The Lagos Zone of the Tax Appeal Tribunal holden at Lagos has ordered the Lagos State Board of Internal Revenue to raise a fresh tax assessment on the Construction and Allied Technical Ltd and the name of the company Managing Director should not be part of the assessed liability.

The panel led by Prof. A. B. Ahmed held that the Managing Director of the Construction and Allied Technical Ltd presented evidence before the Tribunal that he was no longer resident in Lagos during the year of assessment under review and that he has relocated to Ogun State since 2014, and the evidence of his tax payment in Ogun State were also established before Tribunal.

The Panel further held that following the fact and the evidence presented before the Tribunal, the Lagos State Board of Internal Revenue had not complained or raised any objection when he received the payment of Three Hundred and Fifty Thousand Naira (#350,000.00) only, from the Construction and Allied Technical Ltd in 2017, and also had agreed that their computation of the penalties and interest was wrong. 

From facts, the appellant- Lagos State Board of Internal Revenue had submitted that as a result of the Construction and Allied Technical Ltd under deductions and under remittances, the company was served a Demand Notice accompanied by a Notice of Assessment of its established liability for Personal Income tax, With-holding taxes covering the period of 2015 year of assessment in the sum of #2,491,281.67 (Two Million, Four Hundred and Ninety-One Thousand, Two Hundred and Eighty-one Naira, Sixty-Seven Kobo) Only and failed to pay the assessed sum or objected to the assessed liability within 30days of receipt of the assessment and Demand Notice.

The Lagos State Board of Internal Revenue stated that Construction and Allied Technical Ltd was served a notice of its intention to obtain a Warrant of Distrain and advised the company to pay up the outstanding liability within 7 days of receipt of the letter, and the Respondent up till date refused to pay the liability and neither did it appeal the assessed liability. 

In defense, the Respondent- Construction and Allied Technical Ltd maintained that the tax assessment was only issued 13 months after the Respondent had paid its taxes, more so the assessment did not consider the taxes already remitted. 

The company stated that, upon being served with the Notice of Appeal, it commissioned an audit which actually established that they had underpaid and for which reason they immediately raised the balance and paid with the penalties, that the tribunal has a duty to do equity in this case, especially as the assessment which is sought to be made final does not reflect the true position of the company’s financials for the affected year. 

The Construction and Allied Technical Ltd contested the Lagos State Board of Internal Revenue inter alia on the grounds that, the Lagos Internal Revenue did not use the accurate records of its payroll in preparing an assessment of the Respondent’s tax liability and that, if the Tribunal is not inclined to dismiss the claims, the justice of the case will require that the Tribunal directs the Appellant to issue a fresh and correct assessment taking into consideration accurate facts. 

In reply, the Lagos State Board of Internal Revenue stated further that, the payment which ought to have been made since 2015 was made in August 2016, three clear months after the auditors had submitted their report. It is the position of the Appellant that the said PAYE payment was a late payment and did not reflect in the assessment because the audit report did not capture the payment. 

The Lagos Internal Revenue Board submitted that, as such, the assessment has become final and conclusive and the said payment can be deducted as a set-off from the assessed liability as provided for in Section 68 of PITA.

In its well-considered judgment after careful evaluation of the evidence and submissions of both parties, the tribunal led by Hon. (Prof.) A. B. Ahmed as Chairman, Hon.  P. A. Olayemi, Hon. Babatunde Sobamowo, Hon. Samuel Ohwerhoye and Hon. Terzungwe Gbakighir as members unanimously affirmed that once an assessment is final and conclusive, and the tax authority issues a Notice of Refusal to Amend the assessment, the tax payer loses its right of appeal to the tax authority for further amendment and the latter’s right to begin recovery and enforcement of tax due is activated.

However, the tribunal observed that the Construction and Allied Technical Ltd was not proactive in the matter because not only that they have left the matter not attended to, and nothing was said or done by the Lagos Internal Revenue when the company made a payment of Three Hundred and Fifty Naira (#350,000.00) only to the Appellant in 2017 in respect of their Tax liability for the period under review. 

The Tribunal held that PAYE is a tax imposed on the employee, not the company. The employer's responsibility to deduct and remit PAYE to the relevant tax authority arises only after the taxpayer's liability has been determined.

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