Court voids laws denying tax debtor’s right of appeal

On Thursday, the Federal High Court in Abuja struck down “offending provisions,” thus eliminating the right of appeal for tax debtors.

The Federal High Court of Nigeria (Federal Inland Revenue Service) Practice Directions (2021), the Federal High Court of Nigeria (Tax Appeals) Rules (2022), and the Tax Appeal Tribunal (Procedure) Rules (2021).

The measures were deemed illegal by Justice James Omotosho, who wrote that they violated the freedom to appeal guaranteed by the constitution.

The court initially struck down Rule 6(a) of Order III of the Tax Appeal Tribunal Procedure Rules (2021).

Any taxpayer who wishes to appeal a decision by the Federal Inland Revenue Service (FIRS) or another applicable tax authority must first deposit fifty percent of the disputed sum into an account authorized by the Tax Appeal Tribunal.

The Federal High Court of Nigeria’s Order V Rule 3 of the Federal Inland Revenue Service Practice Directions (2021) was also modified.

If you want to contest an assessment that’s been served on you, you have to put half of the amount in question into an interest-bearing account at the Federal High Court while your application and proceedings are being processed.

The third rule was Rule 1 of Order V of the Tax Appeals Rules (2022) of the Federal High Court of Nigeria.

If an appeal is filed against a decision by the Tax Appeal Tribunal, the amount at issue must be put into an interest-bearing account at the Federal High Court’s Chief Registrar’s office, according to the rules.

The case with the docket number FHC/ABJ/CS/12/2022 was filed by Joseph Daudu, SAN, a former president of the Nigerian Bar Association (NBA).

As the first respondent, Daudu sued the Minister of Finance, Budget, and National Planning over the Tax Appeal Tribunal (Procedure) Rules (2021), claiming, among other things, that the rules were unjust, unconstitutional, and a breach of the right to appeal.

As second and third respondents, the applicant also included the Chief Judge of the Federal High Court and the Attorney General of the Federation (AGF).

Justice Omotosho noted in pronouncing the decision, “Even if the 1st respondent (the minister) is permitted to create regulations for the conduct of appeal, he is not expected to construct an embargo to the enjoyment of the right to appeal of any appellant.

“The right to appeal is a fundamental right and the first responder cannot take away such a right by the enactment of subsidiary legislation.

If a law or piece of secondary legislation conflicts with the Constitution in any way, it must be nullified to that extent.

The petitioner claims that the challenged laws unfairly benefit the Internal Revenue Service and make no effort to protect the rights of tax debtors.

If a tax debtor can’t afford to pay the whole amount owed, he loses his right to appeal automatically.

His claim was that everyone, regardless of social standing, would be treated fairly by this court.

He explained that the Constitution’s Section 6(6)(b) gives the court the authority to rule on cases involving the government and private citizens.

The judge emphasized that the court would not permit an unfair clause to undermine the applicant’s constitutional rights.

“In the final analysis, I, therefore, do not hesitate to strike down the offending provisions, which, in the opinion of this court, substantially take away the right of appeal of a tax debtor such as the applicant,” Justice Omotosho said.

Therefore, the judge declared Order III Rule (6) (a) of the Tax Appeal Tribunal (Procedure) Rules, 2021 to be “unconstitutional, null and void.