19 December 2013, Abuja – The Nigerian National Petroleum Corporation (NNPC) has urged the Federal High Court in Lagos to review a ruling by the Tax Appeal Tribunal (TAT), Lagos Zone, on a dispute over an oil mining lease (OML) 118 Production Sharing Contract (PSC).
It said the tribunal wrongly assumed jurisdiction in the dispute.
Parties involved are the Federal Inland Revenue Service (FIRS), Shell Nigeria Exploration and Production Company Limited (SNEPCo), Esso Exploration and Production Nigeria (Deep Water) Limited, Nigerian Agip Exploration Limited and Total E & P Nigeria Limited, joined as second to sixth respondents.
NNPC sought a declaration that TAT, Lagos Zone (the first respondent) lacked the competence or jurisdiction to entertain or adjudicate over rights and obligations conferred on parties to the Bonga PSC.
It said the tribunal cannot determine contractual disputes arising from the different interpretation of the various parties to the contract.
Shell, Esso, Agip and Total had sought declaratory reliefs at the tribunal over the determination of tax incidences of parties in PSC involving NNPC.
The tribunal, in its July 3 ruling, assumed jurisdiction in the case. It held: “The tax assessment challenged in this appeal is within the remit of the Tax Appeal Tribunal.”
But NNPC urged the Federal High Court, presided over by Justice Mohammed Idris, to declare that the tribunal’s decision “ultra vires, illegal, wrongful, null and void and of no effect whatsoever.”
It sought an order of certiorari (order given by a superior court), urging the court to take over the tribunal’s proceedings, determinations and directives and to quash them, as well as the ruling.
NNPC prayed the court to make an order prohibiting TAT, Lagos Zone from further hearing and making any interim or final decision in the case of Shell Nigeria Exploration & Production Company Limited and others vs, FIRS and another, numbered TAT/LZ,001/2012, among others.
It sought an order of perpetual injunction restraining the tribunal (first respondent) from adjudicating on the declaratory reliefs sought by the third to sixth respondents.
NNPC said the tribunal erred when it assumed the powers ordinarily conferred by Section 251 of the 1999 Constitution on the Federal High Court to entertain and determine matters relating to government revenue.
It claimed that by the provisions of the OML 118 (Bonga) PSC, the third, fourth, fifth and sixth respondents are not tax payers known to the FIRS and as such are unable to successfully maintain an action before the tribunal against FIRS.
NNPC added that the reliefs before the tribunal is such that when determined, will have direct impact on Federal Government’s revenue and the contractual relationship in Bonga contract.
NNPC, the concession owner and holder of Oil Prospecting Licence (OPL) 212, executed the Bonga PSC dated April 19, 1993, with Shell as contractor to the operations of OPL 212.
Shell, Esso, Agip and Total constitute the “contractor” apparently through a joint venture in the Bonga contract, which sets out parties’ rights and obligations.
By the contract’s provisions, NNPC files Petroleum Profit Tax (PPT) returns on behalf of itself and the contractor.
According to NNPC, the contractor was to prepare accurate PPT returns and submit to the corporation, which in turn files the returns to FIRS.
The applicant said in 2010, Shell and others prepared “incorrect” PPT returns for 2009 assessment in respect of Bonga license and forwarded same to the NNPC.
NNPC alleged that the returns it received from the contractor was “inaccurate, incorrect and non-compliant with contractual terms of the PSC.”
It claimed it was compelled to file accurate tax returns with FIRS, which resulted in a disagreement with the contractor.
Subsequently, the oil firms instituted an appeal at the tribunal.
They sought “a declaration that although chargeable tax for the year is USD2,042, 706, 851, however, by virtue of the overpayment of PPT in previous years of assessment, the PPT for the Bonga Contract Area in the 2010 year of assessment is nil.”