A Federal High Court,in Lagos south west Nigeria, Presided over by Justice Chuka Obiozor, on Friday ordered four multinational Oil companies, namely Shell Nigeria Exploration and Production Company Limited, Esso Exploration and Production Nigeria( DEEPWATER) Limited, Nigeria Agip Exploration Limited, and Total E&P Nigeria Limited to pay a total sum of $17,900,484.80., as penalty and interest respectively on the imposed education tax of $75,381,332.00.
The judgement of the court was as as a result of appeal filed before the court by Federal Inland Revenue Service, FIRS, against the judgement of the Tax Appeal Tribunal that set aside the demand notice, including penalty and interest and ruled in favour the oil companies.
Dissatisfied with the judgement of the tribunal, FIRS filed an appeal before the Federal High Court.
In a notice of appeal filed and argued before the court, by Ladipo Ojo, the appellant contended that FIRS issued a notice of assessment and served it on Shell Petroleum Company, following which the company raised objection that the basis period used was incorrect.
FIRS responded by withdrawing the assessment, re-issuing same and informing the companies that the observed error and corrections was over the proper basis period and the parties whose names it should be addressed to and that the error to be corrected were never the amount of $75,381,332.00.
It said the error in the original assessment notice did not preclude the Tax Payer from discharging its Tax obligations arising thereof, which in this case should have been the payment on due date of the tax liability owed.
The companies were not only privy to the amount involved in the assessment but also wilfully held on to Government Revenue for almost two years.
Ojo further submitted that FRIS had therefore discharged its obligation to serve the assessment on the representative of the contract area in tax matters pursuant to section 39 of the Petroleum profit Tax Act.
Consequently, he said the demand notice for the penalty and interest were valid, therefore the appeal should be allowed while the judgement of the Tribunal should be set aside, and also uphold the FIRS demand note.
In his judgement, Justice Obiozor upheld the submission of Ladipo and allowed the appeal.
