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

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meaning of Section 13(2)(a)(b) of CITA and derived from or accrued in Nigeria and therefore subject to assessment by the Respondent.

The Respondent on its own part, adopted the above said issues.

ISSUE 1 AND 2
Learned counsel for the Appellant submitted that superior Courts of record have the power of judicial review over decisions of inferior Tribunals and acts of governmental bodies. He relied on Section 6(6) of the 1999 Constitution and the cases of ODUWOLE V FAMAKINWA (1990) 4 NWLR (Pt.142) 239; OGUNMOKIN V MILITARY ADMINISTRATOR OF OSUN STATE (1993) 3 NWLR (PT.594) 261; ABDULKARIM V INCAR (NIG) LTD (1992) 7 NWLR (PT 251) 1; SHYLLON V UNIVERSITY OF IBADAN (2007) 1 NWLR (PT.1014) 1.

He contended that since the Federal High Court of Nigeria is a Superior Court of record by virtue of Section 6 of the 1999 Constitution and the Federal Board of Inland Revenue now Federal Inland Revenue Services is an administrative body of the Federal Government regulating tax, therefore the Federal High Court has the power of judicial review over decisions of Federal Board of Inland Revenue now Federal Inland Revenue Services. He

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relied on the cases of NEPA V EDEGBERO (2002) 18 NWLR (PT.798) 79; NIPOST v. ADEPOJU (2003) 5 NWLR (PT.813) 224.

He also contended that matters contained in Section 251 of the 1999 Constitution and Section 7 of the Federal High Court Act are matters within the exclusive jurisdiction of the Federal High Court and this includes tax matters therefore the Federal High Court has exclusive supervisory jurisdiction over tax matters.

Furthermore, counsel contended that the Appellate jurisdiction granted the Federal High Court under Section 54(1) of Companies Income Tax Act is different from the power of judicial review vested in the Federal High Court by virtue of Section 6 of the 1999 Constitution. GOVERNOR, OYO STATE V FOLAYAN (1995) 8 NWLR (PT.413) 292.

He contended that the procedure of Appeal provided for, under CITA is limited to acts intra vires the powers of FIRS as provided under the Statutes (i.e. CITA and FIRS (ESTABLISHMENT) Act 2007). The procedure of appeal do not apply to ultra vires act or decision of FIRS.

He contended that the learned trial judge wrongly treated the original jurisdiction of the Federal High Court in respect of

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judicial review of ultra vires act or decision as the same with the appellate jurisdiction in respect of intra vires act or decision.

On issue two, counsel for the Appellant submitted that a Superior Court of record has the power of judicial review over administrative actions of public bodies on grounds of unreasonableness, irrationality, proportionality and ultra vires. He referred to the case of ASSOCIATED PROVINCIAL PICTURE HOUSES LTD V WEDNESBURY CORPORATION (1948) 2 QB 91; HARMAN V BUTT (1944) 1 ALL ER 558; NWOKANMU V AZUOKWU (2008) 8 NWLR (PT 670) 767; the book titled JUDICIAL REVIEW (THIRD EDITION) by Michael Supperstone QC, fames Goudie QC and Sir Paul walker at page 171 and also the book titled DE SMITH’S JUDICIAL REVIEW SIXTH EDITION paragraph 16 – 020 page 829.

He distinguished the power of judicial review from the power of appeal which he contended is different from and wider than judicial review. According to counsel, the Appellant’s case before the trial Court was one of judicial review which is clearly within the power of the FHC, as the Appellant challenged the reasonableness of the Assessment notices issued to it by the

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Respondent and not the accuracy or otherwise of the amount assessed on the Assessment notices. He referred to Section 13 and 54 of CITA.

He thus urged this Court to set aside the judgment of the Lower Court.

On the other hand, learned counsel for the Respondent conceded that the Appellate jurisdiction of the FHC is distinct from its original jurisdiction under Section 251 of the 1999 Constitution. However, counsel submitted that the Constitution recognises Acts passed by the National Assembly such as CITA as an existing law. He submitted that where a special provision is made to govern a particular subject matter, and a general provision is made in respect of the same subject matter, the special provision is excluded from the operation of the general provision. He referred to the cases of AG FEDERATION V ABUBAKAR (2007) 10 NWLR (PT.1041) 1; H.B. KRAUS THOMPSON PRG V N.I.P.S.S (2004) 17 NWLR (PT.901) 44; JACK V UNIVERSITY OF MAIDUGURI (2004) 5 NWLR (PT.865) 208.

Counsel contended that since the Constitution which is a general provision provides for the original jurisdiction of the FHC under Section 251 of the 1999 Constitution and CITA which is a

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special provision on tax matters provided for the Appellate jurisdiction of the Federal High Court by virtue of Section 54 CITA, the original jurisdiction of the Federal High Court gave way to the Appellate jurisdiction. He referred to Section 28 of the Federal High Court Act 2004. Therefore the learned trial judge was right in holding that the Appellant had jumped the stile by failing to appeal to the Body of Appeal Commissioners before instituting this suit at the FHC. He referred to LAWAL V. OKE (2000) 7 NWLR (PT.71) 88; FALOYE v OMOSENI (2000) 9 (PT 717) 190; EGUAWUANSE v. AMAGHIZENWEN (1993) 9 NWLR (PT.315) 1; SHELL INTERNATIONAL PETROLEUM MAATSCHAPP V. FEDERAL BOARD OF INLAND REVENUE (2004) 3 NWLR (PT 859) 46.

He also contended that by the nature of relief sought by the Appellant, the Appellant ought to come by way of appeal before the Body of Appeal Commissioners rather than by filing an application for certiorari at the Federal High Court.

He thus urged this Court to uphold the decision of the Lower Court.

In his reply, the Appellant counsel contended that the original jurisdiction under Section 251 of the 1999

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Constitution and Section 7 of the Federal High Court Act is independent of the Appellate jurisdiction in Section 54 of the Companies Income Tax Act and Section 28 of the Federal High Court Act. Therefore the Lower Court has jurisdiction to entertain the Appellant’s application for judicial review.

He also contended that the Respondent wrongly applied the maxim generalia specialibus. It is the contention of Counsel that the maxim did not apply. He relied on the Supreme Court case of NEPA V. EDEGBERO (SUPRA) where the Court held that the Federal High Court derived its original exclusive jurisdiction from Section 251 of the Constitution and Section 7 of the Federal High Court Act.

As regards Respondent’s argument in Paragraph 2.9 of its brief wherein the Respondent argued that an aggrieved party who has been served with an assessment notice only has one option which is to file an appeal before the Appeal Commissioners [Tax Appeal Tribunal]. It is the contention of counsel that an aggrieved party has two option which is to file an appeal before the Appeal Commissioner or to challenge the power of the tax authority to issue the assessment notice before a

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Superior Court of record. He relied on the case of CHAIRMAN OF THE BOARD OF INLAND REVENUE V. REZCALLAH (SUPRA).

ISSUE 3
Learned counsel for the Appellant referred to Section 13 of CITA and submitted that only a Nigerian or foreign Company with permanent agent can be subject to assessment. He referred to the Appellant’s Further Affidavit in support of the Application for Judicial review, where the Appellant deposed to the fact that it is a foreign company and does not do business in Nigeria. He also contended that the Assessment Notices were not served on it but to its associate company i.e. Ocean and Oil Services Ltd.

He contended that the Counter-Affidavit of the Respondent is incompetent as it is among other things contrary to Section 88 of the Evidence Act; the facts deposed therein are inconsistent as they materially contradict Exhibit FBIR 1 relied upon by the respondent. He also contended that the statement made in Exhibit FBIR 1 relied upon by the Respondent for assessment was not published by the Appellant but by its associated company, Ocean and Oil Services Ltd. And thus the Appellant is not bound by

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it. He contended that in any event Exhibit FBIR 1 being a newspaper publication is not admissible in evidence. He relied on the case of RNHW V. SAMA (1991) 2 NWLR (PT.171) 64. He thus urged this Court to strike out the said affidavit or in the alternative attach no weight to it. He relied on the case of JOSIEN HOLDINGS LTD V LORNAMEAD LTD (1995) 1 NWLR (PT.371) 254; FLOUR MILLS OF NIGERIA LTD v R. I. OSIAN (1968) 2 ALL NLR 13. He further submitted that in the absence of the Counter-affidavit, the facts deposed to by the Appellant to the effect that it is a foreign company and does not carry on business in Nigeria nor derived its income from Nigeria remain unchallenged and are therefore deemed to be admitted. He thus urged this Court to hold that the Respondent does not have the authority to assess the income of the Appellant and consequently the Assessment notices are illegal, null and void.

He further contended that even if the Appellant derived its income from Nigeria, the Assessment notices were made in contravention of the general principles of taxation and tax Statutes and are consequently ultra vires, null and void. He referred to the book titled

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“The Nigeria Tax Law” by I. A. Ayua page 4; OKUPE V. FBIR (1074) – (7975) Vol. 9 NSCC page 200; HOCHSTRASSER V. MAYES (1960) AC 376.

He contended that according to Section 65(3) of CITA where a company has not filed returns and the Board [the Respondent in this case) is of the opinion that such a company is liable to tax, it shall use its discretion to determine the amount of total profits and make an assessment accordingly. He also contended that in exercising its discretion, the Respondent must direct itself properly in law, in the case of a foreign company it must be in accordance with Section 40(3)(b) of CITA. It is the contention of Counsel that in the instant case the Respondent had failed to exercise its discretion in accordance with the provision of CITA when it assessed the Appellant at 20% deemed profit on turnover as provided for in a 1996 speech of the Head of State which is not a legislation instead of 15% as provided in Section 40(3)(b) of CITA, hence the Respondent is deemed to have acted unreasonably and ultravires its powers.

Thus the Lower Court is empowered to review the legality of the Assessment Notices (Exhibit A, B, C, and D).

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He referred to Paragraph 11 of the Respondent Counter Affidavit; CHAIRMAN BOARD OF INTERNA REVENUE V. JOSEPH REZCALLAH AND SONS LTD. (1962) Vol. 2 NSCC 1 @ 11; ORDER 47 of the Federal High Court Civil Procedure Rules 2000 , ANISMINIC LTD. V. FOREIGN COMPENSATION COMMISSION (1969) 2 AC 147, OKUPE V. FBIR (SUPRA).

Learned Counsel for the Respondent on the other hand submitted that the Appellant’s issue 3 does not address the ratio decidendi of the judgment of the Lower Court and therefore is incompetent and should be struck out. It is the contention of Counsel that the Lower Court having not decided on the Originating Summons filed by the Appellant but dealt only on the issue of jurisdiction of the Lower Court, this issue is incompetent as it will entail this Court to delve into the evaluation of evidence, which is a duty reserved for the trial Court and not this Court. He relied on the case of ISHOLA V U.B.N. LTD (2005) 6 NWLR (Pt.922) 422; JOSADEG (NIG) LTD V N.D.I.C. (2005) 9 NWLR (PT.929) 167.

Counsel also submitted that even if this Court has the power to determine the Originating summons, the Appellant is subject to taxation in Nigeria having done

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business in Nigeria as provided by Section 13(2)(a) & (b) of CITA. He refer to 2000 Audited Financial Statements of Ocean & Oil Services Ltd. He also relied on Section 25, 30 and 33 of PPTA.

In his reply, learned counsel for the Appellant submitted that by the provision of Order 4 Rule 9 of the Court of Appeal Rules and Section 15 of the Court of Appeal Act this Court is empowered to make orders that the Lower Court would have made. Thus this Court has the power to determine the Appellant’s issue three. He also submitted that in the conduct of a judicial review proceedings, witnesses are not required to be called rather the Court only need to look at the facts deposed to in the affidavit of all parties.

As regards the Respondent argument that the Appellant has a Nigerian subsidiary that carried on business in Nigeria, which therefore means the Appellant derived it’s income from Nigeria. Counsel submitted that the Respondent’s argument is misconceived on the following grounds:
1. He relied on the doctrine of separate corporate personalities between the Appellant and the Nigerian subsidiary.
2. There is no

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evidence that the Appellant directly carried on any business in Nigeria.
3. The Nigerian subsidiary had filed all its tax returns.”

Appellant urged the Court to allow this appeal.

The parties have canvassed their argument in the three issues articulated for determination. However, the Court noticed that the originating processes in the Lower Court was signed by the law firm of Olajide Oyewole and Co. The Court therefore invited the parties to address the Court further on that issue.

These additional briefs were filed pursuant to the order of the Court directing parties to address the Court on the issue of the jurisdiction of the Lower Court in view of the fact that the Motion Ex-parte and the Statement in support was not signed by a Legal Practitioner as required by law.

In addressing the issue, the Appellant filed its additional brief on 12th April, 2016. In the additional brief, learned counsel for the Appellant argued that it is trite law that it is the law in existence at the time when the cause of action accrued that will be applicable to govern the institution of an action. He referred to the case of

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ISAAC OBIUWEUBI V. CENTRAL BANK OF NIGERIA (2011) 7 NWLR (PT.1247) @ 495. He contended that as at the time the Motion Ex-parte was filed on 15th November 2000, it was common practice that counsel may sign Court processes in the name of the firm under which they practice. He also contended that the said practice was approved by the Supreme Court in the case of REGISTERED TRUSTEES OF APOSTOLIC CHURCH V. AKINDELE (1967) NMLR 263 and COLE V. MARTINS (1968) ALL NLR 161. Thus making it the law at that time before the Supreme Court decision in OKAFOR v. NWEKE (2007) 10 NWLR (PT.1043) 521.

He also contended that where in the circumstance, the Court is inclined to follow the decision in OKAFOR V. NWEKE (supra), counsel invited the Court to take judicial notice of the signature in the verifying affidavit belong to Adekunle Fadeyi which is the same as the signature in the Motion Ex-parte and Statement in support. He relied on Section 122(2) [j) and (m) of the Evidence Act and the rules on interpretation “noscitur a sociis”

On its own part the Respondent filed its additional brief on 26th April, 2016. In its brief, Counsel for the Respondent reproduced Section 2

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and 24 of the Legal Practitioners’ Act and contended that Olajide Oyewole and Co is not a Legal Practitioner within the contemplation of the above sections and is therefore incompetent to practice law and sign processes. Thus the Motion Ex-parte and Statement in support signed by Olajide Oyewole & Co. is incurably bad and defective. He relied on the case of SLB CONSORTIUM V. NNPC (2011) 9 NWLR (PT.1252) 317.

As regards the argument of Appellant’s Counsel on the applicability of the Supreme Court case of REGISTERED TRUSTEES OF APOSTOLIC CHURCH V. AKINDELE (supra), counsel for the Respondent submitted that it is trite that when the Supreme Court is faced with two conflicting decision on an issue, the latest decision overrides the earlier. He referred to the case of COUNCIL, FEDERAL POLYTECHNIC MUBI & ANOR V. DINGOLI (2014) LPELR 241871 (CA); CYRIL O. OSAKWE V. FEDERAL COLLEGE OF EDUCATION TECHNICAL ASABA & ORS. (2010) 5 SCM 185 @ 203 B – F. Thus the decision in Okafor v. Nweke (supra) which is the latest decision overrides that of REGISTERED TRUSTEES OF APOSTOLIC CHURCH V. AKINDELE (supra).

He also contended that any decision which does not

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reflect the intention of the draftsman as contained in Section 2(1) and 24 of the Legal Practitioners Act cannot be said to be reliable and cannot bind this Honourable Court irrespective of the time when such decision was rendered. He thus urged the Court to reject the Appellant’s reliance on the case of REGISTERED TRUSTEES OF APOSTOLIC CHURCH V. AKINDELE (supra).

Furthermore, counsel urged this Court to disregard the Appellant’s argument in Paragraph 3.16 and 3.17 of its additional brief on the ground that the verifying affidavit is not the document whose validity is being questioned. He also submitted that the question whether the person who signed the verifying affidavit is the same person who signed the Motion Ex-parte and Statement in support is a question of evidence which requires expert evidence on signature which cannot be resolved in an address.

He thus urged the Court to strike out this appeal as the originating process is incurably bad thereby robbing the Court of its jurisdiction. Appellant urged the Court to allow this appeal.

The parties have canvassed their arguments in the three issues articulated for determination. However, the

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Court noticed that the originating processes in the Lower Court was signed by the law firm of Olajide & Oyewole and Co. The Court therefore invited the parties to address the Court further on that issue.

The Appellant in his Appellant’s additional brief accepted that the originating processes were signed by their law firm. However, he argued that, it was the practice before the Supreme Court held in Okafor v.?Nweke (supra) that only a legal practitioner known to law can sign. The Learned counsel to the Appellant argued that a law firm could sign until the decision in Okafor v. Nweke (supra) in 2007.

The Appellant in his additional brief stated inter alia that the originating processes were filed on 15th November, 2000. This is the date that is of importance to this case. The learned Appellant’s counsel also cited Okafor v. Nweke (Supra) that upturned the former position of the law. It should be noted that the Supreme Court was invited in the case of Okafor v. Nweke (supra) in 2007 to interpret the law. This law came into being and it is cited as Legal Practitioners Act 1975, Cap L.11 Laws of the Federation of Nigeria 2004. It was in Cap 207 Laws

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of the Federation of Nigeria 1990 which therefore means that this Act was in existence by 1975. It was also included in the 1990 Laws of the Federation Nigeria as well as that of 2004.

The argument that the Supreme Court upturned itself in 2007 does not hold water. The Supreme Court did not bring the law into force. The Supreme Court just interpreted the law that was already in existence since 1975.

The law is that, the law that will operate in any matter is the one in force at the time of filing any process and not the one that came into being after the filing of the process. As it were, the law was already in force in 1975 and therefore it should regulate all processes filed after that.

The position of the law with regard to the signing of legal processes by a legal practitioner has been settled in the case of Okafor v. Nweke (supra). The Supreme Court per Onnoghen JSC considered the provisions of Section 2(1) and 24 of the LPA Cap 207 Laws of the Federation of Nigeria 1990 and Cap 11 Laws of the Federation of Nigeria 2004.
The rule is that Court processes signed in the name of a law firm without indicating the name of the practitioner

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who signed them are incompetent and are liable to be struck out. In other words, Court processes must be signed by a legal practitioner known to law. Okafor v. Nweke (supra), Oketedo v. Adewunmi (2010) 8 NWLR Pt.1195 page 65, SLB Consortum Ltd. V. NNPC (2011) 7 NWLR Pt.1252 page 317, Braithwaite v. Skye Bank of Nigeria Plc First Bank of Nigeria PLC v. Mawada & Ors. (2013) 5 NWLR, Pt.1348 page 444, Alawiye v. Ogunsanya (2013) 6 NWLR Pt.1348 page 570. A person shall be entitled to practice as barrister and solicitor in Nigeria if and only if, his name is on the roll, Okafor v. Nweke (supra). See also Section 2(1) of LPA 1975 Cap L 11 Law of the Federation Nigeria 2004.

In the present appeal, the law firm representing the Appellant Olajide Oyewole & Co. signed the originating processes. Such a process signed by a law firm is a nullity and it is void ab initio. It is a question of substantive law and not of procedural law that can be waived. It is an issue that can be raised at any time even at the Supreme Court. It can also be raised suo motu by the Court as in this case Obiekwe v. Obi (2005) 10 NWLR Pt.932 page 60, Oloba v. Akerefa (1986) 3 NWLR Pt.84 page 508, Afribank

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(Nig) Plc v. Bonick Industries Ltd. (2006) 5 NWLR Pt.873 page 300, Oloba v. Akerefa (1986) 3 NWLR Pt.84 page 508.

A Court lacks jurisdiction where the matter before it was not initiated by due process of law. It robs the Court of the necessary vires to continue as any decision reached amounts to a nullity irrespective of how well the proceedings were conducted. See Umanah v. Attah (2006) 17 NWLR Pt.1009 page 509, Madukolu v. Nkemdilim (1962) 1 All NLR page 587.

The originating process filed on 15th November, 2000 signed by the law firm Olajide Oyewole & Co. on behalf of the Appellant is a nullity and void ab initio. Therefore the proceedings culminating in the judgment that is being appealed against is void ab initio. The whole proceeding is a nullity.

The appeal is therefore dismissed.

Costs of N50,000.00 is awarded the Respondent against the Appellant.

Other Citations: (2016)LCN/8658(CA)