TAT ORDERS CONTAINED ENERGY SERVICES LIMITED TO PAY NGN24,792,954.98 TO LSBIR

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The Tax Appeal Tribunal (TAT or “the Tribunal”) on 18 November 2022, ordered CONTAINED ENERGY SERVICES LIMITED (“the Respondent”) to pay NGN24,792,954.98 to the LAGOS STATE BOARD OF INTERNAL REVENUE(LSBIR or “the Appellant”).


BRIEF OF THE CASE

Following an audit of the Respondent’s books and records, the Appellant established that the Respondent had under-remitted and under-deducted personal income taxes for its employees, withholding tax from its transactions, Developmental levies, and Business Premises that was due to the Lagos State Government.


As a result of the under deductions and under remittances, the Appellant served on the Respondent a Notice of Assessment accompanied by a Demand Notice of its established liability for Personal Income Tax, Withholding Taxes, Development Levies, and Business Premises Renewal covering the period of-2011-2016 in the sum of NGN24,792,954.98 (‘twenty-four million, seven hundred and ninety-two thousand, nine hundred and fifty-four Naira and ninety-eight Kobo’).
The Respondent was advised that it had the right to object within 30 days of receiving the assessment and Demand Notices. Following its objection to the assessment, the Appellant requested a meeting with the Respondent’s Tax Audit Reconciliation Committee (TARC). During this meeting, the Respondent requested documents to explain and buttress their grounds for the objection. The Respondent refused to attend the meeting and/or produce the needed papers, as a result of which the Appellant gave the Respondent a Notice of Refusal to Amend (NORA) the tax assessments, in which the Appellant demanded that the assessed sum be paid within 7 days of receipt of the letter.

Following the Respondent’s failure to pay the assessed sum, the Appellant served a notice on the Respondent of its intention to obtain a Warrant of Distrain if the Respondent failed to pay the assessed liability within 7 days. The Respondent has yet to pay the assessed liability and has not filed an appeal, thus the Appellant’s action before this Honourable’tribunal.

  ISSUES FOR DETERMINATION
1  Whether the Appellant has fulfilled all the statutory conditions to enable this honorable Tribunal grant all the relief sought for its Notice of Appeal

2. Whether the Respondent is liable to pay penalty, and interest for the under deduction and under remittance of PAYE, \MHT, State Development Levy, and Business Premises Levy due to the Lagos State Government for the periods under consideration. 

 
TAX APPEAL JUDGMENT

1 Whether the Appellant has fulfilled all the statutory conditions to enable this Honorable Tribunal grant all the relief sought for its Notice of Appeal-
The Tribunal states that ” Section 57 of PITA 2011 (as amended) provides that the relevant tax authority shall cause to be served on or sent by registered post or courier service or electronic mail to each taxable person, or person in whose name a taxable person chargeable whose name appears in the assessment lists a notice stating the amount of any assessable, total or chargeable income, the tax charged, the’place at which the payment should be made, and setting out the rights of that person as contained in, section 58 and 59 of (‘the Act”). In the same vein, Regulation 17 of the Operation of Pay-As-You-Earn (PAYE) Regulations 2002, makes an employer liable for failure to deduct and/or remit personal income taxes of its employees. The Regulation provides thus; ‘An employer who fails to deduct taxes or to account for deductions made shall be liable to the relevant tax authority for the sums lost’ This Regulation is further amplified by Regulation 21 which authorizes legal proceedings against employers who fail to deduct and/or remit by providing that; ” Proceedings may be brought against an employer for the recovery of’ all arrears of taxes outstanding against its employees”  The Appellant has met all the statutory and procedural requirements for this Honorable Tribunal to give the Appellant this relief.


2. Whether the Respondent is liable to pay penalty, and interest for the under deduction and under remittance of PAYE, \MHT, State Development Levy, and Business Premises Levy due to the Lagos State Government for the periods under consideration. From the evidence placed before this Honorable Tribunal, then it is very clear that the Respondent never remitted any amount deducted from the emoluments of her employees for the relevant periods and as such, the assessed taxes should attract the due penalty and interest. Accordingly, this Honorable Tribunal orders that the Respondent be liable to the said penalty and interest as contained in the Notice of Appeal. 

Finally, it is the decision of this Honourable Tribunal that the Respondent pays the sum of NGN24,792,954.98 (twenty-Four Million, Seven Hundred and Ninety-Two Thousand and Nine Hundred and Fifty-four Naira Ninety-Eight kobo) only as a debt owed the Lagos State Government.