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TRANSACTION LOCATION, AND NOT RESIDENCE, DETERMINE WITHHOLDOING TAX

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It is clear to me that the residence of third parties engaged in transactions attracting WHT with a payee is not material. The significant factor is the venue or place the transactions were effected. Once it is shown the transactions with third parties were implemented in Oyo State by way of supplying the transacted items or goods or services in Oyo State, whether the supplier or group of suppliers are not resident in Oyo State, the transactions that arose from the contractual arrangement for the sale or purchase of the goods or services would be the items subject to 5% WHT liability, not the manufacturing business of the payee itself. The WHT is therefore on the goods and services contracted for, not on the manufacturing concern of the payee.

– J.S. Ikyegh, JCA. Nigerian Breweries v Oyo BIR (2012) – CA/I/M.25/2007

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SERVING NOTICE OF TAX ASSESSMENT ON THE TAX PAYER MUST BE DONE

In this regard, the case of Fasogbon v. Layande (1999) 11 NWLR (Pt. 6280) 543 becomes very apt, wherein it was held at pages 556 557 that: “From the steps that must be taken before the tax payable is evolved, to argue that serving notice of assessment on the tax payer is not part of the procedure under the decree is unthinkable. It is like a Romeo without a Juliet. In the realm of the law, to say that the tax payer who by operation of personal income tax is legally indebted to the tax authority for the assessed income tax is not informed of the assessment of the income tax payable would be an imposition, an arbitrary act that affects his civil rights and therefore infringes upon his civil rights and of fair hearing under Section 36 of the 1999 Constitution of the Federal Republic of Nigeria.”

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PROCEDURE BY TAX AUTHORITY WHERE FAILURE TO MAKE NECESSARY TAX RETURNS

My understanding of the aforestated, is that where a taxable person fails to make the necessary tax returns in a year as prescribed by the relevant tax authority, the latter shall after the expiration of the period allowed proceed to make necessary assessment of the amount of tax due based on its best of judgment and such amount assessed must be delivered to the taxable person for his information and compliance. If after there is a failure or refusal to comply then a demand notice may be sent to him or the two may be sent together to facilitate the process of tax payment. Two points are required to be made clearer here. The first is that the assessment shall be on yearly basis for purposes of clarity and not a lumped up assessment. This is to ensure that tax payable for each year is clearly set out. The total number of years assessed where applicable may however be attached together with the demand notice and delivered to the taxable person. In other words, a demand notice is not the same as assessment notice as contended by the Respondent.

— S.C. Oseji, JCA. Access Bank v Edo State BIR (2018) – CA/B/333/2015

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TAX LAWS ARE STRICTLY OR NARROWLY INTERPRETED

Tax laws are strictly or narrowly interpreted from the bare words used in the enactment. There is no presumption or equity about a tax – See Ahmadu and Anor. v. The Governor of Kogi State and Ors. (2002) 3 NWLR (Pt. 755) 502 at 522 thus – “In a taxing legislation, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption about a tax. Nothing is to be read in and nothing is to be implied, one can only look fairly at the language used. But the strictness of interpretation may not always enure to the subject’s benefit, for “if the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind” – Per Lord Cairns- in Partington v. Attorney-General (1869) L.R. 4 H.L. 100 at P. 122. See Maxwell on the Interpretation of Statutes 12th Edition by P. St J, Langan at p.256.” See also Okupe v. Federal Board of Inland Revenue (1974) 4 S.C. 93, Aderawos Trading Co. Ltd. v. F.B.I.R. (1966) L.L.R. 195 at 200 or (1966) 2 ALR (Commercial) 219, Ormond Investment Co. v. Betts (1928) A.C. 143.

– J.S. Ikyegh, JCA. Nigerian Breweries v Oyo BIR (2012) – CA/I/M.25/2007

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TAXES FEDERAL GOVERNMENT IS EMPOWERED TO IMPOSE

I have stated the gravamen of the issues of the Appellant. In A.-G., Rivers State v. FIRS (unreported) (supra), this Court examined the provisions of Items 58 and 59 of Part 1 of the 2nd Schedule to the 1999 Constitution (as amended) and held that law has specifically designated the taxes that the Federal Government is empowered to impose and collect to the exclusion of other taxes like Value Added Tax, Withholding Tax, Education Tax, and Technology Tax. Earlier, this Court in Emmanuel Chukwuka Ukala, SAN v. A. – G., Fed. & Anor. (Unreported) (Supra) per Oshomah, J., had given a similar decision. In my candid opinion, these decisions have knocked the bottom off the decision of the TAT. It must be noted that these decisions are by Courts of Coordinate jurisdiction. They express the jurisprudence on the subject to my satisfaction and I am thereby persuaded. I have no reason therefore to make a conflicting decision to them. The Respondent ought to have been guided by the decision in Emmanuel Chukwuka Ukala, SAN v. A. G., Fed. & Anor. (Unreported) (Supra) being that it was decided on 12th December, 2020 long before the TAT gave its decision on 23rd June, 2021 per page 1038 of the Record.

— I.E. Ekwo, J. Daudu v FIRS (2023) – FHC/ABJ/TA/1/2021

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DEFINITION OF INCOME FOR THE PURPOSE OF TAX

See Longsdon v. Minister of Pensions and National Insurance (1956) 1 ALL E.R. 83 defining “income” inter-alia as “that which comes in.” While Lord Chetwode v. IRC (1977) 1 ALL E.R. 638 held inter-alia that “income” means gross income as reduced for the purpose of tax assessment by deductions specified in the tax code. Consequently, any contractual transaction in which something of exchangeable worth proceeding from the property, severed from the capital, is drawn by the recipient for separate use or benefit is “income” – See Goodrich v. Edwards 255 U.S. 527 referred to in the authoritative work titled Encyclopedia of Taxation Law and Practice (First Edition) page 138 by Sir T.A. Nwamara, and 7up Bottling Company (supra) on the sugar transaction between the company and third parties which was held to attract WHT liability in that case.

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REVENUE PROVISIONS WILL BE CONSTRUED IN FAVOUR OF PUBLIC INTEREST

Let us not forget that the tax being scuffled over is the tax of the appellant’s employees from 2005-2010 which would have long time been deducted from the employees’ salaries but which the appellant failed to remit to the appropriate authority. The tax of 2011 to date has not yet become an issue. I must say this is a most despicable way for any taxpayer to act and it is seriously detrimental to the development of any nation. Following the decision of the court in Phoenix Motors Ltd v. NPFMB (Supra), I am of the view that since the statute under scrutiny is revenue oriented, the interpretation must be construed liberally in favour of deriving revenue by government in the interest of the public. I also firmly agree with the view of the Hon. AG of Lagos, Mr Ade Ipaye that tax payment is an obligation of a citizen according to S.24(f) of the Constitution. Failure of the citizen to pay tax shall strip him of the protection clothed him by S.44(1) of the constitution.

– H.M. Ogunwumiju, JCA. ITV v. Edo Internal Revenue (2014) – CA/B/20/2013

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