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In the realm of tax disputes and appeals, time is often of the essence. It's a critical factor that can influence the outcome of a case, and this principle was recently reaffirmed in a significant Kenyan legal case, Rongai Tiles & Sanitary Wares Limited v Commissioner of Domestic Taxes.

You can find the full judgement HERE.

The 60-Day Rule: A Legal Deadline

One of the core issues in this case revolved around the 60-day rule, which means the Commissioner, in this case, KRA, must make a decision within 60 days from the date when a taxpayer lodges an objection. This rule is not just a suggestion; it's a legal requirement, as outlined in the Tax Procedures Act (TPA).

A Taxpayer's Right to Timely Decisions

Imagine you're a taxpayer, and you've lodged an objection against a tax assessment. You'd expect KRA to review your objection and make a decision within a reasonable time, right? That's where the 60-day rule comes into play. It ensures that KRA doesn't unnecessarily delay making a decision.

 

The Case of Delay in Rongai Tiles & Sanitary Wares Limited

In the Rongai Tiles & Sanitary Wares Limited case, KRA received the taxpayer's objection on July 17, 2017. By the rules of the TPA, they had until September 17, 2017, to issue a decision. However, KRA's decision didn't come until September 21, 2017 - four days after the deadline.

 

The Legal Consequences of a Late Decision

Now, here's where things get really interesting. In the eyes of the law, when KRA fails to meet the 60-day deadline, the objection is deemed to be "allowed." What does this mean? It means the taxpayer's objection is upheld, and they don't have to pay the disputed taxes.

 

The Critical Distinction: Statutory Edict vs. Procedural Technicality

One of the most crucial aspects of this case was the court's clarification on the difference between statutory edicts and procedural technicalities.

Statutory Edict: This is a term used to describe a legal rule or requirement that is set by a statute, like the TPA. The 60-day rule is a statutory edict, and it's not open to interpretation. It's a clear, non-negotiable deadline.

Procedural Technicality: This refers to minor, non-essential rules and processes that can sometimes be overlooked without harming the core principles of justice. Article 159(2)(d) of the Kenyan Constitution relates to procedural technicalities, emphasizing that courts should focus on substantive issues rather than getting bogged down in minor procedural matters.

 

The Verdict and Its Implications

In the Rongai Tiles & Sanitary Wares Limited case, the court declared that a late decision by KRA should be taken seriously. It's not just a procedural technicality; it's a violation of a clear legal rule. The 60-day rule in the TPA is not something KRA can choose to ignore.

Conclusion

So, what's the takeaway here? If you're a taxpayer in Kenya, you have the right to expect timely decisions on your tax disputes. The law is crystal clear about this. If the tax authority, in this case, KRA, doesn't act within 60 days, you don't have to pay the disputed taxes. It's not a technicality; it's the law, and it's there to protect your rights as a taxpayer.

In essence, this case underscores the importance of legal deadlines and the principle that the law is not a matter of choice, but one of obligation. It serves as a reminder that even in complex legal matters, the rules are in place to ensure fairness and justice for all.

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Written by Joseph Wachira
The author is a senior Tax Consultant and can be reached via wachira@cleartax.co.ke