Challenge TAT decision, PwC urges Multichoice
FIRS had accused Multichoice of under-remitting N1.8 trillion in its tax assessment of the company.
Dissatisfied with the assessment, Multichoice filed an appeal at the TAT, challenging the assessment.
In response to the suit, the FIRS raised an oral preliminary objection, challenging the jurisdiction of the Tribunal to entertain the appeal on the ground that it did not meet the condition precedent to its institution.
FIRS, therefore, requested the Tribunal to make an order, compelling Multichoice to make a statutory deposit of an amount under the provisions of the FIRS Establishment Act (FIRSEA).
In its 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, therefore, ordered the appellant to comply with the provision by making the required deposit before the adjourned date of hearing.
Reviewing the decision, PwC stated that the Tribunal’s ruling did not provide insights into how they reached the conclusion that a deposit was required based on the three conditions in the law.
“Therefore, there is room for taxpayers to challenge it if the FIRS attempt to cite this ruling as a precedent to argue that taxpayers must make a statutory deposit prior to filing an appeal.
“It is advisable for the Tribunal to carefully consider the requisite conditions for ordering the statutory deposits, and duly exercise its discretion under the provision in good faith. Not doing this may result in indiscriminate assessments and a decline in taxpayer confidence in the appeal process,” the multinational consulting firm declared in its review of the case, signed by its Tax Partner, Kenneth Erikume, Associate Director, Emeka Chime and Senior Associate, Adeoluwa Akintobi.
According to the company, based on the provision of the law, it is not mandatory for the Tribunal to make the order for the statutory deposit.
PwC argued 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.
The company explained that paragraph 13 of the Fifth schedule to the FIRSEA provides for persons who are aggrieved by decisions of the FIRS to appeal such decisions to the Tribunal, adding that the only conditions to do that are to file the appeal within 30 days in the prescribed form and to pay the necessary filing fees.
“Beyond this, it is important for the rights of taxpayers that the FIRS must prove the conditions first before the Tribunal (at its discretion) can make an order for a statutory deposit.
“Further to the Tribunal’s ruling, the FIRS has allegedly claimed in press releases that the order was for the appellant to pay half of the N1.8 trillion assessment (about N900b), while the appellant has also stated that the order requires it to deposit an amount equal to its prior-year tax, which is significantly lower.
“A simple confirmation of the amount paid by Multichoice in the preceding year of assessment, if any, would have enabled the Tribunal to make a definite order that would not be open to misinterpretation by both parties involved in the dispute.
“However, it is clear from the law that Multichoice is required to pay the lower of the two amounts under the referenced provision of the law,” it maintained.
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