IN THE TAX APPEAL TRIBUNAL
IN THE SOUTH-SOUTH ZONE
HOLDEN AT BENIN
NOTICE OF APPEAL
APPEAL NO: TAT/SSZ/009/18
BETWEEN
BAYELSA STATE BOARD OF INTERNAL REVENUE ------ APPELLANT
AND
AOS ORWELL NIGERIA LIMITED ------ RESPONDENT
BEFORE
PROF. OBEHI A. ODIASE-ALEGIMENLEN CHAIRMAN
DR. DAVID ALA-PETERS COMMISSIONER
MRS. HILDA OFURE OZOH COMMISSIONER
MR. VITALIS FRIDAY AJOKU COMMISSIONER
DR. OLATUNDE JULIUS OTUSANYA COMMISSIONER
JUDGEMENT
This Appeal is brought before the Tax Appeal Tribunal (South-South Zone Sitting in Benin), dated and filed on 10th November 2018 in Suit No. TAT/SSZ/009/2018.
The Appellant is established by the Bayelsa State Board of Internal Revenue Law CAP B2 Laws of Bayelsa State (2006) and charged with the responsibility amongst others with the collection of all taxes, fees, levies and penalties due to the Government of Bayelsa State; and the administration of the relevant tax laws in Bayelsa State.Whereas the Respondent is a company engaged in the provision of integrated and specialized oilfield products, services and solutions across the oil and gas value chain in Nigeria.
BRIEF FACTS
The Appellant in this matter instituted this claim on the ground that the Respondent had failed, refused and/or neglected to file and pay the Pay-As-You-Earn (PAYE) taxes of its staff whose principal place of residence is in Bayelsa State. It states that the Respondent defaulted with regards to the payment of the StateDevelopment levy and the Bayelsa State Infrastructural Maintenance Levy (BIM).
It is for this aforesaid reason that the Appellant carried out an assessment of N42,320,019.08 (Forty-Two Million, Three Hundred and Twenty Thousand, Nineteen Naira, Eight Kobo only), being unremitted taxes consisting of PAYE, Development Levy and BIM, inclusive of penalties and interest for the years 2015 and 2016. This outstanding amount has become a debt owed by the Respondent to the Bayelsa State. This has necessitated the institution of this matter before this Tribunal wherein the Appellant is praying this Honourable Tribunal for the following reliefs:
a) AN ORDER of this Tribunal that the Respondent is indebted to the Appellant in the sum of N42,320,019.08 (Forty-Two Million, Three Hundred and Twenty Thousand, Nineteen Naira, Eight Kobo only), being unremitted PAYE of its staff, Development Levy and Bayelsa State Infrastructural Maintenance Levy in accordance with section 1(b) and (d) of the First Schedule to Personal Income Tax Act 2011 (as Amended), Taxes and Levies (Approved List for Collection) Act and Bayelsa State Infrastructural Maintenance Levy Law 2003.
b) AN ORDER directing the Respondent to pay to the Appellant the sum of N42,320,019.08 (Forty-Two Million, Three Hundred and Twenty Thousand, Nineteen Naira, Eight Kobo only), (inclusive of interest and penalties) being the assessed tax liability for the years 2015 and 2016 due the Appellant in accordance with the relevant tax legislation.
c) AN ORDER demanding the Respondent to file its tax returns with the Appellant as prescribed by law.
d) A declaration that the Respondent is liable to file returns and remit its P.A.Y.E liabilities in accordance with Sections 81(2) and 82 of the Personal Income Tax Act 2011 (as amended).
e) A declaration that the failure, refusal and/or neglect of the Respondent to deduct and remit its P.A.Y.E taxes of its staff is in breach of Sections 81 and 82 of the Personal Income Tax Act 2011 (as amended).
f) A declaration that the failure, refusal and/or neglect of the Respondent to file returns and/or pay its tax as at when due amounts to tax evasion punishable under Section 94 of the Personal Income Tax Act 2011 (as amended).
g) Cost of this action - N2,000,000.00 (Two million naira only).
h) And for such further order or other orders as this Honourable Tribunal may deem fit to make in the circumstance.
ALTERNATIVELY,
a) AN ORDER compelling the Respondent to submit to the Appellant all immigration returns, books and relevant documents showing names, designation, gross incomes, home country of expatriates for the period under reference.
b) AN ORDER compelling the Respondent to furnish the Appellant with documents and details evidencing payment of personal income taxes of its employees to the relevant tax authorities as claimed for the period under reference.
In response to the Appeal, the Respondent on 4/2/2019 filed a Reply acknowledging receipt of Notice of Appeal along with Respondents Witness Statement of Oath.
The summary of Respondent’s Defence is that it is a company engaged in the provision of integrated and specialized oilfield products, services and solutions across the oil and gas value chain. Respondent further says that it has its registered office at plot 52/53 Trans Amadi Industrial Layout Port Harcourt, Nigeria and that it has no head or branch office in Bayelsa State.
Respondent further contended that it did not carry out any directional drilling services for Hilong Oil Services and Engineering Company as alleged by the Appellant. The Respondent equally averred that the person or persons whose names are listed in Respondent’s staff list are not resident in Appellant’s State (Bayelsa State).
The Appellant in opening its case, on the 12th of March 2019, called its witness MrRansomeParodeOmukoro, Technical Adviser to the Appellant, and tendered seven (7) exhibits (Exhibits BSB 1-7) in support of its case. Appellant also filed an Application requesting this Honourable Tribunal to re-open its case and the said application was granted. Similarly, the Respondent, in defence of its case, on 15th May 2019 called Mr. Emeka Johnson who is the Respondent’s Senior Finance and Tax Manager and tendered three (3)exhibits (exhibits AOS 1 to 3). The Respondent also filed a list of Additional Documents on the 11th March 2019 andon the 9th August 2019, filed an Additional Witness Statement on Oath.
The matter came to an end onthe 16th September 2019.
Appellant’s counsel filed its final written address on the 21stOctober 2019 and formulated three (3) issues which are;
1. Whether the Appellant’s demand on the Respondent for its tax liability isin compliance with relevant provisions of PITA 2011 (as amended).
2. Whether the demand of the sum of N42,320,019.08 (Forty-Two Million, Three Hundred and Twenty Thousand, Nineteen Naira, Eight Kobo only) by the Appellant is not final and conclusive in the face of no objection from the Respondent.
3. Whether the Appellant is entitled to the reliefs sought.
On its own part, the Respondent filed its final written address on the 2nd October 2016 and equally formulated three (3) issues which are:
1. Whether the Respondent is obligated to deduct and remit Pay-As-You-Earn taxes of its staff to Bayelsa State when the Respondent has no office in Bayelsa State and none of its employees resides in Bayelsa State.
2. Whether the Taxes and Levies (Approved List for Collection) Act 1998 empowers the Appellant to impose, assess and/or otherwise collect Development Levy from the Respondent, a corporate entity in any manner whatsoever.
3. Whether the Appellant has the power to impose, assess and/or otherwise collect Bayelsa State Infrastructural Development Levy from the Respondent who neither has an office, business, nor operational base in Bayelsa State.
This Honourable Tribunal after listening to the evidence led by the parties in this matter, is of the view that two issues call for determination:
1. Whether the Respondent did indeed carry out any activities within the Appellants territory for which Appellant is calling for Tax liability.
2. Whether the Appellants demand for Tax liability is backed by law.
ARGUMENT OF ISSUE ONE:
The summary of the matter before this Honourable Tribunal is that the Appellants are claiming that the Respondent carried on business in its territory and are therefore calling on the Respondent to deduct and remit the relevant taxes. The Respondent denied that it did any business in Appellant’s Territory and that none of its staff is therefore due to file returns with the Appellant. The Respondents stated that it has its office at plot 52/53 Trans Amadi Industrial Layout, Port Harcourt, Nigeria. It further averred that it has no head or branch office in Bayelsa state and equally stated categorically that it did not carry out any drilling services for Hilong Oil Services and Engineering Company “(Hilong”) in Rigs 19 and 27 which are situate in Bayelsa state as alleged.
The Respondentin paragraph 16 (16.4) of its witness deposition by EMEKA JOHNSON, had this to say:
“The Respondent did not render any services to Hilong during the assessment years in question and had never rendered any Rig maintenance or other services to Hilong in Bayelsa State”.
Under cross examination of RW1 by counsel to the Appellant the following questions were put to the Respondent and the following answers were elicited.
Question:
Is it true that the Appellant in this case the Bayelsa State Board of Internal Revenue has powers to call for returns when it believes vividly that the company carries on business within its jurisdiction?
Answer:
We file returns based on principal place of residence.
Question:
I said the Relevant authority in this case, the Appellant has powers to call for returns from the Company that carries on business within its jurisdiction.
Answer:
Yes, they have powers to call for returns.
Question:
And it is in line with that, that the Appellant issued your company EXHIBIT BSB 1 that is an invitation to meeting and calls for returns?
Answer:
Yes.
Question:
So which rigs did your company carry on directional services?
Answer
I am a finance staff so I don’t go to the field to have those records.
Question:
It is correct to say that your staff works in Bayelsa State but as to stay not for a period of 20 (days) to qualify as itinerant workers?
Answer
My staff has a fixed base (d) and principal place of residence in Rivers state and can visit any location as work demands.
Ironically under cross examination, Respondent identified the names of the three persons in EXHIBIT BSB 3 and BSB 3 A & B as the names of its expatriates based on which assessment was made. Respondent changed its argument to the fact that its personnel are not resident in Bayelsa State. It seems that the Respondent is approbating and reprobating at the same time, as such this piece of evidence cannot be believed. The position of the law is that the Court has no business in believing evidence in installments, it either believes the entire evidence or disbelieves it. In GBADAMOSI VS THE STATE (1991) 6 NWLR (PT196)82 the Court had this to say “your witness is either credible or incredible, he is either a truthful witness or a liar”.
From answers elicited from the Respondent during cross examination, it is very clear that the Respondent employees did carry out work activities/business in the Appellants State (Bayelsa State). This fact is clearly captured in EXHIBIT BSB 3 and EXHIBITS BSB 3 A & B which is the assessment for 2015 and 2016 and contained the names of Respondent expatriate staff. What is not clear is whether those staff stayed in Bayelsa State for 20 days in at least (3) three months between 2015 and 2016 to qualify as itinerant workers as provided for in Section 108 of PITA.
Issue one is therefore resolved in the favour of the Appellant.
ARGUMENT OF ISSUE TWO
By the provision of PITA 2011 as amended and Taxes, Levies (Approved List for Collection) Act (Amendment)Order 2015, and the Bayelsa State Infrastructural Maintenance Levy Law 2003, the Appellant is empowered to demand for the applicable Taxes from any company that carries on business activities within its territory. Whether the company has paid this same tax to the state where it has its headquarters and what was paid is another issue altogether.
It behoves the company, who are the Respondents in this case to liaise with the Tax Authority, who are the Appellant in this case to furnish it with convincing evidence that it has paid to the state where it has its headquarters. To our mind, this issue should not be the cause of any difficulty. The Appellant in furtherance of its position served on the Respondent EXHIBIT BSB3A-3B which is titled “BACK DUTY INVESTIGATION” wherein the Appellant made a formal demand for the sum of N42,320,019.08 (Forty-Two Million, Three Hundred and Twenty Thousand, Nineteen Naira, Eight Kobo only) as Respondents liability regarding PAYE of its expatriate staff, development levy and Bayelsa Infrastructural Maintenance levy (inclusive of interest and penalties). Under cross examination, the Respondent agreed that it in this Tribunal that the Appellant had the opportunity of seeing the remittances the Respondent claimed it had made to the Rivers State Government, and this was after the said document were front loaded.
Again, the position of the law is that facts admitted need no further proof. See the case of AROWOLO VS. AKAIYEJO (2012) 4 NWLR (PT1290) PAGE 286. One cannot help but wonder what the Respondent would have lost by honoring the Appellants invitation and presenting every credible evidence before it to show that it has paid its Tax liability to Rivers State, sadly this was not done. It then follows that if the Appellant has a right to demand from Respondent, the said taxes which it rightfully demanded and Defendants choose to ignore it at their own peril, then the Respondent must be held Responsible for its own action.
On the evidence provided by the Respondent showing it made remittances to Rivers State Government, we have our reservations since the Respondent was unable to provide evidence of receipts and tax clearance certificates from the Rivers State Board of Internal Revenue to buttress its claim of payment. Exhibits AOS 1-3 tendered by the Respondentcannot qualify as credible evidence as it is just a mere schedule of purported tax remittances that were not certified. However, since Rivers State Government is not a party in this suit, we will let it be. To our mind, the contentious issue between the partiescan only be resolved when both parties sit together and address this matter with open minds and sincerity.
In the circumstance, the Appellant’s alternative relief is accordingly granted. We therefore order as follows:
a) Respondent should submit to the Appellant all immigration returns, books and relevant documents showing names, designation, gross incomes, home country of expatriates for the period under reference.
b Respondent should furnish the Appellant with documents and details evidencing payment of personal income taxes of its employees to the relevant tax authorities as claimed for the period under reference.
Dated this __23rd_____ day of ___January___ 2020.
Signed:
Hon. Prof. Obehi Adetokunbo Odiase-Alegimenlen Chairman
Hon Dr. Ala-Peters David Hon. Mrs. Hilda OfureOzoh
Member Member
Hon. Barr. Ajoku Vitalis Friday Hon. Dr. OtusanyaOlatunde Julius Member Member