Judgment summary
This is a ruling on an interlocutory Notice of Motion dated 16th April 2026 filed by Kayser Investments Limited (the Applicant) seeking leave to file and serve a Supplementary Statement of Facts and accompanying documents, with corresponding leave for the Respondent to file a further Statement of Facts in reply (paragraph 1).
The Respondent, the Commissioner of Domestic Taxes, opposed the application by way of a Notice of Preliminary Objection dated 21st April 2026, arguing that the Tribunal lacked jurisdiction to grant orders staying its own proceedings and that its jurisdiction is limited to powers conferred by the Tax Appeals Tribunal Act No. 40 of 2013 (paragraphs 3, y to aa).
The Tribunal considered the Notice of Motion, the Supporting Affidavit of Washib Abdul, and the Preliminary Objection, and found that the Preliminary Objection was misconceived because the Applicant was not seeking a stay of proceedings but leave to file additional pleadings before the substantive hearing (paragraphs 11 to 13).
Background
The Applicant's Notice of Motion, supported by an Affidavit of Washib Abdul, its Director, was premised on the contention that the Respondent's Statement of Facts dated 30 September 2025 had mischaracterised the dispute from one concerning the legality of tax assessments to one alleging the Applicant's non-compliance with filing obligations (paragraph 2A).
The Applicant asserted that its inability to file income tax returns for 2019 and 2020 arose from the Respondent's failure to implement a High Court Judgment delivered on 18 August 2023 in Kayser Investments Limited v Commissioner of Domestic Taxes, Income Tax Appeal No. E112 of 2021, which had nullified the Respondent's Objection Decision and underlying additional assessment for the years 2016-2018 (paragraph 2C(f)).
The Applicant contended that the nullified 2016-2018 assessment remained active on the iTax system, causing a loss carry-forward mismatch that made it technically impossible to file returns for 2019 and 2020 (paragraph 2D). It also argued that the Respondent had used an unlawful self-assessment mechanism instead of a proper additional or default assessment under Sections 29 or 31 of the Tax Procedures Act, thereby denying it due process (paragraph 2B).
The Applicant submitted that the matters and documents in the proposed Supplementary Statement of Facts had already been raised during the Alternative Dispute Resolution (ADR) process, so the Respondent could not claim prejudice or surprise (paragraph 2G).
Core dispute
The core issue was whether the Tribunal should grant the Applicant leave to file and serve a Supplementary Statement of Facts and accompanying documents before the substantive hearing of the Appeal, and whether corresponding leave should be granted to the Respondent to file a Further Statement of Facts in reply (paragraph 1).
The Respondent's Preliminary Objection raised a separate issue, namely whether the Tribunal had jurisdiction to grant the orders sought, on the basis that this would amount to staying its own proceedings, which it argued fell outside the powers conferred by the Tax Appeals Tribunal Act No. 40 of 2013 (paragraph 3).
Court findings
The Tribunal applied the settled test for preliminary objections from Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696, namely that a preliminary objection must consist of a pure point of law argued on assumed facts, and should not be raised where facts must be ascertained or where the Tribunal must exercise discretion (paragraph 9).
The Tribunal found that the Respondent's Preliminary Objection proceeded on a misapprehension of the Application, since the principal prayer was for leave to file a Supplementary Statement of Facts and documents, not for a stay of proceedings (paragraphs 10 to 12). It held that the Preliminary Objection was therefore not properly taken, as it attacked a prayer not before the Tribunal (paragraph 13).
The Tribunal observed that the matters raised, including the nature of the impugned assessment, the effect of the High Court judgment, the iTax treatment of prior assessments, and the Applicant's inability to file returns for 2019 and 2020, were relevant to the fair and complete determination of the substantive Appeal, although not conclusively determinable at the interlocutory stage (paragraphs 14 to 15).
Citing Harrison C. Kariuki v Blueshield Insurance Company Ltd [2006] eKLR and Central Kenya Ltd v Trust Bank Ltd [2003] EALR 365, the Tribunal held that amendments and supplementary pleadings should be liberally and freely permitted unless prejudice and injustice would be occasioned to the opposing party, particularly where such prejudice can be cured by an award of costs (paragraphs 16 to 17).
The Tribunal found that since the Application was brought before the substantive hearing, the Respondent would have the opportunity to examine the Supplementary Statement of Facts, file a Further Statement of Facts, and respond to the matters raised, and would therefore suffer no incurable prejudice (paragraphs 18 to 19).
Outcome
The Tribunal allowed the Notice of Motion dated 16th April 2026 and dismissed the Respondent's Preliminary Objection dated 21st April 2026 (paragraph 21(a) and (b)).
Leave was granted to the Applicant to file and serve a Supplementary Statement of Facts together with the specific documents annexed thereto within 7 days of the date of the Ruling (paragraph 21(c)).
The Respondent was granted liberty to file and serve a Further Statement of Facts and any documents in response within fourteen (14) days of service (paragraph 21(d)). No order was made as to costs (paragraph 21(e)).
Major issues / areas of contention
- Whether the Respondent's Preliminary Objection met the test for a proper point of law under Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd [1969] EA 696.
- Whether the Applicant's Notice of Motion in fact sought a stay of the Tribunal's own proceedings, which the Respondent argued was beyond the Tribunal's statutory jurisdiction.
- Whether leave should be granted to the Applicant to file a Supplementary Statement of Facts and accompanying documents before the substantive hearing.
- Whether the Respondent would suffer prejudice if the Applicant were permitted to introduce supplementary pleadings and documents.
- Whether the proposed Supplementary Statement of Facts introduced new grounds of appeal engaging Section 56(3) of the Tax Procedures Act, or was confined to responsive factual material.