Tax Appeal Tribunal’s Jurisdiction viz-a-viz the Federal High Court


Monday, May 05, 2014 7.33 PM / By Olumide K. Obayemi*


Tax practitioners were apprehensive as to whether the Nigerian Tax Appeal Tribunals (“TAT”) would suffer similar a fate as the extinct Value Added Tax (VAT) Tribunal.


The VAT Tribunal, which was set up under Section 20 of the VAT Tribunal Act and Paragraph 24(1), 2nd Schedule to the VAT Act of 1993, suffered premature extinction post the Constitution of Nigeria (1999) First, in Stabilini Visioni v FBIR, (2009) 13 NWLR (Pt 1157) 200, the Court of Appeal held that the VAT Tribunal was not an administrative Tribunal since appeals from did not lie to the Federal High Court (FHC), and, further, that Section 20 of the VAT Act that had set up the VAT Tribunal was inconsistent with Section 251 of the Constitution of the Federal Republic of Nigeria that had solely conferred jurisdiction of the federal revenue exclusively on the FHC.


Similarly, in Cadbury (Nig.) Plc v. FBIR, (2010) 2 NWLR (Pt 1179) 561, the FBIR had directed Cadbury to render VAT returns based on Cadbury’s payments to its Parent Company in Britain. Upon Cadbury’s refusal, FBIR instituted tax recovery proceedings before the VAT Tribunal. With FBIR’s success, at the VAT Tribunal, Cadbury appealed to the Court of Appeal. The Court of Appeal sustained Cadbury’s objection, and held that the VAT Tribunal had no jurisdiction to entertain VAT issues since such tax issues touched exclusive jurisdiction on federal revenue, conferred solely upon the FHC.


In the latter part of 2013, two separate and conflicting decisions of the Federal High Court were issued that put the jurisdiction and constitutional validity of the TAT in the eye of the storm. First, on October 30, 2013, Justice Adeniyi Ademola of the Abuja FHC in TSKJ II Construces vs FIRS, Suit No. FHC/ABJ/TA/11/12, struck down the composition of the TAT, on the ground that the Federal Inland Revenue Establishment Act No. 13 of 2007 (“FIRSEA”) and the Tax Appeal Tribunals (Establishment) Order of November 25th, 2009 (TAT Order) under which the TAT was established conflicted with the exclusive jurisdiction of the FHC conferred by section 251 of the Constitution.


Next was the December 3rd, 2013 decision of Justice I.N. Buba, in Nigerian National Petroleum Corporation vs Tax Appeal Tribunal, Suit No. FHC/L/CS/630/2013, upholding the creation and establishment of the TAT.


Generally, the FHC exercises exclusive jurisdiction to the exclusion of any other court in civil cases and matters connected with or pertaining to the taxation of companies and other bodies established or carrying on business in Nigeria and all other persons subject to federal taxation.


In 2007, under the Fifth Schedule to the FIRSEA, the TAT was established replacing the former Body of Appeal Commissioners (BAC) and VAT tribunals, with jurisdiction to adjudicate on disputes and controversies arising from Capital Gains Tax Act, Laws of the Federation of Nigeria (LFN) 2010 ; the Companies Income Tax Act, LFN 2010 ; the Personal Income Tax Act, LFN 2010 and amendment thereto (PITA); the Petroleum Profits Tax Act, LFN 2010; VAT Tax Act and  other laws in  the First Schedule to FIRSEAt or other laws made by the National Assembly. . The TAT courts are located in Abuja, Lagos, Ibadan, Benin, Enugu, Kaduna, Jos and Bauchi.


Where the government wishes to initiate civil action to recover unpaid taxes, interest or other penalties, as well as where criminal proceedings are predicated upon tax evasion or tax avoidance schemes, such actions are usually filed with the FHC.


To proceed before the TAT, a taxpayer (individual or corporate) that is aggrieved by an assessment from a Relevant Tax Authority (“RTA”) may file an objection to the assessment with the RTA. The RTA will either amend or refuse to amend the assessment. Where the RTA refuses to amend the assessment, the RTA will then issue a Notice or Refusal to Amend (“NORA”). Upon receiving the NORA, and within 30 days, the taxpayer may file an appeal with the TAT under Section 59 of FIRSEA, Section 11 of the Fifth Schedule to the FIRSEA and Paragraph 5 of the TAT Order.


In Nigeria, a tax appeal must be filed before one of the eight TAT courts above, in the region closest to the taxpayer, and after pleadings are completed, a hearing follows. From the TAT, further appeal lies with the FHC where a party is dissatisfied with a decision of the Tribunal.


In TSKJ v FIRS, TSKJ, a non-resident tax payer had obtained a contract for the construction of the NLNG, and used its subsidiary—TSKJ Nigeria, to render logistic support services. TSKJ later filed self-assessment forms on deemed profits and made deductions of recharges being the cost paid to its local subsidiary. The FIRS disallowed the said deductions as they were not allowed under the turnover basis assessment, and issued additional assessments. TSKJ objected and filed an appeal with TAT, asking that the additional assessment be set aside. The TAT dismissed TSKJ’s claims, following which an appeal was filed at the FHC. Justice Ademola upheld TSKJ’s argument—i.e., that the TAT lacked the jurisdiction to entertain the suit on the ground that the FIRSEA under which the TAT was established conflicted with the exclusive jurisdiction of the FHC conferred by section 251 (1)(a)&(b) of the constitution, and so ordered the disbanding of the TAT courts.


In NNPC v. TAT, the issue related to the NNPC being the agent of the Federal Government in collecting Petroleum Profits tax assessed against the contractors in OML 133, as well as the exact Education Tax liability for OML for the 2010 year. Justice Buba held that the FIRSEA that established the TAT was fundamentally different from the VAT Tribunal Act that purportedly set up the defunct VAT Tribunals. In defining the jurisdiction of the TAT and whether the FIRSEA violated the exclusive jurisdiction of the FHC under Section 251 of the Constitution, Justice Buba started by examining Section 251, which provides thus: “251(1) Notwithstanding anything to the contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters...” He then held that the tenor of the first portion of Section 251 is to the effect that the National Assembly may make laws from time to time, such as to confer additional powers and jurisdiction on the FHC, and that intent of this provision is to enable Legislature expand the jurisdiction of the FHC, and in no way can this provision be construed as empowering the National Assembly to ‘remove,’ or ‘restrict’ the original jurisdiction of the FHC.

Next, Justice Buba compared the 2 statutes that set up the VAT Tribunal and TAT with each other. Para. 24(1) of the 2nd Schedule of VAT Act provided for an appeal from the VAT Tribunal to the Court of Appeal. In contrast, the TAT was created as an administrative framework by which taxpayers could resolve their tax disputes with the FBIR before resorting to the FHC by invoking the FHC’s appellate jurisdiction. Justice Buba, therefore held that the administrative framework did not derogate from the FHC’s original jurisdiction but rather “serves as a condition precedent to bringing an action before the Federal High Court.”


Relying on previous decisions relating to the Body of Appeal Commissioners (predecessors to TAT), which allowed appeals from them to the FHC, Buba held that decisions such as Eguamwense v. Amaghizemwen, (1993) 9 NWLR (Pt 315) 1 and Ocean & Oil Ltd. V. FBIR, (2011) 4 TLRN 135, confirmed that TAT was validly created and that its jurisdiction does not conflict with the FHC. Further, relying on Sections 41 and 42 of the Petroleum Profits Tax Act and Paras 13(1) & 17(1) of the 5th Schedule to the FIRSEA (2007), Buba noted neither of these statutes provided for a direct appeal to the Court of Appeal, unlike the VAT Tribunal Act. While it was clear that the VAT Tribunal proposes to supplant, usurp, and sidestep section 251 exclusive FHC jurisdiction, TAT was a precursor to initiating a lawsuit with FHC.


Finally, Justice Buba held that the Legislature was right to have added an appellate jurisdiction to the FHC, in accordance with Section 28 of the Federal High Court Act which provides thus:


28. The Court shall have appellate jurisdiction to hear and determine appeals from -(a) the decisions of Appeal Commissioners established under the Companies Income Tax Act and the Personal Income Tax Act in so far as applicable as Federal law....


In sum, since the TAT did not attempt to usurp the original jurisdiction of the FHC, its constitutionality was affirmed.


Justice Buba’s opinion in NNPC v. TAT is good law, because in these days and age that specialized courts such as Investment and Security Tribunal and Arbitral Panels pervade the economic terrain, it is apposite that the Tax Tribunal, populated by tax experts be empowered to make judicious and timely decisions on tax matters in Nigeria. You need to tell us where the other judge might have erred. For taxpayers, tax policy makers and legislators, Nigerian tax policy is still in infancy


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