IN THE TAX APPEAL TRIBUNAL IN THE SOUTH-SOUTH ZONE HOLDEN AT BENIN

APPEAL NO: TAT/SSZ/026/2023

BETWEEN:

TRATRIX ENGINEERING LIMITED                                    APPELLANT AND

FEDERAL INLAND REVENUE SERVICE-------------------- RESPONDENT

BEFORE:

PROF OBEHI A. ODIASE-ALEGIMENLEN                         CHAIRMAN

DR DAVID ALA-PETERS                                                          COMMISSIONER

MRS HILDA OFURE OZOH                                                     COMMISSIONER

MR VITALIS FRIDAY AJOKU                                                 COMMISSIONER PROF OLATUNDE JULIUS OTUSANYA                             COMMISSIONER

THURSDAY 9^TH MAY 2024

JUDGEMENT

This Appeal is brought before the Tax Appeal Tribunal (South-South Zone Sitting in Benin), dated and filed on 4^th July 2023 in Suit No. TAT/SSZ/026/2023.

BRIEF FACTS

The Appellant is a registered engineering company with the Corporate Affairs Commission that engages in engineering, construction and other general contracts for its clients including the Delta State Government while the Respondent is a Federal Government Agency saddled with the statutory responsibility for the Assessment, Collection, and Accounting for all tax revenue accruing to the Government of the Federal Republic of Nigeria; as well as the administration of the various tax laws in Nigeria by virtue of the Federal Inland Revenue Service (Establishment) Act 2007.

The Appellant being dissatisfied with the refusal of the Asaba Micro and Small Tax Office of the Federal Inland Revenue Service not to cancel the erroneous Value Added Tax (VAT) Returns filed for April 2020; and the refusal to clear the liability and penalty generated that are indicated on Appellant’s Taxpromax Portal for April, 2022 appealed to the Tax Appeal Tribunal, South South Zone on the grounds set out below:

1.                 GROUNDS OF APPEAL

I.                   The Appellant executed a contract for Delta State Government and payment in the sum of ₦114,698,652.47K was made in March 2022.

II.                Value Added Tax in the sum of amount of ₦6,036,764.51K was deducted from source by Delta State Government.

III.             In April, 2022, while filing tax returns, the Appellant erroneously imputed the withheld sum of ₦6,036,764.51 K (Six Million, Thirty Six Thousand, Seven Hundred and Sixty Four Naira, Fifty One Kobo) by Delta State Government into box 180 and this generated the liability indicated on the Appellant’s Taxpro Max portal, for April, 2022.

IV.            Delta State Government has since remitted the sum of ₦6,036,764.51K to the Federal Inland Revenue Service on behalf of the Appellant.

V.               On March 6, 2023, the Appellant wrote to the Respondent, highlighting the erroneous declaration and attaching Evidence of remittance to Federal Inland Revenue Service by Delta State Government.

VI.            However, all entities and demands made to the Respondent to correct the erroneous declaration of ₦6,036,764.51K as outstanding VAT owed by the Appellant, proved futile as the Respondent has refused to correct this error.

VII.         The  refusal  of  the  Respondent  to  correct  the  erroneous  declaration  of

₦6,036,764.51K as outstanding VAT owed by the Appellant, has left the said amount standing to the debt of the Appellant and the Appellant is unable to process tax clearance.

VIII.      Any other ground(s) as may be argued at the hearing of the appeal.

In view of the above, the Appellant sought the following reliefs from this Tribunal:

I.                   A DECLARATION that the sum of ₦6,036,764.51K indicated on the Taxpromax portal of the Appellant for April, 2022 as Value Added Tax liability, is erroneous and unjustifiable.

II.                A DECLARTATION that the Appellant is not liable to the Respondent in the sum of ₦6,036,764.51K as its Value Added Tax for April, 2022.

III.             AN ORDER setting aside and removing the sum of ₦6,036,764.51K as Appellant’s Value Added Tax liability for April, 2022, since same has been remitted to the Respondent.

IV.            AN ORDER directing the Respondent to correct the erroneous declaration of

₦6,036,764.51K as Appellant Value Added Tax liability for April, 2022.

V.               AN ORDER restraining the Respondent from disturbing, interfering with or shutting down the operations of the Appellant within the jurisdiction of the Respondent.

VI.            Any other Order(s) as this Honourable Tribunal may deem fit in the circumstance of this Appeal.

In response, the Respondent filed its Respondent Reply dated 23^rd August 2023, acknowledging receipt of the Notice of Appeal and indicated its intention to contest the Appeal on the following grounds:

GROUND 1

The Respondent is aware that it is statutory for the Appellant or any taxpayer to self-assess itself to tax.

PARTICULARS

1.     That it is within the statutory right of the Appellant to assess itself to tax.

2.     For the relevant year the Appellant assessed itself to tax, its tax file was not domiciled in the Asaba Micro and Small Tax Office (MSTO, Asaba), as its tax file was transferred from MTO Lagos Island in September 2022.

3.     That the Respondent Tax Pro-max is an automated platform where the Appellant and any taxpayer has access to assess itself to tax and pay the assessed amount.

4.     That the Appellant assessed itself to tax and did not pay the assessed amount thereby accruing penalty and interest as automated in the tax pro-max platform.

5.     That the Respondent has no power what so ever to correct or vacate a self- assessment made by a taxpayer.

GROUND 2

The Respondent has statutory powers to out-rightly deny, withhold or give temporary Tax Clearance to a defaulting Taxpayer.

PARTICULARS

1.     The Respondent is a Federal Government Agency charged with the responsibility of Assessment, Collection, and Accounting for tax revenue accruing to the Government of the Federal Republic of Nigeria.

2.     The evidence of tax assessed and paid is the Tax Clearance Certificate, which the Respondent is bound to release to a taxpayer to show that the taxpayer is not indebted to the Service.

3.     The Appellant in this case has never applied for Tax Clearance Certificate or notified the Asaba Micro and Small Tax Officer of Tax Clearance after it assessed itself to tax.

4.     It is obvious the Appellant is indebted to the Respondent as shown in the tax pro- max automated platform.

5.     That the Respondent has never had any correspondent with the Appellant except the letter it sent to it on the 10^th of March, 2023 alleging wrong filing.

6.     That the Appellants allegations are subject to investigation by the Asaba Micro and Small Tax Office as the alleged tax remittance by the Delta State government is handled by the Government Business Tax Office (GBTO), the Appellant’s file was recently transferred from Lagos MTO and the date and time of the alleged wrong does not fall within the purview the file was domiciled at the Asaba MSTO.

7.     The Appellant is attempting to use the law to arm-twist the Respondent into issuing tax clearance and to estop it from carrying out its statutory duties diligently.

Thus, the Respondent prays this Honourable Tribunal for the following orders:

1.     A declaration that the Respondent does not have the right to correct and or vacate a self-assessment made by a taxpayer that has accrued penalty and interest.

2.     An order of this Honourable Tribunal Mandating the Appellant to subject itself to investigation and proper assessment.

3.     An order of this Tribunal dismissing the Appellant’s Appeal for lack of merit.

TRIAL

The Appellant opened its case on WDNESDAY 18^Th OCTOBER 2023 by calling its sole Witness (AW1) - Mr. Emmanuel Ogbona, an Accountant and an Employee of the Appellant. He adopted his Written Statement dated 12^th October 2023. In support of its case, the Appellant tendered two (2) Exhibits (Exhibit TEN 1 and Exhibit TEN 2). Appellant gave evidence and was duly cross examined after which the Appellant closed its case that same day. The Respondent opened its defense on FRIDAY 17^TH NOVEMBER, 2023 by calling its sole witness; Mr. Ikheloa Akhere John (RW1). He adopted his Written Statement dated 23^rd of August, 2023 and tendered two (2) Exhibits (Exhibit FIRS 1 – Exhibit FIRS 2). The Respondent Witness (RW1) was then cross-examined by the Appellant's counsel, further to which, the Respondent closed its case on WEDNESDAY 21^st FEBRUARY, 2024. The Matter was adjourned to WEDNESDAY 24^TH APRIL 2024 for Adoption of Final Written address. Parties adopted their Final Written Addresses on the said date and Judgment was reserved for today the 9^TH MAY, 2024.

ISSUES FOR DETERMINATION

The Respondent Counsel, Joseph N. Nwokolobia, in its final written address, submitted the following issues for determination:

Whether the Respondent having prescribed a way to remedy the error or mistake made by the Appellant itself, should be held liable where the Appellant insists on its own method of approaching the Tribunal without exhausting the remedies provided.

Appellant Counsel, O. N. Eze, in response, formulated two (2) issues for determination which are:

(1)   Whether the Respondent was right to impose the payment of tax already remitted to it.

(2)   Whether failure of the Appellant to follow the Respondent’s procedure for addressing complaints and grievances denies the Appellant the right to reliefs sought.

From the evidence tendered and arguments canvassed by the Counsels in this matter, the Tribunal is of the view that only one Issue calls for determination.

Whether from the preponderance of evidence in this matter, the Appellant has proved its case to be entitled to the reliefs sought in this Appeal.

DETERMINATION OF THE ISSUE

Whether from the preponderance of evidence in this matter, the Appellant has proved its case to be entitled to the reliefs sought in this appeal.

It is the Appellant case that it executed a contract for Delta State Government in 2022 and a Value Added Tax in the sum of N6,036,764.51 (Six Million, Thirty Six Thousand, Seven Hundred and Sixty Four Naira, Fifty One Kobo only) that was deducted from source by the Delta State Government and remitted to the Federal Inland Revenue Service. However, in April, 2022, while filing tax returns, the Appellant erroneously imputed the withheld sum of N6,036,764.51 (Six Million, Thirty Six Thousand, Seven Hundred and Sixty Four Naira, Fifty One Kobo only) by Delta State Government into box 180 and this generated the liability indicated on the Appellant’s Taxpro Max portal, for April, 2022. That all entries and demands made to the Respondent to correct the erroneous declaration of N6,036,764.51 as outstanding VAT has proved futile as the Respondent has refused to correct this error.

On its own part, the Respondent argued that the Appellant wrote just one letter to the Asaba Tax office as the Exhibit TEN 2 tendered in evidence was not stamped or acknowledged and therefore should be discountenanced by the Tribunal. That It should have written to the Government Business Tax Office (GBTO) from which it claimed the Office of the Accountant General of Delta State deducted and remitted to the GBTO, for the GBTO to investigate, confirm and clear it before same is forwarded to the tax office for issuance of Tax Clearance Certificate (TCC) to write a letter to its head office to correct the alleged mistake. That the Appellant did not exhaust or do a follow up to make sure its letter or mistake done by itself is addressed rather it sat in the confines of its office and waited for three months to approach the Tribunal instead.

From the above and also from evidence during the trial, it is clear that the Appellant VAT for April 2022 which was deducted at source by the Delta State Government and remitted to the Respondent is not in contest as the Respondent neither contradicted the Appellant nor denied receipt of the remittance. The grouse of the Respondent seems to be the procedure in demanding for the correction of such mistake or error.

It is on record that the Appellant upon discovery of its error notified the Respondent through Exhibit TEN 2, a letter dated 11th October, 2022 and subsequently via another letter dated 6^th March, 2023, (Exhibit TEN 1) requesting a correction of the error.

Section 24 of the Federal Inland Revenue Service (Establishment) Act 2007 makes provision for the correction of such mistakes and errors. Section 90 of the Companies Income Tax ACT (CITA) 2007 (as amended) provides for relief in respect of error or

mistakes, that Taxpayers should make an application in writing to the Service, that is the Federal Inland Revenue Service (FIRS) for such reliefs. Thus, the Appellant, writing to the Respondent in Exhibits TEN 1 & 2, in our view, has taken the appropriate approach for the correction of such errors. It is not clear to the Tribunal what the position of the Respondent is. Do they mean that if a taxpayer erroneously makes an under payment, the tax authority has the right to demand for the correct payment or make an Additional Assessment. And if a tax payer makes a honest mistake, that it can’t be corrected? This does not reflect the principle of equity, fairness and justice as enshrined in the administration of taxation and indeed the constitution.

The Tribunal does not agree with the excuse of the Respondent that the taxpayer file on this refund was being handled by Lagos GBTO and was transferred to Asaba MSTO and so the Appellant should have written to Lagos GBTO and that Appellant wrote only one letter. It is not clear to the Tribunal how many letters have to be written before the Respondent wakes up and Act. Under the Law empowering the Appellant to write, one application in writing should suffice or be enough to spur the Respondent to action. Both the FIRSEA 2007 and CITA 2007 recognize the FIRS (Respondent) as a body responsible for the Administration of the various taxes under its purview. The various offices across the country are created for administrative convenience as sub unit to enhance the performance of the Service. Thus where ever an application is made to the Service is immaterial; it is the duty of the Respondent to channel or redirect such request or correspondence to the appropriate office or unit to handle the matter.

The Tribunal does not also agree with the Respondent argument that it has an administrative/Internal process of correcting such errors and thus the Appellant must follow such procedure. The Tribunal is not aware of any statutory provision that rectifying any error in the Respondent’s Tax Promax Portal, can only be done online. Even if we discountenance the Appellant position that the online platform for refund is not working, it is trite law that administrative procedures/rules cannot take the place of substantive laws. See the case of OGUNA V EBINUM & ORS (2019) LPELR-47831

The Respondent also made heavy weather on the judicial precedence that when a law provides for a way of doing things, the failure to adhere to the procedure, renders it a nullity where it cited the case of OJOG V. DUKE (2003)13 NWLR (PT 841) P.581 at 618. The Tribunal totally agrees with this position canvassed by the Respondent. However, the Respondent forgot to avert its mind to the fact that the process it canvasses in Exhibit FIRS 2 is an internal process put in place by the Respondent. The law on correction of errors as has been elucidated above requires the Appellant to write to the Board and that is what the Appellant has done.

Conclusively, based on the evidence in this matter, it is our opinion that there is merit in the Appellant case. Judgement is hereby delivered in favour of the Appellant. Appellant Prayers

(iii) , (iv) and (vi) are granted while Respondent reliefs/counter claims dismissed. The Tribunal hereby orders as follows:

(1)   The Respondent should set-aside and remove the sum of ₦6,036,764.51K (Six Million, Thirty-Six Thousand, Seven Hundred and Sixty-Four Naira, Fifty-One Kobo only) as Appellant’s Value Added Tax liability for April, 2022, since same has been remitted to the Respondent.

(2)   The Respondent should correct the erroneous declaration of ₦6,036,764.51K (Six Million, Thirty-Six Thousand, Seven Hundred and Sixty-Four Naira, Fifty-One Kobo only) as Value Added Tax liability for April, 2022.

(3)   The Respondent is hereby restrained from disturbing, interfering with or shutting down the operations of the Appellant within the jurisdiction of the Respondent in respect of the VAT for April 2022.

This is the unanimous judgement of the Tribunal

Dated this    9^th      day of     May    2024.

Signed:

Hon. Prof. Obehi Adetokunbo Odiase-Alegimenlen

Chairman