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Sack Tax Appeal Tribunals Now, Court Orders Okonjo-Iweala

Ngozi Okonjo-Iweala

SAN FRANCISCO, November 25, (THEWILL) –  The Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, has been ordered to sack the eight Tax Appeal Tribunals constituted by her immediately.

Describing the tribunals as illegal, a Federal High Court sitting in Abuja presided over by Justice Adeniyi Ademola, on Monday , gave the order as it restrained the Tax Appeal Tribunals established by the Federal Inland Revenue Service (FIRS) from adjudicating on tax matters and federal revenue.

Justice  Ademola gave the order while giving ruling  in an appeal filed by TSKJ Construces Internacionals Unipessoal LDA , saying  the bodies were established in contravention of section 251 (1) (a) and (b) of the Constitution of the Federal Republic of Nigeria.

The plaintiff in the case, TSKJ, had dragged  FIRS to court challenging a judgment of a Tax Appeal Tribunal wherein the tribunal asked the company to pay the sum of $12.9 million as tax liabilities for 1997,1998,1999,2000,2001 and 2002 to FIRS.

TSKJ, a nonresident tax payer obtained a contract for the construction of the Nigeria Liquefied Natural Gas (LNG) and in executing the contract, the company used TSKJ Nigeria, its subsidiary, to render logistic support service to it in the course of the contract.

The facts of the case as reviewed by the court showed that  TSKJ filed self assessment forms on deemed profits meaning that its profit could not be ascertained and the company made deductions of recharges being the cost paid to its local subsidiary.

But FIRS disallowed the  deductions on the ground that the deductions were not allowed under the turnover basis assessment and consequently issued additional assessment in respect of the wrong deductions made by TSKJ.

The company was to object  to the additional deductions as it  filed an appeal at the Tax Appeal Tribunal asking that the additional assessment be set aside.

The tribunal also dismissed the company’s claims following which an appeal was filed at the Federal High Court.

In his ruling, Justice Ademola upheld the argument of the company that the tribunal lacked the jurisdiction to entertain the suit on the ground that FIRS (Established) Act 2007 under which the tribunal was established conflicted with the exclusive jurisdiction of the Federal High Court conferred by section 251 (1)(a) and (b) of the constitution.

“The  respondent counsel’s arguments that Tax Appeal Tribunal created by FIRS (Established) Act 2007 as being an administrative panel and not a court affecting the exclusive jurisdiction of the Federal High Court on Federal Revenue and Taxation of companies are mere semantics, misconceived and untenable in law in as much as their decisions affect the civil rights and obligations of companies in relation to taxation matters and revenue of the Federal Government,”   the trial judge said.

Justice Ademola also found that the jurisdiction of the tribunal was in direct conflict with the jurisdiction of the Federal High Court as he  advised that the constitution would first have to be amended before such jurisdiction could be conferred on the tribunals.

He therefore  upheld the appeal by TSKJ and  ordered the Finance Minister to disband the tribunals with immediate effect.