Ocean and Oil Limited V. Federal Board of Inland Revenue (2016)

LawGlobal-Hub Lead Judgment Report

UZO I. NDUKWE-ANYANWU, J.C.A. 

This is an appeal against the decision of the Federal High Court sitting at Lagos delivered on the 3rd day of May, 2007 by HONOURABLE JUSTICE I. N. AUTA.

The facts as briefly stated are as follows:
On the 27th of September 2000, Ocean and Oil Services Ltd issued a statement in the Guardian Newspapers i.e. Exhibit FBIR 1. Pursuant to Exhibit FBIR 1 the Respondent concluded that the income of the Appellant, (the Applicant at the Lower Court) an offshore company was within the meaning of Section 13(2)(a) and (b) of the CITA derived from and/or accrued in Nigeria. The Respondent without further ado issued Exhibit A, B, C and D wherein, pursuant to a budget speech by the Head of State of Nigeria made in 1996 proceeded to assess the deemed profit of the appellant on turnover at 20%. It is the case of the Appellant that the assessments by the Respondent were unreasonable and were made without jurisdiction. The Appellant also contended that its income is neither derived from nor accrued in Nigerian and therefore is not subject to assessment by the Respondent. Hence, the

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application for judicial review at the Court below wherein the Appellant sought for the following reliefs
?1. A declaration that the profits of the Applicant are not derived from Nigeria within the meaning of Section 77 of the Companies Income Tax Act, Cap 60, laws of the Federation 1990,
2. A declaration that the Respondent does not have any power to assess the Applicant to Nigerian taxation.
3. A declaration that the four notices of assessment all dated 11th October 2000, in respect of the years 1997 to 2000 and respectively numbered PRBA 62, PRBA 63, PRBA 64 and PRC 55 for the respective sum $3386909.50, $3894830.93, $4112429.02 and $6825431.52 are ultravires, null and void.
4. An injunction restraining the Respondent from demanding or enforcing the payment of any other similar charge or tax in respect of the Applicant’s operation outside Nigeria.”

?In response, the Respondent filed a counter-affidavit. It is the case of the Respondent that based on Exhibit FBIR 1 and the audited account of the Appellant associated company, Ocean and Oil Services Ltd. The

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Appellant earned income from Nigeria for the years of assessment of the tax in dispute and had failed to file tax returns. Hence, the Respondent evoked it’s power under Section 26(1)(b) and Section 47 (3) of CITA and assessed the Appellant to the standard of 20% deemed profits of turnover according to 1996 Budget speech of the Head of State of Nigeria.

By order of the Court parties filed their respective written address. One of the issues raised by the Respondent in its written address dwelled on the jurisdiction of the Federal High Court to entertain this matter on the ground that the Appellant’s action was premature.

In delivering its judgment, the learned trial judge only dealt on the issue of jurisdiction and held that it lacked jurisdiction to entertain the Appellant’s suit on the ground that the Appellant failed to first appeal to the Appeal Commissioners before the suit was filed at the Lower Court.

Dissatisfied with the said judgment, the Appellant filed a Notice of Appeal on 9th of June 2005, consisting of five (5) grounds of appeal. In accordance with the Rules of this Court, parties have filed their brief of arguments. The Appellant’s

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brief was filed on the 9th day of June, 2009 but deemed properly filed on 22nd of September, 2011, while the Respondent’s brief was filed on 19th of January, 2012 but deemed properly filed on the 23rd of September, 2015. The Appellant filed a reply brief on the 15th of September, 2015 but deemed properly filed on the 22nd of February, 2016.

The Appellant in its brief formulated three issues for determination of the Court viz:
1. Whether the appellate jurisdiction of the Federal High Court as provided in Section 54(1) of the Companies income Tax Act is distinct and separate from its original jurisdiction under Section 251(1) of the Constitution of the Federal Republic of Nigeria and Section 29 of the Federal High Court Act.
2. Whether Federal High Court has no original supervisory or judicial review power over administrative actions of the Federal Board of Inland Revenue Services (now Federal Inland Revenue Service) that are made in excess of its powers and duties.
3. Whether the income of the Appellant as assessed in Assessment Notices Number PRBA 62, PRBA 63, PRBA 64 and PRC 55 are within the