CNOOC Exploration and Production Nigeria Limited & South Atlantic Petroleum Limited (“The Appellants”), who are contractors to the Oil Mining Lease 130 Production Sharing Contract (“PSC”), prepared the petroleum profit tax returns for the 2010 accounting period and forwarded same to the Nigerian National Petroleum Corporation (“NNPC”) to file the returns with the FIRS as provided under the PSC. However, the NNPC unilaterally prepared and filed a different one. On this basis, the FIRS forwarded a Notice of Assessment to the Appellants. Thereafter, the Appellants filed an appeal on the ground that the FIRS’ computations in the Notice of Assessment are wrong in law. The FIRS challenged the appeal on the basis (amongst others) that the Appellants’ objection was incompetent for non-joinder of the NNPC as a proper/necessary party to the appeal.
At the appeal proceedings, the TAT made an order joining the NNPC as a party to the appeal, because in the opinion of the TAT, the Appellant is a desirable and necessary party to be joined in the appeal. Upon being joined as a party to the appeal, the NNPC filed a Notice of Preliminary Objection by which it challenged the jurisdiction of the TAT to hear the appeal on the grounds (amongst others) that the claims before the TAT were connected with or pertaining to the taxation of companies carrying on business in the Federal Republic of Nigeria, thus within the exclusive jurisdiction of the Federal High Court. In its ruling, the TAT held that it has jurisdiction.
At the Federal High Court on an appeal, the court held (amongst other things) that the TAT by exercising jurisdiction in a matter that relates to the revenue of the Federal Government and which pertains to or is connected with taxation of a Nigerian company encroaches upon the exclusive jurisdiction of the Federal High Court as enshrined in Section 251(3) of
the 1999 constitution (as amended).
Dissatisfied with the judgement, the Appellants appealed to the Court of Appeal on various issues among which was the determination of the jurisdiction of the TAT. The Appellants argued that the TAT is merely an administrative body, therefore the proceedings before it is a condition precedent to the assumption of jurisdiction by the Federal High Court. On the other hand, the NNPC & FIRS argued that section 59 of the Federal Inland Revenue Services Act which establishes the TAT, conferring it the powers to determine tax issues affecting a Federal Government Agency, relating to taxation of Companies in Nigeria and issues pertaining to the revenue of the Federal Government of Nigeria is inconsistent with section 251 of the 1999 constitution (as amended) and therefore is void to the extent of its inconsistency.
In relying on the decisions of the Court of Appeal in the unreported judgements of Shell Nigeria Exploration & Production Company, FIRS (unreported judgement appeal no: CA/A/208/2012) & Esso Exploration & Production Nigeria Limited v NNPC (unreported judgement appeal no: CA/A/507/2012), the Court of Appeal recognized the TAT is a vital step towards the resolution of tax related dispute; therefore has jurisdiction over tax matters. Effectively, the Court of Appeal confirmed that TAT has jurisdiction over tax matters and can validly entertain appeals from FIRS.
