TAX: Tax Appeal Tribunal has Original Jurisdiction to Determine Matters Relating to Personal Income Tax


By AndersonTax

On 13 November 2018, in the case between Lagos State Board of Internal Revenue (LIRS) vs Ecoserve Limited (Ecoserve), the Lagos State High Court (Court) ruled that the jurisdiction to determine disputes relating to Personal Income Tax (PIT) assessments is vested in the Tax Appeal Tribunal (TAT). In reaching its decision, the Court relied on the provisions of Sections 58 – 60 of the PIT Act and held that the TAT and not the State High Court is vested with the jurisdiction to hear PIT matters at first instance.


In 2013, LIRS instituted an action against Ecoserve for non-remittance of PIT and Withholding Tax. In response, Ecoserve filed a counterclaim against LIRS seeking, inter alia, an Order of the Court setting aside the Demand Notices issued by LIRS on the basis that the said liabilities were wrongly calculated.

In responding to the counterclaim, counsel to the LIRS argued that Ecoserve had no right to counterclaim because it had not exhausted all the statutory remedies for tax disputes stipulated under Sections 58 – 60 of the PIT Act by objecting to the said assessments and subsequently instituting an action before the TAT.

The Court ruled in favour of LIRS holding that the remedy of a taxpayer on any assessment issued to him is to object to the assessment and have the objection heard by the tax authority and thereafter, the TAT. The Court further held that the State High Court has no original jurisdiction on complaints relating to PIT assessments and subsequently struck out the counterclaim.


Based on this Ruling, taxpayers and tax authorities are expected to commence actions relating to PIT assessments at the TAT. This Ruling is in line with prior decisions of superior courts which state that where a statute prescribes a legal line of action for determination of an issue, the aggrieved party must exhaust all the remedies in that law before going to court.

Notwithstanding the foregoing, it is important to note that the State High Court may, in effect, be robbed of its jurisdiction to determine state tax disputes under the constitution if such disputes are first heard at the TAT. This is because appeals from the TAT lie directly to the Federal High Court (FHC) and not the State High Court by virtue of the Fifth Schedule to the Federal Inland Revenue Service (FIRS) (Establishment) Act.

It is, however, instructive to note that the Lagos State High Court had previously upheld its jurisdiction to hear and determine PIT matters without recourse to the TAT, in the case between Chemiron International Limited v LIRS. (Read our Tax Alert on the Chemiron case here). In that case, the Court relied on Section 272 of the 1999 Constitution which grants the High Court of a State an unlimited jurisdiction over civil and criminal proceedings. Furthermore, the Court, while taking note of the dispute resolution process in the PIT Act, held that a court of law should not allow the provisions of an enactment to be read in such a way as to deny citizens direct access to courts.

Based on the foregoing conflicting decisions, it would appear that the issue relating to the jurisdiction of the State High Court to hear and determine disputes relating to PIT matters still subsists given the inconsistencies in the provisions of the PIT Act and FIRS (Establishment) Act vis-à-vis the Constitution. It is, however, hoped that the Court of Appeal would resolve the apparent inconsistencies.


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