FIRST BANK OF NIGERIA -VS- NIGER STATE BOARD OF INTERNAL REVENUE

IN THE TAX APPEAL TRIBUNAL (NORTH CENTRAL ZONE)

HOLDEN IN JOS

ON WEDNESDAY, THE 13th DAY OF APRIL, 2022

APPEAL NO: TAT/NCZ/007/2021

MOTION NO: TAT/NCZ/016/2021

BEFORE:

RICHARD UMAR BALA COMMISSIONER (CHAIRMAN)

ZAIDU ABDULLAHI COMMISSIONER

UKERA S. EMMANUEL COMMISSIONER

OGBAENYI I. CHIKWENDU COMMISSIONER

SAIDU AHMED COMMISSIONER

BETWEEN

FIRST BANK OF NIGERIA - APPELLANT

AND

NIGER STATE BOARD OF INTERNAL REVENUE - RESPONDENT

RULING

INTRODUCTION

This is a motion challenging the jurisdiction of this Tribunal to hear and determine the appeal herein.

THE MOTION

By a motion dated and filed on 07/12/2021, the Respondent challenged the jurisdiction of this Tribunal to hear and determine the Appellant’s appeal to this Tribunal dated 31/08/2021 and filed on 07/12/2021. The appeal was brought against the decision/action of the Niger State Board of Internal Revenue (NSBIR) whereby, after several correspondences between the parties in respect thereof, it issued a “Notice of Refusal to Amend Assessment” to the Appellant to pay alleged fine of N43,000,000 (revised to N31,500,000) for failure to file with the Respondent monthly returns of new individual customers for the period ninety-one months covering 2011 to 2021 tax years. The Appellant based its appeal on four grounds including:

1) that under section 332(2) of the Companies and Allied Matters Act (CAMA) 1990, the Appellant was not obliged to preserve its accounting records for more than six years, and that the fine for the period June 2011 to March 2021 was statute barred.

2) that the Respondent assumed that the Appellant had not been filing monthly returns for eleven years without having recourse to returns filed by the Appellant which ought to be in Respondent’s custody.

3) that the issue by the Respondent of fine of N43,000,000 (revised to N31,500,000) and Notice of refusal to Amend was contrary to section 49(3) of the Personal Income Tax Act (PITA) as amended.

4) that the fine of N59,000,000, revised to N43,000,000 and Notice of refusal to Amend were baseless, unfounded, arbitrary, illegal null and void and liable to be set aside.

The grounds of appeal were supported by a 13-paragraph affidavit.

The Respondent on the other hand based its motion on 14 grounds as follows:

1) That the Appellant’s appeal was premature.

2) That the appeal borders on section 49(1)-(3) of PITA.

3) That failure to comply with section 49(1) and (3) PITA constituted an offence.

4) That the Respondent was duty bound to ensure compliance by correspondences and bring to bear the punishment to the knowledge of the Appellant for contravening the same.

5) That section 49(3) PITA prescribes the punishment upon conviction for contravening the law.

6) That the Respondent is duty bound to establish a prim facie case of non-compliance against the Appellant.

7) That the notices of demand served on the Appellant and all correspondences were preparatory to the institution of criminal action against the Appellant.

8) That the grounds for the Appellant’s appeal ought to be their defence in the charge intended to be filed against them.

9) That the amount in dispute is only payable upon conviction of the Appellant for noncompliance with the law in cases where the Appellant contested same

10) That where the Appellant concede to the demand notice served for failure to file monthly returns and pay same, criminal proceeding against it is obviated.

11) That the amount in dispute is not a product of the conventional tax assessment/audit but penalty for contravention of the law, payable on conviction.

12) That grounds 3,6 and 11 as well as the witness statement on Oath in support of the Notice of Appeal of the Appellant clearly confirm that the amount in dispute is arrived at by way of fine for failure to comply with the law.

13) That this Honourable Tribunal lacks the jurisdictional competence to adjudicate on criminal matters or appeal.

14) That this matter is premature and is brought in bad faith.

The Respondent supported the motion with a 5-paragraph affidavit, and a Written Address to which the Appellant filed a Reply followed by the Respondent’s Reply on Points of Law.

ISSUES FOR DETERMINATION

In its Written Address, the Respondent distilled one issue for determination, to wit:

Whether having regard to the clear wordings of the PITA and the FIRS Act establishing this Honourable Tribunal, this Tribunal is said to have the requisite jurisdiction to entertain the appeal of the Appellant?

ARGUMENTS

1) The pith of Respondent’s argument in its Written Address is that the Appellant contravened section 49 of PITA which violation is criminalized under subsection 3 of that section. The Respondent further argues that under its establishment Act, the Tribunal is not vested with criminal jurisdiction which renders it incompetent to entertain the Appellant’s appeal against Respondent’s demand for payment of fine, which the Respondent maintained was penalty for contravention of section 49 of PITA, and not payment arising from conventional tax assessment, nor audit. Respondent further argued that the Appellant’s appeal was premature. Respondent cited authorities including CHANG & ORS V. SAHJURY & ORS (1998) LPELR-6443 (CA). Countering Respondent’s counsel, the Appellant in its Written Address in Reply to Respondent maintained that its appeal to the Tribunal was for reliefs relating to the proper and purposeful construction or interpretation of the provision of section 49(3) of PITA, particularly the amount payable by the Appellant to the Respondent as fine for its alleged failure to render returns for its new individual customers. Appellant’s counsel maintained that a cause of action which could not be denied by the Respondent accrued to it and referred to various correspondences from the Respondent which threatened its civil rights and justified its appeal to this Tribunal. Appellant maintained that the issue in dispute was the amount of fine payable and referred particularly to ground 4(g) of Respondent’s motion which stated that where the Appellant concede to the demand notice served for failure to file monthly returns and pay same, criminal proceeding against it is obviated. Appellant further averred that it had paid N2,200,000 as fine for the period 2011 to 2016, insisting that the Respondent had elected to collect fine rather than prosecution and that the dispute was about the amount of fine payable; a cause over which counsel insists the Tribunal is vested with jurisdiction and for which Appellant approached the Tribunal, urging that the Respondent shall not be allowed to approbate and reprobate at the same time. Appellant cited authorities including MOHAMMED NDEJIKO MOHAMMED & 4 ORS V. MOHAMMED HUSSAINI & ANOR (1988) 14 NWLR Pt. 584 PAGE 108 AT PAGES 139-140. In its Reply on Points of Law, the Respondent emphasized that the dispute is rooted in section 49(1) and (3) of PITA and that the Appellant erroneously subsumed its contention under “cause of action.” Respondent further stated that Appellant had admitted the fact of its commission of the offence and that the contention was neither over- nor wrong-assessment, but that it was asked to pay fine.

RESOLUTION OF ISSUE

Now to determine the lone issue before this Honourable Tribunal, it is important to examine various enactments and authorities relating thereto. To begin with, it is crystal clear that section 49(3) criminalized any violation of section 49 PITA. It is also not contested that this Tribunal is under paragraph 20 (3) of the Fifth Schedule to the FIRS Establishment Act, 2007, deemed a civil court. However, one necessary question must be answered in order to make progress in the resolution of the present issue herein; that is: how would the Tribunal come to the conclusion that a tax payer has committed a crime over which it shall decline jurisdiction to adjudicate? To answer this question and deal expeditiously with the issue herein, recourse shall be had to the FIFTH SCHEDULE FIRS ESTABLISHMENT ACT 2007 which deals with the Establishment, Jurisdiction, Authority and Procedure of the Tax Appeal Tribunal. Paragraph 13(1) of the Schedule provides thus:

“13. -(1) A person aggrieved by an assessment or demand notice made upon him by the Service or aggrieved by any action or decision of the Service under the provisions of the tax laws referred to in paragraph 11, may appeal against such decision or assessment or demand notice within the period stipulated under this Schedule to the Tribunal.” Similarly, paragraph 14 provides as follows: “14. Service aggrieved by the non-compliance by a person in respect of any provision of the tax laws, it may appeal to the Tribunal where the person is resident giving notice in writing through the Secretary to the appropriate zone of the Tribunal.” it is relevant to note from the foregoing two paragraphs that there is no bar against the tax payer or the Service, either by operation of the law or as a requirement of the Tribunal to enforce, at the point of filing an appeal, from approaching the Tribunal once aggrieved by an assessment or demand notice made upon him, or any action or decision of the Service with respect to an appeal by a tax payer, or by the non-compliance by a person in respect of any provision of the tax laws, with respect to an appeal by the Service. (underline for emphasis). Under these paragraphs it makes no difference whether the grievance is in respect of a demand for payment of a fine (connoting criminality) or a tax assessment/audit, or in respect of a non-compliance of a criminal nature. The overriding requirement is that the tax payer, or the Service, as the case may be, is aggrieved. Under ORDER VIII of the TAX APPEAL TRIBUNAL (PROCEDURE) RULES 2021, once an appeal is filed in this Tribunal under those foregoing two paragraphs by an Appellant, the Respondent shall within 30 days after the service of the appeal, enter appearance by delivering to the Secretary of the Tribunal a Respondent’s Reply stating therein whether he contests the appeal. Again under the said ORDER VIII, the Respondent is required to enter appearance irrespective of the nature of the subject-matter of appeal ( I.e. whether criminal in nature or not). Now paragraph 12 of the Schedule provides thus:

“12. Where in the course of its adjudication, the Tribunal discovers evidence of possible criminality, the Tribunal shall be obliged to pass such information to the appropriate criminal prosecuting authorities, such as the office of the Attorney-General of the Federation or the Attorney-General of any state of the Federation or any relevant law enforcement agency. Thus, a community reading of paragraphs 13, 14 and 12 of the Fifth Schedule to FIRS Establishment Act, 2007 leaves no one in doubt as to how the Tribunal may arrive at the conclusion of “possible criminality” and what to do with such a conclusion. That is to say, in order to resolve the question of jurisdiction of this Tribunal in the instant appeal, hinged on the alleged criminal nature of the subject-matter of appeal, the Respondent shall duly enter appearance by filing its Respondent’s Reply, there shall be evidence duly and sufficiently placed before this Tribunal in the due course of its proceedings to enable it to judicially and judiciously reach a conclusion, if necessary, on possible criminality in accordance with paragraph 12 of FIRS Establishment Act 2007. The Respondent may choose if it so decides of its case, to come by way of motion to set aside the proceedings in the course of adjudication after entering its appearance, if it considers that it has established by evidence a case of possible criminality against the Appellant.

The law is settled that where a statute prescribes a method of doing a thing, that method should be complied with: In NWANKWO & ORS V. YAR’ADUA &ORS (2010) LPELR-2109 (SC), it was again emphasized at page 42 thus:

“… on the issue or principle in respect of the laid down procedure in a statute or Rules of Court … It is now firmly established that where a statute lays down a procedure for doing a thing, there should be no other method of doing it.”

This procedure of course means that substantive facts may be ventilated as parties may choose, though not to the standard of criminal proof, but sufficient to enable the Tribunal to reasonably reach a conclusion on possible criminality in this appeal, and thus be reasonably enabled to determine first of all other issues (if it would have to determine them in the end), the issue of its jurisdictional competence to hear and determine the substantive issues in the appeal. On whether a preliminary objection to the jurisdiction of a court and substantive matter can be taken together, the Court of Appeal in AIG-IMOUKHEDE V. UBAH & ORS (2014) LPELR-23965 (CA) has this to say on pages 12 to 14: "It is ...an exhibition of wisdom to have the issue of jurisdiction or competence determined before embarking on the hearing and determination of the substantive matter. See Oloba v Akereja (1988) 3 NWLR (pt. 84) 508 SC."

“Contrary to the contention of learned senior counsel for the appellant that the learned trial judge did not follow the above advice and therefore erred in hearing the preliminary objection on service together with the substantive suit, the Fundamental Rights (Enforcement Procedure) Rules 2009 made specific provision allowing the preliminary objection to be heard together with the substantive suit. Order VIII provides thus: ….
The learned trial judge consequently followed the procedure laid down in the Law. He heard the applications together, gave his ruling on the preliminary objections before tackling the substantive application...”

It is very clear from the foregoing paragraph 12 (supra), read in community with paragraphs 13 and 14 (supra), and the authorities cited above, that until the Tribunal has come to the conclusion of “possible criminality” in the course of its due adjudication and on the basis of evidence before it in this appeal, (or any appeal before it), it remains deemed under paragraph 20 (3) (supra) to be sitting in its civil capacity. (underline for emphasis). Any other approach will be contrary to the relevant statutory provisions cited above.

In the circumstance, the Tribunal finds that it is vested with the requisite jurisdiction. The Respondent’s Preliminary objection is hereby refused. Respondent is accordingly ordered to enter its defense within 14 days from the date of this ruling.