A review of the Tax Appeal Tribunal’s ruling In Multichoice Nigeria Limited vs the FIRS

The FIRS alleged that MultiChoice Nigeria (MCN or the Company) had under-remitted about N1.8 trillion in taxes, and directed banks with which the Company had accounts, to freeze such accounts, recover the said sum and pay over to the FIRS. MCN disputed the assessment and filed an appeal at the Tax Appeal Tribunal (the Tribunal or TAT).

The FIRS raised an oral preliminary objection challenging the jurisdiction of the Tribunal to entertain the appeal, on the ground that the suit did not meet the condition precedent to its institution. The FIRS therefore requested the Tribunal to make an order compelling MCN to make a statutory deposit of an amount under the provisions of the FIRS Establishment Act (FIRSEA). 

The Tribunal’s Ruling The Tribunal cited many cases and held that the payment of the statutory deposit is a condition precedent to triggering its jurisdiction to hear the appeal. The Tribunal went ahead to order the Appellant to comply with the provision by making the required deposit before the adjourned date of hearing. We have analyzed this ruling below.

Paragraph 15(7) of the Fifth Schedule to the FIRSEA provides as follows; “At the hearing of any appeal, if the representative of the Service proves to the satisfaction of the Tribunal hearing the request in the first instance that-

a) the appellant has for the year of assessment concerned, failed to prepare and deliver to the Service returns required to be furnished under the relevant provisions of the tax laws mentioned in paragraph 11;

b) the appeal is frivolous or vexatious or is an abuse of the appeal process; or

c) it is expedient to require the appellant to pay an amount as security for prosecuting the appeal, the Tribunal may adjourn the hearing of the request to any subsequent day and order the appellant to deposit with the Service, before the day of the adjourned hearing, an amount, on account of the tax charged by the assessment under appeal, equal to the tax levied upon the appellant for the preceding year of the evaluation or one half of the taxiimposeddd by the appraisal under appeal, whichever is the lesser plus a sum equal to ten percent of the said deposit, and if the appellant fails to comply with the order, the assessment against which he has appealed shall be confirmed. Thepellant shall have no further right of appeal concerning that assessment.

The provision above can be separated into two parts; the first part is stating the conditions for the order, and the second part saying the order to be made by the Tribunal.

The Order

Based on the provision of the law, it is perceived that the Tribunal doesn't need to make the order for the statutory deposit. It is arguable that even if the FIRS can prove at least one of the conditions listed in the provision, the Tribunal may still exercise discretion on whether to order the Appellant to make a statutory deposit or not. 

This is because the provision states that “the Tribunal may adjourn the hearing of the appeal to any subsequent day and order the appellant to deposit with the Service…”. Generally, the word ‘may’ in law connotes a discretionary rather than a mandatory requirement. 

There could be a counter argument the word “may” as used in this context qualifies only the adjournment and that once the Tribunal adjourns the hearing, the deposit should be paid. However, our experience is that the Tribunal can exercise its discretion in suspending and ordering the promise. This means the Tribunal can consider other factors such as the appellant's attitude to the prosecution of the appeal in deciding whether to make such ruling. It ma ay also make other orders, such as accelerated hean aring of the request.