PwC Disagrees with Tribunal’s Order for Multichoice to Deposit N900bn

Dike Onwuamaeze

The PwC Nigeria, in its review of the Tax Appeal Tribunal’s ruling in MultiChoice Nigeria Limited vs. the Federal Inland Revenue Services (FIRS), has stated that it was wrong for the tribunal to order the MultiChoice to deposit half of the disputed N1.8 trillion before it could hear MultiChoice’s appeal against the FIRS.

The FIRS had alleged that MultiChoice had under-remitted about N1.8 trillion in taxes, and directed banks with which the MultiChoice had accounts to freeze such accounts, recover the said sum and pay over to the FIRS.

But the PwC pontificated that based on the provision of the law, it would be perceived that “it is not mandatory for the tribunal to make the order for the statutory deposit.”

The PwC also stated that it would be arguable that even if the FIRS ccould prove at least one of the conditions listed in the provision, the tribunal might still exercise a discretion on whether to order the appellant to make a statutory deposit or not because the provision stated that “the tribunal may adjourn the hearing of the appeal to any subsequent day and order the appellant to deposit with the FIRS.”

It said: “The tribunal’s ruling in this case did not provide insights into how they reached the conclusion that a deposit was required based on the three conditions in the law.

“Therefore, there is room for taxpayers to challenge it if the FIRS attempt to cite this ruling as a precedent to argue that taxpayers must make a statutory deposit prior to filing an appeal.

“It is advisable for the tribunal to carefully consider the requisite conditions for ordering the statutory deposits, and duly exercise its discretion under the provision in good faith. Not doing this may result in indiscriminate assessments and a decline in taxpayer confidence in the appeal process.”

The law provided, according to the PwC that the tribunal would make an order “if the representative of the FIRS proves to the satisfaction of the tribunal…” at least one of these three conditions: that the appellant failed to file tax returns for the year of assessment concerned; that the appeal is frivolous or constitutes an abuse of court process, and, three, that it is expedient to require the appellant pay the statutory deposit.

The PwC stated that it was “curious that the tribunal did not refer to any of the three conditions in reaching its decision. As a result, the tribunal did not mention which facts were placed in proof of such condition(s), or how it considered that the FIRS’ facts were cogent enough to trigger the provision. The tribunal ignored this critical part of the provision and focused on the order for statutory deposit.”

Furthermore, the PwC pointed out that the MultiChoice fulfilled the only condition provided in the fifth schedule to the FIRSEA, which said that an aggrieved person or persons should “file the appeal within 30 days in the prescribed form and to pay the necessary filing fees,” adding that “beyond this, it is important for the rights of taxpayers that the FIRS must prove the conditions first, before the tribunal (at its discretion) can make an order for a statutory deposit.”

The PwC referred to the provision of the law, which stated that “the tribunal may adjourn the hearing of the appeal to any subsequent day and order the appellant to deposit with the FIRS,” and argued that “the word ‘may’ in law connotes a discretionary rather than a mandatory requirement.

It pointed out that a counter argument might arise that the word “may” as used in this context qualified only the adjournment, and that once the tribunal adjourns the hearing, the deposit should be paid.

“However, our experience is that the tribunal can exercise its discretion in both adjourning and ordering for the deposit. This means the tribunal can consider other factors such as the attitude of the appellant to the prosecution of the appeal in deciding whether to make such ruling. It may also make other orders such as accelerated hearing of the appeal.

The PwC also argued that the tribunal order, which simply ordered the MultiChoice to make “the required deposit as provided under Schedule 5 para 15(7) … was vague, especially considering that the provision requires the payment of the lower of: (a) an amount equal to the tax charged upon the appellant for the preceding year of assessment; or (b) half of the tax charged by the assessment under appeal. “

The PwC also noted that the manner the judgment was delivered created ample room for the litigants to make contradictory claims on what the judgment really said, which could have been avoided if the tribunal had specified the amount the MultiChoice should have paid.

It said: “Further to the tribunal’s ruling, the FIRS has allegedly claimed in press releases that the order was for the MultiChoice to pay half of the N1.8 trillion assessment (about N900 billion), while the MultiChoice has also stated that the order requires the company to deposit an amount equal to its prior year tax, which is significantly lower.

“A simple confirmation of the amount paid by the MultiChoice in the preceding year of assessment, if any, would have enabled the tribunal to make a definite order that would not be open to misinterpretation by both parties involved in the dispute. However, it is clear from the law that the MultiChoice is required to pay the lower of the two amounts under the referenced provision.”