Nigeria: the tax debtor’s right of appeal has been denied and deleted from the provisions of the law by a Federal High Court sitting in Abuja recently.
Recall that previously, the law had supported the tax debtor’s right of appeal through provisions of the Tax Appeal Tribunal (Procedure) Rules 2021 and the Federal High Court of Nigeria (Federal Inland Revenue Service) Practice Directions 2021.
Another provision that previously backed this right is the Federal High Court of Nigeria (Tax Appeals) Rules 2022. As it stands, all these provisions have been voided.
Nigeria: More on the Ruling
The judgment presided upon by Justice James Omotosho, highlighted that the identified provisions were unconstitutional because they limit the constitutional provided right of appeal.
Also, it is important to recall that Order III Rule (6) (a) of the Tax Appeal Tribunal (Procedure) Rules (2021) prescribed that an aggrieved person, challenging the tax charged by the Federal Inland Revenue Service (FIRS) or any relevant tax authority, shall pay 50 per cent of the disputed amount into any account so designated by the Tax Appeal Tribunal before such an appeal can be heard.
The above-quoted Order III Rule (6) (a) of the Tax Appeal Tribunal (Procedure) Rules (2021) no longer stands.
In the same light, Order V Rule 3 of the Federal High Court of Nigeria (Federal Inland Revenue Service) Practice Directions (2021) prescribed that where a person intends to challenge an assessment served on him or her, he or she shall pay half of the assessed amount into an interest-yielding account of the Federal High Court, pending the determination of the application and proceedings.
The above by the recent ruling has also been voided.
Order V Rule 1 of the Federal High Court of Nigeria (Tax Appeals) Rules (2022) which was the third provision that was nullified prescribed that where an appellant is appealing against the decision of the Tax Appeal Tribunal, the sum contained in the decision shall be deposited in an interest-yielding account maintained by the Chief Registrar of the Federal High Court.
Background of the Ruling
Filed with suit number; FHC/ABJ/CS/12/2022 by Joseph Daudu, SAN, a former President of the Nigerian Bar Association, NBA on the grounds that the former provisions were unfair, unlawful, and a violation of the right to appeal.
He further sued the Minister of Finance, Budget and National Planning as the first respondent concerning the Tax Appeal Tribunal (procedure) Rules 2021.
Daudu also joined the Chief Judge of the Federal High Court and the Attorney General of the Federation (AGF) as second and third respondents.
Excerpts from Justice Omotosho on the ruling:
“Even though the 1st respondent (the minister) is empowered to make rules for the conduct of appeal, he is not expected to construct an embargo to the enjoyment of the right to appeal of any appellant.
“The right to appeal is a constitutional right and the first respondent cannot take away such a right through the making of subsidiary legislation.
“The law is trite that where any law or subsidiary legislation contravenes the provisions of the Constitution, it shall be declared void to the extent of its inconsistency.
“The said provisions being challenged by the applicant were made to favour the Federal Inland Revenue Service without any attempt to balance the interest of a tax debtor.
“For a tax debtor who is unable to afford to deposit the entire assessed sum of money, he is automatically deprived of his right of appeal.”
“This court, by virtue of Section 6(6)(b) of the Constitution, is empowered to determine issues between government and persons,”
“In the final analysis, I, therefore, do not hesitate to strike down the offending provisions, which, in the opinion of this court, substantially take away the right of appeal of a tax debtor such as the applicant,”
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