Court Nullifies Provisions in Rules/Practice Directions Prescribing Payment of Deposit Pending Hearing of Appeal

The Abuja Judicial Division of the Federal High Court (FHC or “the Court”) has ruled, in the case between, Joseph Bodunrin Daudu SAN (Joseph or “the Appellant” or “the Applicant”) and the Minister of Finance, Budget and National Planning (“The 1st Respondent”), the Honourable Chief Judge of the FHC (“The 2nd Respondent”) and the Honourable Attorney General of the Federation of Nigeria (“the 3rd Respondent”), that the provisions of Rules and Practice Directions prescribing 50% or full payment of disputed assessments prior to the hearing of the appeal is unconstitutional, null and void. The judgment is anchored on the need to ensure fair hearing and guarantee the constitutional right to appeal.

On 7, September 2017, the Applicant, a legal practitioner and principal partner in the law firm of J.B Daudu & Co., received a letter from the Economic and Financial Crimes Commission (EFCC) requesting documents, including tax assessments, evidence of tax remittances, Statement of Financial Position (SOFP), annual reports, etc., dating back to the 2008 financial year (FY). On 4 June 2018, the Appellant also received a letter from the Federal Inland Revenue Service (FIRS) wherein the FIRS assessed the Appellant to tax liabilities of approximately N1.2 billion for the period 2010 to 2017 in respect of Personal Income Tax, Withholding Tax and Value Added Tax.

In reaction to the actions taken by the FIRS, the Appellant filed an appeal with the Tax Appeal Tribunal (TAT) on 2, July 2018. Despite the Appellant's efforts, the TAT affirmed the FIRS's stance in a judgment, causing dissatisfaction on the part of the Appellant. Following this, the Appellant referred the case to the FHC.

While the matter was still pending before the FHC, additional issues arose. The 1st Respondent, purportedly acting within her powers, issued the FIRS TAT (Procedures) Rules, 2021.

Furthermore, on 31 May 2021, the 2nd Respondent issued a Practice Direction titled “the FHC of Nigeria (FIRS Practice Directions 2021)” and “the FHC of Nigeria (Tax Appeals) Rules 2022” on January 10, 2022.

Dissatisfied with the Respondents’ actions, the Applicant sought the following reliefs from the FHC:

1. A Declaration that the Provisions of Order III Rule (6) (a) of the TAT (Procedure) Rules, 2021 issued under the hand of and by authority of the 1st Respondent, which prescribe that an aggrieved person challenging the tax charged by the FIRS or any relevant tax authority shall pay 50% of the disputed amount into any account so designated by the Tax Appeals Tribunal before such appeal can be heard, purportedly as security for prosecuting the appeal are unconstitutional, null and void and contrary to the provisions of Section 36(1) and (2), Section 6(6a) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) and the doctrine of separation of powers.
2. A Declaration that the provisions of Order V Rule 3 of the FHC of Nigeria (FIRS) Practice Directions, 2021 issued under the hand and authority of the 2nd Respondent, which prescribe that where a Respondent intends to challenge an assessment served on him