IN THE TAX APPEAL TRIBUNAL
IN THE SOUTH-SOUTH ZONE
HOLDEN AT BENIN
APPEAL NO: TAT/SSZ/012/2020
BETWEEN:
BAYELSA STATE BOARD OF INTERNAL REVENUE --------APPELLANT
AND
PORT HARCOURT ELECTRICITY DISTRIBUTION PLC-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
WEDNESDAY 16TH JUNE 2021
JUDGEMENT
This Appeal is brought before the Tax Appeal Tribunal (South-South Zone Sitting in Benin), dated and filed on 31/08/2020 in Suit No. TAT/SSZ/012/2020.
BRIEF FACTS
(a) The Appellant is a body corporate established by the Bayelsa State Board of Internal Revenue Law CAP B2 Laws of Bayelsa State, 2006 and is 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 as provided for in the Personal Income Tax Act (PITA) 2011 (as Amended) while the Respondent is a Public limited company registered under the laws of the Federal Republic of Nigeria and licensed to take on the assets and electricity distribution activities of the defunct Power Holding Company of Nigeria within the old Port Harcourt Zone comprising of Akwa Ibom, Bayelsa, Cross River and Rivers States.
The Appellant being dissatisfied with the Respondent’s failure/refusal to file and pay assessed tax liability in the sum of N8,788,947.19 (Eight Million, Seven Hundred and Eighty-Eight Thousand, Nine Hundred and Forty-Seven Naira, Nineteen Kobo) only in respect of PAYE, Development Levy, Bayelsa State Infrastructural Maintenance levy hereby appeals to the Tax Appeal Tribunal South South Zone upon the grounds set out as follows:
i. The Respondent has failed, refused and/or neglected to file and pay its Pay-As-You-Earn taxes of its staff whose principal place of residence is in Bayelsa State, as well as the Development Levy and Bayelsa State Infrastructural Maintenance Levy (BIM) accruing thereof.
ii. Consequent upon such failure, an assessment of N8,788,947.19 (Eight Million, Seven Hundred and Eighty-Eight Thousand, Nine Hundred and Forty Seven Naira, Nineteen Kobo) only being unremitted taxes (PAYE, Development Levy and BIM) inclusive of penalties and interest for the years 2016 and 2017 is outstanding and has become a debt owned by the Respondent to the Bayelsa State Government.
iii. The Respondent has failed, refused and/or neglected to pay the assessed liabilities despite letters of notifications, demand notices, letter of invitation and report of administrative assessment based on back duty investigation.
Consequently, the Appellant sought the following reliefs from this Honorable Tribunal.
(a) AN ORDER OF THIS TRIBUNAL that the respondent is indebted to the Appellant in the sum of N8,788,947.19 (Eight Million, Seven Hundred and Eighty Eight Thousand, Nine Hundred and Forty Seven Naira, Nineteen 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 (Amendment) 2011, taxes and levies (Approved list for collection) Act and Bayelsa State Infrastructural Maintenance Levy Law 2003.
(b) AN ORDER directing the Respondent to pay the Appellant the sum of N8,788,947.19 (Eight Million, Seven Hundred and Eighty Eight Thousand, Nine Hundred and Forty Seven Naira, Nineteen Kobo) only being the assessed tax liability for the year 2016 and 2017 due the Appellant in accordance with the relevant tax legislations.
(c) AN ORDER demanding the Respondent file its tax returns with Appellant as prescribed by law.
(d) A declaration that the Respondent is liable to file returns and remit its PAYE liabilities in accordance with section 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 PAYE of its staffs s 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 tax returns and/or pay its tax as at when due amounts to tax evasion punishable under sections 94 of the Personal Income Tax Act, 2011 (as Amended).
(g) Cost of this action N1,000,000.00 (One Million Naira) only.
(h) And for such further order or other orders as this Honourable Tribunal may deem fit to make in the circumstance.
The Respondent on its own part filed the Respondent’s Reply Acknowledging Service of the Notice of Appeal together with the written statement on oath of its sole witness: Mr. Anthony Ikechi together with the accompanying processes on the 12th day of November 2020 but deemed as properly filed and served on the 13th day of November, 2020, as its reply to the Appeal stating its intention to contest the Appeal on the following grounds:
(a) The Respondent, contrary to the claim of the Appellant, paid the Pay-As-You Earn (PAYE) taxes of its staff stationed in Bayelsa State for the years 2016 and 2017.
(b) The Respondent does not owe the Appellant the sum of N8,788,947.19 (Eight Million, Seven Hundred and Eighty Eight Thousand, Nine Hundred and Forty Seven Naira, Nineteen Kobo) or any sum whatsoever having paid all amounts legitimately due to the Appellant which became due before the filing of this appeal.
(c) The Respondent is not liable to pay any tax under some of the heads of taxes since the laws relied on by the Appellant in making the demand or levying the Respondent are not applicable to the Respondent.
(d) The claims of the Appellant have no factual basis and generally lack merit.
And that the Demand Notice dated 05/10/2018 is grossly erroneous, untenable, and highly misleading and same is vehemently rejected by the Respondent and therefore prayed the Tribunal to discountenance the Appellant’s claims
Trial in this matter commenced on Tuesday 6th October, 2020. However, due to some adjournments on the part of the parties, Appellant actually opened its case on Wednesday 11th February, 2021
In support and proof of its case, the Appellant called a lone witness, Mr. Ransome Parode Omukoro, and tendered 8 Exhibits (Exhibits BYA 1-Exhibits BYA 8)
The Respondent also called a sole witness, Mr. Anthony Ikechi, its Head, Compliance and tendered 8 Exhibits (Exhibits PHE 1-8).
Trial in this matter came to an end on Thursday 25th March. 2021 and was adjourned to Thursday the 27th day of May 2021 for Final Written Addresses. Both parties adopted their Final Written Address on the said date and the matter was adjourned to today Wednesday 16th June, 2021 for Judgement.
ISSUES FOR DETERMINATION
In its Final Written Address, the Appellant Counsel, I.M Beinbein while adopting Issue 1 of the Respondent formulated three (3) issues for determination as follows:
1. Whether this Tribunal has jurisdiction to hear and determine this matter in light of the law establishing the Tribunal.
2. Whether the demand of the sum of N8,788,947.19 (Eight Million, Seven Hundred and Eighty Eight Thousand, Nine Hundred and Forty Seven Naira, Nineteen Kobo) by the Appellant is final and conclusive in the face of no objection from the Respondent.
3. Whether the Appellant is entitled to the payment of additional taxes and levies sought from the Respondent and to all other reliefs sought.
The Respondent Counsel, O. D. Nengim ESQ in his Final Written Address, on behalf of the Respondent, formulated Four (4) issues for determination as follows:
i. Whether this tribunal has jurisdiction to hear and determine this matter in light of the law establishing the Tribunal.
ii. Whether the administrative tax assessment carried out on the Respondent by the Appellant and the purported notices issued to that effect are not invalid.
iii. If issue two above is resolved in the affirmative, whether the Appellant can find a competent claim on the administrative tax assessment and purported notices to that effect.
iv. Whether the Appellant has proved its case to the standard required by law to be entitled to judgment and the reliefs sought.
After listening to the witnesses in this matter and evaluating the evidence tendered and arguments canvassed by both Counsel, we are of the view that there are only three (3) issues in actual contention:
(1) Whether this tribunal has jurisdiction to hear and determine this matter considering the law establishing the tribunal.
(2) Whether the Demand Notice dated 5th October 2018 has become Final and Conclusive
(3) Whether the Appellant has proved its case as required by law to be entitled to judgment and the reliefs sought from this Tribunal
DETERMINATION OF ISSUE ONE: Whether this tribunal has jurisdiction to hear and determine this matter considering the law establishing the tribunal.
The Respondent vehemently contended that the statutes providing tax authorities the legal veil to sue and be sued and the ones empowering the Tax Appeal Tribunal to adjudicate on tax matters do not contemplate and confer any power or legal capacity to the State Boards to file an Appeal. That the reference to “Service” stated in Sections 13 (1) & (3) of the fifth Schedule of the FIRS (Establishment) Act 2007 and Order III, Rules 1 & 3 of the TAT (Procedure) Rules 2010 was to the FIRS and not to any state internal revenue board. Respondent further contended that the Appeal as commenced by the Bayelsa State Board of Internal Revenue, which was established by the Bayelsa State Board of Internal Revenue Law, 2006 is contrary to the express provision of both the Rules and Law establishing the Tribunal as this Board lacks the locus standi to file this action because it is not a juristic person and thus, the Tribunal lacks jurisdiction to entertain the suit.
Respondent in emphasizing this, concluded that, “If a judicial authority lacks the requisite jurisdiction to hear and determine an issue, any step taken in relation to the matter is a nullity and void as jurisdiction is a threshold issue in adjudication by any court or judicial authority which can be raised at any time”.
The Tribunal agrees with the Respondent that Jurisdiction is a fundamental issue that bothers on the root and foundation of the suit. Clearly, Jurisdiction is the authority the court or Tribunal has, which enables it to decide matters that are laid before it for litigation or to take cognizance of matters presented in a formal way for its decision. This has been addressed in a plethora of cases.
In SALAHUDEEN & ORS v. AJIBOLA & ORS (2019) LPELR-47412(CA) the learned Judges noted that,
“… the importance of a Court to have jurisdiction to hear a matter before it is sacrosanct. This is because where a Court is drained of jurisdiction to entertain a matter, the proceeding flowing from it, no matter the quantum of diligence, dexterity, artistry, sophistry, transparence and objectivity injected into it will be marooned in the intractable web of nullity.
His Lordship MUSA DATTIJO MUHAMMAD, J.S.C. while Delivering the Leading Judgment in ENUKORA v. FRN (2018) LPELR-43822(SC) emphasized that:
“It is settled that the issue of jurisdiction is fundamental as it touches on the competence of the Court. Jurisdiction remains a threshold issue. Being the lifewire of any determination by the Court, it should be considered and determined first before anything else since no matter how well considered the Court's decision is, it will come to naught once the Court lacks the competence to try and determine the issue before it”
The Tribunal is also aware that the issue of Jurisdiction can be raised at any stage of trial. There is therefore wisdom in diligently giving due consideration to the issue of jurisdiction once raised. While acknowledging all the arguments canvassed by the Respondent, it is imperative to note that it is a settled principle of law that when a word, phrase or sentence appear in different statutes or laws, such words or sentences should be read in all the statutes, especially earlier statutes, to properly understand the true meaning of such constructions.
This principle is noted in MOBIL OIL (NIG) PLC v. IAL 36 INC (2000) LPELR-1883(SC), where the Supreme Court held that,
“…it is an elementary principle and fundamental to the construction of a provisions of any statute to read the Sections as a whole to enable the interpreter to gather the collective sense of the provision. Where the subject matter construed concerns other sections of the same statute, all provisions must be read, considered and construed together as forming a composite whole.”
Similarly, while addressing the issue of interpretation of statutes in the case of CO-OPERATIVE & COMMERCE BANK (NIG) PLC v. AG ANAMBRA STATE & ANOR (1992) LPELR-875(SC), the Supreme Court emphasized that,
“it is quite legitimate to interpret an instant statute under construction by reference to other earlier statutes in the same group of legislation in order to determine the course and content of the legislation under consideration.”
Other cases such as, MINISTER OF HOUSING AND LOCAL GOVERNMENT V. HARTWELL (1965) A.C.1134; BARENTZ V. WHITING (1965) 1 WLR 433; AND BROWN V DYERSON (1969) 1 QB.45 also emphasis this principle.
Furthermore, on the issue of jurisdiction, as was rightly indicated by the Respondent, Section 59(1) of the FIRS (Establishment) Act 2007 gave powers to the Tax Appeal Tribunal to adjudicate on tax matters as provided in the fifth Schedule of the FIRS (Establishment) Act 2007. Paragraph 11 of the fifth Schedule of the FIRS (Establishment) Act 2007 which is on the jurisdiction of the Tax Appeal Tribunal states as follows:
(1) “The Tribunal shall have power to adjudicate on disputes, and controversies arising from the following tax laws (hereinafter referred to as 'the tax laws')-
(i) Companies Income Tax Act, CAP. 60 LFN ; 1990.
(ii ) Personal lncome Tax Act No. 104, 1993.
(iii) Petroleum Profits Tax Act CAP. 354 LFN ; 1990 ;
(iv) Value Added Tax Act No. 102 ; 1993 ;
(v) Capital Gains Tax Act CAP. 42 LFN ; 1990, and
(vi) any other law contained in or specified in the First Schedule to this Act or other laws made or to be made from time to time by the National Assembly”.
All the above laws are the specific provisions on the operations of the different taxes and were in existence before the enactment of the FIRS (Establishment) Act 2007. It is trite law that when a general provision conflicts with a specific provision, the specific provision prevails. This is illustrated in the cases, AMERICA SPECIFICATION AUTOS LTD & ANOR V AMCON (2017) LPELR-44016(CA), MINI & ORS V YAKURR L.G.A & ORS (2019) LPELR-46300(CA), and N.N.D.C. V PRECISION ASSOCIATES LTD (2006) 16 NWLR (pt. 1006) 527 at 553.
In determining if the word “Service” as used in the FIRS (Establishment) Act 2007, also applies to the Internal Revenue Boards of States? Section 87. (1) of the Personal Income Tax Act (PITA) 2011 (as Amended) provides as follows:
“There is hereby established for each State, a Board to be known as the State Board of Internal Revenue (in this Act referred to as "the State Board") whose operational arm shall be known as the State Internal Revenue Service (in this Act referred to as "the State Service").
From the above, it is clear the Respondent did not avert its mind to the fact that all the taxes are not administered by Federal Inland Revenue Service alone but in conjunction with the various relevant state tax authorities.
Thus with respect to those taxes that are administered by the various state tax authorities, such as the personal income taxes (except for the residents of FCT and security agents), Value Added Tax, Capital Gains Tax and Withholding Tax, the enabling tax laws recognizes the various states internal tax Boards as the Statutory relevant tax authority and the “Service” as the operational arm of the Board.
Consequently, it is our considered opinion that the Tax Appeal Tribunal is well clothed with Jurisdiction to entertain this matter. Issue one is hereby resolved in favour of the Appellant.
DETERMINATION OF ISSUE TWO: Whether the Appeal has become Final and Conclusive
Section 58 (1) of Personal Income Tax Act 2011(as amended) provides that:
“If a person disputes an assessment, he may apply to the relevant tax authority by notice of objection in writing, to review and to revise the assessment, and the application shall state precisely the grounds of objection to the assessment and shall be made within thirty days from the date of service of the notice of the assessment”.
This means that for an objection to be valid, it must fulfil the following three conditions
(1) The objection must be in writing
(2) It must precisely state the grounds of objection to the assessment, and
(3) It must be made within thirty days from the date of service of the notice of the assessment”.
Respondent argued that it made a valid objection in Exhibits PHE 5 dated December 21, 2018 when it received Exhibits BYA 2, 3, & 4. From Exhibits PHE 5, the above, first two (2) conditions in respect of a written objection, which is precise, has been met.
However, the last contention is as to whether that purported letter of objection is within the 30 days window as stipulated in the Personal Income Tax Act 2011(as amended) as to be within the window of a valid objection, since any objection made after the 30 days, renders the assessment final and conclusive.
See the case of FEDERAL INLAND REVENUE SERVICE V. INNOMACO PHOTO LAB. VOL. 9 ALL NTC Pg. 277 where the court held that where a tax assessment is not contested within the stipulated 30 days time, the assessment becomes final and conclusive. See also the case of FEDERAL INLAND REVENUE SERVICE V. GAZETTA COMMUNICATION LTD VOL. 8 ALL NTC Pg. 3
The disputation is that the Appellant contended that the Respondent response to Appellant’s letter to distrain, in Exhibit BYA 4 was made when the assessment on the Respondent was already a due debt. Meanwhile, the Respondent contended that it did not see the purported Exhibit BYA 6, vis the Demand Notice dated 5th October 2018, and averred that all other letters/documents sent to them were acknowledged. In our opinion, for the fact that the Respondent has shown itself to be consistent in its acknowledgement of Exhibit BYA 1-5, we can only agree with the Respondent that he was not privy to that document. So, counting from the date of 22nd November 2018 when the Respondent received Exhibit BYA 2, the Final and Conclusive Demand Notice, the 30 day window had not elapsed and therefore, the assessment has not become final and conclusive.
Issue two (2) is therefore resolved in favour of the Respondent.
DETERMINATION OF ISSUE THREE: Whether the Appellant has proved its case as required by law to be entitled to judgment and the reliefs sought from this Tribunal
In deciding this issue, the tribunal will examine the various laws relating to the issue vis a vis the arguments canvassed, and the facts elicited during the trial.
PAYE
The Appellant has been consistent on its statement throughout the trial, as evident in paragraph 15 of its witness statement of oath, and also in Exhibit BYA 6 and during cross examination, that it sent a Demand Notice to the Respondent to pay N2,171,878.28 and N6,617,068.94 for 2016 & 2017 years of assessment.
This payment is in respect of its Nigerian staff/ employees who are resident in Bayelsa State. It also covers With-Holding Tax Liability, Development Levy, Bayelsa Infrastructural Levy and Interest & Penalties.
However, the Respondent in its Witness statement on Oath, in paragraph 31 stated that the Appellant never served it letters of 5th October 2020, which is titled: Demand Notice on Outstanding Audit Liabilities;
Although the Appellant insisted that the letter were sent to the Respondent, the Respondent denied receiving the letter as highlighted during cross examination when the Appellants witness was confronted with the following question:
Respondent Counsel: Please take a look at Exhibit 6, it was not acknowledged by the respondent, all the other documents were acknowledge by the respondent.
AW: Yes, on the face of this, you can’t see any acknowledgement.
Since the Appellant was not able to furnish the Tribunal with the acknowledged copy of the said letter, we tend to believe that the Respondent may not have received that Demand Notice dated 5th October 2020, which is in contention. The Respondent wouldn’t have lost anything if it had requested for that Demand Notice at the time when it responded the Appellant in Exhibit PHE 5. Similarly, the Appellant would have also deemed it necessary at this point when Respondent denied receipt of the said demand notice, to have furnished the Respondent the Demand Notice. In our view, both parties didn’t treat this issue with open minds. However, in Exhibit PHE 5 dated 21st December 2018, Respondent acknowledged receipt of Exhibit BYA 3; Final Demand Notice and Exhibit BYA 4- Intention to distrain. From the available facts in Exhibit PHE 5, the existence of a Demand Notice and the amount of the tax liability in contention was communicated to the Respondent. This would be the reason the Respondent in Exhibit PHE 3, provided a month by month salary schedule for the years 2016 and 2017. Thus the Respondent can not completely deny knowledge of the Demand Notice and the tax liability in contention.
According to evidence adduced, in 2016, the Appellant computed the PAYE tax liability in Exhibit BYA 6 in the sum of N9,145,833.07 while the Respondent indicated with evidence in Exhibit PHE 2 & 3 that it had paid N9,253,752.37.
In 2017 also, the Appellant assessed the Respondent through Exhibit BYA 6 to the sum of N6,871,849.98 while the Respondent in Exhibit PHE 2 & 3 paid the sum of N7,220,317.07, these Exhibits are inclusive of automated/system generated Bayelsa State payment receipts.
In view of the above, the Respondent in our opinion had fully discharged its PAYE tax liabilities pertaining to the years 2016 and 2017 to the Appellant.
WITHHOLDING TAX
By the provisions of Section 73(1) of PITA and Section 81 (1) of CITA and other relevant sections in these Act and other statutes, WHT is deducted based on the transactions such as rent, dividends, royalties and payments made to third parties on contract of supplies and other services.
The Appellant in Exhibit BYA 6, assessed the Respondent withholding tax (WHT) in the sum of ₦1,825,000 each for 2016 and 2017 years of assessment. The Respondent contested these assessments and claimed that it had paid the WHT due in the sums of ₦316,250 (Three Hundred and Sixteen Thousand, Two Hundred and Fifty Naira) and ₦430,991 (Four Hundred and Thirty Thousand, Nine Hundred and Ninety one Naira) for 2016 and 2017 years of assessment respectively. These sums tally with the sums the Appellant acknowledged receipt of, as contained in Exhibits BYA 6 and as highlighted during cross examination.
Respondents counsel: Since the said documents you requested from the respondents were not supplied, it was the Best of Judgment that was used to complete the outstanding Tax Liability that the Appellant is demanding from the Respondent, that’s correct?
AW: Partly correct, with respect to the assessment on Withholding Tax only.
Respondent Counsel: Will it surprise you to hear that the Respondents do not have any vehicle lease or hirer agreement with any vendor in Bayelsa State?
AW: It will surprise me because that claim is yet to be supported by documents verifiable proof.
Respondent counsel: You doubt it on behalf of the Appellant, but you have not provided anything to substantiate it.
AW: A Tax Audit is conducted by the Tax Authority pursuant to section 47, 48 and 54 of PITA 2011 as amended, which empowers the Tax Authority to request for information. There is no provision for a taxpayer to ask for evidence or proof before providing the requested information as such we do not require a proof to request for schedule of vehicles which is readily available to the Respondent.
Thus although the Respondent failed to submit the lease and rent agreement as claimed by the Appellant, the Appellant provided schedules for the WHT for 2016 and 2017 years of assessment with names of Individuals/Contractors that have transacted business with the Respondent to support its argument (see Exhibit BAY 6). At this point the burden of proof shifted to the Respondent. See the case of INEME v. INEC & ORS (2013) LPELR-21415(CA) and AKINDOSOYE v IKUGBAYIRE & ANOR Supra.
In response to the Appellants claim on WHT, the Respondent only claimed that it hired some property in Bayelsa State but failed to fault the evidence provided by the Appellant. This was highlighted during cross examination of the RW1.
Appellants counsel: In Paragraph 22, please read Paragraph 22 of your witness statement on oath, (the respondent witness reads) At the Respondent Central office, Port Harcourt as well as its branch in Yenogoa in Bayelsa State, records are kept with regards to the Recruitment of staff, Procurement of Essential materials, and procurement of accessories, lease or hired etc., that’s correct?
RW: Yes.
Appellant: You didn’t front-load any Lease Agreements, Staff Recruitment, Procurement of Essentials, Hiring of vehicles etc.
RW: No, we didn’t provide any documents that’s because our operations are centralized at the Head office in Port Harcourt. So we don’t have decentralized systems where the state can directly engage workers.
Appellant counsel: It’s true that the Appellant requested for Staff Payroll information from the Respondent from the year 2015 to 2017?
RW: That’s not correct, because we did our filings for the Years mentioned, and No because we didn’t provide all but we provided for the year 2016.
Appellant counsel: In exhibit PHE 1, no reference was made as to the rented properties, and agreements, Vehicles hired, leased agreements etc.
RW: Yes to rent, the others are centralized.
Appellant counsel: the Premises you are using in Yenogoa in Bayelsa State are all rented properties?
RW: Yes
Consequently, on this claim, since the Respondent was not able to refute the claims of the Appellant with relevant facts, the Tribunal upheld the Withholding Tax assessment in favour of the Appellant.
BAYELSA STATE INFRASTRUCTURAL MAINTENANCE LEVY
Bayelsa State Infrastructural Maintenance Levy Law CAP. 14, 2003 imposed payment of Bayelsa State Infrastructural Maintenance Levy (BIML), on every company operating the Bayelsa State. Pursuant to Section 2(1). The law states:
The levy shall be paid by every company whether corporate or unincorporated carrying on business in Bayelsa State irrespective of whether its headquarters is located outside the State’.
Pursuant to this enabling law, the Appellant assessed the Respondent to BIML in the sum of ₦300,000 (Three Hundred Thousand Naira) for each of the 2016 and 2017 years of assessment as contained in Exhibit BYA 6. The Respondent claimed that it’s operation or line of business is not included in the schedule to this Law. During cross examination the following was elicited from the AW1:
Respondents counsel: Have you come across the Bayelsa State Infrastructure Maintenance Levy Law 2003, nowhere in that law is the respondent line of business mentioned as one of those liable to pay Infrastructural Maintenance Levy, that’s correct?
AW: That’s correct.
Respondents counsel: And yet you included it in your Demand Notice you sent to the Respondent?
AW: Yes, because the law provides for ‘any other Business’(sic)
Respondent counsel: Can you please mention to this Tribunal, how much ‘any other business’ are meant to pay as mentioned in the Law.
AW: I cannot remember.
Respondents counsel: Can I suggest to you that the amount for any other business is five hundred thousand Naira (500,000.00) “I cannot remember” Please go to paragraph 16 of your witness statement on oath, under item1, 2016 summary of findings, you wrote three hundred thousand naira (300,000.00), that’s true?
AW: Yes
Having being confronted with the provision of the Law, the Appellant proceeded to argue that the Respondent business was categorized as medium scale business under manufacturing companies. After careful review of the submission of the two parties and the provisions of the said Law, the Tribunal is of the view that the Respondent is an incorporated company registered in Nigeria and it’s carrying on business in Bayelsa State with share capital of 10 million of 50 kobo each. Although, the Respondent’s claimed that it can not be charged for this levy, it is clear that as a going business concern, its operation is not exempt from the BIML, under Section 2 of that Law.
The Tribunal has therefore reduced the assessment to ₦100,000 (One Hundred Thousand Naira) as against what the Appellant originally imposed, as the Respondent is a small-scale company based on its share capital.
In furtherance to the above, Section 3(1) of the BIML, has imposed penalty on defaulters that failed to pay as required by the provisions of the law. Section 4 of the Law states that:
‘Where a company fails to pay the levy payable by it on or before the date on which the levy is due and payable, that company in addition to its liability to the levy, is liable to pay an additional levy at the rate of ten per centum per month upon the amount of levy that it has failed to pay to be computed from the date on which the levy become due and payable’.
From the above section, the Respondent having failed to pay the levy payable by it on or before the date as specified in Section 3(1) of the Law, will be liable to a ten (10) per cent as penalty. To this end, the Respondent will be liable to additional levy of ₦10,000 (Ten Thousand Naira).
The Tribunal has therefore resolved the BIML in favour of the Appellant.
Development Levy
Development levy is payable on/by all individuals working within the state. Therefore, the sum of ₦8,100 (Eight Thousand, One Hundred Naira) and ₦6,200 (Six Thousand, Two Hundred Naira) payable as Development Levy is upheld by the Tribunal.
Interest Payable
The Tribunal in line with paragraph 8 of the Fifth Schedule of the FIRS (Establishment) Act 2007 on Establishment, Jurisdiction, Authority and Procedure of the Tax Appeal Tribunal, has the power to vary tax assessments before it, vis:
“The Tribunal may, after giving the parties an opportunity of being heard, confirm, reduce, increase or annul the assessment or make any such order as it deems fit.”
In pursuance of this, the Tribunal proceeds to vary the extant assessment. The
Appellant in its computation used 21 per cent for sum due as interest. The Tribunal is of the view that the interest should be at the prevailing monetary policy rate as provided in Section 74 (1) of Personal Income Tax Act 2011 (as amended).
“Any person or body corporate who, being obliged to deduct tax under section 69,70,71, or 72 of this Act, fails to deduct, or having deducted, fails to remit such deductions to the relevant tax authority within thirty days from the date the amount was deducted or the time the duty to deduct arose, shall be liable to a penalty of an amount of 10 per cent of the tax not deducted or remitted in addition to the amount of tax not deducted or remitted plus interest at the prevailing monetary policy rate of the Central Bank of Nigeria”
In this circumstance, the Tribunal has applied 14 per cent, as this was the prevailing monetary policy rate for year 2016.
Conclusively, the position of the Tribunal is presented in the revised assessment as shown below:
REVISED ASSESSMENT FOR 2016 AND 2017 YEAR OF ASSESSMENT
|
2016 |
2017 |
|||
|
PAYE |
9,154,833.09 |
6,871,849.99 |
||
|
WHT |
1,825,000.00 |
1,825,000.00 |
||
|
BIML |
100,000.00 |
100,000.00 |
||
|
Grand Total |
11,079,833.09 |
8,796,849.99 |
||
|
PAYE Remittences |
9,253,752.37 |
7,220,317.07 |
||
|
WHT Remittances |
326,250.00 |
(9,580,002.37) |
430,991.00 |
7,651,303.07 |
|
Net |
1,499,830.72 |
1,145,541.92 |
||
|
Penalty |
139,983.07 |
104,554.19 |
||
|
Interest (14%) |
195,976.30 |
146,375.87 |
||
|
BIML |
10,000.00 |
10,000.00 |
||
|
Development Levy |
8,100.00 |
354,059.39 |
6,200.00 |
267,130.06 |
|
Net sum payable |
1,853,890.11 |
1,412,671.98 |
||
Total tax liability ₦3,266,562.09
From the computations above, the total tax liability payable amounts to the sum of ₦3,266,562.09 (Three Million, Two Hundred and Sixty Six Thousand, Five Hundred and Sixty Two Naira, Nine Kobo).
The Tribunal therefore orders as follows:
(1) The Respondent is to pay to the Appellant a total sum of ₦3,266,562.09 (Three Million, Two Hundred and Sixty Six Thousand, Five Hundred and Sixty Two Naira, Nine Kobo).
(2) There is no order as to costs.
This is the judgement of the Tribunal
Dated this __ 16th _____ day of __ June___ 2021.
Signed:
Hon. Prof. Obehi Adetokunbo Odiase-Alegimenlen Chairman
Hon Dr. Ala-Peters David Hon. Mrs. Hilda Ofure Ozoh
Member Member
Hon. Barr. Ajoku Vitalis Friday Hon. Dr. Olatunde Julius Otusanya Member Member
REPRESENTATION:
I.M.Beinbein. - Appellant
O. D Nengim, ESQ - Respondent