On Tuesday 8 March 2022, the Tax Appeal Tribunal (TAT or “the Tribunal”) sitting in Lagos, ruled in Investment Holdings Limited (IHL or “the Company” or “the Appellant”) and Federal Inland Revenue Service (FIRS or “the Respondent”) that the provision of Section 15(7) of the Fifth Schedule to the FIRS (Establishment) Act, 2007 (FIRSEA or “the Act”) supersedes the provision of Order 3 Rule 6 of the TAT (Procedure) Rules 2021 (“the Rules”).
The TAT further clarified that the burden of proof lies with the tax authority to convince the Tribunal of the existence of the conditions prescribed in the FIRSEA before it will mandate payment of security deposit before the prosecution of a tax appeal.
Facts of the case
On 25 January 2022, the FIRS filed a preliminary objection (PO) against the TAT’s jurisdiction to entertain an appeal filed by IHL because the Company failed to make a security deposit as provided in Order 3 Rule 6 of the Rules and Paragraph 15(7) of the Fifth Schedule to the FIRSEA.
The FIRS argued that by failing to pay the security deposit, the Appellant did not satisfy the conditions for initiating the appeal, thereby rendering the appeal incompetent. Consequently, the FIRS asserted that the TAT lacked jurisdiction to hear the appeal for failure of the Appellant to comply with Order 3 Rule 6 of the Rules and Paragraph 15(7) of the Fifth Schedule to the FIRSEA. It, therefore, urged the TAT to be guided by its decision in the case between Multichoice Nigeria Limited vs FIRS and dismiss the appeal accordingly.
On the other hand, IHL argued that Order 3 Rule 6 of the Rules was inconsistent with the provisions of Paragraph 15(7) of the Fifth Schedule to the FIRSEA and, therefore, null and void in line with Section 68(2) of the FIRSEA. IHL opined that the requirement for security deposit by Paragraph 15(7) of the Fifth Schedule to the FIRSEA was contingent on the satisfaction of the Tribunal that it was “expedient to require the Appellant to pay an amount as security” for the appeal to proceed. The Company noted that the FIRS’ PO failed to provide any evidence that the payment of the security deposit was expedient to the prosecution of the appeal, hence the objection should be dismissed.
