By Bolanle Oniyangi

 INTRODUCTION                                                                               

Tax Appeal Tribunal (TAT) is established in accordance with Section 59(1) of the Federal Inland Revenue Service (Establishment) Act, 2007.[1] The TAT formally took off pursuant to the Tax Appeal Tribunal Establishment Order, 2009 issued by the Hon. Minister of Finance, Federal Republic of Nigeria as published in the Federal Government Official Gazette No 296, Vol. 96 of 2nd of December, 2009. By this enactment, the TAT replaces the former Body of Appeal Commissioners (BAC) and Value Added Tax (VAT) Tribunals.[2]

As part of the ongoing reforms of the tax system in Nigeria, the TAT is set up by the Federal Government to adjudicate on all tax disputes arising from operations of the various Tax Laws as spelt out in the Fifth Schedule to the FIRS (Establishment) Act, 2007. Specifically, the Fifth Schedule states that the TAT has jurisdiction over disputes arising from the under listed laws;

  1. Companies Income Tax Act (CITA)
  2. Petroleum Profit Tax Act (PPTA)
  3. Personal Income Tax Act (PITA)
  4. Capital Gains Tax Act (CGT)
  5. Stamp Duties Act (SDT)
  6. Value Added Tax Act (VAT)
  7. Taxes and Levies (Approved list for collection) Act as well as other laws, Regulations, Proclamations, Government notices or Rules related to these Acts.

Consequently, the Tax Appeal Tribunal Chairmen and Commissioners were inaugurated on the 4th of February, 2010 while the secretariat staff resumed duties at their respective posts on 1st of July, 2010 after a two-week induction training. This marked the formal take-off of the new Tax Appeal Tribunal in Nigeria. All proceedings before the Tribunal are guided by the Tax Appeal Tribunal (Procedure) Rules, 2010.

The first set of Commissioner’s term expired in 2016 and new set of 50 commissioners inaugurated on 19th November, 2018 by the Hon. Minister of Finance.[3]

PROCESSES UNDER THE TAT

The Tax Appeal is an important component of the tax system and the new tax policy offers a step by step objection and appeal process which gives the complainant an opportunity to explore other dispute resolution mechanisms before gaining access to the regular Court system. According to the Establishment Act, both the taxpayer and relevant tax authority can initiate the appeal process.[4] A taxpayer aggrieved by an assessment or demand notice made upon him by revenue authorities or aggrieved by any action or decision of the revenue authorities under the provisions of the tax laws administered by the revenue authorities may appeal against such action, decision, assessment or demand notice within a period of 30 days.[5] On the other hand, the revenue authorities, if aggrieved in relation to any person in respect of any provisions of the tax laws, can also within a period of 30 days, file an appeal at the appropriate Zone of the Tribunal.[6]

ORGANIZATIONAL STRUCTURE OF THE TAX APPEAL TRIBUNAL

The Tribunals are set up across the six (6) geo-political zones of the country in accordance with the provision of Section 59 (1) of the Federal Inland Revenue Service (FIRS) Establishment Act, 2007 with two (2) additional Tribunals in Lagos and Abuja. Therefore, the TAT is an amalgam of eight (8) zonal Tribunals and a Coordinating Secretariat.[7]

THE TAT ZONES

A Tax Appeal Tribunal is located in each of the six geo-political zones, Abuja and Lagos with areas of jurisdiction as stated below.

  1. North East Zone Tax Appeal Tribunal- Located in Bauchi covers Adamawa, Borno, Bauchi, Gombe, Yobe and Taraba States.
  2. North West Zone Tax Appeal Tribunal- Located in Kaduna covers Kaduna, Kano, Katsina, Kebbi, Jigawa, Sokoto and Zamfara States.
  3. North Central Zone Tax Appeal Tribunal- Located in Jos covers Benue, Nasarawa, Niger, Kogi, Kwara and Plateau States.
  4. South West Zone Tax Appeal Tribunal- Located in Ibadan covers Ekiti, Ogun, Ondo, Osun and Oyo States.
  5. South East Zone Tax Appeal Tribunal- Located in Enugu covers Abia, Anambra, Ebonyi, Enugu and Imo States.
  6. South South Zone Tax Appeal Tribunal- Located in Benin City covers Akwa Ibom, Bayelsa, Cross River, Delta, Rivers and Edo States.
  7. Abuja Tax Appeal Tribunal- Located in Abuja covers Abuja, Federal Capital Territory only.
  8. Lagos Tax Appeal Tribunal- Located in Lagos covers Lagos State only.[8]

THE TAX APPEAL COMMISSIONERS

Tax Appeal Tribunal has a total of fifty (50) Tax Appeal Commissioners. A Tribunal consists of five (5) members appointed by the Honorable Minister of Finance.[9] The Chairman for each zone shall be a legal practitioner who has been so qualified to practice for a period of not less than 15 years with cognate experience in tax legislation and tax matters.[10] The Chairman presides at every sitting of the Tribunal and in his absence the members shall appoint one of them to be the Chairman.[11] The quorum at any sitting of the Tribunal shall be three members. [12]

A Tax Appeal Commissioner shall hold office for a term of three years, renewable for another term of three years only and no more, from the date on which he assumes his office or until he attains the age of 70 years whichever is earlier.[13]

KEY RESPONSIBILITIES OF THE TAT

Tax Appeal Commissioners are responsible for the adjudication of all cases filed at the Tribunal. The Commissioners sit to hear and determine all tax appeals filed at the Tribunal. The Commissioners are appointed on part time basis and as often as may be necessary, meet to hear appeals in the jurisdiction or zone assigned. The Commissioners refers cases that appear to them in the course of hearing, to have criminal elements, to the office of Attorney General of the Federation/States or other law enforcement agencies for prosecution. The Tribunal at the end of proceedings may affirm, annul, discharge or vary tax assessment issued or appealed against by the parties. The Award or Judgment of the Tribunal shall be registered at the Federal High Court and enforced as if Judgment of the Court.

Other responsibilities performed by the Registry/ Secretary of the Tribunal includes:

  1. To receive appeal and other processes for filing at the Tribunal by
  2. Taxpayers and tax authorities;
  3. To effect service of all Appeals and Tribunal processes on necessary parties;
  4. To create the necessary platform for Tax Appeal Commissioners to conduct sittings;
  5. To conduct research on tax laws, regulations and policies in order to assist the Tax Appeal Commissioners in their deliberations, rulings and Judgments;
  6. To transmit record of proceedings to the Federal High Court on Rulings, Judgments and decisions of the Tribunal;
  7. To liaise with the relevant stakeholders with a view to creating awareness on tax appeal process generally and particularly the existence of the Tax
  8. Appeal Tribunal as an alternative dispute resolution mechanism before action at Court system.[14]

THE COORDINATING SECRETARIAT

Administratively, the Coordinating Secretariat located in Abuja, FCT is the central coordinating and operational office of the Tribunal. It is headed by a Coordinating Secretary. The Secretariat renders support services, coordinates the activities of the zones as well as general oversight functions.

It has six (6) functional units as follows:

  1. Tax Records/Case Flow Management
  2. Publicity & Communications
  3. Tribunal Administration
  4. Facility Management
  5. Accounts

TAT RELATIONSHIP WITH THE OFFICE OF THE HON. MINISTER OF FINANCE

The Coordinating Secretary (CS) is the Accounting Officer of the Tax Appeal Tribunal and he reports to the Hon Minister of Finance who provides strategic guidance to TAT. Some of the areas of their relationship are:

  1. the Hon. Minister of Finance provides strategic guidance and supervision to TAT ;
  2. the Minister approves the release of quarterly allocation and capital vote  to the Tax Appeal Tribunal;
  3. the Minister approves expenditure in excess of approval limit of the Coordinating Secretary;
  4. CS submits annual plans and annual budgets to Minister for approval;
  5. CS reports key developments to the Minister in a timely manner, seeking advice and approval;
  6. CS meets the Minister regularly to review issues, opportunities and challenges;
  7. CS submits all financial documents including budgets and financial statements to the Minister and
  8. CS submits consolidated quarterly and annual reports to the Minister for review and approval.

ACHIEVEMENTS OF THE TAT

The TAT has achieved the objectives of setting it up which is timely determination of settlements on tax disputes in an informal atmosphere devoid of technicalities of the Court room.

From inception to date, the TAT has handled over five hundred (500) cases with values as follows:

2010 – 2016 – ₦                –   75.8 billion

2018 – 2020 – ₦              – 381,013,087,914.25

   $           – 14,779,158.07

   € (EUR) – 585,511.00

   £ (GBP) – 11,145.00

   ZAR      – 644,857.00

The table below represents the cases and values of pending cases in TAT as of date:

S/N

 

ZONE NO. OF CASES TOTAL DISPUTED TAX LIABILITY

( )

TOTAL DISPUTED TAX LIABILITY

($)

TOTAL DISPUTED TAX LIABILITY

( )

1. ABUJA    2 1,226,115,562.33
2. NCZ    11 140,801,385.25
3. NEZ    8 853,151,479.55
4. NWZ   12 2,185,142,361.71
5. SWZ   13 8,311,303,681.68
6. SEZ   16 3,827,459,374.72
7. SSZ   31 269,008,892,145.88 6,021,534.00 800,500.00
8 LAGOS   105 93,015,610,545.07 3,358,890,844.34
Sub-total of the disputed tax liability of the cases pending appeal 379,435,552,163.80 3,364,912,378.34 800,500.00

 

Other achievements include:

  1. Smooth take-off and establishment of governance structure for the TAT.
  2. The average Appeal Clearance Rates achieved was 73%.
  3. Development of a functional TAT website (tat.gov.ng).
  4. Codification of the TAT Judgements and Rulings in Volumes 1 & 2.
  5. Installation of digital audio recording system.
  6. Commencement of the annual stakeholders’ conference on tax dispute resolution which brings together the major stakeholders in the tax system to chart a way forward in tax dispute resolution and tax compliance.
  7. It helps to reduce the incidence of tax evasion;
  8. Ensure fairness and transparency of the tax system;
  9. Minimize the delays and bottlenecks in adjudication of tax matters;
  10. Improve the taxpayers’ confidence in our tax system;
  11. Provide opportunity for expertise in tax dispute resolution;
  12. Provide avenue for effective involvement of parties;
  13. Focus on facts rather than legal technicalities;
  14. Promote early and speedy determination of matters without compromising the principle of fairness and equity.[15]

THE CHALLENGES OF RESOLVING TAX DISPUTES UNDER THE TAT

One of the features of a tax is that it is a compulsory payment for which no direct benefit is received in return. Few persons, if any, willingly pay to the state on a continuous basis, hence the cliché that no one pays tax with a smile. Tax disputes are as certain as tax payments and the manner of resolution of the disputes is a major factor in the revenue base of a country and also for purposes of driving investments.

Tax disputes, now being resolved by the TAT have hitherto been majorly handled by the Federal High Court by virtue of section 251 of the 1999 Constitution. But it is commonplace that the traditional or conventional law courts are not only over-burdened with cases, which take long to decide, but also some of them lack the requisite skills and competencies to deal with specialized matters like taxation.

A major concern with the new regime of tax disputes resolution is that by the conferment on the TAT of exclusive jurisdiction to settle all disputes arising from the operation of the Act and all other tax statutes administered by FIRS, the High Courts are forthwith ceased of jurisdiction to entertain such matters. This concern has caused raging controversies on the constitutionality of TAT, and unfortunately, judicial pronouncements on the issue have, so far, left much to be desired.   The gamut of the arguments against the establishment of TAT is that section 59 of the Act, which established the Tribunal offends the overriding provisions of section 251(1) (a), (b) and (c) of the 1999 Constitution which confers exclusive jurisdiction on the Federal High Court in respect of civil causes and matters relating to the revenue of the Government of the Federation. In other words, the matters now being entertained by the TAT fall within the exclusive jurisdiction of the Federal High Court and until the Constitution is amended, the present arrangement is threatened.

It is instructive to note that in time past the courts have relied on the arguments above to declare as null and void the provisions establishing Body of Appeal Commissioners and Value Added Tax-Tribunal. While some judges have held that the establishment of the TAT is unconstitutional, others have held otherwise. This situation leaves much to be desired and have encouraged forum-shopping among lawyers and tax practitioners in the resolution of tax disputes. The decision of the Federal High Court in NNPC v. CNOOC by Justice Ibrahim Buba held that TAT is not a Court, its decision being subject to appeal to the Federal High Court does not conflict with Section 251 of the Constitution. The latest judicial pronouncement by the Court of Appeal in the case of FIRS v. TSKJ11 Construces International Sociadade LDA[16] has put to rest this controversy and an end to the confusion earlier created.

Another concern with the resolution of tax disputes at the TAT bothers on the issue of restriction on the right of appeal against decisions of the Tribunal. The Act provides that appeal against the decision of the Tribunal lies to the Federal High Court “on points of law” and further appeal lies to the Court of Appeal. This provision implies that no appeal shall lie against the decision of the Tribunal to the Federal High Court other than on a point of law. It follows that the intention of the sponsors and the drafters of this Act is to bar appeal on point of facts. The argument against this provision is that it offends the constitutional right of a litigant to appeal against the decision of a lower Court to a higher Court. Interestingly, the Act is also silent on the right to further appeal to the Supreme Court against the decision of the Court of Appeal. Whatever is the intention of the legislature in this regard, it can be validly argued that an express provision for further right of appeal to the Supreme Court may be superfluous as appeal will always lie to the Supreme Court against the decision of the Court of Appeal except where the constitution or statute provides otherwise.

The challenge of the Tribunal having to operate from rented buildings does not reckon well with tax development.

Another challenge of the TAT is delay in disposing of appeals. The ideal appeal cycle time is 180 days but factors like unpreparedness of counsel to the parties appearing before the Tribunals, non-filing of necessary documents and incessant application for adjournment are creating excessive delays in disposal of the appeals pending across the Tribunal Zones.

The Commissioners and Staff of the Tribunal lack adequate training to be on top of the job.

WAY FORWARD

As laudable as the foregoing arguments against the constitutionality of the TAT may seem, if accepted, it may act as a drawback on the underlining philosophy behind the establishment of the Tribunal and make nonsense of recent tax reform efforts of the government. TAT was established with the major aim of expediting the resolution of tax disputes in a more informal and friendly fashion. Arguing for a return of the jurisdiction over Federal tax disputes to the Federal High Court on grounds of pardonable legislative lapses is a regressive approach to law reform and economic development:

  1. There is the need to fast track the process of amending Section 251 (1) (a) and (b) of the Constitution of the Federal Republic of Nigeria 1999 (as amended).
  2. The Minister of finance should take full responsibility of TAT as provided in the law.
  3. The constitution should be amended to recognize the TAT and that appeal should stop at the Court of Appeal.
  4. It should be autonomous like the Investment and Securities Tribunal (IST).
  5. There is the need to make effort on the other phases of TAT modernization process which include: provision of internet facility at the zonal offices, provision of wide area networking (WAN) to integrate all the zones and the Coordinating Secretariat, deployment of Enterprise Resource Planning (ERP).
  6. Integrated and sustainable publicity and manpower development strategies are urgently required.
  7. Provision of a functional library and provision of e-law reports at all the Zones and the Coordinating Secretariat.
  8. There should be more sensitization to increase public awareness on the existence, access and use of the TAT.
  9. Reduce backlog of pending cases by at least 15% per quarter.
  10. Ensure quarterly reports and annual reports of TAT received by the Hon. Minister of Finance within 10 working days of end of quarter and I month to end of year.
  11. Timely service of filed processes before Tribunal on parties within 48hours and 72 hours outside jurisdiction.
  12. CTC of Rulings and Judgments should be issued within 72 hours.
  13. Records should be transmitted within 30 days of Appeal.
  14. Quarterly stakeholders’ engagement.
  15. Procure permanent offices for the Tribunals and Coordinating Secretariat.
  16. Review of TAT establishment order and procedure to incorporate emerging challenges and observed gaps.

Reforms in dispute resolution systems globally are tilting towards specialization of Courts. The argument is that specialization is a way of achieving excellence and thoroughness. Specialization in a specific type of conflict has become necessary to improve performance and reach timely and just Rulings in an environment marked by increasing conflict proliferation and diversification. Quite often, the advantages of specialized Tribunals can be seen in terms of the problems they are set up to resolve. Consequently, the creation of a specialized Tribunal with exclusive jurisdiction over tax disputes can be seen as solving certain basic problems that have hindered the efficient disposition of tax disputes before the High Courts. Tax cases, like other cases, before the regular Courts take long to be disposed off and the Courts are deprived of the benefits that come with specialization in the handling of Court cases.

CONCLUSION
It is the expectation of all stakeholders that the establishment of the TAT would:

• reduce the incidence of tax evasion, ensure fairness and transparency of the tax system, minimize the delays and bottlenecks in adjudication of tax matters in traditional Court system, improve the taxpayers’ confidence in our tax system, provide opportunity for expertise in tax dispute resolution, provide avenue for effective involvement of parties, focus on facts rather than legal technicalities and promote early and speedy determination of matters without compromising the principle of fairness and equity.

Tribunal procedure reduce the uncertainty, expense and delay associated with resort to litigation. Access to effective dispute resolution will attract foreign investors and new investment expansion of an existing investment.

Written By Bolanle Oniyangi (LL.B, B.L, LL.M, FCTI, CMC), bolanle.oniyangi@firs.gov.ng

[1] Ibid

[2] tat.gov.ng/executive-brief

[3] Section 4, Fifth Schedule of the FIRSEA

[4] Order III, Rule 1 TAT (Procedure) Rules 2010

[5] Order III, Rule 2 TAT (Procedure) Rules 2010

[6] Order III, Rule 3 TAT (Procedure) Rules 2010

[7] Paragraph 1, TAT (Establishment) Order, 2009

[8] Paragraph 1, TAT (Establishment) Order, 2009

[9] Section 2 (1) Fifth Schedule of the FIRSEA

[10] Section 2 (2) Fifth Schedule of the FIRSEA

[11] Section 2 (3) Fifth Schedule of the FIRSEA

[12] Section 2 (4) Fifth Schedule of the FIRSA

[13] Section 4, Fifth Schedule of the FIRSEA

[14] tat.gov.ng/about-us

[15] tat.gov.ng/news

[16] CA/AB/122/2014 (unreported)

Practical Considerations to Negotiate an Enforceable Joint Operating Agreement in Civil Law Jurisdictions (Netherlands: Kluwer Law International, 2020) By Professor Damilola S. Olawuyi, LL. B (1st Class), BL (1st Class), LL.M (Calgary), LL.M (Harvard), DPhil (Oxford), Professor of Law and Deputy Vice-Chancellor, Afe Babalola University, Ado Ekiti, Nigeria, www.damilolaolawuyi.com. & Professor Eduardo G. Pereira, LL. B (Brazil), LL.M (Aberdeen), PhD (Aberdeen),www.eduardogpereira.com   

Book information For more information or to order your copies, please contact Mr. Keji Kolawole: info@ogeesinstitute.edu.ng , Tel: +234 81 40000 988

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