The Tax Appeal Tribunal (TAT) has directed the Nigeria Liquefied Natural Gas (NLNG) Limited to pay the Federal Inland Revenue Service (FIRS) $27.5 million as full and final settlement of the revised company income tax (CIT) for the 2016 assessment year.
According to NAN, this directive was part of a judgment delivered by the tribunal sitting in Abuja.
The five-member panel, chaired by Alice Iriogbe, rendered the judgment in the terms of the settlement agreed to by both parties.
The tribunal, in the certified true copy of the judgment delivered on July 11 and made available on Tuesday, noted that a settlement agreement was filed by the parties on July 10.
The company, an appellant, had sued the FIRS, a government revenue agency, as the sole respondent.
NLNG requested the tribunal to restrain the revenue agency from collecting $141.75 million from it as CIT for the year under review.
According to NLNG, this payment is made at a daily hire rate, which includes both fixed and variable elements, starting from the delivery of the vessels to the appellant and continuing until the date and time of redelivery, or the handover of the vessels by the appellant to Bony Gas Transport (BGT) at the end of the lease.
The company said although parties to the TCPAs agreed that the lease and the attendant lease payments would continue until the vessels’ redelivery dates at the end of the lease term, it became necessary for the appellant to replace the old steam vessels with more efficient dual fuel diesel engine vessels to reduce operating expenses.
It said in line with its business objectives, the firm entered into a termination agreement with BGT to exit the TCPAs before the leases expired.
NLNG, however, said FIRS took the stance that the terminal costs were not reasonably and necessarily incurred for its business operations.
As a result, NLNG sought seven reliefs, including a declaration that, considering the TCPAs, the refit and drydock payments totalling $141.7 million were ultimately incurred by the appellant without any duplication in BGT’s records.
The company thus sought an order to nullify the FIRS’ notice of additional assessment based on the reasons detailed in grounds one to four and the accompanying particulars outlined in this notice of appeal.
It also sought an injunction restraining the FIRS, its agents, officers, or representatives from further taxing the company for the 2016 assessment year as outlined in the demand note reference number: PDBA/CIT/AUD/16/207 dated December 15, 2021, along with other reliefs.
Delivering the judgement, the tribunal said the parties had been involved in settlement discussions throughout the trial.
The panel ruled that under the settlement terms, NLNG agreed to pay FIRS $27.5 million as a full and final settlement of the revised CIT assessment and the subject matter of this appeal, provided the payment was made by July 12, 2024.
“In furtherance of the above the appellant (NLNG) on Monday 8th July, 2024, duly remitted the said sum of USD$27,500,000 (Twenty-Seven Million, Five Hundred Thousand Dollars) to the respondent (FIRS), being the full and final settlement amount agreed upon by the parties.
“In the circumstance, the terms contained in the terms of settlement have been adopted and made judgement of this Honourable Tribunal. This is the judgment of this Honourable Tribunal.”
TAX PANEL REJECTS NLNG’S REQUEST TO DISQUALIFY TRIBUNAL FROM SITTING
Earlier, the tax panel rejected NLNG’s request to disqualify the tribunal from further sitting, which was based on the company’s lack of confidence in the tribunal’s ability to adjudicate the case.
In its motion, the company requested the tribunal to direct the chairperson, Iriogbe, and another member, Ajayi Bamidele — both former FIRS staff — to recuse themselves from the case, arguing that their presence in the panel posed a likelihood of bias against the applicant.
In its ruling, the tribunal said after reviewing the application, it found no substantial grounds to support the request for disqualification.
The tribunal agreed with the FIRS lawyer’s argument, referencing Section 59 of the FIRS Establishment Act 2007 (as amended) and Paragraph 8 of the 5th Schedule of the same Act.
