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Published On: Thu, Mar 6th, 2014

Tax enforcement: investigation and litigation under Nigerian tax laws: raising the standards and protecting rights and responsibilities. Part 1

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firs logo KabiruBy James Binang Esq.

One: Introduction: definition of terminologies:

It remains incontrovertible that defining Legal terminologies has been a problem to lawyers. This much was noted by a Professor of Jurisprudence, J.M.A Ojomo when he said;

“As long as definitions are a translation of thoughts into words, they create problems for lawyers. Law itself is an exercise in controversy. And for as long as the teaching of Jurisprudence begins with the hypothesis that words have no particular meaning except in the context within which they are used; therefore depending on the speakers’ abstraction, words are not more than verbal recommendations of what the speaker feels they are in the context which they are used.”

Litigation has been variously defined. Justice Y.V Chandrachud in his book Advanced Law Lexicon described Litigation as:

“A Judicial Controversy, a contest in a Court of Law; a judicial proceeding for the purpose of enforcing a right. Law Suit; process of carrying on a law suit.”

The Black’s Law Dictionary defines litigation as:

“The process of carrying on a law suit. A law suit itself or several litigations pending before the Court.

From the foregoing, it can be said without much fear of contradiction that the category of definitions to litigation and indeed other legal terminologies are never closed and almost always depend on the context in which these definitions are used. However, for the purpose of this paper, Litigation procedures are all those processes involved in undertaking a lawsuit; be it civil or criminal before courts.


A civil action is often brought to enforce, redress or protect a private or civil rights; a non-criminal litigation. It is a personal action which is instituted to compel payment or the doing of some other thing which is purely civil. It is a proceeding in a court of competent jurisdiction by one party against another for the enforcement or protection of a private right or for the redress or prevention of a private wrong. The civil action maybe involving a private party suing another private party or a private party suing or being sued by the Government but the proceedings do not involve criminal proceedings. Under the Federal Inland Revenue Act civil actions are provided for under Section 34(1) and states as follows:

“Without prejudice to any other provision of this Act, or any other Law listed in the first schedule to this Act, any amount due by way of Tax shall constitute a debt due to the service and maybe recovered by a civil action brought by the Service.”

Civil litigation presupposes that the Federal Inland Revenue Service (hereinafter referred to as FIRS) has legally engaged the defaulting Tax payer with all the statutory demand Notices, Reminders and Distrain. Civil litigation is therefore undertaken as a last resort to redress a particular civil wrong perpetrated against the Service. Under the Federal Inland Revenue Act, the Tax Appeal Tribunal also has jurisdictions to deal with tax related matters which are civil in nature.


It is important to note that for reasons of the nature of the private rights sought to be enforced, the proper parties in any civil litigation undertaken by the Service are:




A criminal proceeding is defined as action or proceeding instituted or prosecuted by the state in its own name against a person(s) who is accused of a crime to punish him therefore. A criminal proceeding is ordinarily one which if carried to a conclusion may result in the imposition of a sentence such as death, imprisonment, fine or forfeiture of property.

It is important to note that the gamut of legal rules that govern the mechanism under which investigation, prosecution, adjudication and punishment of crime as well as protection of the constitutional rights of the accused, constitutes a criminal procedure.


Under the Federal Inland Revenue Act, offences and penalties are listed under Part VI of the Act.


Note that the Federal High Court of Nigeria (FHC) has Original Jurisdiction in all causes or matters(civil or criminal) initiated by the Federal Inland Revenue Service. Additionally, any dissatisfied party has the constitutional right of appeal against the decisions of the FHC to the Court of Appeal and where necessary to the Supreme Court of Nigeria.


he Federal Inland Revenue Service has a mandate among other things to administer all the enactments listed in the first schedule to the act or any other enactment or law on taxation in respect of which the national assembly may confer power on the Service.


Under civil litigation, the Federal Inland Revenue Service strives to enforce its civil right against a particular Tax payer(s) who has defied all the Statutory Assessments and Demand Notices issued by the Service and duly served on them (the Defendant(s)). The process culminating to a civil action instituted by the Service is as follows:

i. The L&P Department of FIRS as Claimant, files a specially endorsed Writ of Summons and Statement of Claim at the Federal High Court in the location where the Defendant(s) resides or carries on business. The Writ of Summons is accompanied by the Claimant’s Witness Statement on Oath which itself is supported by Certified True Copies of all Public documents used in the course of correspondences (Assessments, Demand Notices, Reminders etc.) from the FIRS to the Tax payer. The Suit is also supported by the Claimant’s Written Address.


ii. The Claimant Witnesses must be officers of the Service who are competent and conversant with the facts of that case as per their involvement in the process of Tax Administration with the officers/Agents of the Defendant(s). The Claimant’s witnesses must also be conversant with the documents attached to the Witness Statements on Oaths and the relief sought from the Court.


iii. The Claimant’s Court processes are then served on the Defendant(s) who either by themselves or by a Legal Practitioner of their choice files a Memorandum of Appearance and a Statement of Defence along with the Defendant(s) Witness Statements on Oath supported by necessary documents in their Defence. There is also a Defendants Written Address in reply to the issues of Law and fact raised in the Claimants Written Address.


iv. The Defendant’s Memorandum of Appearance, Statement of Defence, Witnesses Statements on Oath and Written Address are then served on the Claimant (FIRS) through the Legal and Prosecution Department (L&P). The Solicitors after a careful perusal of the defence may decide to file an Amended Statement of Claim or further address or Reply as the case may be.

v. At a fixed named for Hearing of the case, the Claimant applies to the Court that pleadings have been exchanged and calls on its witnesses to adopt their statements and exhibits on oath in cause of Examination- in- Chief. At the end of the Examination –in –Chief, each Claimant’s Witnesses is Cross-Examined by the Counsel for the Defendant(s) and where necessary Re-Examined by the Claimant’s Counsel.

vi. At the close of the Claimants case, the Defendant(s) commences its Defence by calling on its Witnesses to adopt its Defence Witnesses Statements/Exhibits on Oath. At the end of the testimony of each Defence Witness, he/she will be Cross-Examined by the Counsel for the Claimant and where necessary Re-Examined by the Defendant’s Counsel.

vii. At the end of the case for the Defence, Counsel for the Defence and Claimant are respectively called upon to adopt their Written Addresses in support of their arguments and thereafter the Court takes a date for Judgment.


N/B: Apart from the ideal case scenario stated above, it is worthy to note that there are always a lot of interlocutory applications (e.g. Injunction, Production of documents, interrogatories etc) that are considered by the Courts before Hearing and Judgment. These Statutory Interlocutory Applications follow the same pattern of Front Loading in terms of Procedure and Rulings. See generally Orders 26 to 43 of the Federal High Court Act Civil Procedure Rules (2009).

However, the Court is duty bound to consider and determine on the merits all interlocutory applications pending before it, before it proceeds to consider the substantive Civil suit. See the case of: MOBIL OIL NIGERIA UNLTD Vs. MONOKPO.

If the Court gives judgment in favour of FIRS, the L&P Department will proceed to enforce the judgment under the Sheriffs & Civil Process Act (Judgment and Enforcement Rules) Cap S6 Laws of the Federation of Nigeria 2004(As Amended).

It is also important to note that sometimes the Tax payer or any other person can undertake Civil Litigation as a Claimant (Plaintiff) against FIRS (Defendant). In this scenario the above procedure is reversed and the Legal Department or the Legal Section of the Special Enforcement Unit (SPU) defends the Civil action in Court on behalf of the Service or any of its officials sued as Co-Defendants.

An aggrieved Tax payer may exercise the option of bringing his claim before the Tax Appeal Tribunal in which case, the Rules of that tribunal will apply. Note that whether the action/claim is brought before the Federal High Court or the Tax Appeal Tribunal, the Evidence Act Cap E14 Laws of the Federation of Nigeria 2004 applies in terms of the burden of proof. Also the grundnorm –the Constitution of the Federal Republic of Nigeria 1999 (as amended) applies in all cases.


Sections 43 and 44 of the FIRS Act No. 13 of 2007 make provisions for certain offences that can be criminalized by the Service in course of administration of the Tax Laws listed in the First Schedule of the FIRS Act. For the avoidance of doubt, the Legislations administered by the Service and listed on the First Schedule of the FIRS Act include but is not limited to;

a. Companies Income Tax Act Cap. 60 LFN, 1990,

b. Petroleum Profits Tax Act Cap. 354 LFN, 1990,

c. Personal Income Tax Act No. 104, 1993,

d. Capital Gains Tax Act Cap. 42 LFN, 1990,

e. Value Added Tax Act 1993 No. 102, 1993,

f. Stamp Duty Act Cap. 411 LFN, 1990,

g. Taxes and Levies (Approved List for Collection) Act 1998 No. 2, 1998;

h. All Regulations, Proclamations, Government Notices or Rules issued in terms of these Legislations.

It is important to note that apart from offences created under the principal enactment as shown on the First Schedule to FIRS Act 2007, these Subsidiary Legislations in themselves also made mention of several offences which are punishable under those Laws. For instance, Failure to deduct and remit any Tax in the laws listed in the First Schedule to the Act by a taxable person is punishable under Section 40 of the FIRSA. Furthermore, Failure to file a Return with the FIRS is punishable by Section 55(1) of the Companies Income Tax Act Cap. C21, Laws of the Federation of Nigeria 2004 (As Amended); just to mention but a few.


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