Tax Alert

This alert contains:

FHC nullifies the requirement to pay security deposits before appeal at the TAT and the courts

Background

The Federal High Court (FHC) of Nigeria in the case of Joseph Bodunrin Daudu SAN v. Minister of Finance Budget and National Planning & 2 Ors 1 struck out certain provisions of the Tax Appeal Tribunal (Procedure) Rules (2021) (“TAT Rules”), the Federal High Court of Nigeria (Federal Inland Revenue Service) Practice Directions (2021) (“FHC Practice Direction”) and the Federal High Court of Nigeria (Tax Appeals) Rules (2022) (“Tax Appeal Rules”) which require a tax payer to pay 50% or 100% of a disputed tax assessment as deposit before filing appeals.

These provisions were held to be an infringement on the taxpayers’ constitutional right of fair hearing and therefore null and void.

The FIRS had assessed Joseph Bodunrin Daudu SAN (the “Applicant” or the “Taxpayer”) to outstanding Personal Income Tax, Withholding Tax and Value Added Tax. Dissatisfied with the assessment, the Applicant appealed to the Tax Appeal Tribunal (TAT) in July 2018, who ruled in favour of the Federal Inland Revenue Service (FIRS).

The Taxpayer then appealed the judgment before the FHC. While the matter was still pending in court, the Minister of Finance, Budget and National Planning (MoF) made the TAT Rules and the Honourable Chief Judge of the FHC (Chief Judge) issued the FHC Practice Direction and the Tax Appeal Rules.

The Applicant then filed this suit against the MoF, the Chief Judge and the Attorney General of the Federation (“Respondents”) challenging the constitutionality of these Rules and Practice Direction.