Mobil Oil (Nig) Ltd. Vs Federal Board Of Inland Revenue (1977)
LawGlobal-Hub Lead Judgment Report
Mobil Oil (Nigeria) Ltd., which will hereafter be referred to as the appellants, were assessed for and have paid tax and super tax for the year 1968/69 and 1969/70 inclusive. Later, by a letter dated 16th June, 1970, the Principal Inspector of Taxes decided to make additional assessment on the appellants by acting or purporting to act under Section 30A of the Companies Income Tax Act, 1961, and computing the tax payable by the appellants on 15% of what it described as “turnover as per accounts” submitted by Messrs. Peat, Marwick, Cassleton Elliot & Co., the auditors of the appellants. After further communications and correspondence between the parties, the assessment was reduced to 10% of “turnover as per accounts”.
The appellants were dissatisfied with these additional assessments and objected to them. Upon the Federal Board of Inland Revenue refusing to review the assessments, the appellants appealed to the Body of Appeal Commissioners. On 23rd March, 1973, the Body of Appeal Commissioners gave their decision in which they upheld the assessments complained of subject to the deductions of the amount of purchase taxes collected by the appellants on behalf of various State Governments from the figure adopted by the Federal Board of Inland Revenue in their computation of the additional assessments complained of.
Still dissatisfied with this decision, the appellants appealed to the High Court of Lagos State from where the record of proceedings was forwarded to the Federal Revenue Court which was the court which had jurisdiction to hear the appeal at the material time.
The appellants, after setting out in twenty paragraphs the facts on which they proposed to rely, added six grounds of appeal. This procedure is in accordance with Rule 5(2) of the Income Tax Appeals (Lagos) Rules (published as L.N.54 of 1957 in Volume 8 of the Laws of the Federation), which reads –
“5(2) The grounds of appeal shall set out concisely in separate paragraphs the relevant facts (but not the evidence by which they are to be proved) or any point of law, or both, upon which the appellant intends to rely in support of his appeal and the concluding paragraph shall, where the appeal is against an assessment, set out –
(a) the amount of the income shown on such assessment and upon which tax has been assessed, and also the amount of the tax as assessed and the identification number of the assessment, and
(b) the amount of the income upon which the appellant considers the tax should have been assessed, and the amount of the tax thereon payable, which the court is asked to find and adjudge as being the proper amounts:
provided that this paragraph shall be read where necessary, subject to the modifications set out in rule 20.”
It should be pointed out at this juncture that Rule 20 referred to above is not relevant to the consideration of the present case. It is further provided in Rule 8(1) as follows: –
“8(1) Before the expiration of the thirteenth day after the day on which the grounds of appeal were served upon him, the respondent shall deliver or cause to be delivered to the Registrar, for filing, a concise statement of the relevant facts (but not of the evidence by which they are to be proved) or any point of law, or both, upon which he intends to rely at the hearing of the appeal, and shall comply with the provisions of paragraphs (2) and (4) (a) of this rule.
(2) Such statements shall be signed by the respondent or by any of the persons authorised to sign on his behalf as provided by Rule 6 and shall hereafter be referred to as the ‘respondent’s answer’.
(4)(a) The respondent shall, when presenting his answer for filing, pay to the Registrar the fees for filing and service and supply the Registrar with a copy of the said answer for service on the appellant.
Pursuant to the provisions of the above rule, the Federal Board of Inland Revenue (as respondent) filed its “respondent’s answer” which reads:
(1)Save and except as is hereinafter expressly admitted, the respondent denies each and every allegation of fact in the appellants’ grounds of appeal as if each were set out seriatim and specifically traversed.
(2) The respondent admits the contents of paragraphs 1, 2, 3, 10, 11, 12, 13, 15, 16, 18, 19, and 20 of the appellants’ grounds of appeal.
(3)The respondent is not in a position to deny or admit the contents of paragraphs 4, 5, 6, 7, 9, and 17 of the appellants’ grounds of appeal and puts the appellants to the strictest proof thereof.
(4)The respondent denies the contents of paragraphs 8 and 9 of the appellants’ grounds of appeal and puts the appellants to the strictest proof thereof.
(5)With respect to paragraph 14 of the appellants’ ground of appeal, the respondent avers that the respondent acting in exercise of its powers under Section 30(A) of the Companies Income Tax Act, 1961 assessed the appellants to tax on the turnover of their business for the years of assessment 1968/69 and 1969/70 as per the accounts submitted on their behalf by their auditors Messrs. Peat, Marwick, Cassleton Elliot & Co.
(6) The respondent avers that in general the decision of the Body of Appeal Commissioners is correct.
(7) The respondent will further support the decision on the grounds that
(a) On the facts shown the appellants were liable to assessment under Section 30(A) of the Companies Income Tax Act, 1961.
(b) The trade or business of the appellants for the years 1968/69 and 1969/70 produced assessable profits which in the opinion of the respondent were less than might be expected to arise from its trade or business.
Wherefor the respondent will plead that this appeal be dismissed and the judgment of the Appeal Commissioners affirmed.”
(The Underlining is ours).
On the receipt of the respondent’s answer, the appellants applied by motion to the Federal Revenue Court for an order that –
“(i) evidence in relation to the above appeal may be adduced in part by the admission of proceedings before the Body of Appeal Commissioners on 22/11/72, 23/11/72 and 4/12/72, the written addresses of counsel before the Commissioners and the judgment of the Appeal Commissioners which are all contained at pages 1-105 of Exhibit “A” to the affidavit of Nathans Nnaka sworn to in this Court on the 3rd of April, 1973;
(ii) the exhibits tendered at the hearing shall be deposited with the registrar and that the same shall form part of the proceedings before this Honourable Court;
(iii) the admission of the documents and exhibits as aforesaid shall be subject to the compulsory attendance for cross-examination of the witnesses who gave evidence before the Appeal Commissioners;
(iv) the appellants and the respondent shall be at liberty to adduce such additional evidence, as they may deem fit, to establish matters in controversy in the appeal; and
(v) such further or other orders or direction as this Honourable Court may deem fit to make.”
The application was made pursuant to the provisions of rule 15 which read:-
“15(1) Subject to the express provisions of Section 61 of the Ordinance and of these Rules, the practice and procedure of the court in relation to an appeal under the provisions of these Rules shall be assimilated as nearly as may be to the practice and procedure of the court in the exercise of its civil jurisdiction as if the appellant and the respondent were respectively the plaintiff and the defendant in an action, and the civil procedure rules of the court for the time being in force shall apply with such modifications as may be necessary.
(2)Evidence in relation to any such appeal may be adduced in any manner in which it may be adduced in an action.
(3)The Court may give such directions as it may deem fit to give effect to the foregoing provisions of this rule.”
(The underlining is ours).
After hearing argument during which learned counsel for the respondent opposed the application to call additional evidence, the learned President of the Federal Revenue Court (Lambo, P.) in a reserved ruling, found as follows: –
“Despite the extraordinarily wide provision of Rule 15(2) in so far as an appeal to this court is concerned, I do not share the view of the appellants’ learned counsel nor do I think that the sub-rule confers a ‘carte blanche’ on an appellant or a respondent to transgress all the known principles of law, which govern adduction of further or new or additional evidence on the hearing of an appeal. To my mind, any such view will make a complete mockery of the exercise by this court of its appellate jurisdiction in respect of decisions from Appeal Commissioners.
While it is true that every appeal to the Court of Appeal is by way of re-hearing, this only means that the Court of Appeal is in the same position as if the rehearing were the original hearing, and hence it may receive evidence in addition to that before the court below, and may review the whole case and not merely the points as to which the appeal is brought; but evidence that was not given before the court below is not commonly received.
In the result there will be an order on prayers (i) and (ii) of the motion paper as prayed. An order on prayer (iii) is refused and that on prayer (iv) will be suspended until the court is fully informed of the nature and extent of the evidence which the appellants propose to adduce and the reason why it was not called at the earliest opportunity which the appellants had of doing so.”
(The underlining is ours).
An application by the appellants for leave to appeal against the above ruling was later withdrawn by the appellants on 28th January, 1974.
On 17th April, 1974, learned counsel for the respondent applied to the Federal Revenue Court for an order that the appellants should disclose to respondent the nature and extent of the evidence which the appellants propose to adduce. In the course of his reply to the application, learned counsel for the appellants pointed out that the application was a misconception of appeal proceedings in tax matters. After hearing argument from both parties, the learned President, on that same day, 17th April, 1974, ordered –
“that the nature and extent of the evidence of the proposed witness or witnesses be filed in court on or before 23rd April, 1974 with liberty to the respondent/applicant to apply for a copy thereof.”
Notwithstanding this order, however, learned counsel for the appellants on 23rd April, 1974 gave notice of his intention to call evidence for the purpose of establishing the facts averred in certain paragraphs of his amended grounds of appeal. On the following day, that is, on 24th April, 1974, learned counsel for the appellants informed the court that he would like “to call evidence in support of the appeal” and that he would “be calling, first of all, Mr. Roberts”. When learned counsel for the respondent objected, the learned President sustained the objection by ruling as follows:-
“The issue now raised by Chief Williams’ application to call evidence was dealt with in my ruling of the 19th of November, 1973. The matter was further considered on the 17th of April, 1974, when it was ordered, pursuant to my earlier ruling aforesaid, that the nature and extent of the proposed evidence which the appellants intended to adduce be filed in court not later than Monday, the 22nd of April, 1974. This has not been done and it does not appear to me that it is proposed to comply with that order. I still remain of the view I took in my ruling of the 19th of November, 1973. As the proposed evidence has not been filed in court as ordered, I regret I must refuse the application to call evidence in support of the appeal.”
Being dissatisfied with the ruling of 17th April, 1974, and having obtained the necessary leave of the Federal Revenue Court, the appellants have now appealed against the ruling. In his submissions before us, Chief Williams, who appeared for the appellants, complained that the learned President erred in law in deciding that the appellants must give particulars of the nature and extent of the evidence intended to be led in support of those paragraphs of the grounds of appeal which were denied or not admitted in the respondent’s answer. Learned counsel then contended that since in the course of the hearing before him, the learned trial Judge, on the 14th day of December, 1973, expressly ruled that the respondent’s application to strike out certain paragraphs in the appellant’s grounds of appeal be dismissed, the relevance of the allegations made in the said paragraphs cannot subsequently be disputed. Learned counsel also pointed out that the decision of the learned President is inconsistent with the relevant rules of court as interpreted by the Supreme Court in Aluminium Industries A.G. v. Federal Board of Inland Revenue (1971) 1 NMLR p. 339. It was further submitted with much force that the learned President failed to appreciate that the hearing of a tax appeal under the rules of court applicable thereto is in effect a fresh trial of the issues of fact and law in controversy between an appellant and the respondent and not an appeal stricto senso; that he exercised his discretion wrongly or failed to exercise the same judiciously in making the order complained of when it is clear that the respondent could not reasonably complain that they did not have notice of the facts upon which the appellants intended to lead evidence. Finally, learned counsel contended that the learned President erred in law in failing to observe that he ought not, according to the rules of practice and procedure, order the appellants to give particulars of evidence intended to be led in support of their pleadings. In support of his submissions, learned counsel referred to the decision in the following cases: –
(i) Federal Board of Inland Revenue v. Diab A. Nasr (1964) 1 All NMLR 408 at pp. 409 – 410
(ii) John Khawams Pools Co. Ltd. v. Federal Board of Inland Revenue FRC/L/1A/74 delivered on 30th January, 1975 by Belgore, J., in the Federal Revenue Court, as well as the judgment of this court in SC. 98/1975, delivered on 16th June, 1975, confirming the ruling; and
(iii) The “practice direction” of Taylor, C. J., (which is actually a ruling) in E. A. Ajayi v. Federal Board of Inland Revenue, Appeal No. LD/25A/69 delivered on 18th January, 1971.
In his reply, the learned legal adviser to the Federal Board of Inland Revenue conceded that the rules are silent as to whether the court has the power to demand that it must be fully informed of the nature and extent of the evidence which an appellant in a tax appeal proposes to call before allowing such evidence to be adduced. He, nevertheless, contended that the court has the power to ask for the particulars of such additional evidence. The learned legal adviser also pointed out that the issue in the present case is not whether the learned President of the Federal Revenue Court objected to the calling of evidence by the appellants but that it is whether he has the power, which learned counsel contended that he has, to insist on knowing the type of evidence the appellants proposed to call.
A close perusal of Rules 5(2) and 8(1) of the Income Tax Appeals (Lagos) Rules, shows, in our view, that the procedure to be followed by the parties, after the filing of the grounds of appeal and the reply of the respondent’s thereto, is intended to be as near as possible to those prescribed for the hearing of a case in the High Court after pleadings have been completed. To think otherwise will make nonsense of the provision in both rules that both the grounds of appeal and the respondent’s answer thereto shall set out –
“the relevant facts (but not the evidence by which they are to be proved).”
There can be no doubt that it is in order to keep Rule 15(1) in harmony with Rules 5(2) and 8 as interpreted above that it is provided therein that the practice and procedure of the High Court in relation to appeal in tax matters shall be assimilated as nearly as may be to the practice and procedure of the High Court in the exercise of its civil jurisdiction as if the appellant and the respondent were respectively the plaintiff and the defendant in an action, and that the civil procedure rules of the High Court for the time being in force shall apply. That, in our view, is why it is further provided in rule 15(2) that –
“evidence in relation to any such appeal may be adduced in any manner in which it may be adduced in an action.”
In considering the provisions of Rules 5(2), 8 and 15 referred to above in Aluminium Industries A.G. v. Federal Board of Inland Revenue (1971) 1 NMLR 339 at p. 342, this court observed that –
“the effect therefore of the rules to which we have referred was to treat the amended grounds of appeal and answer as pleadings.”
It only remains for us to add that in an action before the High Court, it is the right of the party to decide whether to adduce evidence in support of his pleadings or not. The court has no power to force him to give particulars of the nature and extent of the evidence which he proposes to call in the exercise of that right. The averments are there in the pleadings (or in the grounds of appeal in a tax appeal) for the trial Judge to see.
In the case in hand, it will be recalled that in his “answer” to the appellants’ grounds of appeal, the respondent averred in paragraphs (3) and (4) therein as follows: –
“(3)The respondent is not in a position to deny or admit the contents of paragraphs 4, 5, 6, 7, 9, and 17 of the appellants’ ground of appeal and puts the appellants to the strictest proof thereof.
(4)The respondent denies the contents of paragraphs 8 and 9 of the appellants’ grounds of appeal and puts the appellants to the strictest proof thereof.”
Unless the appellants have the right to call evidence at the hearing of their appeal, how can they be expected to provide the “strictest proof” asked for by the respondent
It is, we think, precisely to meet a situation such as this that Rules 5, 8 and 15 of the Income Tax Appeals (Lagos) Rules are worded in such a way as to leave no room for doubt that the procedure to be followed at the hearing of income tax appeals before the High Court is that normally followed at the trial of a case before that court. As the Federal Revenue Court has not made its own rules with respect to income tax appeals, the rules of practice and procedure (that is, the Income Tax Appeals (Lagos) Rules, applicable in the High Court of Lagos State at the hearing of income tax appeals, are also applicable at the hearing of such appeals before the Federal Revenue Court. (See Section 9 of the Federal Revenue Court Decree, No. 13 of 1973). That being the case, both the appellant and the respondent in such appeals are entitled to call evidence, if they so desire, in support of the facts stated in the grounds of appeal and in the respondent’s answer as the case may be. (See also the decision of this court in Federal Board of Inland Revenue v. John Khawam Pools Co. Ltd. SC.98/1975 delivered on 16th June, 1975).
In this connection, it is, we think, pertinent to point out that the views which we have expressed above accord with those expressed by this court in the case of Federal Board of Inland Revenue v. Diab A. Nasr (1964) 1 All NMLR 408, a case where evidence was taken on appeal in the High Court from a tax matter. In that case, this court considered the provisions of Section 57 subsections (7) and (9) of the Companies Income Tax Act, 1961, which deal with the onus of proof which lies on an appellant and observed at page 410 as follows: –
“The reference to the onus of proof makes it clear that an appeal to the High Court is an appeal on fact as well as on law and the High Court of Lagos (Income Tax Appeals) Rules assimilate the procedure on an appeal to that in an action and provide for the adducing of evidence. The position is thus different from that in England where the High Court is bound by the Commissioners’ findings of fact, provided there was any evidence to support them. The reference to the onus of proof also means that if the tax-payer wishes the court to hold that the assessment complained of is excessive, he must produce sufficient evidence to enable the court to decide not merely that the assessment is excessive but by how much it is excessive.”
While still on this point, and for the avoidance of doubt, it is our view that the “practice direction” given by Taylor, CJ., in E. A. Ajayi v. Federal Board of Inland Revenue (Appeal No. LD/25A/69 delivered on 18th January, 1971) by virtue of his powers under Rule 15(3) of the Income Tax Appeals (Lagos) Rules does not affect the right of an appellant or respondent in an income tax appeal before the Federal Revenue Court to adduce evidence, if he so desires, at the hearing of the appeal.
From the above, it is clear that the ruling complained of cannot be allowed to stand. We accordingly allow the appeal and set aside the ruling of the learned President of the Federal Revenue Court in Suit No. FRC.L/2A/73 delivered on 17th April, 1974. However, as the appellants have indicated to us that they would no longer require the evidence which they had opposed to call in the court below, we would not make any consequential order in this respect.
The appellants are awarded costs of this appeal assessed at N100.
Other Citation: (1977) LCN/1930(SC)