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Nigerian High Court Nullifies Section of Tax Laws

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CEM REPORT, LEGAL | A Federal High Court sitting in Abuja has declared certain sections of the Tax Appeal Tribunal (Procedure) Rules (2021), the Federal High Court of Nigeria (Federal Inland Revenue Service) Practice Directions (2021), and the Federal High Court of Nigeria (Tax Appeals) Rules (2022) as unconstitutional, null and of no consequences.

The sections were declared unconstitutional on the grounds that they constrained the constitutionally provided right of appeal. The sitting judge, Justice James Omotosho noted the right to appeal is a constitutional right and the Minister of Finance, Budget and National Planning (1st respondent) cannot take away such right through the making of a subsidiary legislation.

He explained that although the 1st respondent (the Minister) had the power to make rules for the conduct of appeal and was not expected to construct an embargo to the enjoyment of the right to appeal of any appellant. He noted that “the law is trite that where any law or subsidiary legislation contravenes the provision of the Constitution, it shall be declared void to the extent of its inconsistency.“

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“In final analysis, I, therefore do not hesitate to strike down the offending provisions which in the opinion of this court substantially takes away the right of appeal of a tax debtor such as the applicant.”

Nullified Sections

Justice Omotosho hence declared the provisions of Order III Rule (6) (a) of the Tax Appeal Tribunal (Procedure) Rules, 2021 as “unconstitutional, null and void and contrary to the provisions of section 36(1) and (2), Section 6(6) (a) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) and the doctrine of separation of powers.”

He also declared that the provisions of Order V Rule 3 of the Federal High Court of Nigeria (Federal Inland Revenue Service) Practice Directions, 2021 as “unconstitutional, null and void and of no consequence having regard to the provisions of Sections 251(1), 6(6) (a) & (b), 36(1) & (2) of the 1999 Constitution (as amended), Paragraph 17(1) and 21 of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act, 2007 and is contrary to the principles of separation of powers and the Rule of Law.”

The judge also declared the provisions of Order V Rule 1 of the Federal High Court of Nigeria (Tax Appeals) Rules, 2022 as “unconstitutional, null and void and of no consequence having regard to the provisions of Sections 251(1), 6(6) (a) & (b), 36(1) & (2) of the 1999 Constitution (as amended), Paragraph 17(1) and 21 of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act, 2007, and is contrary to the principles of separation of powers and the Rule of Law.

He issued an order striking down (deleting) the provisions of Paragraph V Rule 3 of the Federal High Court (Federal Inland Revenue Service) Practice Directions 2021, or any other similar provision therein, for being unconstitutional and above the powers of the 2nd respondent (the Chief Judge of the Federal High Court) to issue practice directions.

Justice Omotosho also ordered the striking down (deleting) of the provisions of Order V Rule 1 of the Federal High Court of Nigeria (Tax Appeals) Rules 2022, for being unconstitutional and over the powers of the 2nd respondent to issue practice directions and Rules of court.

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He equally ordered the striking down (deleting) of the provisions of Order IlI Rule 6 (a) of the Tax Appeal Tribunal (Procedure) Rules, 2021 for being unconstitutional, null and void and above the powers of the 1st respondent (the Minister of Finance) to make Rules prescribing the procedure and conduct of appeals before the tribunal.

The motion was filed by Joseph Daudu, a former President of the Nigerian Bar Association (NBA). The motion challenged the law which had required him to pay 50 per cent of the N1.2 billion tax he was billed before he could appeal his assessment.

Daudu, in the suit, marked: FHC/ABJ/CS/12/2022, prayed the court to declare the said provisions as unconstitutional, null and void and of no consequences, stating that the provisions were unfair, unlawful and a violation of the right to appeal.

The suit listed the Minister of Finance, Budget and National Planning (who made the Tax Appeal Tribunal (Procedure) Rules (2021); the Chief Judge of the Federal High Court (who made the Federal High Court of Nigeria); Federal Inland Revenue Service) Practice Directions (2021) and the Federal High Court of Nigeria (Tax Appeals) Rules (2022), and the Attorney General of the Federation (AGF), were listed as respondents in the suit.

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