On 17 September 2019, the Tax Appeal Tribunal ("TAT" or "the Tribunal"), sitting in Lagos, upheld a notice of objection to a tax assessment sent to the e-mail address of the Tax Controller of the Federal Inland Revenue (FIRS), Lagos Zone. According to the Tribunal, a receipt of e-mail by the Tax Controller being a very senior officer of the FIRS translates to receipt by the FIRS. This decision was reached in the case betweenEarth Moving International Limited (the Company) v Federal Inland Revenue Service (FIRS).
The Tribunal also held that a notice of objection due for submission during a nationwide strike, was appropriately submitted as it was filed the working day following the strike.
The FIRS conducted a desk review on the Company's accounting and tax records and subsequently assessed the Company to additional tax liabilities. The Company objected to the additional tax.
Thereafter, the FIRS issued a revised assessment notice dated 27 August 2018, serving same on the Company on 29 August 2018. The Company further objected to the revised assessment notice via a notice of objection dated 26 September 2018. The Company claimed to have sent the objection via electronic mail to the email address of the Tax Controller of the FIRS, Lagos Zone on 27 of September 2018 and subsequently served a physical copy of the objection to the FIRS on 2 October 2018 (which had exceeded the prescribed 30 days for filing such objections). In response, the FIRS issued a Notice of Refusal to Amend (NORA) on the ground that the Company's notice of objection was filed out of time and that the assessment notice had become final and conclusive. Thereafter, the Company appealed to the Tribunal.
At the Tribunal, the FIRS argued that the Company ought to have communicated its objection on or before 28 September 2018 in line with Section 69(2) of the Companies Income Tax Act (CITA) which provides that an objection to an assessment notice should be made within 30 days from the date of service of the notice. The FIRS also contended that the Company did not send its objection to the official e-mail address provided by the FIRS but rather sent the mail to a non-existent e-mail address.
In a counter response, the Company argued that the Nigeria Labour Congress (NLC) embarked on a nationwide strike on the 27th and 28th of September, 2018, which led to the closure of all FIRS offices on the expected objection dates. Furthermore, the Company maintained that it had duly notified the FIRS of the objection by mailing it electronically to the official e-mail address of the Tax Controller on 27 September 2018 prior to submitting the physical objection on 2 October 2018.
Furthermore, the Company argued that the express intention of Section 69(1) of CITA which provides that a Company should object to a tax assessment by an application in writing, is to ensure that the FIRS receives written objections regardless of their mode of delivery (i.e. electronically or physically). The Company submitted that CITA does not restrict the mode of writing an objection to physical letters.
The Tribunal upheld the Company's argument and noted that the law did not provide that an objection must necessarily be conveyed via a particular medium of communication, provided that it is in writing. The Tribunal also held that the physical service of the objection by the Company on the working day following the two-day NLC warning strike was valid and thereby renders the FIRS' assessment inconclusive.
The TAT's decision implies that taxpayers can employ other modes of communication in objecting to tax assessments, provided the communication is in writing. Thus, the TAT has now ruled that an objection to an assessment sent by electronic means (e-mail) is a valid objection. However, the TAT failed to make a clear pronouncement on whether an objection sent via e-mail will be sufficient to dispense with the need for a physical submission of the objection.
Another question that still needs to be answered is whether an objection sent via an e-mail to the FIRS without a confirmation that the FIRS actually received the mail would be valid, given that the FIRS challenged the existence of the email address to which the Company's objection was sent. Similarly, the TAT's decision needs additional clarification as to the level of the FIRS' "senior officer" that will be senior enough, for the purpose of serving an objection to the FIRS through electronic means.
This is clearly an interesting decision that will attract commentaries and diverse views. Taxpayers and consultants are therefore advised to seek guidance in carrying out their business and tax transactions, to protect their rights and avoid undue tax exposure.
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