By Jennifer Ugwueke
Leading professional services firm, PwC, has questioned the recent ruling of the Tax Appeal Tribunal, TAT, ordering MultiChoice Nigeria to deposit N900billion, half of the N1.8trillion the Federal Inland Revenue Service, FIRS, said the company was owing in taxes, before the continuation of an appeal filed by the pay television service providers.
In an analysis of the ruling contained in its PwC Tax Alert posted on its website on Wednesday, the firm, stated the TAT did not refer to any of the three conditions necessary for the issuance of an order to compel payment of N900billion, but focused on the order for statutory deposit.
Noting that the tribunal cited many cases and held that the payment of the statutory deposit was a condition required to trigger the appeal, it said the tribunal proceeded to order MultiChoice to comply with the provision by making the deposit before the next hearing.
PwC stated that Paragraph 15 (7) of the Fifth Schedule of the FIRS Act, on which the tribunal hung its ruling, is separable into two parts, with the first stating conditions for the order and the other the order to be made.
The section states: “At the hearing of any appeal if the representative of the Service proves to the satisfaction of the Tribunal hearing the appeal 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.
(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 appeal 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 charged upon the appellant for the preceding year of assessment or one half of the tax charged by the assessment. 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 and the appellant shall have no further right of appeal with respect to that assessment.”
PwC noted that the words of the paragraph are conditional, as they put the onus of proof on the FIRS.
“This clearly shows that the burden is on the FIRS to put forward relevant materials and facts before the tribunal in proof of at least one of the three conditions,” said PwC.
It listed those conditions as failure by the appellant to file tax returns for the year concerned, the appeal is frivolous and that it is expedient to require the appellant to pay the statutory deposit.
PwC further stated that it was strange that the tribunal did not refer to any of the three conditions in reaching its decision.
“Based on the provision of the law, it is perceived that it is not mandatory for the tribunal to make the order for 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 a discretion on whether to order the appellant to make a statutory deposit or not,” it stated.