maxim equity aids the vigilant and not the indolent is breathed into life this application which would prejudice the Respondent ought not to be allowed but struck out to give ample time and efficiency in determining the substantive suit.xiv.That the Applicant wanted to use this Application to delay the determination of the suit and essentially delay the collection of the tax in dispute.xv.That the application having failed to meet the threshold for granting leave to adduce additional documents lacks in merit and ought to be dismissed with costs to the Respondent.
4.The Applicant’s further replying affidavit sworn by Maurice Mwaniki, the Applicant’s tax agent was dated and filed on 12th February, 2025 wherein the Applicant outlined the following as its further grounds for making the Application:a.The Applicant was not aware of the further evidence requested by the Respondent:i.That the Respondent at paragraph 10 of its Replying Affidavit dated 4th February 2025 stated that it requested the documents the Applicant was seeking to adduce.ii.That the Respondent attached an electronic mail sent to Sachin Varma via electronic mail address sachin.varma@rb.com and copied to the Africa Global Logistics (AGL Group), the Applicant’s clearing agent via electronic mail ke014-tax.kenya@aglgroup.com.iii.That the said Sachin Varma is a former employee of the Applicant who left the business in 2022.iv.That the communication did not reach the Applicant as the electronic mail was sent to a former employee whose electronic mail address was no longer operational.v.That further, the Applicant’s clearing agent did not receive the electronic mail because the Applicant’s clearing agent had just transitioned from Bollore Transport and Logistics (BTL) to AGL and some of its new electronic mail addresses were not fully functional until May-June 2024 due to system migration.vi.That the Applicant’s clearing agent did not also receive the request for the documents.b.The Respondent will not be prejudicedi.That the Respondent suffers no prejudice because it already had an opportunity to interrogate the documents in question during the Alternative Dispute Resolution (ADR) discussions.ii.That the Applicant endeavoured to present this new evidence to the Respondent at the ADR deliberations. However, the Respondent declined to consider the evidence.iii.That the evidence indeed confirms that the Applicant used the correct transactional values while making its declaration.iv.That the Applicant should only pay taxes that are truly due and payable.v.That it is in the interest of justice for the Tribunal to allow the Application.
5.On 30th January, 2025, the Tribunal directed parties to file and serve upon each other their written submissions on or before 12th February, 2025 and since both parties complied with the Tribunal’s directions, the written submissions of both parties have been carefully considered by the Tribunal.
Analysis and Findings
6.The Tribunal notes that the Applicant herein was seeking the indulgence of the Tribunal to allow it to file an amended supplementary statement of facts to corroborate the evidence submitted in an earlier filed statement of facts. The Applicant filed an appeal against the review decision by the Respondent who decided that a different methodology ought to have been used to determine the import value of the Applicant’s imported consignment of medicine.
7.The Tribunal also notes that the Applicant stated that it was only whilst engaging in the ADR process that the Respondent requested the Applicant for documentation which had not been provided at the review stage nor at the point when the Respondent was making its review decision. The Applicant’s grounds in the instant application are that the Respondent refused to consider documentation during the ADR process in spite of the fact that it was the Respondent who requested the documents. The Respondent contested this position on the ground that it would be prejudiced as it did not sight the documents when making its review decision.
8.The Tribunal's power to determine an Application of this nature is anchored on the provisions of Rule 10 of the Tax Appeals Tribunal (Procedure) Rules 2015 which provides as follows:
9.The Tribunal also notes the following provisions of Section 13 (6) of the TATA:
10.The Tribunal is also guided by the following holding in the case of Commissioner of Income Tax-vs-Total Kenya Limited [2021] eKLR in making its determination on whether to allow the Applicant to file additional documents:
11.In the case of Mohamed Abdi Mahmud-vs-Ahmed Abdullahi Mohamed & 3 Others [2018] eKLR the Supreme Court expressed itself by holding as follows:
12.Guided by statute and the principles outlined in the authoritative and persuasive precedents as outlined in the previous paragraphs, the Tribunal notes that the additional evidence that the Applicant seeks to adduce through this application was neither provided during the formative period, of the dispute, namely the Application for review stage nor during the time when the Respondent was making its review decision. The evidence was provided during the ADR process upon a request by the Respondent for documentation from the Applicant to support its Ex-work costs. The Applicant states that the Respondent then refused to consider the documents and the ADR process failed.
13.The view of the Tribunal is that the documents listed in the application which the Applicant seeks to adduce before the Tribunal are critical in supporting the Tribunal to clarify the facts of the dispute and in its final decision. The Tribunal is also of the view is that it has the discretion, pursuant to the provisions of section 13 (6) of the TATA, to limit whether or not it may consider any new documentary evidence that is adduced at any stage of the dispute. The fact that documents were to be provided to assist with the ADR process is not a basis for the Tribunal to refuse to admit the same into evidence.
14.The only limit to the discretion of the Tribunal as outlined in Section 13 (6) of the TATA is that outlined pursuant to the following provisions of Order 21 of the Tax Appeals Tribunal (Procedure Rules), 2015:
15.The Tribunal is of the further view that the documents that the Applicant wishes to adduce as additional documentary evidence are at the core of the dispute which is the Applicant challenging the methodology used by the Respondent to determine the import value of its consignment. The additional documentary evidence will be interrogated by the Tribunal and will influence how the Tribunal will make its decision.
16.It is the view of the Tribunal that the tests prescribed in Mohamed Abdi Mahmud case [SUPRA] have been met to the extent that the additional evidence sought to be adduced will eliminate vagueness or doubt over the dispute and has a direct bearing on the main issue in the Appeal. The Tribunal has not found any evidence to suggest the Applicant’s additional documentary evidence are calculated to be utilized for the purposes of removing lacunae and filling gaps in evidence. The documents are relevant to the Appeal and it is in the interests of justice and fairness to allow the same to be admitted in evidence.
17.The Tribunal reiterates its holding in the case of Alliance Tobacco Limited vs Commissioner of Legal Services & amp; Border Control [TAT Appeal No. 42 of 2024] to support the position that the guiding principle in applications to amend pleadings is that the same will be liberally and freely permitted unless prejudice and injustice will be occasioned to the opposite party.
18.The Respondent did not prove the grave prejudice it is likely to suffer should the additional documentary evidence be admitted by the Tribunal.
Disposition
19.The Tribunal is inclined to exercise its discretion in favour of the Applicant and allow a similar latitude in filing any additional documents by the Respondent for the purposes of balancing out the competing interests of the parties in the Appeal.
20.The Orders that accordingly recommend themselves are as follows:a.The Applicant be and is hereby granted leave to file a Supplementary Statement of Facts and to file additional documents limited to the documents identified in the application.b.The Applicant to file and serve the Supplementary Statement of Facts and the additional documents within Seven (7) days of the date of delivery of this Ruling.c.The Respondent be and is hereby granted a corresponding leave to file and serve any Supplementary Statement of Facts and additional documents.d.The Respondent to file and serve the Supplementary Statement of Facts and additional documents (if necessary) within Seven (7) days of the date of being served by the Applicant.e.The Appeal is fixed for hearing on 18th March, 2025.f.No orders as to costs.
DATED AND DELIVERED AT NAIROBI ON THIS 28TH DAY OF FEBRUARY, 2025.……………………………CHRISTINE A. MUGACHAIRPERSON……………………………ABRAHAM K. KIPROTICHMEMBER……………………………TIMOTHY V. VIKIRU (DR.)MEMBER