Judgment summary
The Applicant, Ultra World Security Systems Limited, applied by Notice of Motion dated 13th July 2026 for an extension of time to appeal against the Respondent's Objection Decision dated 20th July 2023 (para 1). The Applicant also sought to have its Memorandum of Appeal deemed duly filed, to have that appeal heard together with an appeal against Agency Notices dated 29th May 2026, and to restrain enforcement pending determination (para 1).
The Applicant's case was that the disputed income tax assessment arose from import transactions carried out by third parties who had fraudulently used its KRA PIN following unlawful alteration of its corporate records, and that it had been engaging the Respondent's Investigation and Enforcement Department in the expectation the matter would be resolved administratively (para 2).
The Respondent did not file any response or submissions, and the Application was treated as unopposed, though the Tribunal still assessed it against the legal test (paras 3-4).
The Tribunal examined the documentary record, including the objection lodged on 27th May 2023, a referral to the Respondent's investigative arm on 29th May 2023, the Objection Decision of 20th July 2023, a 2023 agreement with persons associated with Super System Security Company Limited, a further complaint referenced as dated 3rd May 2025, and the Respondent's letter of 15th January 2026 confirming unauthorised use of the Applicant's PIN (paras 15-23). Agency Notices were then issued on 29th May 2026, and the Applicant filed its Application on 13th July 2026 (paras 32-33).
The Tribunal found that this documentary history, considered cumulatively, amounted to reasonable cause under Section 13(4) of the Tax Appeals Tribunal Act, while stressing that this finding turned on the particular facts and was not a general rule that negotiations suspend appeal timelines (paras 37-38). It also found the intended appeal raised a genuine, non-frivolous question on attribution of tax liability, and that any prejudice to the Respondent could be addressed by eventual recovery of tax, interest and penalties if the appeal failed, whereas refusal would cause substantial prejudice to the Applicant (paras 43-46).
Background
The Applicant sought to challenge the Respondent's Objection Decision dated 20th July 2023, which confirmed an income tax assessment arising from import transactions said to have been undertaken using the Applicant's KRA PIN (para 2(a)).
The Applicant maintained that the transactions were carried out by third parties who had fraudulently used its PIN after unlawfully altering its corporate records, and that it had complained to the Registrar of Companies, which subsequently restored its corporate records (paras 2(b), 41).
The Applicant had referred the alleged PIN misuse to the Respondent's Investigation and Enforcement Department on 29th May 2023, two days after lodging its objection on 27th May 2023, and continued engagement through a 2023 agreement with persons associated with Super System Security Company Limited and further correspondence referenced in 2025 (paras 16-20, 22).
On 15th January 2026, the Respondent's letter confirmed that the Applicant's PIN had been used without authority in transactions involving Super System Security Company Limited and the County Government of Tharaka Nithi, and that relevant offices had been notified for action (para 23). Despite this, the Respondent issued Agency Notices dated 29th May 2026 to enforce the assessment (para 2(f), 32).
Core dispute
The central question was whether the Applicant had shown 'other reasonable cause' under Section 13(4) of the Tax Appeals Tribunal Act for its delay in filing a Notice of Appeal against the Objection Decision of 20th July 2023, given that it had instead pursued an internal investigation into alleged fraudulent use of its KRA PIN (paras 7-9, 31).
A further issue was whether, if time were extended, the appeal against the Objection Decision should be heard together with a challenge to the Agency Notices dated 29th May 2026, and whether enforcement under those notices should be stayed pending determination of the appeal (paras 1(c)-(d), 47-51).
Court findings
The Tribunal held that extension of time is an equitable remedy, not a right, and that the Applicant bore the burden of laying a satisfactory basis for its exercise, citing Nicholas Kiptoo Arap Korir Salat v IEBC & 7 Others and County Executive of Kisumu v County Government of Kisumu & 8 Others (paras 10-11).
It found that continued administrative engagement with the Commissioner does not, without more, suspend the statutory appeal period, and that the Objection Decision itself had advised the Applicant of its right to appeal, referencing Drylands Seed Limited v Commissioner of Domestic Taxes [2025] KETAT 322 (KLR) (paras 24-26).
However, the Tribunal distinguished this case on its facts, noting that the Applicant had formally invoked the Respondent's investigative machinery before the Objection Decision was issued, that the complaint was not abandoned, and that the Respondent's own correspondence independently confirmed continued engagement into 2025 and 2026 (paras 29-30, 35-36). On this basis, the Tribunal found reasonable cause established under Section 13(4) of the TAT Act, while emphasising this was fact-specific and not a general rule (paras 37-38).
The Tribunal further found that the intended appeal raised a genuine, non-frivolous question as to whether tax liability was properly attributable to the Applicant given the alleged unauthorised use of its PIN (paras 40-43). On prejudice, it found the Respondent had shown none and remained able to recover tax, interest and penalties if the appeal failed, whereas the Applicant faced substantial prejudice if refused (paras 44-46).
On the Agency Notices, the Tribunal invoked Section 18 of the TAT Act and Section 14(e) of the Tax Procedures Act, finding it appropriate to preserve the subject matter of the appeal pending determination, without deciding the validity of the assessment or the notices (paras 47-51).
Outcome
The Tribunal allowed the Application. It deemed the Memorandum of Appeal, Statement of Facts and accompanying documents as properly filed and served, subject to payment of the requisite filing fees (para 54(a)-(b)).
The Respondent was ordered to file and serve its response to the appeal within thirty (30) days of the Ruling (para 54(c)). The Agency Notices dated 29th May 2026 were lifted unconditionally during the pendency of the appeal, and the Respondent was restrained from taking any enforcement action founded upon the disputed assessment (para 54(d)-(e)). No order was made as to costs (para 54(f)).
Major issues / areas of contention
- Whether the Applicant showed 'other reasonable cause' under Section 13(4) of the Tax Appeals Tribunal Act for the delay in appealing the Objection Decision of 20th July 2023
- Whether pursuing an internal investigation into alleged fraudulent use of a KRA PIN can amount to reasonable cause for delay in filing an appeal
- Whether the intended appeal raised an arguable question as to attribution of the disputed income tax liability
- Whether the Respondent would suffer prejudice from an extension of time compared with prejudice to the Applicant if refused
- Whether enforcement under the Agency Notices dated 29th May 2026 should be stayed pending determination of the appeal