➥ CASE SUMMARY OF:
Joseph Bodunrin Daudu v Federal Inland Revenue Service (2023) – FHC/ABJ/TA/1/2021
by Branham Chima.
Joseph Bodunrin Daudu
Federal Inland Revenue Service
Federal High Court – FHC/ABJ/TA/1/2021
➥ JUDGEMENT DELIVERED ON:
Tuesday the 19th day of September, 2023
➥ THIS CASE IS AUTHORITY FOR:
⦿ TAX IS LEVIED WHERE THE PERSON RESIDES
The issue here is that of Personal Income Tax provided for by the PITA 2015. The tax is levied where the person resides. — I.E. Ekwo, J.
⦿ RESPONDENT FAILED TO ESTABLISHED EARNED TAXABLE INCOME
The power of the Board is not to be exercised by determining a company’s assessable profits according to its BOJ but rather to determine total profit to which the applicable tax rate is applied. The Respondent failed to establish that the Appellant indeed earned taxable income or turnover for the relevant periods or establish the nature and value of the taxable services rendered by the Appellant during the period in question i.e., 2010 to 2017. — I.E. Ekwo, J.
⦿ COUNSEL SHOULD DRAW COURT’S ATTENTION TO PREVIOUS DECISION
However, learned Counsel for the Respondent failed to draw the attention of the Court to this previous decision. Clearly, he had a duty in law to do so; see Global Trans. S.A. v. Free Enter. (Nig.) Ltd. (2001) 5 NWLR (Pt.706) 426 where it was stated that it is the duty of Counsel to draw the Court’s attention to previous decision of the Court on the same subject matter. — I.E. Ekwo, J.
⦿ TAXES FEDERAL GOVERNMENT IS EMPOWERED TO IMPOSE
I have stated the gravamen of the issues of the Appellant. In A.-G., Rivers State v. FIRS (unreported) (supra), this Court examined the provisions of Items 58 and 59 of Part 1 of the 2nd Schedule to the 1999 Constitution (as amended) and held that law has specifically designated the taxes that the Federal Government is empowered to impose and collect to the exclusion of other taxes like Value Added Tax, Withholding Tax, Education Tax, and Technology Tax. Earlier, this Court in Emmanuel Chukwuka Ukala, SAN v. A. – G., Fed. & Anor. (Unreported) (Supra) per Oshomah, J., had given a similar decision. In my candid opinion, these decisions have knocked the bottom off the decision of the TAT. It must be noted that these decisions are by Courts of Coordinate jurisdiction. They express the jurisprudence on the subject to my satisfaction and I am thereby persuaded. I have no reason therefore to make a conflicting decision to them. The Respondent ought to have been guided by the decision in Emmanuel Chukwuka Ukala, SAN v. A. G., Fed. & Anor. (Unreported) (Supra) being that it was decided on 12th December, 2020 long before the TAT gave its decision on 23rd June, 2021 per page 1038 of the Record. — I.E. Ekwo, J.
➥ JUDGEMENT DELIVERED BY:
Honourable Justice I.E. Ekwo
⦿ FOR THE APPELLANT
Emmanuel C. Ukala, SAN.
⦿ FOR THE RESPONDENT
Olatunji Salawu, Esq.
➥ CASE FACT/HISTORY
The Appellant is a Legal Practitioner, carrying on legal practice in the name and style of J. B. Daudu & Co. The Respondent on 7th June 2018 served him with Exhs. JB 4′ and 5′ and the notices of attachment dated 4th June 2018 and assessed him as being indebted to the service’ in the total sum of N1,225,115,562.33 (One Billion, Two Hundred Twenty-Five Million, One Hundred and Fifteen Thousand, Five Hundred and Sixty-Two Naira, Thirty Three Kobo).
After going through the trial, the Tribunal entered judgement for the Respondent by affirming two out of the three notices of assessment and the main findings of the Tribunal were as follows:
i. On Personal Income Tax: The Respondent was ordered to refer the issue of Residency in this matter to the Joint Tax Board for Resolution within a reasonable time of the decision in line with the provisions of the Personal Income Tax Act.
ii. On Value Added Tax: The Appellant was found liable to the VAT Assessments from 2010 2017 in the sum of N176,566,015.73 (One Hundred and Seventy-Six Million, Five Hundred and Sixty-Six Thousand, Fifteen Naira, Seventy-Three Kobo), and,
iii. On Withholding Tax: The Appellant was found liable to WHT Assessments from 2010 2017 N71,987,564.52 (Seventy-One Million, Nine Hundred and Eighty-Seven Thousand, Five Hundred and Sixty-Four Naira, Fifty-Two Kobo). It also found the Appellant liable to interest on the judgement sum and interest at the prevailing CBN rediscount rate from the date of judgement until the judgement debt is liquidated.
In the Amended Notice of Appeal, the Appellant expresses dissatisfaction with the judgement of the Tax Appeal Tribunal (hereinafter referred to as TAT) sitting in Abuja delivered on 23rd June, 2021, coram Hon. Iriogbe Ayo Alice (Chairman), Hon. Ishola Rufus Akintoye, Hon. Ajayi Julius Bamidele, Hon. Al Mustapha Aliyu and Hon. Nasiru Kuliya, and appeals to the Federal High Court upon the grounds of error of law as follows, inter alia: ‘The Tax Appeal Tribunal Abuja fundamentally erred in law when it assumed jurisdiction in respect of the Personal Income Tax of the Appellant in the absence of a valid Notice of Assessment issued to the Appellant’.
➥ ISSUE(S) & RESOLUTION(S)
I. Whether the rule of fair hearing is applicable to the proceedings of the Tax Appeal Tribunal?
RULING: IN APPELLANT’S FAVOUR.
A. THE TAX TRIBUNAL EXERCISES JUDICIAL POWERS AND THUS IS BOUND TO EXHIBIT FAIR HEARING
[‘The Tax Appeal Tribunal is established by S. 59 of the FIRS Act, 2007 and is given power to settle disputes arising from the operations of the Act and under the 1st Schedule to the Act. In the said 1st Schedule, is a list of enactment and laws over which it has primary jurisdiction to settle disputes. It is also to have primary settlement jurisdiction on all regulations, proclamations, government notices or rules in terms of the legislations mentioned therein. This makes the TAT an administrative agency created by statute and endowed with judicial powers. The power to exercise primary jurisdiction to settle disputes means that it has authority to inquire and can take decisions that are likely to affect the civil rights and obligations of a person or persons undergoing proceedings before it. Simply put, it performs quasi-judicial functions. It was stated in Gyang v. C.O.P. Lagos State (2014) 3 NWLR (Pt. 1395) 547 at 558 that: “It has long been settled in a line of cases decided by this court that administrative bodies or tribunals, acting judicially in the determination or imposition of a decision that is likely to affect the civil rights and obligations of a person, are bound and enjoined to strictly observe the principles of fair hearing. See R v. Electricity Joint Commission (1968) NMLR 102; Adeyemi v. Attorney-General Federation (1984) 1 SCNLR p. 525; Adigun v. Attorney-General Oyo State &18 Ors (1987) 1 NWLR (Pt. 53) 678’
‘There is therefore no doubt that since the TAT is given the power under the law which establishes it to determine or impose a decision that is likely to affect the civil rights and obligations of a person or persons undergoing proceedings before it, it is bound and enjoined to strictly observe the principles of fair hearing. It is also the law that the doctrine of fair hearing is expansive. This means that it has a variation of ramifications and is nebulous in nature. This is the reason that the Court will look at the details of the events and circumstance upon which the allegation of the breach is hinged in order to uncover the nature of the breach and come to a proper conclusion.’]
B. THE DECISION OF THE TAX TRIBUNAL IS VOID SINCE A MEMBER WHO WAS PART-TIME OF THE PANEL CONTRIBUTED TO ITS FINAL DECISION
[‘Upon looking at the submission of the Respondent, it is pertinent to answer; whether it is mandatory for the members of the TAT to be present throughout the proceedings? The answer in my opinion, is yes. The reason is that it would be wrong for any member of the TAT to sit in the panel whenever it is convenient for him. The entire process would by that account manifest itself as a derision of the statutory nature of the panel. The TAT decides the rights, duties and liabilities under tax laws, the consistency in the panel during the proceedings of a case must be mandatory. The next issue not considered by the Respondent when making submission on this point is the statutory and constitutional effect of the outcome of its proceedings of the TAT. It cannot be denied that apart from being present in the proceedings by all members of the panel, the members of the TAT would require to deliberate on the processes and proceedings before coming to its conclusion or decision on the matter. By endorsing the judgement in pages 1038 1066 of the Record, Hon. Nasir Kuliya is telling the world that he participated in all the stages of the proceedings, he took part in the deliberations with other members of the panel thereafter and that is the conclusion he has reached with the other members. This is a grave error on the part of the TAT. Part of the ramification of the rule of fair hearing is that a man cannot be a judge in a matter he never heard or never fully heard. A member of an administrative tribunal such as the 1st Respondent must be consistent in the proceedings. For any defence to have effect on issue of this nature, the onus is on the Respondent to show that the law allows a member of the TAT to attend proceedings as such member pleases and still take part in the deliberations that resulted in the final decision of the panel.’
‘If the attendance of the proceedings by any member of the panel of the Respondent is optional going by the position of the learned Counsel, then such absent member does not have to take part when the other members are deliberating and taking a decision. If he does, then he has participated in taking a decision in a matter he was not part of. I am saying this to show the lack of tact and elucidation of the correct position of the law by the said learned Counsel.’
‘On the whole, I find that the failure of the Tribunal to observe the principle of fair hearing has the consequence of nullifying the entire proceedings and in fact has so done. By this conclusion, I make an Order nullifying the proceedings of the TAT for not complying with the principles of fair hearing. Therefore ground 5 upon which this issue is predicated resolved in favour of the Appellant. By this decision all other issues of lack of fair hearing raised and argued by the parties are hereby over taken by event.’]
‘I make an Order setting aside the entire judgement of the Tax Appeal Tribunal delivered on 23rd June, 2021. This is the Order of this Court.’
➥ MISCELLANEOUS POINTS
➥ REFERENCED (LEGISLATION)
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)