Objectives & Powers of Tax Appeal Tribunal

CONTRIBUTED CHIBUEZE. K. JAMES

INTRODUCTION

Tax disputes in Nigeria are primarily resolved by the courts and the Tax Appeal Tribunal. The courts’ jurisdiction over tax disputes is determined by whether the taxes are federal, state, or local government taxes, and jurisdiction over taxes administered at both the federal and state levels, such as stamp duties, is determined by the taxpayer’s legal personality and, for individuals, their place of residence. ^[1]

The authority to hear and decide tax issues is granted to the Federal High Court, State High Courts, Tax Appeal Tribunal, and Revenue Courts of the various local government bodies. The Federal High Court hears appeals from the Tax Appeal Tribunal^[2], the Court of Appeal hears appeals from the Federal High Court and state High Courts^[3], and the Supreme Court, the nation’s highest and ultimate court, hears cases from the Court of Appeal.

In addition, Nigerian regulations ^[4]offer administrative avenues for resolving tax disputes before going to court, that is a taxpayer seeking to challenge an assessment will do so by submitting a written protest to the tax authorities together with supporting documentation. The complaint is either rejected by the tax authority or it is upheld, invalidating the assessment. If the objection is rejected, the taxing authority sends the taxpayer a notice of refusal to amend (NORA). A taxpayer who has been wronged has 30 days from the date of the NORA to file an appeal with the Tax Appeal Tribunal or any other relevant court that has jurisdiction over the case. It is important to highlight that, until the administrative procedures for resolving tax problems are exhausted, a taxpayer who feels wronged may still take their case to the Tax Appeal Tribunal or the courts.^[5]

This research provides an analysis of the establishment and organizational structure of the Tax Appeal Tribunal viz-a-viz, its broad objectives and power.

ESTABLISHMENT OF TAX APPEAL TRIBUNAL.

Tax Appeal Tribunal (TAT) was established pursuant to Section 59(1) of the Federal Inland Revenue Service (Establishment) Act, 2007 and empowered to adjudicate disputes resulting from the application of the tax rules listed in the FIRS Act’s First Schedule.^[6]

As part of the ongoing reforms of the tax systems in Nigeria. TAT is set up by the federal government to adjudicate all tax disputes arising from operations of the various Tax laws as spelt out in the fifth schedule to the FIRS (Establishment) Act, 2007. Specifically, the Fifth Schedule states that the TAT has jurisdiction over disputes arising from the under-listed laws; Companies Income Tax Act (CITA); Petroleum Profit Tax Act (PPTA); Personal Income Tax Act (PITA); Capital Gains Tax Act (CGT); Stamp Duties Act (SDT); Value Added Tax Act (VAT); and Taxes and Levies (Approved list for collection) Act as well as other laws, Regulations, Proclamations, Government notices or Rules related to these Acts.^[7]

The tribunal is a 5-man panel referred to as tax appeal commissioners, headed by a legal practitioner who has been qualified to practice for a period not less than 15 years with cognate experience in tax legislation and tax matters, providing expert-based adjudication of tax disputes.^[8] It is important to note that these tax appeal commissioners are usually appointed by the minister of finance after meeting the requisite qualification standard as stipulated in the Act^[9], and a quorum at any sitting of the tribunal shall be three members.

The Tribunals are further set up across the six (6) geo-political zones of the country with two (2) additional Tribunals in Lagos and Abuja, meaning the TAT is an amalgam of eight (8) zonal Tribunals and a Coordinating Secretariat for easy adjudication of matters and dispensation of justice.

OBJECTIVES FOR THE ESTABLISHMENT OF TAX APPEAL TRIBUNAL

The new tax policy offers a step-by-step objection and appeal process, giving the complainant the chance to explore other dispute resolution mechanisms before being granted access to the normal court system. Tax Appeal Tribunal is a crucial part of the tax system. The Establishment Act states that the appeal process may be started by either the taxpayer or the appropriate tax authority. It is the expectation of all stakeholders that the broad objectives for the establishment of the TAT will include:

1. To reduce the incidence of tax evasion and ensure fairness and transparency of the tax system;
2. To adjudicate on all tax disputes arising from operations of the various tax laws spelt out in the First Schedule to the FIRS (Establishment) Act 2007;
3. To prioritize facts over legal technicalities and to facilitate early and swift decision-making while maintaining the value of justice and fairness;
4. To boost trust on the part of taxpayers in the tax system; and
5. To provide the opportunity for expertise in tax dispute resolution and avenue for effective involvement of parties.^[10]

THE RULES OF PROCEDURE & POWERS OF THE TAX APPEAL TRIBUNAL

The minister issued new Tax Appeal Tribunal (procedure) rules 2021. The Rules were issued under powers in paragraph 21 of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act. The Rules, which override the 2010 Rules, are meant to direct Tax Appeal Tribunal hearings in terms of practice and procedure. The few innovations contained in the rule include:

1. Electronic filing: According to the Rules, all processes and documents that may be submitted to the TAT secretariat may be submitted electronically if so requested by the TAT.^[11] Similar to this, processes and papers are correctly served when sent electronically, as specified by the TAT, whether by email or another method;^[12]
2. Virtual hearing of application: The Rules allow for virtual proceedings, particularly for delivering rulings and applications using technology or platforms recommended by the TAT;^[13]
3. Place of filing appeal: According to the Rules, appeals may be submitted in any of the secretariats of the eight zones as long as the Notice of Appeal and any supporting documentation are correctly headed with the name of the relevant zone of the Tribunal where the matter is to be heard. The appeal would subsequently be moved to the appropriate zone in accordance with the Chairman’s instructions;^[14]
4. Pre-trial conference: The TAT may order a Pre-trial conference to help resolve disputes by focusing on fewer topics;^[15]
5. Mandatory payment of 50% of tax assessed: A taxpayer who intends to appeal must first deposit 50% of the tax that is being contested into an account that the TAT has designated as security for the appeal. The taxpayer must also submit a deposition to that effect together with the appeal;^[16]
6. Documents-only procedure: Where a dispute may be settled through documentary evidence, the parties may forgo an oral hearing. Then all the parties need to do is submit any pertinent paperwork with the Notice of Appeal or Reply, Witness Statement on Oath, Written Address;^[17]
7. Costs: The Tribunal now has the discretion to order costs against a party, its representative or a legal practitioner for any misconduct, undue delays or defaults.^[18]

To this end, the Tax Appeal Tribunal is empowered pursuant to paragraph 20(2) of the Fifth Schedule of the FIRS (Establishment) Act, to:

1. Require the discovery and production of documents;
2. Receive evidence on affidavits;
3. Dismiss an application for default or deciding matters ex-parte;
4. Summon and enforce the attendance of the person and examine him on oath;
5. Set aside any order or dismissal of any application for default or any order passed by it ex-parte;
6. Call for the examination of witnesses or documents to review its decisions; and
7. Do anything which in the opinion of the Tribunal is incidental or ancillary to its functions.

RECENT KEY DECISION OF THE TAX APPEAL TRIBUNAL

EMENITE LIMITED V FIRS^[19]

Nigerian taxpayers have been unclear about the mandatory 50% payment of tax before their matter is to be heard by the TAT. Question as to whether the requirement was a discretionary requirement in statutorily defined situations that needed to be proven to the satisfaction of the Tribunal, or if it was an obligatory condition-precedent to the competence of tax appeals to the TAT arose.

In the case of Emenite Limited v. FIRS, the Tribunal clarified how to correctly interpret the relevant clauses of Order III Rule 6(a) of the TAT (Procedure) Rules 2021 and paragraph 15(7) of the Fifth Schedule to the FIRS (Establishment) Act 2007. In this pivotal case, the TAT decided that the provisions of Order III Rule 6(a) of the TAT Rules are not enforceable against taxpayers and that the security deposit requirement for prosecution of tax appeals to the Tribunal is not mandatory under the FIRS Act.

Also, see the case of Investment Holdings Limited Vs FIRS^[20] where the Tax Appeal Tribunal held same. This development has provided relief to taxpayers who had previously complained about the TAT’s earlier view of the security deposit requirement as mandatory and a condition precedent to the competence of tax appeals to the Tribunal.

CONCLUSION

This Rule of procedures took effect from 10 June 2021 and they are intended to improve the Tax Appeal Tribunal’s ability to administer justice. Given the widespread use of technology in the delivery of justice, they also reflect the reality of the day. The TAT can now punish negligent parties for lack of professionalism and unneeded delays thanks to the ability to order expenses.

One point of controversy is the requirement that 50% of the tax in question must be paid before an appeal can be filed. Since it is established that regulations cannot supersede an Act’s provisions, this provision may be contested on the grounds that it is inconsistent with the Federal Inland Revenue Service (Establishment) Act 2007. In addition, where a taxpayer lacks the funds to deposit, the provision may be contested on constitutional grounds, as it would prevent them from accessing justice.

However, the recent judicial decision made by the Tax Appeal Tribunal in the Emenite Limited V FIRS, places the security deposit requirement for tax appeals to the TAT as discretionary and that the Tribunal may only require an appellant to pay the deposit if the FIRS files an application with proof of the necessary statutory circumstances that is satisfactory to the Tribunal.

1. Etigwe Uwa SAN & ors ‘ The Tax Disputes and Litigation Review: Nigeria’ The Law Reviews[2023] available at https://thelawreviews.co.uk/title/the-tax-disputes-and-litigation-review/nigeria accessed on 18th October 2023. ↑
2. Federal Inland Revenue Service (Establishment) Act 2007, Fifth Schedule, Para 17. ↑
3. Ibid, Fifth Schedule, Para 21. ↑
4. Tax Appeal Tribunal (procedural) Rules 2021, Order 3, Rule 1. ↑
5. Oando Supply and Trading Limited v. Federal Inland Revenue Service (2011) 4 TLRN 113 ↑
6. Federal Inland Revenue Service (Establishment) Act 2007, Section 59(2). ↑
7. Ibid, Fifth Schedule, Para 11(1). ↑
8. Ibid, Fifth Schedule, Para 2(2). ↑
9. Ibid, Fifth Schedule, Para 3. ↑
10. Tax Appeal Tribunal: Available at https://tat.gov.ng/executive-brief/ accessed on 20^th October 2023. ↑
11. Tax Appeal Tribunal (procedural) Rules 2021, Order 3 Rule 5. ↑
12. Ibid, Order 7 Rule 5. ↑
13. Ibid, Order 11 Rule 4. ↑
14. Ibid, Order 4 Rule 2. ↑
15. Ibid, Order 17 Rule 2. ↑
16. Ibid, Order 3 Rule 6. ↑
17. Ibid, Order 15. ↑
18. Ibid, Order 22. ↑
19. Emenite Limited V FIRS (2022) 4 NTTLR 159. ↑
20. Investment Holdings Limited Vs FIRS (2022) 5 NTTLR 252. ↑