The Federal High Court sitting in Lagos has held that the Economic and Financial Crimes Commission (EFCC) lacks the power under law to investigate tax offenses, prosecute tax offenders, or demand payment for taxes such as Value Added Tax (VAT) and Withholding Tax (WHT).
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The decision was reached in the matter between Heritage Energy Operational Services Limited against the Revenue Mobilization Allocation and Fiscal Commission, and the EFCC in a SUIT NO.: FHC/L/CS/330.
In the case which was heard by Hon. Justice A. Lewis-Allagoa, the questions for determination were as follows:
Whether by virtue of the provisions of (i) paragraphy 32 (a-e) of Part I to the Third Schedule of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) (the “Constitution”) and (ii) Section 6 of the Revenue Mobilization, Allocation and Fiscal Commission Act, Cap R7, Laws of Federation of Nigeria, 2024 (the “RMAFC Act”), the powers of the 1st Defendant extend to and include the power to assess, demand and collect revenue from private individuals and entities?
Whether having regard to the provisions of (i) paragraph 32 (a-e) of Part I to the Third Schedule of the Constitution; (ii) section 6 of the RMAFC Act; (iii) Sections 1, 2, 8 and 25 (i) of the FIRS Act; and, paragraphs 1 & 5 of the First Schedule to the FIRS Act, the 1st Defendant (that is, the Revenue Mobilization, Allocation, and Fiscal Commission) has the power to assess , collect and demand from the Plaintiff herein, the payment of value added tax (VAT) and withholding tax (WHT) in connection with the Plaintiff’s business operations?
In his ruling, Justice Lewis-Allogoa stated that the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) does not have the power to demand payment for under-remittance of VAT and WHT.
Justice Lewis-Allogoa also mentioned that while the EFCC has the authority to investigate complaints, in this case, all complaints made by the RMAFC concerning the collection, assessment, and demand of taxes from Heritage Energy, particularly under-remittance of VAT and WHT, are null and void.
His ruling read, “I agree with the contention of counsel for the Plaintiff that the 1st Defendant (the Revenue Mobilisation Allocation and Fiscal Commission) does not have the power to demand the payment for under-remittance of VAT and WHT. While the plaintiff does not dispute the authority and responsibility of the 2nd Defendant to investigate all complaints that it receives, in this regard, all complaints made by the 1st Defendant concerning collecting assessment and demand of Tax from the Plaintiff more particularly under remittance of VAT and WHT is null and void”.
This ruling brings clarity to the responsibilities and powers of the RMAFC and EFCC in regards to tax collection and enforcement.
The decision is expected to have far-reaching implications for businesses operating in Nigeria and their obligations to the government in terms of tax compliance.
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