The South-South Zone of the Tax Appeal Tribunal holden in Benin has ordered Speciality Drilling Fluids to pay Bayelsa State Board of Internal Revenue the sum of N288,000,000.00 (Two Hundred and Eighty-Eight Million Naira only) assessed tax liability for the years, 2019 to 2021 in accordance with the relevant tax legislations.

The tribunal led by Hon. Prof. Obehi Odiase-Alegimenlen unanimously held that if a tax payer did not file its Return to the Tax Authority as required or refuses to furnish the Tax Authority with available documents as requested, the Tax Authority has the power to resort to a Best of Judgement Assessment.

The Tribunal stated that the statutory window given to Speciality Drilling Fluids to respond to the Demand Notice has elapsed long before the company eventually responded and is statute barred and the Assessment done by the Bayelsa State Board of Internal Revenue has become Final and Conclusive.

From facts, the Appellant- Bayelsa State Board of Internal Revenue being dissatisfied with the Speciality Drilling Fluids’ failure and refusal to file and pay the revised assessed tax liability in the sum of N288,000,000.00 (Two Hundred and Eighty-Eight Million Naira only) in respect of PAYE and Bayelsa State Infrastructural Maintenance Levy, appealed to the Tax Appeal Tribunal, South-South Zone on the grounds that such assessment being unremitted taxes inclusive of penalties and interest for the years 2019-2021 tax years has become a debt owned by the firm to the Bayelsa State Government. 

The Bayelsa State Board of Internal Revenue posited that Speciality Drilling Fluids has failed, refused and/or neglected to pay the assessed liabilities despite letters of notifications, demand notices, letters of invitation and report of administrative assessment based on back duty investigation.

The Internal Revenue sought amongst others for a declaration that the failure, refusal and/or neglect of the firm 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).

In defense, the Respondent- Speciality Drilling Fluids contended that it remits all her employees PAYE taxes and submits Annual returns to Rivers State Internal Revenue Service, Port Harcourt in compliance with the provisions of the Personal Income Tax (Amendment) Act 2011 (PITA) and all the relevant laws.

The firm averred that the Bayelsa State Board of Internal Revenue Reliefs before the Tribunal will amount to double taxation and further that Bayelsa State Board of Internal Revenue Infrastructure Maintenance Levy has no Joint Tax Board approval and hence not collectable, and urged the Tribunal to dismiss the case in its entirety.

In a well-considered judgment, the tribunal led by Hon. Prof. Obehi Adetokunbo Odiase-Alegimenlen as Chairman, Hon Dr. Ala-Peters David, Hon. Mrs. Hilda Ofure Ozoh, Hon. Barr. Ajoku Vitalis Friday and Hon. Prof. Otusanya Olatunde Julius as members held that no Authority has the jurisdiction to impose taxes if such Authority does not qualify as a Relevant Tax Authority.

The Tribunal held that by a combined reading of the PIT Act 2011, an itinerant worker can be in two different tax jurisdictions 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 credit/refund will be granted to such taxable person or individual.

The Tribunal stated that the Speciality Drilling Fluids witness admitted carrying out drilling activities in Bayelsa State within the years in question by the Bayelsa State Board of Internal Revenue and that the number of workers is immaterial in determining the jurisdiction of a tax authority.

The Tribunal held that once business or taxable activities are carried out by an individual or company in a particular state territory, that State Authority automatically becomes a Relevant Tax Authority and thus clothed with the jurisdiction to find out what is happening in its territory and can call for information and records on the payment of taxes therein.

“…from the date Exhibit BYS 1 was issued to the Respondent, to the date of 2nd February 2022 when the Respondent eventually woke up from its slumber to respond to the Letters/Demands made by the Appellant, about a period of Four (4) months had elapsed. Section 58(1) of PITA 2011(as amended) states that any assessment that has not been duly objected to, within the stipulated 30 days period has become final and conclusive.” The Tribunal ruled