On 20th June, 2018, the Lagos State High Court delivered a ruling in Chemiron Nigeria Ltd v. Lagos State Board of Internal Revenue on the jurisdiction of the State High Court in personal income tax matters. The Claimant commenced the action at the Lagos State High Court to challenge the Demand Notice served on it by LIRS for alleged failure to deduct and remit taxes due from its employees.
In response, LIRS filed a preliminary objection challenging the jurisdiction of the High Court to hear the matter on the ground that having failed to formally object to the tax assessment and take other steps set out in Sections 58 and 60 of the Personal Income Tax Act as well as Section 59 of the FIRS Act 2007, the Claimant’s action is incompetent.
The court held that an action commenced at the High Court by a tax payer against an assessment is competent even when the taxpayer fails to forward a notice of objection to the tax authority or explore the tax man’s in-house mechanism before commencing the action at the High Court.
In urging the court to strike out the action, LIRS’ counsel argued as follows:
In response, the Claimant urged the court to dismiss the preliminary objection on the following grounds:
This decision of the court clearly shows that the taxpayer also has the option of approaching the High Court for redress without taking steps to follow the procedure set out under Section 58 and 60 of the Personal Income Tax Act. This is a deviation from the established practice of taxpayers commencing their cases at the Tax Appeal Tribunal further to Section 13 of the Fifth Schedule to the Federal Inland Revenue Service (Establishment) Act, 2007 which provides that a taxpayer who is aggrieved with any decision or action of the tax authority may challenge such decision or action at the Tax Appeal Tribunal within 30 days of such decisions or actions.
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This Legal Alert contains information on tax /legal issues. It does not constitute legal or professional advice on such issues. Where specific legal advice is needed, the services of a solicitor/tax adviser should be sought.