A federal high court sitting in Lagos presided over by Justice Chuka Obiozor has 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 judgment of the court was as a result of an appeal filed before the court by Federal inland revenue service (FIRS) against the judgment 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 decision of the tribunal, FIRS filed an appeal before the Federal high court.

In a notice of appeal filed and argued before the court, by Barrister Ladipo Ojo, the appellant contended that FIRS issue a notice of assessment and serve it on Shell Petroleum Company, following which the company raised the objection that the basis period used was incorrect.

FIRS responded by withdrawing the assessment and re-issue same and inform the companies, the observed Error and corrections were over the proper basis period and the parties whose names it should be addressed to, the error to be corrected were never the amount of $75,381,332.00.

The error in the original assessment notice does not preclude the Tax Payer from discharging its Tax obligations arising thereof, which in this case should have been the payment on the 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

Mr. Ladipo 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, the demand notice for the penalty and interest are valid, therefore the appeal should be allowed while the judgment of the Tribunal should be set aside, and also uphold the FIRS demand note.

In his judgment, Justice Obiozor upheld the submission of Mr. Ladipo and allow the appeal.

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