TSKJ Construcoes Internacional Sociadade Uniperssoal LDA

Has the Supreme Court finally settled the Tax Appeal Tribunal versus the Federal High Court jurisdictional debate or further entrenched the taxpayer dilemma?

ASSIGNMENTS UNDER THE PETROLEUM INDUSTRY ACT: INVESTOR CONSIDERATIONS FROM UPSTREAM TO DOWNSTREAM

INTRODUCTION

The issue of Court's jurisdiction is without doubt a radical and crucial question of competence. If a court has no jurisdiction, the proceedings are and remain a nullity, however well conducted and brilliantly decided they might have otherwise been. The reason is that, a defect in competence is not intrinsic to, but rather, it is extrinsic to the ¹ adjudication. An attack on jurisdiction is no doubt a question of law, but it is much more than ² that, it is a question of competence. In TSKJ Const rucoes Internacional Sociadade Uniperssoal LDA ("TSKJ") v. Federal Inland ³ Revenue Service ("FIRS") , the appellant approached the apex Court to decide in the main the following:

1. the nature of the jurisdiction of the Tax Appeal Tribunal ("the tribunal") in matters connected with or pertaining to federal taxation and
2. the legal effect of the jurisdiction of the tribunal vis-à-vis the constitutional original jurisdiction of the Federal High Court on tax related disputes.

Although the Court observed the notoriety of the above issues and sought to put same beyond further controversy, this article seeks to analyse the extent to which the decision of the apex court impacts the jurisdictional debate between the tribunal and the Federal High Court. It seeks to determine whether the court's decision has conclusively resolved the debate or whether the issue has merely "taken a new guise" or form.

TSKJ v. FIRS: highlighting the lengthy and multi-tiered journey of tax dispute resolution in Nigeria from the Tax Appeal Tribunal to the Supreme Court.

a. The facts

The facts in TSKJ v. FIRS are quite interesting. TSKJ, a Portuguese company and a non-resident taxable person in Nigeria incorporated TSKJ Nigeria Limited (a Nigerian subsidiary), to execute an LNG project for Nigerian LNG Limited. During the project, TSKJ filed and paid taxes on a self-assessment basis. In its practice of assessing her tax liability based on turnover, TSKJ deducted what it termed as 'Recharges', being cost paid to its Nigerian subsidiary for logistics and support services rendered in the course of executing the LNG project. FIRS disagreed with these deductions and accordingly issued an additional tax assessment. TSKJ objected to the additional tax assessment prompting an appeal to the tribunal.

The tribunal heard the matter and delivered its judgment on 1st August 2012, dismissing the appeal and ordering TSKJ to pay the additional assessed tax. Aggrieved, TSKJ appealed to the Federal High Court to set aside the decision of the tribunal and to declare the additional assessments as invalid, null and void. The Federal High Court, found in favour of TSKJ and in the main held per A.F.A. Ademola J., that "the Tribunal lacked jurisdiction over issues of taxation of the Federal Government, such being a matter that falls squarely within the purview of the jurisdiction of the Federal High Court pursuant to Section 251 (1) (a) & (b) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended)."

Disconcerted by this dramatic twist in the case, FIRS headed to the Court of Appeal arguing among other things that, the Federal High Court erred when it held that the tribunal lacked the requisite jurisdiction to adjudicate on matters connected with or pertaining to federal taxation.

The Court of Appeal agreed with the tax authority in this regard when it held among other things that, "the Tribunal is an administrative Tribunal for tax matters and that its jurisdiction does not interfere with that of the Federal High Court. Rather the Tribunal was instituted as a condition precedent for an aggrieved taxpayer to fulfil before it can approach the Federal High Court to review the decision in its appellate jurisdiction."

Piqued, TSKJ approached the Supreme Court, prompting the decision which is now under consideration.

b. The Supreme Court's verdict

When the matter got to the Supreme Court, it was the submission of the learned counsel for the Appellant (TSKJ) that pursuant to Section 59 and Paragraph 20(3) of the FIRS Act, 2007, the Tax Appeal Tribunal is deemed to be a "Civil Court" and not a mere administrative tribunal, as stated by the Court of Appeal. He further argued that in effect, the TAT being a Court, cannot rightly entertain matters pertaining to federal taxation and revenue of the Government of the Federation, as doing so would be a usurpation of the jurisdiction of the Federal High Court.

The learned counsel for the Respondent (FIRS) argued in response that, the tribunal was established as an administrative body for internal ministerial secondary tax appraisal and constituted by the Executive arm of Government to provide the technical expertise necessary to deal with tax complaints and/or objections. Therefore, it is not meant to usurp the powers of the Federal High Court. He further contended that the status of a Court cannot be ascribed to the tribunal within the meaning of the Constitution. Consequently, the provision of Section 251(1) of the 1999 Constitution, which prohibits "other courts," does not apply to the tribunal, as it neither falls under that description nor operates as such.

Upon due consideration of the arguments, the apex Court in concordance with the ruling in Addax Petroleum Development (Nigeria) Limited ⁴ v. Federal Inland Revenue Service established that the Tax Appeal Tribunal is an administrative tribunal empowered to determine the correctness of assessment to tax without undue fixation on formality. On the status of the tribunal, the Court held that the TAT is purely an administrative tribunal, one which carries out quasi-judicial functions, as opposed to a Court as defined in Section 6 (3) and (5) of the 1999 Constitution.

On the very crucial issue whether the status of the TAT as an administrative tribunal conflicts with the provision of Section 251 (1) (b) of the Constitution, thereby usurping the jurisdiction of the Federal High Court as it pertains to adjudication on tax matters, it was held that "the term"Court" in Section 251 (1) of the Constitution means another Court which forms part of the judicature of the Federal Republic of Nigeria in the sense of Section 6 (3) and (5) of the Constitution. Clearly and without any iota of doubt, the Tax Appeal Tribunal is certainly not one of them."

The Court reasoned in line with the saying that "all courts are tribunals, but not all tribunals are ⁵ courts." This supports the principle that an administrative body which is invested with quasijudicial functions is not in the same position as a ⁶ purely judicial body. It also goes without saying that where a statutory body such as the tribunal, performs nearly judicial functions, it is not tied to ordinary judiciary procedure.⁷

In dismissing TSKJ's appeal, the Supreme Court unanimously held that: "The Tax Appeal Tribunal is an administrative body, therefore a mere condition precedent, and its jurisdiction i s not incongruous , incompatible or inconsistent with the jurisdiction of the Federal High Court."⁸

Footnotes

1 TSKJ v. FIRS: highlighting the lengthy and multi-tiered journey of tax dispute resolution in Nigeria from the Tax Appeal Tribunal to the Supreme Court.

2 A.G. of Lagos State v. Hon. Justice L.J. Dosumu (1989) ANLR

3 (unreported judgment dated 9th May 2025) Appeal No: SC/955/2017 Leading judgment delivered by Jummai Hannatu Sankey, J.S.C

4 (2012) 7 TLRN 74, 85

5 Addax Petroleum Development (Nigeria) Limited v. Federal Inland Revenue Service (Supra)

6 Cooper v. Wilson (1937) 2 KB 311

7 Cooper v. Wilson (Supra)

8 TSKJ v. FIRS (Supra)

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