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Thursday, December 14, 2023

Tribunal orders AEDC to pay N5.3 billion for outstanding VAT, withholding tax

The FIRS and EFCC had, in 2018, conducted a tax investigation on the appellant for the 2013-2017 years of assessment.

• December 14, 2023
EFCC, FIRS and AEDC
EFCC, FIRS and AEDC

On Thursday, the Abuja Tax Appeal Tribunal ordered the Abuja Electricity Distribution Company (AEDC) Ltd to pay the cumulative sum of N5.3 billion as value-added tax (VAT) and withholding tax liability between 2013 and 2017.

The five tax appeal commissioners, chaired by Hon. Alice Iriogbe in a judgment, held that the assessment of the VAT made by the Federal Inland Revenue Service (FIRS) on the company was valid and in accordance with the Value Added Tax Act (VATA).

AEDC had, in the appeal marked TAT/ABJ/330/2024, sued the FIRS as the sole respondent.

The FIRS, in conjunction with the Economic and Financial Crimes Commission, had, in 2018, conducted a tax investigation on the appellant for the 2013-2017 years of assessment.

At the end of the investigation, a tax liability of N20,163,668,697 was established against the company.

The FIRS, therefore, conveyed the liability for the period to the AEDC vide a letter dated September 21, 2018, but KPMG, on behalf of the company, was said to have objected to the assessments through a letter dated November 1ember, 2018.

On November 20, 2019, the company appointed a consortium, Messrs Ascension Consulting Services Consortium, authorised to reconcile its VAT matters in the ongoing tax investigation with the FIRS and EFCC.

The said letter stated that the appointment was because they handled the compliance aspect of the work and are now “expressly authorised to discuss and conclude the matter.”

The tribunal, however, observed that during the oral testimony of the AEDC’s witness, Martins Aroge, it was clear that KPMG (another tax consultant) was mandated to reconcile the appellant’s withholding tax liability matters.

The FIRS, while giving its evidence, argued that the appellant, through its agents, Ascension Consulting Consortium and KPMG, held several reconciliation meetings with the respondent (FIRS) and came up with N4, 534,358,874.00 revised computations as their own reconciled liabilities for the company and N780, 307,078.00 as withholding tax (totalling N5, 314, 665, 952) through two letters dated March 24, 2021 and September 10, 2021.

But the AEDC, dissatisfied with the assessment contained in the FIRS’ Notice of Refusal to Amend (NORA) dated February 24, 2022, appealed against the federal agency’s decision.

Giving a three-ground appeal, the electricity firm said the FIRS was wrong to have assessed the tax based on an unauthorised representation by its agent and to have issued a VAT assessment of over N4.53 billion based on a purported letter instead of relying on the legal basis of the VAT Act, among others.

Delivering the judgment, the five-member panel held that the action of its agents bound the AEDC, Ascension Consulting Services Consortium (comprising of Ascension Consulting Services, TBS Professional Services and The Eminent Konsult) appointed to act on its behalf for reconciliation of VAT in respect of the tax investigation/reconciliation exercise.

“This honourable tribunal, therefore, compels the appellant to pay N4,534,358,874 only as VAT liability for 2013 – 2017 as contained in the Notice of Refusal to Amend (NORA) to the respondent (FIRS) forthwith. This honourable tribunal compels the appellant to pay the sum N780,307,078 only as withholding tax liability for 2013 and 2016 as established by its consultant KPMG,” it ordered.

The tribunal also compelled AEDC to pay the N100.000 pending cost awarded in favour of the FIRS during the proceeding.

According to the tribunal, the appellant is also liable to interest on the judgment sum at the prevailing CBN rediscount rate from the judgment date until the debt is liquidated.

“This is the judgment of this honourable tribunal,” it declared.

(NAN)

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