Tax Appeal Tribunal Dismisses N1.9m Lagos Internal Revenue Tax Liabilities Assessment against Mega Trust Insurance Brokers for being Arbitrary


The Lagos Zone of the Tax Appeal Tribunal has dismissed the sum of N1.9m Lagos Internal Revenue Tax Liabilities Assessment against Mega Trust Insurance Brokers for being arbitrary, imaginary, unreliable, and not based on any document or information from the company. 

The tribunal held that the Withholding Tax, Penalty, and Interest calculated by the Lagos State Board of Internal Revenue on the total PAYE have no legal basis, while the Development Levy and Business Premises have been fully paid.

From facts, the appellant- Lagos State Board Of Internal Revenue had submitted that an audit exercise into the books and records of the Respondent was conducted and alleged that the Respondent failed to accurately deduct and remit the Personal Income Tax of its employees, Withholding Taxes from applicable transactions, Development Levy and Business Premises Levy due to the Lagos State Government. 

The appellant maintained further that the Respondent was served a Notice of Demand accompanied by a Notice of Assessment of its established liability, and contended that consequent upon the failure of the firm to object to the assessed liability within 30 days as allowed by law, a letter of Intention to Obtain Warrant of Distrain was issued, urged the court to order that the sum be paid into the coffers of the Lagos State Government.

In defense, the respondent- Mega Trust Insurance Brokers maintained that the firm has not been a viable Company, but was only managing to exist and using the Office of another business. Also, at the material time, it had only two full-time employees whose taxes were duly deducted and remitted. 

The firm maintained that the then Managing Director, who was merely used to fulfil the regulatory requirement, did not earn any salary, that despite providing all the necessary information to the revenue board, and the board still went on to add the Chairman of the Respondent and the said Managing Director to the payroll as their paid employees.

He maintained that the Lagos State Board Of Internal Revenue did not do any form of investigation into the affairs of the firm before coming up with the bogus assessment, and they had no reason to disbelieve the information provided by the firm as no law makes it compulsory for Directors of a Company to be paid salaries and the objection was raised on the tax assessment, urged the court to dismiss the case.

In opposition, the Lagos State Board of Internal Revenue maintained that the Mega Trust Insurance Brokers had forfeited every right to object to the assessment by staying mute for 4 years, after service of the relevant documents on it, urged the court to grant the relief sought.

In its considered judgment at a panel headed by Prof. A.B. Ahmed Esq as Chairman, P.A. Olayemi, Esq, and Babatunde Sobamowo Esq, Samuel Ohwerhoye Esq, Terzungwe Gbakighir Esq as members held that service of the letter of objection by the respondent served on the Station Manager, Lagos State Internal Revenue Service, Lagos Island, is a proper service on the Executive Chairman and the demand notice cannot be said to be final and conclusive in the face of a valid, legal and legitimate objection by the Respondent.

The tribunal further stated that the collection of the alleged liabilities must be held in abeyance pending the determination of the issues raised in the objection by the Respondent. 

The Tribunal stated that before the liability of PAYE can be established and claimed by a Relevant Tax Authority, the two basic conditions under the provisions of PITA must be satisfied; that the said taxpayer is a resident of the Relevant Tax Authority and secondly that the taxpayer has earned income that is taxable.

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