IN THE TAX APPEAL TRIBUNAL
SOUTH-SOUTH ZONE
HOLDEN
AT BENIN
APPEAL No.: TAT/SSZ/011/2023
BETWEEN:
BAYELSA STATE BOARD OF INTERNAL REVENUE APPELLANT
AND
MI NIGERIA LIMITED RESPONDENT
BEFORE:
PROF. OBEHI A. ODIASE-ALEGIMENLEN CHAIRMAN
DR DAVID ALA-PETERS COMMISSIONER
MRS HILDA OFURE OZOH COMMISSIONER
MR VITALIS FRIDAY AJOKU COMMISSIONER
PROF. OLATUNDE JULIUS OTUSANYA COMMISSIONER
WEDNESDAY 24TH APRIL
2024
JUDGEMENT
This Appeal is brought
before the Tax Appeal Tribunal (South-South Zone Sitting in Benin), dated and
filed on 09/01/2023 in
Suit No. TAT/SSZ/011/2023.
BRIEF FACTS
The Appellant is a body corporate established
by the Bayelsa State Board of Internal Revenue Law CAP B2 Laws of Bayelsa State, 2006 and is charged with the responsibility, amongst others, with the collection of all taxes, fees, levies and penalties due to the
Government of Bayelsa State; and the administration of the relevant tax laws in
Bayelsa State as provided for
in the Personal Income Tax Act (PITA) 2011 (as Amended) while the Respondent is a corporate body
registered with the Corporate Affairs
Commission that is engaged in providing
innovative drilling fluid engineers and developing drilling fluid systems and
additives to oil and gas operators
The
Appellant being dissatisfied with the Respondent’s failure/refusal to file and
pay the revised assessed
tax liability in the sum of ₦5,472,000.00 (Five Million,
Four Hundred and Seventy Two
Thousand Naira only) in respect of PAYE and Bayelsa State Infrastructural Maintenance Levy, appealed to the Tax Appeal Tribunal, South
South Zone upon
the grounds set out as follows:
i.
The Respondent has failed, refused and/or neglected to file and pay its
Pay-As-You-Earn taxes of its staff whose principal place of residence is in
Bayelsa State.
ii.
Consequent upon such failure, an administrative assessment of ₦5,472,000.00 (Five Million,
Four Hundred and Seventy Two
Thousand Naira only) being unremitted taxes
(PAYE) for the period of
March 2021 and December 2021 is outstanding and has become a debt owned by
the Respondent to the Bayelsa State Government.
iii.
The respondent has failed, refused and/or
neglected to pay the assessed liabilities despite letters of notifications,
demand notices, letter of invitation and report of administrative assessment.
Consequently, the Appellant sought the following reliefs
from this Honorable Tribunal.
(a)
AN ORDER OF THIS TRIBUNAL that the Respondent is indebted to the
Appellant in the sum of ₦5,472,000.00 (Five Million,
Four Hundred and Seventy Two
Thousand Naira only) being unremitted PAYE of its Staff and Bayelsa State
Infrastructural Maintenance Levy in accordance with Section 1(b) and (d) of the
First Schedule to Personal Income Tax Act (Amendment) 2011 and Bayelsa State Infrastructural
Maintenance Levy Law 2003.
(b)AN ORDER directing the Respondent to pay to the
Appellant the sum of ₦5,472,000.00 (Five Million,
Four Hundred and Seventy Two
Thousand Naira only) being the assessed tax liability for March 2021 and
December 2021 due the Appellant in
accordance with the relevant tax legislations.
(c) AN ORDER demanding the Respondent to file its
tax returns with the Appellant as prescribed by law.
(d)A declaration that the Respondent is liable to file returns
and remit its P.A.Y.E. liabilities in accordance with Sections 81(2) and 82 of
the Personal Income Tax Act 2011 (as amended).
(e) A
declaration that the failure, refusal and/or neglect of the Respondent to deduct and remit its P.A.Y.E of its staff is in breach of
Sections 81 and 82 of the Personal Income Tax Act 2011 (as amended).
(f) A declaration that the failure, refusal
and/or neglect of the Respondent to file Tax returns and/or pay its tax as at
when due amounts to tax evasion punishable under Section 94 of the Personal
Income Tax Act (as amended).
(g) Cost of this action – N1,000,000.00
(One
Million
Naira) only.
(h)And for such further order or other orders
as this Honourable Tribunal may deem fit to make in the circumstance.
The Respondent being
served with the processes in
this suit, filed a Respondent reply
acknowledging receipt of the Notice of Appeal. This response was dated 3rd
March 2023 and filed on the same day
stating its reasons for contesting
this Appeal
as follows:
(a) The demand for
the alleged unpaid Pay as You Earn (PAYE)
tax issued by the Appellant vide its demand letter dated 18th
December 2020 for March 2020 to December 2020 and the Administrative Assessment
for March 2021 to December 2021 in the sum of ₦5,472,000.00
(Five Million, Four Hundred and Seventy Two
Thousand Naira only) and contained
in the Appellant’s letter dated 24th January 2022 are null and void
because of the fact that the Respondent employees mentioned in the Appellant
letters were not tax resident in Bayelsa State and consequently, are not
subject to personal income tax in Bayelsa State.
(b) The applicable
PAYE taxes of the Respondent employees mentioned in the Appellant’s letters for
the years 2020 and 2021 respectively have been deducted by the Respondent and
remitted to Rivers and Lagos State where the affected employees reside
(c) The Appellant
lacks the powers to levy PAYE tax on persons who are not tax resident in
Bayelsa State.
Trial
in this matter commenced
on 17TH APRIL 2023 with
the Appellant opening its case where
Appellant called its sole witness, Mr.
Ransome Parode Omukoro, its Technical
Tax Adviser who testified as AW1. He adopted
his Written Statement on Oath sworn 9th January 2023 and tendered Eight
(8) Exhibits (Exhibit BYS 1- BYS 8). At
the close of his Evidence in Chief, he was cross-examined by the Respondent and the matter was adjourned to Wednesday the 24th of
May, 2023 for defence.
The Respondent opened its defence on WEDNESDAY 21st June, 2023 by calling its first
witness (RW1), Mrs Data Maureen Moore who tendered Four (4) Exhibits, (Exhibit
MIS 1 to MIS 4) and was fully cross-examined. Pursuant to an
order by this Tribunal on the 15th November 2023, the Notice of
Appeal was amended, by amending the Respondent name from MI SWACO to MI Nigeria
Limited. On 16th November 2023, the Respondent second witness, Mrs
Teninlanimi Arowosegbe (RW2) adopted her witness statement on Oath sworn on 1st
November 2023. She tendered four (4) Exhibits (Exhibit MIS 5 to Exhibit MIS 8)
and was also dully cross examined. At
the close of the cross-examination of RW2, Respondent closed its case on the
13th November,
2023 and this Honourable Tribunal adjourned the matter to the 24th day of
January, 2024 for the Adoption of Final Written Address. Both
parties adopted their Final Written Addresses on Wednesday 13th March 2024 and
the matter was then adjourned to today Wednesday 24th April, 2024 for Judgement.
ISSUES FOR
DETERMINATION
Respondent
Counsel, Chisom Ndubuisi, in his Final Written Address dated 19th
December 2023, postulated two
(2) Issues for determination as follows:
(1) Whether having regard
to the testimony of the parties and evidence tendered, the Appellant is entitled
to receive pay-as-you-earn (PAYE) tax for March to December 2021 from the
Respondent; and
(2) Whether having regard to the testimony of
the parties and evidence tendered, the Appellant is entitled to any of the
reliefs sought in this Appeal
The Appellant Lead Counsel, I. M. Beinbein
ESQ, after being served with the Respondent Final
Written Address, also formulated
two Issues for
determination in his Final Written Address dated 13th
February 2024 which are:
(1)
Whether
the Administrative Assessment carried on by the Appellant
on the Respondent for PAYE and
other taxes is proper?
(2)
Whether the Appellant has adduced credible evidence to
be entitled to judgement?
After listening to the witnesses in this matter and
evaluating the evidence tendered and arguments canvassed by their Counsel, the
Tribunal is of the opinion
that the cardinal issue that calls for determination in this matter is:
Whether the Appellant has proved Its Case as required by Law to be
entitled to the judgement of this Tribunal?
DETERMINATION OF THE ISSUE
Whether the Appellant has proved Its Case as required by Law to be
entitled to the judgement of this tribunal?
It is the
Appellant case that the Respondent
has failed, refused and/or neglected to file tax returns and pay its
pay-as-you-earn taxes and Bayelsa Infrastructure Maintenance Levy (BIM) for
some of its personnel deployed onboard Respect Rig in Ogboinbiri, Southern Ijaw
Local Government Area of Bayelsa State. Consequently upon such failure, the
Appellant raised an Administrative Assessment of ₦5,472,000.00
(Five Million, Four Hundred and Seventy Two
Thousand Naira only) on the Respondent. In opposition, the Respondent
argued that as part of Respondent operations, some of its employees sometimes
go on board oil drilling platforms, rigs and boats for a very short period. That
in 2020 and 2021, the affected Employees were deployed to the OES RESPECT
Section (1A) of PITA 2011(as
amended) states that notwithstanding anything in the Principal Act, the relevant
tax authority in a State shall have powers to collect tax under this Act from
itinerant workers. Section 108 of PITA
2011(as amended) defined “itinerant worker” to include
“an individual irrespective of his
status who works at any time in any state during a year of
assessment (other than as a member of the armed forces) for wages, salaries or
livelihood by working more than one State and work for a minimum of twenty (20)
days in
at least three (3) months of every assessment year”.
Section 3 of PITA 2011(as amended) referring on
Persons
whom tax is to be collected provides as
follows:
“In the case of an itinerant worker, tax
may be collected for any year by any State in which
the itinerant worker is found during the year: Provided that— (a) in an assessment
for any year upon an itinerant worker credit shall be given against the tax payable,
but not exceeding the amount thereof, for any income tax already paid by him to any
other tax authority for the same year; and (b) collection of so much of any tax
imposed in a territory on an itinerant worker for a year of assessment as
remains unpaid
on the itinerant worker leaving that territory during that year shall remain in
abeyance
during his absence from that territory, and if he returns to that territory having
during his absence paid tax in some other territory for that year, credit shall
be given
against any unpaid tax in the first-mentioned territory, but not exceeding that
unpaid
amount, for the tax paid in that other territory’’
A combined reading of the above provisions will reveal
that an itinerant worker can be in two different tax jurisdiction in a
particular Year of Assessment and 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 or not as provided in Section 108 of PITA
2011(as amended) and Section 3 of PITA 2011(as
amended). Whether or not the taxpayer who is
eventually found in the territory of a relevant tax authority will pay tax to
that authority or not, will be determined by that Relevant Tax Authority based
on information and documents at their disposal and as provided by PITA 2011(as
amended). This information is to be made available by the taxpayer to the tax
authority. In this case, how can the relevant tax authority determine whether
such Respondent worker worked in the OES
RESPECT RIG for just the 2 weeks as stated by the Respondent or worked more
than 60 days as provided by the law, if this information is not made available
by the Respondent. Through the length and breath of the Respondent’s defense in
this case, the Respondent didn’t exhibits valid evidence to support their claim
that the affected workers did not work more than 2 weeks in Bayelsa State. (see
Exhibits MIS 1-8).
In addition, the
Appellant Counsel during cross examination confronted the Respondents Witness
with the following questions:
Appellant: Do you know the use of time sheet for
IOC (International Oil Company)?
RW1: Yes, I do.
Appellant: You did not attach the time sheet of
employees earlier mentioned that is correct?
RW1: Yes, that is correct.
Appellant: You did not also frontload the payroll
schedules of these workers; that is correct?
RW1: That’s correct, but we attached the
evidence of tax clearance certificate of the employees to show that PAYE was
duly deducted by the company and remitted to the Employees State of Resident.
It is trite law,
that when a party who is in possession to produce evidence, and fails to do so,
it is deemed that his failure to produce same is an intended act because the
evidence if so produced will be adverse to its case. See the case of OGUNNIYI
V HON. MINISTER OF FCT & ANOR (2014) LPELR-23164(CA)
Section 46 of PITA 2011 (as amended) gives Power to the Relevant Tax Authority to call
for further returns as provided:
The
relevant authority may give notice in writing to a person when and as often as
it thinks
necessary requiring him to deliver within a reasonable time limited by such notice
fuller or further returns respecting any matter as to which a return is required
or
prescribed by this Act.
Section 47 of PITA 2011 (as amended) further empowers the Tax
Authority
to call for returns, books, documents and information as follows:
(1)
For the purpose of obtaining full information in respect of
the income or gain of a person, the relevant tax authority may give notice to
the person requiring him, within the time limited by the notice, to—
(a) complete
and deliver to the relevant tax authority, any return specified in the notice;
(b) attend personally before an officer of the
relevant tax authority for examination with respect to any matter relating to
such income gains;
(c) produce or cause to be produced for
examination at the place and time stated in the notice which time may be from
day to day for such period as the relevant tax authority may consider
necessary, for the purpose of the examination of any book, document, account
and return which the relevant tax authority may deem necessary; or
(d) give orally or in writing any other
information including a name and address specified in the notice
(2)
For the purpose of subsection (1) (a) to (d) of this
section, the time limited by a notice shall not be less than seven
days from the date of service of the notice, so however
that an officer of the relevant tax authority not below the rank of a Chief Inspector
of Taxes may act in any of the cases Personal Income Tax Act stipulated
in subsection (1) (c) or (d) of this section, without giving any of the required
notices set out in this section.
Exhibit BYS 1-8, shows that Appellant wrote to
Respondent demanding for taxes after discovering that the Respondent is
carrying out Economic Activities in its territory. Respondent did not respond
to these letters neither did it object to the Assessment or file its Returns
and provide information on their activities in the OES RESPECT RIG. Section 54(3) of PITA 2011 (as amended) provides that:
Where a
taxable person has not delivered a return within the time allowed and the relevant
tax authority is of opinion that tax is chargeable on that person, the relevant
tax
authority may, according to the best of its judgement, determine the amount of
the assessable,
total or chargeable income and make an assessment accordingly, but that assessment
shall not affect any liability otherwise incurred by such person by reason of his
failure or neglect to deliver a return.
A combined reading of Section 47 & 54(3) of PITA
2011 as Amended, reveals that if a taxpayer did not file its Return to the Tax
Authority as required or refuse to furnish the Tax Authority with available
documents as requested, the Tax Authority has the power to resort to a Best of
Judgement Assessment.
Moreover, Section
58(1) of PITA 2011(as amended) states that any assessment that has not been dully objected to within the stipulated 30
days period
has become final and conclusive.
The records of proceedings in part
states;
Appellant:
Mrs. Please take a look at Exhibit BYS1A &B, BYS2A&B, BYS3,
BYS4A&B, BYS5A&B, BYS6A&B, BYS7A&B and BYS8A&B. The
Respondent is duly served on its demand notice; that is correct?
RW1: Yes, I can see they were served on us.
Appellant:
She affirms that we actually served it.
Appellant: Upon the receipt of the Exhibit
BYS1-8, the Respondent did not respond to any of these demand notices; that is
correct?
RW1: Yes, that is correct because we have
no employee resident in Bayelsa State.
Therefore, in
our opinion, the window statutorily given to the Respondent to respond to the
Administrative Assessment elapsed long before the Appellant even approached the
Tribunal, and thus is statute barred and the Assessment has become Final and Conclusive.
See the cases FIRS V
Oba International Services Ltd, All Nigerian Tax Cases, Vol. 11, page 400; FIRS
V Nigeria Services and Supply Ltd, All Nigerian Tax Cases, Vol. 11, page 390;
FBIR V Manila Industrial Security Services Ltd, All Nigerian Tax Cases, Vol. 2,
Page 62.
It is trite law that equity aids the vigilant not the
indolent. See the cases of AJAYI
V. OSUNUKU & ORS (2008) LPELR-8332 (CA), AG RIVERS STATE V. UDE &
ORS (2006) LPELR-626 (SC). We are
aware of the reason put forward by the Respondent for not responding to any of
the Appellants letters that the workers deployed to the OES RESPECT RIG in Bayelsa State did work there only for two weeks.
It is our opinion that the Respondent should have been vigilant enough to know
that once its workers are deployed to the Appellant territory, it’s lawful for
the Appellant to call for records and information concerning those staff. And
it’s the duty of the Respondent to furnish the Appellant with the required
documents such as time sheet etc to show that such Employees did not work in
that territory for more than two weeks as is been claimed. Ignoring the
Appellant does not help its case because it is trite law that a party who is in
possession to produce evidence but fails to do so, it is deemed that his
failure to produce same is an intended act because the evidence if so produced
will be adverse to its case. See the case of OGUNNIYI V HON. MINISTER OF FCT
& ANOR Supra
In our opinion, there is merit in the Appellant claim
and judgement is hereby entered in favour of the Appellant.
The Tribunal hereby
orders as follows:
(1)
that the
Respondent to pay to the Appellant the sum of ₦5,472,000.00 (Five Million,
Four Hundred and Seventy Two
Thousand Naira only) being the assessed tax liability for March 2021 to
December 2021 due to the Appellant
in accordance with the relevant tax legislation.
(2)
There is no order as to cost
Dated this __ 24th _____ day of __ April____ 2024.
Signed:
Hon. Prof. Obehi Adetokunbo Odiase-Alegimenlen Chairman
Hon Dr. Ala-Peters David
Hon. Mrs. Hilda Ofure Ozoh
Member Member
Hon. Barr. Ajoku Vitalis Friday Hon.
Bar Vitalis Friday Ajoku Hon. Prof. Olatunde Julius Otusanya
Member Member Member
APPEARANCES:
I. M.
Bein Bein with B. E. Cocodia - Appellant
Chisom Ndubuisi - Respondent