The Tax Appeal Tribunal sitting in Abuja on Thursday ordered the Abuja Electricity Distribution Company (AEDC) to pay the Federal Inland Revenue Service (FIRS) N5,314,665,952 which amounts to Value Added Tax (VAX) and Withholding Tax (WHT) liabilities owed between 2013 to 2017.
The judgement was delivered by a five-man Tax Appeal Commissioner led by its presiding judge, Hon. Iriogbe Alice, against an appeal entered by the AEDC in No: TAT/ABJ/APP/330/2022.
In its case, the AEDC’s legal team contended that sometime in 2018, the FIRS, in conjunction with the Economic and Financial Crimes Commission (EFCC) conducted a tax investigation on the company for the 2013-2017 years of assessment period (YOA).
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After the assessment, the AEDC expressed dissatisfaction with the findings of the tax collection agency of the federal government, contending that the FIRS did not provide any lawful basis for such liability.
The electricity company then formulated three grounds of appeal against FIRS.
Its legal team opined that the FIRS was wrong to have assessed the AEDC to tax based on an unauthorised representation by its agent and to issue a Value Added Tax (VAT) assessment of NGN4,534,358,874 (Four Billion five hundred and thirty-four million, three hundred and fifty-eight thousand, eight hundred and seventy-four Naira) based on a purported letter instead of relying on the legal basis of the VAT Act.
The company added that the respondent was wrong in assessing the AEDC to additional Withholding Tax (WHT) liability of NGN780,307,078.00 (Seven hundred and eighty million, three hundred and seven thousand, and seventy-eight Naira) without taking into due consideration of relevant laws and procedures.
“The Respondent was wrong to have issued the Appellant a VAT assessment of
NGN4.534,358,874.00 (Four billon. five hundred and thirty-four million, three hundred and fifty-eight thousand, eight hundred and seventy-four Naira) without stating the basis for such liability,” the AEDC maintained, thereby praying the Tribunal to quash the tax liability.
Objecting to the appeal, the FIRS legal team in its response dated May 16, 2022, denied the appellant’s claims that the assessment was invalid.
The respondent asserted that there was a Tax Investigation conducted by a Joint Task Force of the FIRS and the EFCC and that at the end of the exercise, an assessment was issued on the appellant to the tune of N20,168,668.687.00 (Twenty Billion One Thousand and Sixty Eight Million, Six hundred and Sixty Eight
Thousand. Six Hundred and Eighty Seven Naira only ) for the period 2013 -2017.
The respondent said further that a reconciliatory meeting was held with the
AEDC which was represented by a Consortium of Tax Consultants: TBS
Professional Services, ACS Ascension and TEK Financial Services and KPMG
Professional Services.
“The Respondent asserted that at the Reconciliation Meeting, the Appellant’s
representatives /agents streamlined the VAT Assessment to N4,534.358,874.00 (Four Billion, Five Hundred and Thirty-Four Million, Three Hundred and Fifty-Eight
Thousand. Eight Hundred and Seventy-Four Naira only) and the Respondent therefore raised an assessment in the agreed sum and served same on the Appellant,” FIRS team added.
FIRS also argued that it rightly assessed the AEDC to the sum of N780,307,078.00 (Seven Hundred and Eighty Million, Three Hundred and Thousand and Seventy-Eight Naira only) for Withholding Tax (WHT) being an amount also agreed upon by the Appellant’s agent: KPMG, in the course of the Reconciliation Exercise and that the Appellant did not issue a valid notice of objection.
The tax collection agency urged the Tribunal to dismiss the appeal and compel the AEDC to pay the tax liability.
Passing its judgement on Thursday, Hon. Alice held that evidence showed that the AEDC defaulted in the tax dispute.
The Tribunal held that the appellant is bound by the action of its agents whom it appointed to act on its behalf for Reconciliation of Value Added Tax in respect of the tax investigation Reconciliation Exercise.
The rest of the Tribunal’s orders read, That the Assessment of Value Added Tax in the sum of N4,534,358,874 (Four Billion, five Hundred and thirty four million, three hundred and thousand, eight hundred and seventy-four Naira only) made by the Respondent on the Appellant is valid and in accordance with the Value Added Tax Act (VATA).
“This Honourable Tribunal therefore, compels the Appellant to pay N4,534,358,874.00 (Four Billion, Five Hundred and Thirty -Four Million, Three Hundred and fifty -eight thousand, eight hundred and seventy four naira) only as VAT liability for 2013 – 2017 as contained in the Notice of Refusal to Amend (NORA) to the Respondent forthwith.
“This Honourable Tribunal compels the Appellant to pay the sum N780,307,078.00 (Seven Hundred and eighty million, Three Hundred and Seventy-Eight Naira) only as WHT liability for 2013 and 2016 as established by its consultant KPMG.
” This Honourable Tribunal compels the Appellant to pay the sum of N100,000
(One Hundred thousand naira Only) pending cost awarded in favour of the Respondent in the course of the proceeding.
“The Appellant is also liable to interest on the judgement sum at the prevailing
CBN rediscount rate from the date of judgement until the judgement debt is liquidated.
“This is the judgement of this Honourable Tribunal.”