Examining the Appeal Procedure at the Tax Appeal Tribunal (TAT) (Part I)
Ikechukwu Onuoma Esq.
Taxation permeates all aspect of the Nigerian corporate space and this has huge implications on all sectors. It is expected that with constant interactions with tax authorities, tax disputes are inevitable. Thus, the need for a seamless procedure to settle such dispute.
Tax appeal procedure in Nigeria encompasses steps taken by a party (or parties) dissatisfied with a tax assessment or any action of an authorized officer of a Tax Authority to challenge same starting from a written objection, through instituting an appeal at the TAT and further appeal to superior courts. An appeal can lie to the TAT once the preceding conditions have been met and the parties have locus standi to institute the appeal. As we would notice, TAT creates an administrative channel for those who want speedy resolution of tax dispute without resort to litigation proper.
This discourse starts by examining the Jurisdiction of TAT and its conflict with the exclusive jurisdiction of the Federal High Court (FHC). It further guides you through the procedure for instituting an appeal at the TAT and obtaining the judgement and enforcing it.
For convenience purposes, the remaining part of this article will be divided into five subheadings; Pre-Appeal where we will discuss what gives a party a right to institute an appeal and the time limit for instituting same and various controversies. Commencement of Appeal contains a discussion on how to commence an appeal. It further discusses Proceedings proper and evidence, after which it examines the Judgement and Further Appeal and Enforcement mechanisms. Just before the conclusion, recommendations for an improved tax appeal process are proffered.
There are controversies as to whether TAT usurps the power of the FHC. The Constitution grants the FHC exclusive jurisdiction in matters pertaining to; revenue of the government of the Federation or its organs, taxation of companies or bodies carrying on business in Nigeria subject to federal taxation, custom, export and excise duties.
TAT’s jurisdiction covers disputes and controversies arising from administration of federal tax laws like Companies Income Tax Act, Petroleum Profits Tax Act, Personal Income Tax Act, Capital Gains Tax Act, Value Added Tax Act and Stamp Duty Act among others. TAT can even make rules regulating its procedures, and proceedings before it, are deemed to be ‘judicial proceedings’. It is also a ‘civil court for all purposes’.
Moreover, the constitution further provides for its supremacy and voids any contrary legislation to the extent of such inconsistency. This presents a dilemma as the jurisdiction of TAT encroaches the exclusive jurisdiction of the FHC and contravenes the constitution.
However, it will be apt to examine this controversy in the light of decided cases. Previously, there were provisions for Value Added Tax Tribunal (‘VAT Tribunal’), Body of Appeal Commissioners (‘BAC’) and Federal Board of Internal Revenue (‘FBIR’) internal dispute resolution channels as administrative mechanisms to determine federal tax disputes. But the amendment to FIRS Act repealed all the tribunals listed above and replaced them with the TAT.
In Stabilini Visinoni V. FBIR, the respondent sued the appellant for filing incorrect VAT returns at VAT Tribunal. In response, the Appellant challenged the jurisdiction of the VAT Tribunal on the grounds of its conflict with the exclusive jurisdiction of FHC on tax disputes. The Appeal Court held that the provision of VAT Act establishing VAT tribunal contravened the Constitution and was void. As a result, the VAT Tribunal had no jurisdiction to hear the appeal. Same was held in the latter case of Cadbury Nig. Plc v. FBIR.
However, in CNOOC Exploration and Production Nigeria Limited & South Atlantic Petroleum Limited v. Nigerian National Petroleum Corporation & Federal Inland Revenue Service (‘CNOOC v. FIRS’), the Court of Appeal reversed its earlier stance and held otherwise. Here, there was a dispute over the petroleum profits tax and education tax assessments issued by FIRS to the appellants. FIRS challenged the appeal claiming that a necessary party was not added and prayed for TAT to dismiss the appeal. Following a TAT order, NNPC was joined as a party. It objected to its joinder and filed a preliminary objection claiming that TAT lacked jurisdiction to hear tax appeal as it usurped the powers in the exclusive jurisdiction of TAT. TAT held that it has jurisdiction to hear appeals and struck out NNPC as a party. NNPC further appealed its striking out at the FHC which held that it could be joined as a party and that TAT lacked jurisdiction in tax matters.
Discontented, CNOOC& SAPETRO (appellants) appealed at the Appeal Court claiming that TAT was aimed at furthering the interest of taxpayers by reducing the time expended in the tax appeal procedure. Despite the requirement for instituting an appeal at TAT before a further appeal, its decisions are still subject to registration at the FHC. It further argued that the precondition of institution an appeal at TAT was merely an administrative mechanism engineered by tax experts whose decisions would be reviewed by the FHC. As such, it did not usurp the powers of the FHC as there was no intent whatsoever to assume the place of the FHC and its processes are not civil but ‘deemed civil’.
The Court of Appeal on the prompt of the appellant followed its earlier decision in Esso Petroleum and Production Nig. Ltd and SNEPCO V. NNPC and reaffirmed the jurisdiction of TAT to adjudicate on federal tax disputes. Consequently, it did not interfere with the exclusive jurisdiction of the FHC.
Federal Inland Revenue Service (Establishment) Act (hereinafter referred to as ‘FIRS Act’) is the primary legislation governing appeals. In 2010, the Honourable Minister of Finance (HMoF) also enacted the Tax Appeal Tribunal (Procedure) Rules to govern its procedural operations. It allows appeal against any demand notice, tax assessment, action or decision of the service to lie within thirty (30) days of the delivery of such notice otherwise such notice is ‘final and conclusive’ and the tax is liable for interests and penalties. This time limit is subject to extension if TAT is satisfied that there was sufficient cause for the delay. The service and by extension, other Relevant Tax Authorities (RTAs) like the State Board of Internal Revenues can also file an appeal at the TAT.
In practice, a taxpayer who disagrees with the tax issued by the RTA can file a notice of objection to such RTA. The RTA can choose to heed the objection and reassess accordingly. It can also refuse to amend the assessment and issue a Notice of Refusal to Amend (NORA). Then, the party can choose to go through the internal dispute resolution mechanism of the RTA. The taxpayer can now appeal to the TAT within 30 days of receipt or delivery of NORA. Appeals at TAT are made in the zone where the cause of appeal arose. TAT lacks jurisdiction to handle criminal matters. Failure of a party to file a written objection at the RTA does not bar an appeal to TAT.
A salient question is whether the settlement by FIRS and non-objection precludes a taxpayer from appealing to TAT. There is a controversy surrounding this because, even though the TAT in the case of United Capital Assets Management Limited v. Federal Inland Revenue Service (FIRS) held that it can allow appeals that do not fall within the specified timeframe, it contradictorily held that the assessment appealed against was ‘final and conclusive’ because of the appellant’s negligence to file a written objection within the time stipulated in line with section 69 of CITA. This is clearly against its decision in Shell Petroleum Development Company of Nigeria Limited v Lagos State Board of Internal Revenue Service, in which it reiterated the superiority of the FIRS Act over other legislations in the first schedule (including CITA) in line with section 68 of FIRS Act.
Commencement of Appeal
This includes all the procedures involved in commencing an appeal, presenting evidence, examining witnesses, representing disputing parties, obtaining TAT judgements, and further appealing the decisions of TAT.
A Party instituting a tax appeal (Appellant) usually files a notice of appeal in Form TAT. Only parties affected by the assessment can appeal against it. The form contains the name and address of the parties, grounds of appeal, reliefs sought, particulars of the assessment appealed against and the address of the affected parties. The rules provide for the criteria for joining parties as appellants or respondents to the appeal which is whether the right to relief accrues to can be exercised against the party. The court can also suo motu add parties as it thinks fit. Copies of the list of witnesses, their written statement on oath and documents sought to be relied on should be forwarded alongside the notice of appeal. Service can be personal or substituted.
Importantly, parties can represent themselves or choose a lawyer, chartered accountant, or adviser to represent. The latter is advisable because aside from the pros of expertise, it allows for the continuance of proceedings in the eventuality of death, insanity or bankruptcy, the legal representative will be able to continue the case because the proceedings cannot be abated.
On receipt of notice of appeal, the respondent is required to file a signed reply in Form TAT 3 within 30 days. In the reply, the respondent states whether he contests the appeal or not and the reasons for contesting alongside the witnesses, their statements and the documents sought to be relied upon. All these must be signed by the parties or their representatives. The parties are to be notified seven days before the date fixed for hearing. Default in appearance by the appellant will warrant striking out of the appeal while default on the part of the respondent will lead to hearing the appeal on the merit of the documents submitted. Application to TAT to relist an appeal or set aside its decision obtained in the absence of a party must be made within 14 days or ‘such longer period as allowable for good cause shown’.
In the concluding part of this article, we shall discuss Proceedings, Judgement, and Further Appeal and Enforcement mechanisms as well as recommendations for an improved tax appeal process are proffered.
Ikechukwu Onuoma is an astute lawyer with over 15 years of cognate experience in litigation, mediation. He is also the managing partner at Obra Legal, Enugu.