CNOOC EXPLORATION AND PRODUCTION NIGERIA LIMITED & ANOR v. NIGERIAN NATIONAL PETROLEUM CORPORATION & ANOR
COURT OF APPEAL LAGOS DIVISION
(IKYEGH; OGAKWU; TUKUR, JJ.CA)
The appellant and 1st respondent are parties to a Production Sharing Contract (PSC) concerning an Oil Mining Lease (OML) 130 over a Contract Area (the Contract Area) in which another company, Total Upstream Nigeria Limited is the Operator of the Contract Area. In accordance with the PSC, Total Upstream Nigeria Limited prepared the Petroleum Profits Tax (PPT) returns for the 2010 accounting year in respect of the Contract Area and sent same to the 1st respondent for filing with the 2nd respondent. However, the 1st respondent failed to file the returns and instead unilaterally prepared and filed another returns with the 2nd respondent. Relying on the returns filed by the 1st respondent, the 2nd respondent assessed the Contract Area for the purpose of Tertiary Education Tax and served the Notice of Assessment on the appellants in October, 2011.
The Operator on behalf of the appellants filed a Notice of Objection challenging the Notice of Assessment on the ground that it believed that it was incorrectly prepared. After receiving the Notice, the 2nd respondent replied by sending a letter to the Operator stating that the objection had been “noted for memorandum purposes only”. The appellants, being dissatisfied with the response, filed an appeal to the Tax Appeal Tribunal on the ground that the assessment was wrong. After being served, the 2nd respondent challenged the appeal on several grounds one of which was that the appellant lacked the locus to appeal to the Tax Appeal Tribunal since the returns were not filed by the appellants but by the 1st respondent and that non-joinder of the 1st respondent rendered the appeal incompetent. The Tax Appeal Tribunal in its ruling delivered in June, 2012 dismissed the objection of the 2nd respondent and went ahead to join the 1st respondent in the matter.
After being served with the joinder, the 1st respondent filed a Notice of Preliminary Objection challenging the jurisdiction of the Tax Appeal Tribunal to hear and determine the appeal on grounds which bordered mainly on the allegation that the claims before the Tax Appeal Tribunal were connected with taxation of companies carrying on business in the Federal Republic of Nigeria, and as such only the Federal High Court has the jurisdiction to the exclusion of any other court to entertain the matter. In its ruling of February 2013, the Tax Appeal Tribunal held that it has the requisite jurisdiction to entertain the appeal while striking out the 1st respondent. The 1st respondent was dissatisfied with the ruling and consequently filed a Notice of Appeal at the Federal High Court, Lagos Division urging it to overrule the Tax Appeal Tribunal.
After hearing the parties, the Federal High Court Judge gave his ruling on the 22nd of May 2015 in which it held that the appellant had no locus standi to initiate the appeal and that the Tax Appeal Tribunal lacked jurisdiction to entertain the appeal as the subject matter is connected with the taxation of a Nigerian company which is an exclusive duty of the Federal High Court. The court also held that the non-joinder of the 1st respondent was fatal as it strips the Tax Appeal Tribunal of jurisdiction to hear the appeal. The appellants became aggrieved and filed a Notice of Appeal at the Court of Appeal, Lagos Division. One of the issues raised for determination was whether the jurisdiction of the Tax Appeal Tribunal to entertain the appellants’ appeal infringed on the exclusive jurisdiction of the Federal High Court to hear tax disputes as stipulated under section 251 of the Constitution of the Federal Republic of Nigeria, 1999.
Arguing the issue, Learned Senior Counsel for the appellant submitted that the Tax Appeal Tribunal has the jurisdiction to entertain the tax appeal because the Federal Inland Revenue Service Act, which established the Tax Appeal Tribunal does not encroach on the exclusive jurisdiction of the Federal High Court. Learned Senior Counsel further argued that the Tax Appeal Tribunal is an administrative body and that its proceedings is a condition precedent to the assumption of jurisdiction by the Federal High Court. Counsel relied on section 251(1) (a) and (b) of the 1999 Constitution of the Federal Republic of Nigeria (as amended); Federal Inland Revenue Service (Establishment) Act, 2007; Eguamwense v. Amaghizemwen. Learned Senior Counsel further contended that the Tax Appeal Tribunal was not created to be a court but to be deemed as functioning like a civil court. Learned Senior Counsel cited Paragraphs 1(1) and 20(3) of the Fifth Schedule to the Federal Inland Revenue Service Act, 2007; Orji v. Dorji Textile Mills. Reliance was also placed on the decision in Nigerian National Petroleum Corporation v. Tax Appeal Tribunal and 3 Ors to submit that the Tax Appeal Tribunal is not a court. Counsel urged the court to resolve the issue in favour of the appellant.
Responding to the argument of the appellant, Learned Senior Counsel for the Respondents submitted that the Tax Appeal Tribunal does not have the jurisdiction to hear and determine tax appeals and that once a court is clothed with exclusive jurisdiction, other courts are precluded from exercising original jurisdiction over the matter. Learned Senior Counsel cited section 251(1) of the 1999 Constitution of the Federal Republic of Nigeria and the cases of Buhari v. INEC and Oyeniran v. Egbetola. Learned Senior Counsel further submitted that the Tax Appeal Tribunal was deemed to be a Civil Court by the National Assembly and that it was placed in the same category with courts mentioned in section 6(5)(j) of the 1999 Constitution. Counsel also argued that by the clear wording of Paragraph 20(3) of the Fifth Schedule to the FIRS Act, the Tax Appeal Tribunal is to be treated as a civil court for the purposes of exercising jurisdiction in respect of disputes arising out of tax laws, which pertain to taxation of companies in Nigeria, tax payable to the FIRS, an agent of the Federal Government. Learned Senior Counsel also relied on Nospecto Oil and Gas Ltd v. Olorunnimbe to argue that the provisions of the FIRS Act, no matter how laudable and practicable, cannot override the provisions of the Constitution donating exclusive jurisdiction to the Federal High Court in respect of revenue of the Federal Government, taxation of companies and issues involving Federal Government agencies. Counsel urged the court to discountenance the argument of the appellants and resolve the issue in favour of the respondents.
In resolving the issue, the court held thus:
Now in Shell Nig. Exploration and Production & Ors v. FIRS & Anor, this Court at page 38 held thus:
“The procedure for resolving claims and objections such as in the instant matter, are spelt out. When an assessment is made and the party is not satisfied, it can serve a Notice of Objection with the FIRS. It can also file a notice of refusal to amend the assessment as desired where it disagrees with FIRS. The party may also then appeal against the assessment to the Tax Appeal Tribunal. If the party is still dissatisfied with the decision of the Tax Appeal Tribunal, then it can approach the Federal High Court, the Court of Appeal and the Supreme Court.”
The above recognition of the Tax Appeal Tribunal by this Court as a vital step towards the resolution of tax related disputes shows that the Tax Appeal Tribunal has jurisdiction over such matters.
The facts of the case of Esso v. NNPC contained in the certified true copy presented to this Court by learned senior counsel to the Appellants, are also relevant to this instant one, as the facts in issue there also revolved around petroleum profit tax and education development tax arising from a production sharing contract. In that case, this Court at page 11 of the CTC of the judgment, wholly approved the procedure prescribed by the petroleum profit Tax Act, which includes an appeal to the Tax Appeal Tribunal. This Court then went on to hold at page 12 thus.
“It must also be stated that Section 251(1)(b) of the Constitution of Nigeria 1999 as amended gives exclusive jurisdiction to the Federal High Court in civil causes and matters connected with or pertaining to the taxation of companies and other bodies established or carrying on business in Nigeria and all other persons subject to Federal taxation. It may be added that in respect of the petroleum profit tax, it is after the exhaustion of remedies or the process set out in (i) (ii) and (iii) above that a person may approach the Federal High Court”.
Part of the process referred to by this Court above, is an appeal to the Tax Appeal Tribunal. In essence, the combined effect of the aforementioned decisions is that the Tax Appeal Tribunal has jurisdiction to entertain tax matters such as in the instant case.
Issue resolved in favour of the appellants.
A. Tunde Oluwo with Berenibara and A. Adewusi for Appellants
Chidimma Okoronkwu for 1st Respondent
Oladapo Akihaosun with A. Jolaoso and O. Omeyele Miss for 2nd Respondent.