A Federal High Court, Lagos, has upheld $87.9 million USD as penalties and interests slammed on MTN Nigeria Communication Plc, by the Nigeria’s Federal Inland Revenue Service (FIRS).
Justice Ayokunle Faji who presided over the court, upheld the penalties and interests, while delivering judgment in an appeal filed by FIRS against October 20, 2023 judgment of Tax Appeal Tribunal (TAT).
In the judgment, the tax tribunal had awarded $71 USD million, as the principal sum, while refused to grant penalties and interest as demanded by the FIRS.
Dissatisfied with the TAT judgment, FIRS through its lawyers, Bolanle Oniyangi, leading Moses Ideho and Olufemi Asekun, approached the Justice Faji’s led-court, in an appeal marked FHC/L/1A/2024, for the set aside of TAT’s judgment.
Specifically, FIRS asked the court for the followings: “An order setting aside the decision of the Tax Appeal Tribunal (TAT) Panel 3, dated 20 of October, 2023.
“An order directing the Appellant to demand for all penalties and interest arising from the principal sum issued by the Honourable Tribunal vide its judgment dated the 20th October, 2023.”
In urging the court to grant the above orders, FIRS’ lawyers in their Brief of Argument filed on April 4, 2024, formulated two issues for determination to wit: “Whether the Honourable Tribunal was right in refusing to grant the Appellant the accruing penalties and interest upon finding that the goods and services purchased by the Respondent were subject to value added taxes?
“Whether the Honourable Tribunal was right in applying the provisions of the Company Income Tax Act (CITA) in discharging the assessments on the penalties and interest arising from the operations of the Value Added Tax Act?
The lawyers urged to determine the above issues raised in their favour and grant the reliefs sought in the instant appeal.
However, the respondent, MTN, through it’s lawyers, Agada S. Agada with P. Baiyere, filed it’s Brief of Argument on April 19, 2024, and raised a sole issue for determination to wit: “Whether the Tribunal erred in law when it set aside the penalty and interest imposed by the appellant (FIRS) on the respondent’s principal value Added Tax liability?
MTN lawyers submitted that the Tribunal rightly set aside the penalty and interest imposed by the appellant on it’s alleged principal VAT liability. And the the Tribunal correctly interpreted Section 13(2) & (3) of the 5th Schedule to the FIRS Acct.
The Counsel submitted further that the Appellant’s arguments on the applicability of Section 13(2) & (3) of the 5th Schedule to the FIRS Act do not stem from the Notice of Appeal and therefore of no effect.
In response to the MTN’s Brief of Argument, FIRS on May 8, 2024, filed a Reply to the Respondent’s brief of argument, wherein it’s Counsel reiterated the arguments in some paragraphs of it’s Brief of Argument and further submitted that the argument canvassed by it stems from and is founded on ground 2 of the Notice of Appeal.
The counsel urged the Court to hold that the argument canvassed by the Appellant in its Brief of Argument, be it on the provisions of Section 13(2) & (3) of the 5th Schedule to the FIRS Act, Section 32 or any provisions of the FIRS Act is clearly founded and sufficiently premised on ground 2 of the Notice of Appeal.
In deciding the appeal on January 24, 2025, Justice Faji resolved all the issues canvassed by the parties against MTN Nigeria Communication Plc.
In the final analysis, Justice Faji after citing series of plethoras authorities held that: “…… I must therefore resolve the sole issue against the respondent. I therefore find merit in this appeal.
“The decision of the TAT contained from page 750 of the record to the effect that interest and penalty are not due to be paid by the respondent to the appellant is hereby set aside.
“This appeal therefore succeeds. I grant the three reliefs sought, as prayed.”
