By Zhihwi Dauda Esq.

1.1 ABSTRACT

In English law, a Practice Direction is a supplemental protocol to the Rules of Civil and Criminal Procedure in the Courts – “it is a device to regulate minor procedural matters its an official announcement by the Court laying down rules as to how it should function.”[1] The Supreme Court of Nigeria also defined “Practice Direction” in the case of BUHARI VS INEC (2008)[2] “…as the name implies, direct the practice of the Court in a particular area of procedure of the Court. A Practice Direction would be described as a written explanation of how to proceed in a particular area of law in a particular Court. …” The Court went further to also define ‘Practice” as “…the form, manner and order of conducting and carrying on suits or prosecutions in the Courts through their various stages according to the principles of law and the rules laid down by the respective Courts.”

Recently, the Honorable Chief Judge of the Federal High Court of Nigeria John Terhemba Tsoho, signed and issued on 1st June, 2021 the Federal High Court (Federal Inland Revenue Service) Practice Direction 2021 (referred to as Practice Direction 2021). This has led to enquiries from Taxpayers, Tax Practitioners and Legal experts in the field of Taxation on what the Practice Direction 2021 seeks to achieve, its legal backing and its implications. The search for answers to these enquiries is the underlying reason for the research conducted in the article. This work seeks to appraise the general provisions of the Practice Direction, examine the Legal framework of the Practice Direction, outline the implications of the Practice Direction to the Nation, to Federal Inland Revenue Service and to the Taxpayer. Also  to examine the limitations or challenges affecting the effective application of the Practice Direction and proffer recommendations as a way forward.

 1.2. INTRODUCTION

The legislative power of making laws for the Federal Government of Nigerian is vested in the National Assembly by virtue of Section 4 of the 1999 Constitution (As Amended) on. However, no matter how effective the Legislature in Nigeria can be, it cannot legislate on all rules required for the effective functioning of Government in all sectors, agencies or departments of Government. Therefore the valuable time of the legislature can be saved by delegating its power to the Executive and Judicial Authority as the case may be through the “Subsidiary Legislature”

The Subsidiary Legislation has become the trend in all democratic countries,[3] Nigeria is not an exception. Records in most Countries have shown that of the total legislative output in a country, only a small portion is made directly by the Legislature, and by far the larger portion of it emanates from administrative authorities through Subsidiary Legislature. These authorities frame such legislation under powers conferred on them by the Legislature (the legal frame work).

The National Assembly in Nigeria, for instance, while framing a Statute, usually confines itself to enunciating the general principles and policies relating to the subject-matter in question, and delegates to some agencies the power to legislate further and fill in the details. This technique is used extensively as there are no statutes enacted by the Legislature which do not delegate some power of legislation to an administrative agency.[4]

The Federal High Court (Federal Inland Revenue Service) Practice Direction 2021 is an example of Subsidiary Legislature from Judicial Authority. A Practice Direction can be described as a written explanation of how to proceed in a particular area of Law in a particular Court.[5] The purpose of the Practice Direction 2021 is to deal with the order or manner of conducting proceedings in Civil and Criminal trials that concern tax matters before the Federal High Court of Nigeria.

How does this Practice Directions 2021 come into force? Why was it issued this year 2021?  Why was the Practice Direction not issued in the time of Tax Reform of 2007 when many Tax Legislations were amended in Nigeria? To answer these questions, permit me to talk about the man that engineered and set the law in motion for the realization of this Practice Direction 2021. Since the appointment of Mr. Muhammad Nami as Executive Chairman of the Federal Inland Revenue Service (FIRS) by the President of FRN, Muhammadu Buhari (GCOR) on Saturday 9th of December, 2019 followed by his confirmation by the Senate on Wednesday 13th of December, 2019 and his resumption to office on Thursday 14th of December 1999 at the FIRS headquarters in Abuja, [6] he has left no one in doubt as to his intention to for FIRS. In his message to staff on assumption of duty, he said

 “I owe my appointment as the Executive Chairman of FIRS to God, I am aware of the enormity of the responsibility ahead of me, This task, as enormous as it is, requires masterstroke measures, resilience in policy implementation and foresight to evolve novel ideas. I shall spare no effort to summon the courage to actualize this task. Most times, success is borne out of the will to endure hardship such as tax drive entails. To my  staff, I want to assure you that respite has come to you, especially to those of you  who are hardworking and professional in their work.”

Within one year of his administration, he disclosed that FIRS generated and remitted =N=66 billion as Stamp Duty revenue into the Federation Account in five (5) Months between January to May, 2020.[vii]  He also disclosed through his representative Mr Ezra Zubairu, the then Coordinating Director, Enforcement Support Group of FIRS, at the opening ceremony of the Lagos International Trade Fair (LITF) in Lagos that a total of =N=4,178 trillion was generated in taxes from January to October. 2020.[viii] by the end of December 31st, 2020 FIRS was able to generate =N=4.9 Trillion as tax revenue in the 2020 fiscal year which represented about 98 per cent of the government’s tax target of =N=5.1 Trillion set for the FIRS [ix]

Mr. Muhammad Nami EC/FIRS realized the significant of having an effective procedure for smooth Tax Dispute Resolution in the Court, accordingly, he has made effort to seek for the issuance of the Practice Directions by the Chief Judge of the Federal High Court. The present Chief Judge of the Federal High Court, Honorable Justice John Terhemba Tsoho, who  is dedicated to his duty and fully aware of  the significance of taxation to any nation, he  accepted the request and in exercise of his constitutional and statutory powers developed the well-articulated  Federal High Court (FIRS) Practice Direction 2021, which will protect and  ensure  justice is done to both the Taxpayer and Tax Authorities in resolution of Tax Dispute before any division of the Federal High Court of Nigeria.

1.3. LEGAL FRAMEWORK FOR THE FEDERAL HIGH COURT (FIRS) PRACTICE DIRECTION 2021.

A Legal Framework laws comprises of laws that are more specific than constitutional provisions. They lay down general obligations and principles but leave to governing authorities the task of enacting further legislation and other specific measures to governing authorities, as may be required.[x] Jurisprudentially, Legal Framework for the Federal High Court (FIRS) Practice Direction 2021 consists of legislation that form the basis or give legal backing to the existence and exercise of any right or duty or power under the Practice Direction 2021.It is the foundation that provides for the basis of enforcement of the Practice Direction 2021. These framework includes but is not limited to the following:

  1. Section 254 of 1999 Constitution[xi] which provides thus:

“Subject to the provisions of any Act of the National Assembly, the Chief Judge of the Federal High Court may make rules for regulating the practice and procedure of the Federal High Court.”

  1. Section 34 (1) of the Federal High Court Act[xii] which provides that:

“As far as practicable, all revenue causes and matters shall, notwithstanding anything to the contrary in any enactment or law, be tried, determined or disposed of in priority to any other business of the Court’’;

  1. Section 33 (6) of the Federal Inland Revenue Service Act[xiii] which provides as follows:

“Nothing in this Section shall be construed so as to authorize the Sale of an Immovable Property without an Order of a High Court, made on Application in such Form as may be prescribed by the Rules of Court”;

  1. Section 34(1) of the Federal Inland Revenue Service (Establishment) Act[xiv] which provides 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 may be recovered by a Civil Action brought by the Service”;

  1. Paragraph 16(2) of the 5th Schedule of Federal Inland Revenue Service (Establishment) Act [xv] which provide thus

“An Award of Judgment of the Tribunal shall be enforced as if it were a Judgment of the Federal High Court upon registration of a copy of such Award or Judgment with the Chief Registrar of Federal High Court by the party seeking to enforce the Award or Judgment”;

  1. Paragraph 17(5) of the 5th Schedule of Federal Inland Revenue Service (Establishment) Act[xvi] which provides thus:

“The Chief Judge of the Federal High Court may make Rules providing for the Procedure in respect of Appeals made under this Act and until such Rules are made, the Federal High Court Rules relating to Hearing of Appeals shall apply to the Hearing of an Appeal under this Act”;

  1. Section 8(g) Federal Inland Revenue Service (Establishment) Act[xvii] provides thus:

“The Service (FIRS) shall adopt measures to identify, trace, freeze, confiscate or seize proceeds derived from tax fraud or evasion;

  1. Section 26(4) of Federal Inland Revenue Service (Establishment) Act[xviii] which provides thus “ Nothing in the foregoing provision of this section or in any other provision of this Act shall be construed as precluding the Service from verifying by tax audit or investigation into any matter relating to any return or entry in any book, document, accounts including those stored, on a computer, in digital, magnetic, optical or electronic media as may, from time to time, be specified in any guideline by the Service”
  1. Section 44(2)(a)&(k) of 1999 Constitution[xix] which provides thus:

“(2) nothing in subsection (1) of this section shall be construed as affecting any general law:

(a) for the imposition or enforcement of any tax, rate or duty;

(k) relating to the temporary taking of possession of property for the purpose of any examination, investigation or enquiry;

  1. Order 57 Rule 3 of the Federal High Court (Civil Procedure) Rules 2019[xx] which provides those:

“The Chief Judge shall have the power to issue practice directions, protocols, directives and guidance towards the realization of speedy, just and effective administration of justice.”

The Federal High Court (Federal Inland Revenue Service) Practice Direction 2021 which was issued by the Chief Judge of Federal High Court in exercise of statutory powers vested on him has the force of law subject to “the inconsistency rule” and is binding on all litigants that approach the Court with their tax matter as was rightly pointed out by Niki Tobi, JSC, in the case of BUHARI Vs INEC (2008) Supra where he pronounced on “what is the legal status of Practice Directions?  It was held that

“Practice Directions have the force of law in the same way as rules of Court, I held in Abubakar v. Yar-Adua (2008) 4 NWLR (Pt. 1078) 465 at 511 that rules of Court include practice Direction. – – Practice Directions will, however, not have the force of law, if they are in conflict with the Constitution or the statute which enables them “.

The Court in the case of ORAEKWE & ANOR V. CHUKWUKA & ORS (2010)[xxi] where the Court held as follows:

“… In other words, the Election Tribunal and Court Practice Directions 2007, qualifies as a rule of Court, and since the rules of Court must be obeyed, it therefore follows that the said Practice Directions must also be obeyed. …”

1.4 GENERAL REVIEW OF THE PROVISIONS OF THE PRACTICE DIRECTION 2021

Generally speaking, The Federal High Court (Federal Inland Revenue Service) Practice Directions 2021 commenced operation on 1st of June, 2021 shall be applicable to all tax matters new and pending before any division of the Federal High Court throughout the Federation.

ORDER I of the Practice Direction 2021 is titled: “Objectives and applicability of the Practice Directions” which provides to the extent that, the Practice Directions shall save to the extent or as may be directed by The Honorable Chief Judge, applies to both criminal matters and civil causes in relation to tax issues before the Federal High Court; Ensure effective case management system and expeditious determination of Tax related matters; Encourage settlement of tax debt or liability between disputing parties, Provide direction on applications from the FIRS and Promote the use of electronic filing and service systems and proceedings in Tax related matters. This provision leaves no one in doubt as to what the Practice Direction 2021 seeks to achieve. Any Judge or Parties involved in any tax matter will by Order I of this Practice Direction 2021 have a focused mind knowing fully that this matter will be given accelerated hearing, it will not be tried as other Court proceedings. It will required both the Litigant and the Court to sit up and be on top of their game as regard the handling of tax matters.

ORDER II of the Practice Direction 2021 is titled: “Place of Commencement” Provides : An application shall be filed in the Judicial Division from which a claim emanates in conformity with the Civil Procedure Rules of the Court. Also an application commenced in a wrong Judicial Division shall be dealt with as provided for in the Federal High Court (Civil Procedure) Rules.

The above provision signifies that the Division of the Federal High Court where the Taxpayer was issued an Assessment Notice by the Tax Authority should be the venue for the commencement of the action. The provision of the Federal High Court Civil Procedure rules 1999 will equally be applied in determining which division of the Federal High Court is the right venue for the tax matter to be heard in that circumstance. Importantly, where either the aggrieved Taxpayer or the Tax Authority commenced a tax matter under the Practice Direction 2021 in a wrong division of the Federal High Court. The Judge in that Court can transfer the case back to the rightful division and not to strike the matter on these grounds.

ORDER III Rules (1) to (10) titled “Mode of commencement (Filing an Application for Interim Order)” The provision of this order makes a clear provision on how the Tax Authority (FIRS) should exercise certain powers confirmed on it by its Establishment Act. This will significantly reduce unnecessary litigation challenging certain action of the FIRS by the taxpayers. It is my humble opinion also that this Order III seek to protect the taxpayer from the arbitrary exercise of power by the Tax Authority.

ORDER III Rule (1) and (II) of the said Practice Direction provides for the procedure to be followed by the FIRS in the following applications namely:

(i) Interim Order of Forfeiture of Immovable Property under Section 33(4)(5)&(6) of the Federal Inland Revenue Service Act[xxii]where the property is distraint and also for the purposes of tax investigation under Section 26(4) of the Federal Inland Revenue Service Act[xxiii] and Section 44(2)(a)&(k) of 1999 Constitution[xxiv]

(ii) Interim Order of Freezing of Bank Account; (Post No Debit) under Section 8(g) and 31 of the Federal Inland Revenue Service Act[xxv]

(iii) An Ex-parte Order of Court for the FIRS to have access to Tax Payer’s books, documents, servers, billing systems, bank accounts including those stored in a computer; in digital, magnetic, optical and/or electronic form; it is imperative to note that, ordinarily the Tax Authority (FIRS) has power to request for information as enumerated above under Section 26 of FIRSEA 2007 without Court Order but where the taxpayer refuses to corporate the Service has two options open to it. One is to approach the Federal High Court under the Practice Directions 2021 and obtain interim Order of Court or to initiate criminal prosecution against the managing director and secretary of such company under Section 26(3) of the Federal Inland Revenue Service Act[xxvi] which provides “(3) A person who contravenes the provisions of this section is, in respect of each offence, liable on conviction to a fine equivalent to 100 per cent of the amount of the tax liability.” This is equally supported by the FIRS’s power under Section 47 of the Federal Inland Revenue Service Act[xxvii]

(iv) An Ex-parte Order for the FIRS to have access and/or seal the business premises or other known place of business, where the Tax Payer refuses to willingly grant access to the FIRS under Section 33 of the Federal Inland Revenue Service Act[xxviii]

ORDER III Rules (3) of the practice direction provides thus

“The Affidavit in support of the application shall be accompanied by any of the following documents:

(i) A copy of the Notice of Assessment or the Tax Demand Notice served on the Tax Payer.

(ii) A copy of the Notice served by FIRS on Tax Payer requesting access to the Tax Payer’s books, documents, servers, billing systems, bank accounts, including those stored in a computer; in digital, magnetic, optical or electronic form for the purpose of Tax investigation or Audit.

(iii) Warrant of Distraint and/or Warrant of Access duly executed by the Executive Chairman of the FIRS as provided for in the Federal Inland Revenue Service (Establishment) Act (As Amended).

(iV) Brief Written Address.”

It is worthy to point out here that the word “any” used in the opening paragraphs of the Order III Rules 3 of this Practice Direction can literally be interpreted to mean, whenever the Tax Authority (FIRS) wishes to apply for any Interim Order under Order III Rule (I) and (II) of the Practice Direction, it must attach any of the documents listed in Order III rules 3 (i) to (iii) above depending on the nature of the application. I am of the opinion that the requirement of Order III rules 3 (iv) of the Practice Direction as to brief written address is not optional. The Tax Authority is equally allowed to attach as many other documents that are relevant to the fact in issue in the application.

ORDER III Rules (5) of the practice direction provides thus

5.(i) The Judge shall make an Interim Order of Forfeiture of the property to the FIRS on behalf of the Federal Government pending the determination of the Motion on Notice, if he is satisfied that the requirements in these Practice Directions are complied with.

(ii) The Judge shall make an Interim Order of Freezing of the bank account of a defaulting Tax Payer pending the determination of the Motion on Notice.

(iV) The Judge may make an Order granting the FIRS leave to enter and/or seal the business premises or other known place of business of the Tax Payer, pending the determination of the Motion on Notice.

This Order specifically re-establish the power of the Judge of the Federal High Court to grant the Interim Order sought by the Tax Authority (FIRS) under Order III Rule (1) and (2) of the Practice Direction for 14 days without first requiring the Tax Authority to put the Taxpayer on Notice. However Order III Rule (6) (i) & (ii) and Rule 7(i)-(iii) of the Practice Direction imposes a duty and obligation on the Tax Authority (FIRS) to put on Notice via a Motion on Notice the Taxpayer who is affected  by the Interim Order granted. The Rules provides thus:

“6. (i)     Upon the grant of the Interim Order of Forfeiture or Freezing of a bank account by the Court, the FIRS shall file a Motion on Notice with a Written Address within fourteen (14) days after service of the Interim Order, seeking for an Order Absolute for the immovable property or an Order forfeiting the assessed amount.

(ii)     Where the FIRS finds it necessary to apply for extension of time of the Interim Order granted by the Court, it shall apply for an extension before the expiration of the fourteen (14) days.

  1. A Motion on Notice shall be supported by an Affidavit setting out the facts thereof, exhibiting a copy of the Interim Order, Written Address and any of the following documents:

(i)   A Warrant of Distraint and/or Warrant of Access duly executed by the         Executive Chairman of the FIRS as provided for in the Act;

(ii)  Evidence of service of the Notice of Assessment and or the Demand Notice on the Respondent; and

(iv) Such other document as may be directed by the Court.”

The taxpayers affected by such Interim Order, whom the Tax Authority (FIRS) has served a Motion on Notice are under the duty to file a Memorandum of Appearance, Counter Affidavit and the supporting documents within 14 days of service of the Motion on Notice on him if he wishes to oppose the FIRS’s Motion. If such a taxpayer cannot enter appearance and file its Counter within time allow, he can subject to the rules on default of appearance apply for extension of time to file its Counter Affidavit. Both Parties to a matter under the Practice Direction can use the E-filing provision of the Federal High Court. Order III Rules 8, 9 and 10 of the Practice Direction 2021 provides thus:

8. “A party on whom a Motion on Notice has been served in accordance with the preceding Directions who intends to oppose the said motion shall file a Counter Affidavit and Written Address within fourteen (14) days of the service of the Motion on him.”

  1. “ Where the Respondent applies for extension of time, the application shall be considered subject to Federal High Court (Civil Procedure) Rules on Default of Appearance.”
  2. “The e-filing provisions as contained in the Federal High Court (Civil Procedure) Rules shall also be applicable to Tax related matters.”

To further underscore the significance attached to tax matters under Section 34 (1) of the Federal High Court Act which requires tax matters to be tried, determined or disposed of in priority to any other business of the Court. Order III |Rule 4 of the Practice Direction 2021 further reiterates thus:

“4 . A Judge to whom a Tax related matter has been assigned or before whom such matter comes shall accord priority to it.”

ORDER IV of the Practice Direction which is titled “Service of Processes” provides for the manner in which Court process may be served in respect to tax matters that are tried besed under the Practice Direction 2021.  Order IV Rules (1) to (3) the Practice Direction 2021 provides thus:

“1. Service of Court processes and or hearing notices may be effected by e-mail, WhatsApp or as may be directed by the Court and same shall be deemed as good service.

  1. The print-out of same shall be sufficient proof of service.
  2. Time shall run in accordance with the provisions of the Federal High Court (Civil Procedure) Rules.

The provision of the above Rule simplifies the process of service of Court Processes based on modern day reality. Therefore, both the Tax Authority (FIRS) and the Taxpayer can serve its processes through Email, and Notification of the email and the hearing Notices can equally be sent through WhatsApp.

The question one may then postulate is that: Can a hearing Notice be served via Telegram, Instagram and Text messages and the likes based on this rule?  I will be bold to opine that, the answer to the question post above is in the affirmative. The print out of such notice electronically is sufficient proof of service. My opinion is based on the “the generic rule” which is expressed in Latin maxim “Ejusdem generis (of the same kind.)” meaning “the general word shall not extend in its effect beyond subjects Ejusdem Generis” all the other social media platforms used for private communication can be used as electronic means of Service under this rule if the Court so directs because they form part of the generic term “electronic means”

Worthy of Note is that  Order IV Rules 2 above provides that “The print-out of same shall be sufficient proof of service” does not in any way require that the party whom was served electronically via any of the means must acknowledge the receipt of such mail or WhatsApp before its print out can be accepted as proof of service.

The Practice Direction 2021 further abridged the time which a litigant hitherto enjoyed under the Federal High Court (Civil Procedure) Rule 2019 within which to file their process to shorter the time for doing an act in order to promote speedy completion of Tax Matters before the Court.

ORDER V of the Practice Direction which is titled “Mode of Entering Appearance” provides thus:

“1. A Respondent shall within fourteen (14) days after the service of the Court processes mentioned in Order III (8) of these Practice Directions enter Appearance by delivering to the Registrar, a Respondent’s Counter Affidavit and Written Address in support thereof.

  1. If the Respondent is not contesting the application, he shall file an application for the leave of Court to pay into the designated bank account, the Tax Debt or Liability in question and request the discharge of the entire application.

One significant provision made by the Practice Direction 2021 is the imposition of pre-requisite requirement of making a deposit with Court High Interest Yielding Account, half of the assessed amount whenever the Taxpayer chooses not to exploit the internal administrative mechanism for objecting to an Assessment Notice and resolving Tax Dispute but rather chooses to approach the Federal High Court to challenge the Assessment Notice Served on him.  ORDER V Rules 3 of the Practice Direction 2021 provide thus

“3. Where a Respondent intends to challenge an Assessment served on him, he shall pay half of the assessed amount in an interest yielding account of the Federal High Court, pending the determination of the application.”

The Practice Direction has equally made provision to protect the Respondent who may be dragged to Court by the Applicant and be left with the case hanging on his neck without the Applicant making effort to diligently prosecute his Application. When the Court is sure that the Applicant is aware of the date of the matter and no sufficient or justifiable reason was advanced to the Court on that date, may strike out the Application and grant application for Award of Cost  in favour of  the Respondent, if the Judge so wishes to exercise his discretion in that regard. However the Applicant can apply for re-listing of his application within a reasonable time and if the judge is convinced on the grounds and reason adduced may grant the request.

ORDER VI Rules 1 and 2 of the Practice Direction 2021 which is titled “Default of Appearance” provides thus:

“1. If on the day of Hearing or on the adjourned date, the Applicant does not appear and is not represented, the application may be struck out in the interest of justice.

  1. When an application has been struck out due to Non-appearance of the Applicant, the Court may upon application direct the application to be re-listed on terms.”

The Practice Direction equally made provision to protect the interest of the Applicant where the Respondent shows a nonchalant attitude towards the matter;  for instance, the Respondent filed to enter appearance and filed its Counter Affidavit within 14 days allowed by the Practice Direction. The Applicant may proceed and apply to the Court orally that the matter be determined based on his written and/or oral submission and the Court to proceed thereafter to enter default judgment.

ORDER VI Rules 3 of the Practice Direction 2021 provides thus:

“3. Where any Respondent fails to appear, upon proof of service, the Applicant may proceed upon default of appearance as provided for in the appropriate provisions of the Federal High Court (Civil Procedure) Rules.”

 

IMPLICATION OF THE PRACTICE DIRECTION FOR FIRS

  1. FIRS cases will receive accelerated hearing and priority over other matters in the Federal High Court. It means, with exception of Criminal matters where the life of a citizen is involved the Judge in Court is to hear tax matter firsts. Where such is not done the Counsel representing the Tax Authority (FIRS) has the duty to remind the Court of the existence of his tax matter before the Court.
  2. It has laid down the procedure to be followed by FIRS to easily exercise its statutory power vested on it by the Act of National Assembly to freeze accounts of a tax defaulters.
  3. It has equally made it easy for FIRS to have full access to the income of the digital economy by accessing their billing system, or information including those stored in a computer, digital, magnetic, optical and electronic form, which where, hitherto, difficult to access. We must note that technology has made it possible for many Multinational Corporation or companies operating in Nigeria to operates a paperless office, having most or all transactions done one-line with no physical records for the Tax Authority (FIRS) to inspect or investigate in exercise of its statutory power, with this Practice Direction Interim order can be obtained.
  4. It will reduce frivolous appeals to the Federal High Court against an Assessment Notice since Order V Rule 3 of the Practice Direction imposes a pre-requisite requirement on Taxpayer to deposit into the High Yielding Account of the Federal High Court half of the amount assessed in the assessment Notice etc.

1.6 IMPLICATION OF THE PRACTICE DIRECTION FOR TAXPAYERS

  1. Taxpayers who intends to drag FIRS to Court may need to think twice about the pre-requisite requirement to deposit half of the amount accessed with the Court. This will make many to opt out for the internal mechanism provided for the objection to an Assessment Notice within 30days and choose to go for reconciliation and settlement of account with the Tax Authority peacefully, this will be for the benefit of both Parties.
  2. It may be difficult for taxpayers who are in the digital economy to hide their payment billing system in light of the interim Order the Court can grant under the Practice Direction
  3. Taxpayers who are not in the FIRS net but operate huge accounts can easily be captured through an interim order of freezing their account under the practice directions.
  4. Taxpayers who intend to approach the Court must prepare the practice direction abridged time within which to file process.

1.7 IMPLICATION OF THE PRACTICE DIRECTION FOR THE NATION

  1. It will yield more revenue to the Government as taxpayers will no longer use litigation as a reason to hold unto tax revenue for many years pending determination of the case at Court.
  2. It will reduce the number of tax cases that will be pending in Court. Presently there are many tax cases pending before the Federal High Court due to the prolonged trial period of tax matters.
  3. It will reduce tax revenue lost to the nation.
  4. It will bring assurance to the taxpayers that their rights under tax laws are protected and can indirectly promote Foreign Direct Investment (FDI)

 1.8 CHALLENGES AND LIMITATION TO THE APPLICATION OF THE PRACTICE DIRECTION.

There is no concept, rule or practice of law that has no challenge or limitations, the Federal High Court (Federal Inland Revenue Service) Practice Direction 2021 is not an exception. Some of these challenges are as follows:

  1. Lack of Awareness: without extensive campaign on the existence of the Practice Direction many taxpayers may not be aware of its provision and this will affect its compliance as there may be many default judgment instead of judgment on merit.
  2. The absence of similar Practice Direction in the Court of Appeal and Supreme Court may result into prolonged appeal against the decision of Federal High Court.
  3. Legal Practitioners attitude toward tax matter: If a lawyer is determined to prolong a case unnecessarily through frivolous applications, he or she can do so except the Judges take full charge of their Court.
  4. Proper documentation of tax records by tax officers may affect the Tax Authority to bringing water tight cases against the tax defaulter.
  5. Lack of training and retraining of the in-house lawyers handling tax matter for the Tax Authority  by an expert can affect their general performance under this practice direction.

RECOMMENDATIONS

The writer wishes to forward the following recommendations as solution to the challenges the Tax Authority may face under this practice direction thus:

  1. The Tax Authority (FIRS) should liaise with and apply to the President of Court of Appeal and Chief Justice of the Federation for the issuance of Court of Appeal (FIRS) Practice Direction and Supreme Court (FIRS) Practice Direction to provide for speedy determination of appeals in tax matters. This will ensure the fast conclusion of appeals in tax matter.
  2. The Tax Authority (FIRS) should organize a training for all its in-house lawyers on this practice Direction to familiarize themselves with it.
  3. The Federal High Court should organize training for all Federal High Court Judges group by group, over time on the necessity and objective of the practice direction so that the Practice Direction will not be frustrated.
  4. The Tax Authority (FIRS) should create extensive awareness on the provision of the practice direction amongst its staff, taxpayers and journalists.
  5. The Tax Authority (FIRS) should sacrifice and print some copies of the Practice Direction 2021 and also liaise with all the state branch Chairmen and chairpersons of NBA to include the Practice Direction in their training for their lawyers during their weekly or monthly Meetings.
  6. The Tax Authority (FIRS) needs to articulate and clearly define for taxpayers the available internal administrative mechanism for resolutions of tax matters to encourage taxpayers to make use of them for the interest of both parties instead of always rushing to the Court.
  7. The Tax Authority (FIRS) should critically examine if there is anything that can affect the effective implementation of this Practice Direction and come up with necessary amendment to the relevance Tax legislation through the Finance Act 2021 to remedy such factors or limitation.

1.10 CONCLUSION

The Federal High Court (Federal Inland Revenue Service) Practice Direction 2021 is a wonderful piece of Subsidiary Legislature that has the backing and force of law;  designed to promote accelerate and speed up the determination of Tax Dispute while protecting the right of Taxpayer as well as the Tax Authority as stipulated in the various Tax Laws. The Judges of the Federal High Court need to buy into this practice Direction in exercise of their discretions in order to support its effective application or else the Practice Direction may not achieve its principal objective as stipulated in Order I of the Practice Direction. The Tax Authority needs to create awareness to the public particularly Tax payers in Nigeria.

ABOUT THE AUTHOR:

Barr. Zhihwi Dauda Esq. (LL.B, B.L, LLM & ACTI, (E-mail: [email protected] Phone: 08059538671) is a Legal Practitioner with over 15years post-call experience, member of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja District,  experienced Tax Practitioner and PhD Research S

[1] Wikipedia <https://en.wikipedia.org > Accessed on 12th June, 2021

[2] BUHARI VS INEC (2008) 19 NWLR PART 1120 PAGE 246 also reported as (2008) LPELR-814(SC) page 1 at 37 – 39  See also the case of ORAEKWE & ANOR v. CHUKWUKA & ORS (2010) LPELR-9128(CA) page 1 at 28 – 29.

[3] M. S Shafie , MIMA Arif , H. Hanapi, FM. Hassan  “Subsidiary Legislation in Malaysian Administrative Law: Definition, Advantages & Grounds to Challenge it”  http://dx.doi.org/10.29322/IJSRP.8.10.2018.p8238 <http://www.ijsrp.org/research-paper-1018/ijsrp-p8238.pdf> Accessed on 12th June, 2021.

[4] Ibid

[5] W. KEMASUODE “Trial within trial: Regulation by means of practice direction” <https://nji.gov.ng/wp-content/uploads/2020/02/Paper-on-TRIAL-WITHIN-TRIAL-delivered-at-NJI.pdf> Accessed on 13th June, 2021

[6] Bassey Udo  “New FIRS chairman assumes office, pledges to make a difference” Premium Time on line, December 19, 2019

<https://www.premiumtimesng.com/business/369091-new-firs-chairman-assumes-office-pledges-to-make-a-difference.html> Accessed on 13th June, 2021

[vii]  Executive Chairman of FIRS Mr. Muhammad Nami, on 1st July, 2020 in Abuja during the inauguration of the inter-ministerial committee on the audit & recovery of stamp duty and launch of FIRS adhesive stamp, disclosed that FIRS generates N66bn from stamp duty in five months. He further disclosed that: “the total collection by the revenue agency from January to June 29th this year is as follows: “Stamp duties remitted by Money Deposit Banks (MDBs) was N20.00bn, stamp duties revenue from stamping of instruments was 7.90bn, amount hitherto warehoused with CBN now remitted to Federation Account was N39.00bn and the total stamp duty remitted into Federation Account from January, 2020 – May, 2020 was N66.00bn.” This was published  on daily trust on line of 1st July, 2020   https://www.dailytrust.com.ng/firs-generates-n66bn-from-stamp-duty-in-five-months.html (Accessed on 7th of July,2020)

[viii] Vanguard news online https://www.vanguardngr.com/2020/12/firs-generates-n4-17trn-in-revenue/ Accessed on 14th June, 2021

[ix] Premium Time Online https://www.premiumtimesng.com/news/more-news/437409-nigerias-firs-raked-in-n4-9trn-in-tax-revenue-2020-official.html> Accessed on 13th of June, 2021

[x] Wikipedia “ meaning of  farmekwork laws” <https://en.wikipedia.org>Accessed on 13th June, 2021

[xi] Section 254 of 1999 Constitution of the Federal Republic of Nigeria ( As amended)

[xii] Section 34 (1) of the Federal High Court Act CAP F12 Laws of the Federation of Nigeria 2010

[xiii] Section 33 (6) of the Federal Inland Revenue Service Act No.13 of 2007

[xiv] Section 34(1) of the Federal Inland Revenue Service Act No.13 of 2007

[xv] Paragraph 16(2) of the 5th Schedule of Federal Inland Revenue Service (Establishment) Act No.13 of 2007

[xvi] Paragraph 17(5) of the 5th Schedule of Federal Inland Revenue Service (Establishment) Act No.13 of 2007

[xvii] Paragraph 17(5) of the 5th Schedule of Federal Inland Revenue Service (Establishment) Act No.13 of 2007

[xviii] Paragraph 17(5) of the 5th Schedule of Federal Inland Revenue Service (Establishment) Act No.13 of 2007

[xix] Section 254 of 1999 Constitution of the Federal Republic of Nigeria ( As amended)

[xx] Order 57 Rule 3 of the Federal High Court (Civil Procedure) Rules 2019

[xxi] ORAEKWE & ANOR V. CHUKWUKA & ORS (2010) LPELR-9128 (CA) page 1 at 29

[xxii] Section 33 (6) of the Federal Inland Revenue Service Act No.13 of 2007

[xxiii] Section 33 (6) of the Federal Inland Revenue Service Act No.13 of 2007

[xxiv] Section 254 of 1999 Constitution of the Federal Republic of Nigeria ( As amended)

[xxv] Section 33 (6) of the Federal Inland Revenue Service Act No.13 of 2007

[xxvi] Section 33 (6) of the Federal Inland Revenue Service Act No.13 of 2007

[xxvii] Section 33 (6) of the Federal Inland Revenue Service Act No.13 of 2007

[xxviii] Section 33 (6) of the Federal Inland Revenue Service Act No.13 of 2007