The Federal High Court in Abuja has set aside a contentious judgment previously issued by the Tax Appeal Tribunal (TAT), which had mandated Abuja Electricity Distribution Company (AEDC) to pay the Federal Inland Revenue Service (FIRS) a combined ₦5.31 billion in alleged Value Added Tax (VAT) and Withholding Tax (WHT) liabilities dating back to 2013. In a significant ruling delivered on Monday, Justice Umar Mohammed held that the tribunal’s decision was undermined by bias and a breach of the principles of natural justice, thereby necessitating a complete retrial of the case.
The dispute dates back to a December 14, 2023 judgment delivered by the TAT, in which AEDC was ordered to pay ₦4.53 billion in VAT liabilities for the 2013–2017 assessment years, ₦780.3 million in WHT liabilities, and an additional ₦100,000 as costs in favour of the FIRS. AEDC immediately challenged the ruling, arguing that the judgment was flawed and that compelling compliance would endanger electricity supply across multiple states, including Kogi, Nasarawa, Niger, and the Federal Capital Territory.
Why the Court Reversed the Tribunal’s Decision
At the heart of AEDC’s appeal was an allegation of procedural unfairness linked to the involvement of Honourable Ajayi Julius Bamidele, who served as a member of the TAT panel that adjudicated the case. AEDC contended that Bamidele had previously worked with the FIRS and had directly participated in tax audit decisions relevant to the very liabilities under dispute. According to the company, this prior involvement created a clear conflict of interest and violated the rule against bias.
Justice Umar described this revelation as “uncontroverted,” noting that neither the FIRS’ counter-affidavit nor relevant submissions successfully disputed the claims. Additional testimony provided by a partner at KPMG Advisory Services strengthened AEDC’s position. The KPMG representative stated unequivocally that during the relevant audit period, FIRS’ tax audit teams reported to Bamidele, who was then a coordinating director responsible for overseeing such examinations.
The court ruled that this undisputed link struck at the jurisdiction and integrity of the tribunal’s decision. Citing settled Supreme Court authority, Justice Umar emphasised that no individual may sit in judgment over a matter in which they have been previously involved or have a vested interest. Even the perception of bias, he argued, “destroys the integrity” of judicial or quasi-judicial proceedings.
The FIRS had attempted to argue that AEDC waived its right to raise the issue by failing to object during the tribunal hearings. But Justice Umar dismissed this contention, stating that a violation of natural justice could not be ignored or excused by procedural omissions. Once bias—or the likelihood of bias—is established, he held, the entire proceedings become null and void regardless of whether the tribunal otherwise acted correctly.
A Full Retrial Ordered
With these findings, the court declared AEDC’s appeal meritorious, set aside the TAT judgment in its entirety, and ordered the matter to be sent back to the tribunal for a fresh trial before a properly constituted panel.
Background to the Dispute
The controversy began after a 2018 joint tax investigation conducted by the FIRS and the Economic and Financial Crimes Commission (EFCC). The FIRS alleged that AEDC owed billions in unpaid taxes for the 2013–2017 period. AEDC disputed the assessment, maintaining that the liabilities lacked lawful foundation and that conclusions drawn by the tax authorities were incorrect. The matter escalated through hearings and submissions before the TAT, ultimately resulting in the now-quashed ruling.
Monday’s judgment resets the long-running tax conflict, reopening a legal battle with major implications for both the electricity distributor’s finances and Nigeria’s broader tax administration framework.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
