by Vernia Legal Practitioners | Mar 14, 2023 | Litigation, Society & Law
SECTION 134 (1) of the 1999 CONSTITUTION provides that in order to be declared the winner of an election, a candidate running for the office of the President of Nigeria must:
a. Have majority of the votes cast in the election; and
b. He has not less than one-quarter of the votes [25%] cast in each of at least two-third of all States of the Federation [24 States] and the Federal Capital Territory, Abuja.
The 2023 General Federal Elections conducted on the 25th of February 2023, resulted in Asiwaju Bola Ahmed Tinubu, the Presidential Candidate of the All Progressive Congress as the winner of the election. However, the results as released by the Independent Electoral Commission [INEC] shows that he was not able to win up to 25% of the votes cast in the F.C.T. This has led to a debate on whether or not, he should be declared the winner, going by the interpretation of Section 134 (b) of the Constitution. There are 2 schools of thought on this:
1. A candidate needs to score 25% of the total votes in 24 States including the F.C.T.
2. A candidate needs to score 25% of the total votes in 24 States and 25% in the F.C.T too.
Section 6 of the Constitution establishes the Judiciary as the machinery charged with the interpretation of laws. Hence the Supreme Court, being the Apex Court is burdened with this enormous responsibility. In the celebrated decision of Awolowo v. Shagari [1979] Sc 62/1979, the locus classicus which establishes the use of Literal Rule in interpretation of statutes, the Supreme Court held that laws should be given their literal interpretation, especially where there is no ambiguity of any kind.
“When interpreting statutory provisions, it is correct, as submitted by learned counsel for the appellant, that the words used must be given their natural and ordinary meaning except where, to do so would lead to absurdity.”
However, in this instance, the words of the Constitution, though look simple, are quite capable of two different interpretations. As we all know, simple punctuations can render several meanings to a sentence. In the same vein, a statute can be drafted in such a way that it is capable of having different meanings. In such a situation, what should the Courts do? In the same Awolowo v. Shagari, the Court said:
It is also relevant, we think, to point out that anybody called upon to interpret any kind of statute should not, for any reason, attach to its statutory provision, a meaning which the words of the statute cannot reasonably bear. If the words used are capable of more than one meaning, then the person interpreting the statute can choose between these meanings, but beyond that he must not go…. “Judges are not called upon to apply their opinions of sound policy so as to modify the plain meaning of statutory words, but where, in construing general words the meaning of which is not entirely plain there are adequate reasons for doubting whether the legislature could have been intending so wide an interpretation as would disregard fundamental principles, then we may be justified in adopting a narrower construction.“
The Court was basically saying whenever a provision is capable of having two meanings, it would resort to picking one in so far as it is not going beyond both of them.
Furthermore, in a plethora of cases, the Courts have said that the intention of the draftsmen should be considered while interpreting laws, hence, a statutory provision is not given a wrong meaning. The Court of Appeal in P.D.P V. Edevbie [2022] Lpelr-58656 [CA], relying on Saraki V. F.R.N [2016] 3 Nwlr [Part 1500] Page 531, stated that the main object of statutory interpretation is to discover the intention of the lawmaker, which is to be deduced from the language used. But, the question is, how can we truly know and decipher their intentions especially in this particular situation?
The interpretation of Section 134 would have been so much easier if it used the word “including” rather than “and”. In this way, the meaning would be the candidate scoring 25% of the votes in 24 states including the FCT; thereby counting the FCT as the 37th State. But, it does not. Hence, this is subject to an alternative interpretation.
The buck stops at the desk of the Supreme Court. It can elect any of the possible meanings of Section 134 and it would be deemed right. This is because the plain interpretation of the Constitution can result to more than one meaning and in such scenario, the Court is enjoined to make a choice as long as it does not go beyond the possible meanings.
As said earlier, the Supreme Court has a heavy duty to discharge here. English Language is the latest hard nut the Court must crack. A battle of interpretation. Indeed, it is Grammar versus the Gavel.
TEAM VERNIA
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by Vernia Legal Practitioners | Jan 11, 2023 | Commercial Law, Litigation, Society & Law
In preparation for unforeseen or uncontrollable events which may come to light in the course of executing contractual obligations, parties to the contract may insert the Force Majeure clause. The clause entitles parties to a contract to be discharged from carrying out their obligations in the contract as a result of certain specified unforeseen events or events beyond the control of the parties. The consequence of a Force Majeure clause is that any party unable to fulfil its own part of the contract would be excused from performance or the time for execution will be extended to allow the party carry out their obligations.
The Court of Appeal in its decision in Globe Spinning Mills Nigeria Plc. v. Reliance Textile Industries Limited [2017] LPELR – 41433 [CA] reiterated the importance of including a Force Majeure clause in contracts. By virtue of the unexpected global pandemic, the Force Majeure clause has become one of the most essential in Company Contracts. Numerous companies rely on this clause to alleviate the risk of non-performance and take away liability for inevitable and unforeseen occurrences, for example the COVID-19 Pandemic.
Elements of Force Majeure
There are certain indispensable conditions prerequisite to a Force Majeure clause availing the party seeking to leverage on it. These conditions were highlighted by the Court of Appeal in Diamond Bank Ltd V. Ugochukwu (2008) 1 NWLR (Pt. 1067) per Rhodes- Vivour, J.C.A [as he then was]:
“…there must be an event which significantly changes the nature of the contractual rights of the parties that it would be unjust to expect the parties to perform those rights such as: (1) Where the subject matter of the contract has been destroyed, or is no longer available. (2) Death or incapacity of a party to a contract. (3) The contract has become illegal to perform as a result of new legislation. (4) A contract can be frustrated on the outbreak of war. (5) Where the commercial purpose of the contract has failed.”
As rightly stated by Abdu Aboki, J.C.A in Federal Ministry Of Health v. Urashi Pharmaceuticals Ltd [2018)] LPELR 46189 [CA], for an event to be considered as Force Majeure, it has to be unforeseen at the time of entering the contract. The occurrence must be one that could not have been imagined by any reasonable man and inevitable to the parties of the contract. It must also not be as a result of negligence, an act or omission of any of the parties to the contract, the events include both natural and human acts, for example riots, strikes or war.
Essence of Force majeure Clauses
Recently Nigeria Liquefied Natural Gas [NLNG] invoked the Force Majeure clauses in all its Sales and Purchase Agreements (SPA) as a result of its inability to carry out its operations due to the flood in their operational areas, thereby excluding themselves from any liabilities that may arise as a result of the floods causing their inability to operate. Taking into consideration the recent occurrences around the world i.e. the COVID-19 Pandemic, unpredictable weather changes etc., the importance of inserting a Force Majeure clause in contracts cannot be overplayed.
Having a detailed, well-structured and unambiguous Force Majeure clause will save many contractual agreements, while protecting the parties from immense loss and even lawsuits.
Invocation and Limitation
The party relying on Force Majeure has to prove that it is truly incapable of fulfilling its contractual obligations as a result of the occurrence of the event stated in the clause, it must also prove that there was no way it could have foreseen the event.
A Force Majeure claim will not be upheld by the Court simply because the situation is difficult or the circumstances slightly changed; such an event must be one that could possibly not have been envisioned.
These limitations are vital to note because regardless of a Force Majeure clause, the party to a failed contract can still take action against the executor once there is the slightest possibility that such act could have been envisaged. Thus, a Force Majeure Clause can be used as a shield to protect oneself from liability. On the other hand, it can be a sword, to be used against the defaulting party to ensure fulfillment of his obligation.
A Force Majeure is also restricted to the events and the implications of the occurrence of such events covered under the clause.
Conclusion
It is important to note, for parties inserting the clause, it must be couched properly to avoid ambiguity and various interpretations.
Finally, regardless of how well a contract is drafted, the allowance for unforeseeable occurrences should always be created with comprehensive steps to alleviate the effects of such events that could not have been anticipated.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
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by Vernia Legal Practitioners | Dec 20, 2022 | Commercial Law, Society & Law
Introduction
Introduction
It is beyond prevarication or doubt that proper regulations by the government of a state are indispensable for the proper functioning of economies and societies. The main objective for any such regulation is to ensure that the regulation works effectively, and is in public interest. This is why it is quite commendable that on the 19th day of October, 2022, the President of Federal Republic of Nigeria signed the Nigeria Startup Act, 2022 [the Act] into law, thus positioning Nigeria’s startup economy as the leading digital hub in Africa.
Definition of Startup
The Interpretation section of the Act defines Startup as “a company in existence for not more than ten [10] years, with its objective being the creation, innovation, production, development or adoption of a unique digital technology innovative product, service or process” See, Section 47 of the Act.
Basically, Startups are young companies founded to develop a unique product or service, bring it to the market and make it irresistible and irreplaceable for customers. It is a company typically in the early stages of its development.
Objectives Of The Act
Section 1 of the Act provides for the objectives of the Act as follows:
- Provide a legal and institutional framework for the development of startup in Nigeria;
- Provide an enabling environment for the establishment, development and operation of startups in Nigeria;
- Provide for the development and growth of technology-related talents; and
- Positioning Nigeria’s startup ecosystem, as the leading digital technology centre in Africa, having excellent innovators with cutting edge skills and exportable capacity.
Application Of The Act
From Section 2 of the Act, it is clear that the Act only applies to companies incorporated under the Companies and Allied Matters Act and granted the startup label and organization and establishments, whose activities affect the creation, support, and incubation of labelled startups in Nigeria.
Highlights and Benefits of the Act
- Establishment of the National Council for Digital Innovation and Entrepreneurship [the Council]: Section 3 of the Act establishes the Council which is comprised of the President and Vice-President serving respectively as Chairman and Vice-Chairman of the Council, as well as other stakeholders who were commendably carefully curated to draw support of the Executive Government to provide policy and encourage greater collaboration between the State and the private sector. The Council shall be a body corporate with the responsibility to formulate and provide general policy guidelines for the realization of the objectives of the Act together with other functions and powers as clearly stated in Section 7 [1] & [2] of the Act.
- Secretariat of the Council: By the provisions of Section 9 of the Act, the National Information Technology Development Agency [NITDA] is designated to serve as the Secretariat of the Council [the Secretariat] to be headed by the Director General of the NITDA. The secretariat’s role has been designed to help operationalize the function of the Council and its functions are clearly started in Section 9 [2] [a-r] of Act.
- Startup Support and Engagement Portal: Section 10[1] of the Act establishes the Startup Support and Engagement Portal [the Portal] to serve as a flatform through which a startup conducts registration with relevant Ministries, Departments and Agencies [“MDAs]. It also facilitates the issuance of permit or licence to labelled startups amongst other function as contained in Section 10[2] [a-l] of the Act. There shall also be a coordinator of the Portal who is responsible for maintaining a register of labelled startup in Nigeria and keeping relevant documents/record. The office of the Coordinator of the Startup Portal is provided under Section 11 of the Act.
- Startup Labelling Process: Section 13[2] of the Act defines “Labelled Startups” as registered limited liability companies that has been in existence for a period not more than ten years from the date of incorporation involved in innovation, development, production, improvement, and commercialization of a digital technology innovative product or process. One of the eligibility requirements for the grant of a startup label is that it must have at least one-third local shareholding held by one or more Nigerians as founder or co-founder, amongst others. Once a company becomes a labelled startup, it is obligated to comply with the provisions of the Act and all extant laws governing businesses in Nigeria. Other obligations are as provided in Section 16 of the Act.
- General Incentives for Startups:
- Establishment of Startup Investment Seed Fund [the Fund]: Section 19 [1] of the Act establishes the Fund to be managed by the Nigeria Sovereign Investment Authority. The Act provides that there shall be paid into the Fund on an annual basis, as un not less than Ten Billion Naira from sources to be approved by the Council. The Fund may provide financial support and early-stage finance to labelled startup, and also provide relief to technology laboratories, accelerators and hubs as provided by Section 19 [3] of the Act
- Training, Capacity Building and Talent Development: Section 21 and 22 of the Act provides that the Secretariat shall implement a training capacity building programme for Startups and also establish centres for acquisition of technology in the six geopolitical zones of Nigeria for the promotion of digital technology utilization, strengthening of digital technology management capability and information systems. These centres would achieve this through collaboration with relevant agencies, the private sector and supporting the activities of related academic research institution.
- Protection of Intellectual Property Rights: The Act acknowledges the importance of intellectual property rights towards the growth and development of startup. The Secretariat, as part of its objectives, must ensure that holders of intellectual property rights are encouraged to exploit these rights and the Secretariat shall also take steps towards assisting startups in institutionalizing and commercializing their rights. See; Section 31 of the Act.
- Tax and Fiscal Incentives: The Act provides several tax and fiscal relief for labelled startup. By Section 24 of the Act, a labelled startup operating in eligible industries under the Pioneer Status Incentives [PSI] Scheme may apply through the Secretariat to the Nigeria Investment Promotion Commission [NIPC] for grant of tax relief and incentives under the PSI. If granted, this would entitle the labelled startup to a tax holiday for an initial period of three years, which may be extended for an additional two years. Furthermore, by Section 25 [2] of the Act, a startup may also be exempted from payment of income tax or any other tax chargeable on its income or revenue for up to five years, subject to certain qualifications.
While the above listed incentives are not exhaustive, it should be noted that the incentives conceived under the Act apply not just to the startups, but also the wider ecosystem.
6. Regulatory Compliance for Startup: Below are some of the basic regulatory compliances that Startups in Nigeria need to comply with:
- Corporate Affairs Commission: As provided under the Companies and Allied Matters Act, 2020, all companies in Nigeria must be incorporated under CAC before commencing operation and Annual returns must also be filed.
- Tax Remittance: All Startups are required to register for tax and file their audited accounts and tax computations with the Federal Inland Revenue Service [FIRS] within eighteen [18] months of incorporating their company or not later than six [6] months after its accounting period, whichever is earlier. Value Added Tax [VAT] are also to be remitted to FIRS monthly except where tax incentives have been granted to such startup company.
- Special Control Unit Against Money Laundering [SCUML]: This is a unit under the Economic and Financial Crime Commission [EFCC] and some designated non-financial institutions are required to register with the Special Control Unit to obtain the SCUML Certificate.
Conclusion
The Nigeria Start up Act, 2022 is a fundamental step in the development of a legal framework for startups operating in Nigeria as there are adequate provisions and benefits which if effectively and practically implemented will aid the ability of the Act to achieve its objectives and also ensure that Nigeria Technology ecosystem remains in the global market.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
by Vernia Legal Practitioners | Dec 8, 2022 | Commercial Law, Litigation, Society & Law
Introduction
A Contract is simply an agreement between two or more parties that is legally binding. Simply put, it is an agreement that the law will enforce.
A Memorandum of Understanding on the other hand, is a preliminary to a Contract. It is an agreement that a contract will be entered between parties in future. Perfectly put by the Court of Appeal in Aburime & Anor v. Osunbor [2022] Lpelr-57590 [Ca]:
” Memorandum of Understanding is not the real agreement but a document guiding the future agreement. Its status is something less than a complete contract.……The implication is that its content cannot be enforced. Be that as it may, it remains a document which the parties can refer to for the purpose of reminding them of the content therein.” Per Bola, J.C.A. [PP 11 – 12]
Also, in B.P.S Construction & Engineering Co. Ltd V. Fcda [2017] Lpelr-42516 [Sc], the Supreme Court held per Kekere-Ekun, J.s.c (Pp 20 – 21 Paras B – B):
“…it is clear that a memorandum of understanding or letter of intent, merely sets down in writing what the parties intend will eventually form the basis of a formal contract between them. It speaks to the future happening of a more formal relationship between the parties and the steps each party needs to take to bring that intention to reality.
Therefore, it is clear as crystal that an MOU is not to be enforced. It is a preliminary to a future Agreement to be entered into by contracting parties. An MOU is for the future.
However, for every law, there is an exception. There is a way whereby an MOU can still be deemed an agreement which the Courts would recognize as binding on the parties. Where the parties to an MOU agree to be bound by the terms and conditions, none of them is permitted to later aver that the MOU is not binding. The rules of Estoppel forbid such party. The Court of Appeal in Tower Securities & Investment Co. Ltd. v. Coronation Merchant Bank Ltd (2020) Lpelr -51415 (Ca) per Aliyu, J.c.a (Pp 34 – 36 Paras A – E) explained:
“There is no doubt that an MOU’s status is less than a complete contract. But in the peculiar facts and circumstances of this case under which the MOU was executed, I am confident to hold that the parties intended to be bound by the terms thereof. ……………In the case of B. P. S. Construction Company & Engineering Ltd Vs. FCDA (2017) 10 NWLR (Pt. 1572) 1 or (2017) LPELR-42516 (SC)..………… both this Court and the Supreme Court held in that case, that the parties did not intend to be bound by the MOU, since it only represented a preliminary understanding of the parties’ plan to enter into a contract in the future. But in the case leading to this appeal, the parties did not make the MOU subject to the execution of any further agreement. They intended that it should be binding on them and indeed commenced the execution of the terms therein as noted supra. In this circumstance, the Appellant cannot be allowed to renege from it.”
Also, the Supreme Court held in Adedeji v. Obajimi [2018] 16 Nwlr Part 1644 Page 146 that an MOU was enforceable because the parties intended to be bound, they had intentions to create a legal relationship. The Appellant signed the MOU to pay the sum of N5,000,000 to buy a company [at a particular date] and also a statutory deposit of N500,000 to the Central Bank of Nigeria. It was agreed that in the event of an inconclusive sale, the Appellant would be reimbursed the money incurred for expenses. But the Appellant did not pay the N5,000,000 and he sued for reimbursement. The Apex Court held that he had breached the terms of the MOU as he failed to perform his contractual obligations. There was an intention to be bound and he breached the agreement. Therefore, the MOU was enforceable.
From the above decisions, there is an emphasis to intention to create legal relationships. This element is usually what differentiates contracts from mere agreements. Offer, Acceptance, Consideration and Capacity might all be present but no agreement will receive the force of law if it lacks an intention.
Conclusion
Memorandums of Understanding are generally unenforceable. There are usually preliminaries to future agreements. However, where parties intend to be bound, then they are placed on the same pedestal as Contracts and consequently receive the stamp of enforceability, in which case a Memorandum of Understanding is a binding obligation. Where there is intention, it is no longer a preliminary; it is a debt to be paid. An MOU is thus, an IOU.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
by Vernia Legal Practitioners | Oct 9, 2022 | Politics, Society & Law
The forthcoming 2023 General Elections is the most important topic in the Nigerian political sphere being discussed right now. The prominent parties at the forefront are the All Progressive Congress which is flag-borned by former Governor of Lagos State, Asiwaju Bola Ahmed Tinubu; the People’s Democratic Party whose candidate is former Vice-President of Nigeria, Alhaji Atiku Abubakar; and finally, the Labour Party being represented by former Governor of Anambra State, Mr. Peter Gregory Obi.
Jurisdiction
The APC administration while campaigning in 2019 promised Nigerians it would bring a massive change in all strata of governance. It made the same promise in 2019 when seeking re-election. However, the vast majority of Nigerians disagree and insist that the APC government has failed to fulfil its promises. Currently, the rate of insecurity has skyrocketed like never before, the economy has melted down, the Naira currently keeps being devalued on a daily basis, insurgency is no longer a piece of “breaking news” as it is now the norm, amongst other disheartening tales the Nigerian person can easily tell. Yet, the APC wants to contest again.
Questions to answer
- After nearly 8 years of ruling, should APC be rewarded with at least another 4 years in power?
- After 16 previous years, should the PDP be given the reins of the country again?
- Is it time for the Labour Party, whose candidate has a brilliant track record in governance? Should there be a new Sherrif in town who would probably set the ball rolling for good governance, thereby restoring Nigeria back to its glory days?
In the past few months, Labour Party’s candidate, Mr. Obi has been the most popular especially on mainstream social media. His achievements as a former Governor have been brought to the fore of political debates and discussions. His supporters dubbed as “OBIdients” have taken campaign and political awareness to another level. Their passion, grit and doggedness cannot be ignored. This drive to see their preferred choice get to the Aso Rock has also led to several allegations that they have been bullying and attacking members of the opposition parties, especially members of the APC who are popularly called “BATified”, not to cast their vote for the APC. The OBIdients are demanding a truthful change in governance and refuse to back down or be brow-beaten. It is their strong and unshaken belief that the APC government must not be allowed to continue in leading the country. To them, Nigeria has regressed like never before and enough is enough.
Two Sides of A Coin
Everyone has the right to vote a party or person of choice. Article 21, Universal Declaration of Human Rights, 1948 provides that everyone has the right to take part in the government of his country, directly or through his chosen representatives. Section 38, 1999 Constitution says that everyone has the right to freedom of thought, conscience and religion. Section 40 goes further, establishing the rights to free assembly and association and that a person can belong to any political party of his choice. These statutes highlights that a person has the right to cast his vote in favor of anyone he chooses to. That is the law. It is an unfettered right and no one should be disenfranchised. That is the right and proper thing. Section 51(2), Electoral Act, 2022 says “no voter shall vote for more than one candidate or record more than one vote in favor of ANY candidate”. This means, you should cast your vote according to your choice.
However, we must take a look at the other side of the table. Is it just to vote in a government that majority of the people are unhappy with? Is it fair to reward, by all acceptable standards of governance, a failed administration which has kept the citizenry in a state of misery, by voting for its continuity? Currently, the Academic Staff Union of Universities [ASUU] has been on strike since February 14th 2022, thereby suspending academic activities and keeping students at home for almost a year, consequently, educational stagnation is inevitable. During the #EndSARS protests that swept the nation 2 years ago, precisely on the 10th day of October 2020, protesters were shot dead at the Lekki Toll Gate, which is today known as the “Lekki Massacre”. The nation has suffered so many cases of injustice from the government in different ways. Jeremy Bentham, the father of the Utilitarian School of Thought argues that the essence of law is to promote collective happiness of the people. Thus, OBIdients insist that to vote in the APC administration would be politically immoral, unfair and unjust despite the fact that the law entitles everyone to vote according to his/her conscience. Narendra Mordi says people power must be combined with good governance to bring about real, deep and long lasting change; good governance cannot remain merely a philosophy, concrete steps have to be taken for realizing its good. The OBIdients who have been resilient and staunch in their support, refuse to back down and are unapologetically unfriendly towards members and supporters of the opposition. This behavior has been branded by many as bullying and hostile but they do not bat an eye lid.
So, the burning question remains, which better reflects Justice: Voting [according to your choice] a candidate that is deemed harmful to collective good of the people or forcefully demanding for better governance and insisting on it vehemently?
What is Justice?
One cannot take away the institution of the law in society. Without it, we are no better than animals. However, the aim of the law is to ensure Justice and foster progress in society. We opine strongly and agree with Bentham that the law is to create happiness for the highest number of people. Therefore, it can be argued that voting in a person that is seen as a threat or harmful to the majority, is “unjust” even though the law gives you a freedom to choose.
According to Le Modesit Jnr., never mistake Law for Justice, Justice is an ideal, and Law is a tool. The BATified believe that they have the right to vote in their preferred choice. This is the law and it is valid because it is a reflection of the provisions of the law. To them, this is justice and it can be argued to be so. However, the OBIdients on the other hand insist that such choice although legal, is unjust on the long term and would have grave consequences. Their stance is akin to the words of Immanuel Kant: “The worst form of Injustice is pretended Justice”.
Yes, bullying and attack should not be tolerated, but can the OBIdients be blamed? Jim Crow laws in the 80’s legalized slavery and yet, that did not make them just. The nation needs a revolution to effect that change it was promised 7 years ago. The people are tired to their bones. Nigerians need to be free from shackles that has kept us bound for so long. At this point, it is seen as a do-or-die affair for many people. Patrick Henry on March 23rd of 1775 said, “give me liberty or give me death”.
It is legal to vote a candidate of choice. However, if that choice is fatal to collective good of the people, it is deemed unjust.
TEAM VERNIA
52B, Adeyemo Akapo Street,Omole Phase I Estate,
Off Agidingbi Road, Ikeja, Lagos.
+234 813 830 6975
[email protected]
by Vernia Legal Practitioners | Sep 26, 2022 | Commercial Law, Society & Law, Tax
Tax Appeal Tribunal [hereinafter referred to as the “TAT” or “Tribunal”] is established pursuant to SECTION 59 (1), FEDERAL INLAND REVENUE SERVICE [ESTABLISHMENT] ACT, 2007 [hereinafter referred to as the “FIRS Act”]. The TAT replaces the former Body of Appeal Commissioners [BAC] and Value Added Tax [VAT] Tribunals. The TAT is not a Court, but rather an administrative body saddled with responsibilities of handling disputes on taxation; to be specific, taxes accruable to the Federal Government of Nigeria.
Jurisdiction
The 5th Schedule of the FIRS Act states that the TAT has jurisdiction over all matters contained in the 5th Schedule [to the FIRS Act]. These includes: disputes arising from the Companies Income Tax Act [CITA], Petroleum Profit Tax Act [PPTA], Personal Income Tax Act [PITA], Capital Gains Tax Act [CGT], Stamp Duties Act [SDT], Value Added Tax Act [VAT], Taxes and Levies [Approved list for collection] Act as well as other laws, Regulations, Proclamations, Government notices or Rules related to these Acts. Furthermore, it is instructive to note that the Tribunal also adjudicates tax disputes arising from the actions and decisions of state tax authorities provided the disputes relate to any of the Acts listed in the First Schedule to the FIRS Act. There used to be a debate as to which is the appropriate forum to bring federal taxation matters to, whether it is the TAT or the Federal High Court [hereinafter referred to as “FHC”]. Section 251(a) – (c), 1999 Constitution confers upon the FHC exclusive jurisdiction to entertain and adjudicate upon matters related to taxation of the Federal Government or its agencies. Section 59 (2), Establishment Act saddles the TAT with the responsibility of handling disputes relating to taxes due to the Federal Government through the FIRS. Therefore, it begged the question that when there is a grievance, which of the two judicial bodies is the appropriate point of call? Can a complainant bypass the TAT and go straight to the FHC or he must go through the former first? After series of decisions, the Court of Appeal finally put an end to this. In Federal Inland Revenue Service v. TSKJ [Construcoes Internacional Sociadade Unipersoal], [2017] LCN/10279 CA, the Court held that a party must approach the TAT before escalating a grievance to the Federal High Court where a statute prescribes a line of action in resolution of a dispute, all available remedies must be exhausted first before resorting to the halls of a Courtroom. This however, as properly and firmly noted by the same Court of Appeal in the later decision of Skye Bank Plc v. K.S.I.R.S [2021] 12 Nwlr [Part 1789] Page 27], the TAT is not a Court and does not ousts the jurisdiction of a Court.
The TAT Zones
A Tax Appeal Tribunal is located in the Federal Capital Territory, Lagos State and in each of the six geo-political zones of Nigeria.
Initiation of Action
The Tax Appeal Tribunal as defined by the Court of Appeal in Skye Bank Plc v. K.S.I.R.S [supra] is an administrative tribunal set up to determine the correctness of assessment of tax without fixation of formality. When a tax has been imposed on a party, he is free to object to it and lay a complaint to the imposing authority. Upon failure to reach an amicable resolution, such complainant [aggrieved party] has the right to escalate it further by approaching the TAT. The procedures of filing an action under the TAT, like a usual Court, is regulated by procedure and hence the Tax Appeal Tribunal [Procedure] Rules 2021.
According to the FIRS Act and Order 3 Rule 1, TAT [Procedure] Rules 2021, both the taxpayer and relevant tax authority can initiate the appeal process. Rule 2 provides that such complainant shall file the action within a period of 30 days from the date on which the cause of complaint [action, decision, assessment or demand notice] which is being appealed against, was made by the FIRS. However, the Tribunal may still entertain an appeal after the expiration of the said period of 30 days if it is satisfied that there was a reasonable cause for the delay. Going further, Rule 3 says that if the complainant is the FIRS or any relevant tax authority, aggrieved by non-compliance by any person in respect of any provisions of the tax laws referred to in Paragraph 11 of the 5th Schedule to the Act under its administration, it may as in Rule 2 above, file an appeal at the appropriate zone of the Tribunal.
If a party is still dissatisfied with the decision of the Tribunal, Order 1, Rule 1, Federal High Court [Tax Appeal] Rules, 2022 provides that such party can file a Notice of Appeal to the Federal High Court within 30 days after the decision of the Tribunal was given.
Structure
According to Section 2, 5th Schedule, Establishment Act, the TAT has a total of 50 Tax Appeal Commissioners. A Tribunal consists of 5 members appointed by the Honorable Minister of Finance. The Chairman for each zone must be a legal practitioner who has been so qualified to practice for a period of not less than 15 years with experience in tax legislation and tax matters. The Chairman presides at every sitting of the Tribunal and in his absence the members shall appoint one of them to be the Chairman. The quorum at any sitting of the Tribunal is 3 members. Section 4 provides that a Tax Appeal Commissioner is to hold office for a term of 3 years, which is renewable for another term of three years only, from the date on which he assumes his office or until he attains the age of 70 years whichever is earlier.
Responsibilities of The TAT
The Tribunal is responsible for entertaining, determining and adjudicating on all the cases filed before it. The Tax Appeal Commissioners sit on the tribunals to perform these duties. Also, where the cases also have elements of crime, it can refer them to the office of the Attorney General of the States or Federation [as the case may be]; or other law enforcement agencies so the matters can be prosecuted. The decision of the Tribunal [Award or Judgement] will be registered at the Federal High Court and enforced as if it was a Judgment of the Court.
Bottlenecks of Dispute Resolution
As gleaned earlier, appeals from the TAT lie to the Federal High Court. Order 1, Rule 1 Federal High Court Tax Appeal [Procedural] Rules, 2022 is instructive on this. However, this can only be done on points of law. The Act provides that appeal against the decision of the Tribunal lies to the Federal High Court “on points of law” and further appeal lies to the Court of Appeal. No room for an appeal on points of facts is made here. This may appear unconstitutional and could be challenged. However, it would also seem that the approach as universal appeal in matters of tax appeal. In addition, the Rules require a deposit of Judgement Sum. Order 5 Rule 1 mandates a tax debtor who is challenging the decision of the Tribunal [“the Tribunal”] to deposit the judgement debt in an interest yielding amount maintained by the Chief Registrar of the Court. Otherwise, the appeal will not be heard. This is a precondition that must be satisfied. In our opinion, it seems unfair to a party being asked to deposit the same amount of money which he is appealing against, before he can make that appeal. It is nothing but a representation of the popular phrase associated with the military which is “obey before complain”. The essence of appealing is to overrule the lower court and prevent that “obedience” from taking place. However, on the flip side, it is argued that this payment to the Government is imperative for the funding of developmental projects. Failure of parties to pay hinders the tasks the Government intends to carry out. Besides, Paragraph 17, 5th Schedule of the FIRS Act mandates this payment to be made as a condition precedent to further appeal. It should be noted that this approach is not unique to Nigeria. It could be found in other tax jurisdictions to a varying degree.
Furthermore, at the TAT, the commissioners who adjudicate the disputes are experts who have experience in taxation. However, the Judges at the Federal High Court where appeals from the TAT will lie to, might not be vast in the realm of taxation and this undoubtedly can scupper the Court from reaching a sound and robust decision. There have been calls for the establishment of a proper Revenue Court manned by Judges appointed from legal practitioners with verse knowledge of and wealth of experience in tax matters and tax dispute resolution.
Conclusion
The TAT has always been a proper forum to ventilate taxation related grievances. Parties do not need to go to Court and endure all the stressful procedure required just before they can seek redress. The Tribunal saves them that long and tedious process. The aim, like any other body tasked with judicial and adjudicatory powers is to determine rights and liabilities and ultimately grant redress being sought by parties who come before it.
However, the system is not perfect as it is fraught with its own shortcomings. The restriction on appeals only on points of law is a not in the interests of litigants as the very Justice they seek before the Federal High Court is already limited. We strongly opine that a balance be struck in the payment of the Judgement Sum as a pre-condition for appeal, which would reflect equity and fairness. Yes, it looks harsh on parties but also, the Government needs the money too. The Law needs an amendment. Then, to ensure well-grounded decisions, forged from solid jurisprudence are reached, devoid of all the stressful procedure and legalese of the regular Courts, we suggest that there should be the establishment of Revenue Courts in line with the prescription of the revised National Tax Policy Document. In fact, the TATs can be transformed into these proposed Revenue Courts while the Chairmen be elevated to the position of Judges.
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