In 2021, the Tax Appeal Tribunal (TAT) amended its rules, with the new rules cited as the TAT (Procedure) Rules 2021 (“the TAT Rules”). Among provisions included were those permitting virtual hearings and those empowering the TAT to conduct its proceedings in a manner it deems fit to ensure speedy dispensation of justice.
The Federal High Court (FHC) recently delivered a judgment in Joseph B. Daudu SAN v. Federal Inland Revenue Service (FIRS) which featured a fine balance between the exercise of discretion by the TAT in the conduct of its proceedings, and the fundamentality of adhering to principles of fair hearing. This article examines the judgment of the FHC in this case and recommends more thorough attention to seemingly minor details that may border on fundamental principles of fair hearing.
- HIGHLIGHT OF FACTS
The Federal Inland Revenue Service (“FIRS” or “the Respondent”) issued and served on a former president of the Nigerian Bar Association (NBA), Mr. Joseph Bodunrin Daudu, SAN (“the Appellant”), notices of assessments to Withholding Tax (WHT), Personal Income Tax (PIT) and Value Added Tax (VAT) all dated 4th June 2018 to the tune of over N1,225,115,562.33 for the period covering 2010 to 2017. After a series of exchange of correspondences, the Appellant was aggrieved and filed an appeal before the TAT sitting at the Federal Capital Territory (FCT) Abuja.
In its judgment delivered on 23rd June 2021, the TAT held that the Appellant was liable to pay the amount assessed by the Respondent plus post-judgment interest. Further aggrieved, the Appellant filed an Amended Notice of Appeal to the Federal High Court on, inter alia, the following pertinent grounds:
- Tax Appeal Tribunal Abuja erred in law and rendered the entire proceedings a nullity when at various stages of the hearing and determination of the Appellant’s appeal, it sat with differently constituted panels such that a member Hon. Nasiru Kuliya who did not participate or attend on certain dates when crucial and critical aspects of the proceedings took place turned around to participate in the deliberation and delivery of the final judgment and by doing so, violated elementary but fundamental principles of fair hearing (ground 5).
- The Tax Appeal Tribunal Abuja erred in law and acted without jurisdiction, when although improperly constituted, assumed jurisdiction to adjudicate over the appeal lodged by the Appellant and rendered its decision on the 23rdof June 2021 in the manner it did as if it was a Court or Tribunal created under the 1999 Constitution (as amended) that was acting in compliance with the provisions of section 36(1) and (2) of the said Constitution (as amended) (ground 6).
The Appellant urged the FHC to inter alia, allow the appeal and set aside in its entirety the judgment of the TAT delivered on 23rd June 2021.
In response, the Respondent filed its reply based on the following grounds:
- The judgment of the TAT was valid as proceedings therein are informal and in consonance with the provision of its rules, especially Orders XXI (4), V (5), and XXVII of the TAT Rules.
- ISSUES FOR DETERMINATION
The TAT preferred the issues for determination formulated by the Appellant. The issue for determination relevant to this treatise is presented as follows:
- Whether or not the entire proceedings before the trial Tribunal is not nullified and rendered null and void consequent upon the haphazard participation of one of its members in the person of Hon. Nasiru Kuliya whose inconsistent participation caused the TAT to sit with differently constituted panels at various stages of the hearing and determination of the Appellant’s appeal?
- RELEVANT LEGISLATIONS
- 1999 Constitution of the Federal Republic of Nigeria (as amended).
- Federal Inland Revenue Service (Establishment) Act 2007 (FIRSEA).
- The Tax Appeal Tribunal (Procedure) Rules 2021.
- ARGUMENTS ON ISSUE FOR DETERMINATION
4.1 Appellant’s Argument
The Appellant clarified that his contention was not based on the quorum provision contained in paragraph 4 of the Fifth Schedule to the FIRSEA but his constitutional right to fair hearing, based on the following:
- The entire proceedings is incompetent on the ground that the right to fair hearing of the Appellant had been violated as a member of the trial Tribunal in person of Hon. Nasiru Kuliya was absent from the three days proceedings.
- This happened first, at the stage of the proceedings when the Respondent opened its case and its witness by name Olabode Simeon Olatunji (A Deputy Direction, Tax) in the Respondent’s employ was cross-examined by the Appellant.
- Again, it happened when the written addresses were adopted and adumbrated upon.
- Despite these, the said Hon. Nasiru Kuliya took part in the delivery of the judgment and endorsed same as though he participated in all the stages of the trial.
4.2 Respondent’s Argument
The Respondent countered the Appellant’s arguments as follows:
- None of the cases cited and relied upon by the Appellant is applicable to this case.
- Proceedings before the TAT are informal, and appearances before the TAT are not restricted to legal practitioners as chartered accountants and tax advisers are permitted to represent parties before the TAT.
- The Chairman ordinarily chairs the proceedings of the TAT, and in the Chairman’s absence, members of the TAT are at liberty to appoint one of them as acting Chairman.
- The decision of the TAT is valid where signed by the Chairman alone; reference being made to Orders XXI (4), V (5), and XXVII of the TAT Rules.
- The Appellant’s allegation of violation of right to fair hearing does not automatically void proceedings and judgment of a Court or Tribunal as the burden of proving same is on the party who alleges it.
- Mere variation in the composition of the TAT, that is, absence of one member when the Respondent’s first witness testified (whose testimony had no influence on the decision of the TAT, since decision was not given on oral evidence) is incapable of rendering the judgment of the TAT, whose quorum is ordinarily three out of five, void.
- TAT’S DECISION ON THE ISSUE
The FHC referred to section 59 of the FIRSEA and held that the TAT is an administrative agency created by statute and endowed with judicial powers. In other words, the TAT, by virtue of its power to exercise primary jurisdiction in the settlement of disputes and its authority to inquire and take decisions affecting the civil rights and obligations of persons, performs quasi-judicial functions. Then the FHC referred to the decision in Gyang v. COP Lagos State wherein it was held that administrative bodies or tribunals must strictly observe principles of fair hearing in their performance of judicial roles.
Furthermore, the FHC noted that it was crucial to thoroughly consider the peculiar facts of this case, the doctrine of fair hearing being expansive, varied in ramifications, and nebulous in nature. In considering the facts, the FHC observed that the Respondent admitted (did not deny) the allegations made by the Appellant. It held that it was compulsory for members of the TAT to be present throughout the proceedings, as it would be a wrongful exercise of judicial power for any member of the panel to sit whenever convenient for him. It held that the presence of every member of the panel goes to the point of its consistency as all members of the panel would be required to deliberate on the processes and proceedings before coming to its conclusion or decision on the matter.
The FHC quipped that a ramification of the doctrine of fair hearing is that a man cannot be a judge in a matter he never heard or never fully heard. It added that the action of the inconsistent member of the panel in endorsing the judgment is tantamount to a misrepresentation that he participated in all stages of the proceedings, took part in the deliberations with other members of the panel thereafter, and came up with the endorsed judgment. In sum, the court held that failure of the TAT to observe fair hearing principles operated to nullify the entire proceedings.
Kudos must be given to the FHC for exposing the Machiavellian attempts by the Respondent to move the court to misinterpret the intended objective of Order XXI Rule 3 of the TAT Rules. For emphasis, the said rule is excerpted below:
“Order XXI – Determination of Appeal
- The decision of the Tribunal may be unanimous or taken by a majority of members and the decision shall record whether it was unanimous or majority decision;
Provided that where there is a tie, the Chairman or presiding member shall have a casting vote.”
Though the TAT rules permit the reaching of a decision by a majority of members, it mandates the judgment to clearly show that such decision was a majority one. Thus, the TAT rules do not in any way permit a breach of fair hearing as argued by the Respondent.
In these times characterized by mixed opinions from members of the public and negative perceptions from the international community on judicial conduct in Nigeria, this decision comes as a timely reminder that the exercise of judicial powers must be taken with utmost seriousness and members of a panel must be double-conscious of leaving no margin for error. As Lord Denning famously remarked, justice must be rooted in confidence. Only by this level of consciousness from the Bench or “quasi-Bench” would such negative perceptions transform into deep-rooted public confidence in the judicial process.
For further information on this article and area of law, please contact
Olukolade O. Ehinmosan at: S.P.A. Ajibade & Co., Lagos
By telephone (+234 1 472 9890), fax (+234 1 4605092)
Mobile (+234 815 0865 646 +234 815 9794 230)
- Associate, Tax, Real Estate and Succession, SPA Ajibade & Co, Lagos, Nigeria.
- Electronic copy of the TAT Rules available at https://tat.gov.ng/Content/TAX-APPEAL-TRIBUNAL- PROCEDURE-RULES-2021.pdf last accessed 3rd October 2023 at 4:12 pm.
- Order XVII (1) & 9 of the TAT Rules.
- Unreported. Suit No: FHC/ABJ/TA/1/2021, available at https://thenigerialawyer.com/wp- content/uploads/2023/09/JUDGMENT-J.B.-DAUDU-SAN-V-FIRS-1-TheNigeriaLawyer.pdf, last accessed 2nd October 2023 at 12:31 pm.
- Coram: Hon. Iriogbe Ayo Alice (Chairman), Hon. Ishola Rufus Akintoye, Hon. Ajayi Julius Bamidele, Hon. Al Mustapha Aliyu, and Hon. Nasiru Kuliya.
- (2014) 3 NWLR (Pt. 1395) 547.
- Ibid, at page 558.
- Metropolitan Properties Co (FGC) Ltd v. Lannon (1968) EWCA Civ 5; (1969) 1 QB 577, Court of Appeal (England and Wales).