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The South-South Zone of the Tax Appeal Tribunal holding in Benin has nullified the N1.1 billion tax assessment issued by the Bayelsa State Board of Internal Revenue against Popham Walter Odusote Ltd for the years 2017 to 2020 for failure to follow proper procedure as laid down by laws.
The Tribunal panel unanimously held that the assessment issued by the Bayelsa State Board of Internal Revenue was invalid, that under the law, a taxpayer must first be requested to deliver returns before an assessment can be made, and failure to observe this procedure renders the assessment null and void.
However, the Tribunal directed Popham Walter Odusote Ltd to cooperate with the Bayelsa State Board of Internal Revenue by providing all relevant documentation for verification on tax assessment.
From facts, the Appellant- Popham Walter Odusote Ltd, a company based in Lagos State, was displeased with the assessment and demand notice of the Bayelsa State Board of Internal Revenue demanding the sum of N1.1b as (PAYE) tax.
The company argued that it does not owe any tax to the Bayelsa State Board of Internal Revenue since all their staffs are resident in Lagos State and their PAYE taxes have been remitted to the Lagos State Internal Revenue Service that the only contract it had relating to Bayelsa was a consultancy project with the Nigerian Content Development and Monitoring Board (NCDMB) and not for the years under assessment.
In defense, the Respondent- Bayelsa State Board of Internal Revenue, argued that the company carried out business operations within Bayelsa State where it deployed over sixty (60) employees and subcontractors. The Bayelsa State Board of Internal Revenue stated that despite repeated notifications and requests, the company failed to file returns or remit PAYE taxes, and as such, it exercised its power to issue a Best of Judgment (BOJ) Assessment under PITA.
In a well-considered judgment, the Tribunal held that the Bayelsa State Board of Internal Revenue failed to prove that it properly notified Popham Walter before conducting the tax audit or issuing the assessment.
The Tribunal stated that there was no proof that the “Notification of Tax Audit Exercise” letter was ever received by Popham Walter Odusote Ltd, and as such, the condition precedent for issuing a valid assessment was not fulfilled.
The Tribunal further noted that while it was clear Popham Walter Odusote Ltd had some business presence in Bayelsa State through contracts at the Agbami field, there was insufficient evidence to establish that its employees were resident in the State for the purpose of (PAYE) taxation.
The Tribunal, directed Popham Walter Odusote Ltd to cooperate with the Bayelsa State Board of Internal Revenue by providing all relevant documentation for verification. These include the list of employees and subcontractors deployed to Bayelsa, the company’s payroll schedules and PAYE remittance details, as well as copies of its technical service contracts, timesheets, and all records relating to the Bayelsa State Infrastructural Maintenance Levy (BIM).
The Tribunal declared that the ?1,131,999,976.00 (One Billion, One Hundred and Thirty-One Million, Nine Hundred and Ninety-Nine Thousand, Nine Hundred and Seventy-Six Naira only) assessed as PAYE for the years 2017 to 2020/2021made in the demand letter and the Final Demand Notice issued by the Bayelsa State Board of Internal Revenue, as null and void.
The Tribunal upheld that once a taxable person, individual or Company operates in the territory of a Tax Authority, that Tax Authority has become a Relevant Tax Authority, notwithstanding whether or not that individual or business will eventually be liable to tax.
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