ECODRILL NIGERIA LIMITED v. AKWA IBOM BOARD OF INTERNAL REVENUE (2014)

ECODRILL NIGERIA LIMITED v. AKWA IBOM BOARD OF INTERNAL REVENUE

(2014)LCN/7305(CA)

In The Court of Appeal of Nigeria

On Monday, the 23rd day of June, 2014

CA/C/216/2012

RATIO

COURT: INTERFERENCE; WHETHER WILL NOT INTERFERE WITH THE FINDINGS OF THE TRIAL COURT UNLESS IT WAS PERVERSE

It would, thus, be a good starting point to remind ourselves that an appellate court (such as this court) will not disturb concurrent findings of fact of such lower courts unless certain pre-conditions are present: the appellant could either establish a substantial error apparent on the face of the record of proceedings; show that such findings of fact were perverse; were unsupported by the evidence before the trial court; that the findings and conclusion were arrived at as a result of a wrong approach to the evidence or a wrong application of the principles of substantive law or procedure, Enang v Adu (1981) 11-12 SC 25, 42; Nwadike v Ibekwe (1987) 4 NWLR (pt. 67) 718; Igwego v Ezeugo (1992) 6 NWLR (pt.249) 561, 576; Lamai v Orbih (1980) 5-7 SC 28; Woluchem v Gudi (1981) 5 SC 291, 326; Ike v Ugboaja (1993) 6 NWLR (pt. 301) 539, 569; Chinwendu v Mbamali (1980) 3-4 SC 31 etc.

The jurisprudential rationale for this cautious approach of appellate courts to the concurrent findings of fact by two lower courts finds firm anchorage on syllogistic reasoning. It comes to this: it is the irrefutable premise that the making of findings of fact is a matter, pre-eminently, within the province of a trial court. The said court had the opportunity of seeing, hearing and observing the witnesses while in the witness box. Thus, its conclusions on the facts are presumed to be right. This explains why the onus is placed on the person seeking to upset the judgment on the facts to displace this presumption. Thus, where, in addition, an appellate court (such as the appellate High Court, in the instant appeal) had confirmed such conclusion or findings, the presumption becomes even stronger. It can, consequently, only be reversed where such an appellant (such as the present appellant) shows special circumstances for such an exercise, Williams v Johnson (1937) 2 WACA 253; Balogun v Agboola (1974) 1 All NLR (pt. 2) 66; (1974) 10 SC 111; Ibodo v Enarofia (1980) 5-7 SC 42, 55-58; Eholor v Osayande (1992) 6 NWLR (pt. 249) 524, 548; Ogunjumo and ors v Ademola and ors (1995) LPELR -2337 (SC) 22, D-G; G-B; Sokwo v Kpongbo (2008) All FWLR (pt 410) 680, 695-696; Braimah v Abasi (1998) LPELR -801 (SC) 34, C-E; Ometa v Numa (1935) 11 NLR 18; Okonkwo v Okagbue (1994) 9 NWLR (pt 368) 301. per. CHIMA CENTUS NWEZE, J.C.A.

EVIDENCE: BURDEN OF PROOF; THE BURDEN OF PROOF IN CRIMINAL TRIALS

In effect, at the trial Magistrate’s Court, an essential element of the offence under section 81 of PITA offence was not proved. That notwithstanding, the appellate High court affirmed the conclusion of that court. This is rather curious for, as it is well-known, in criminal trials, the prosecution has the duty to prove the essential elements of the offence charged, section 138 (1) of the Evidence Act; 36 (5) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended); Njovens v State (1973) NWLR 331; Ameh v State (1973) 7 SC 27; Miller v Minister of Pensions (1947) 2 All ER 372; Kalu v State (1988) 4 NWLR (pt 90) 503; Ayo v State (2006) 6 WRN 134; Sam v COP (2009) All FWLR (pt 450) 760, 769 etc. per. CHIMA CENTUS NWEZE, J.C.A.

MEANING OF WORDS: THE TERM “RESIDENT” OR “RESIDENT”; THE DEFINITION OF THE TERM “RESIDENT” OR “RESIDENT”, WHETHER THE DEFINITION IS CONSISTENT WITH THE COMMON LAW RULE FOR DETERMINING AN INDIVIDUAL’S RESIDENCE, WHICH IS BASED ON A PERSON’S LINK OR CONNECTION WITH A COUNTRY AND WHAT IS THE MOST IMPORTANT FACTOR CONSIDERED IN DETERMINING FACTUAL RESIDENCE

Now, the term “residence” or “resident” is not defined anywhere in the PITA. However, this omission is not peculiar to this Nigerian tax enactment. Like (Nigeria’s) PITA, the Canadian Income Tax Act did not define the term “residence” or “resident”. It was the Supreme Court of Canada that filled this legislative hiatus in Thomson v. Minister of National Revenue (1946) SCR 209, 225 when it defined “residence” to be:
…a matter of the degree to which a person in mind and fact settles into or maintains or centralizes his ordinary mode of living with its accessories in social relations, interests and conveniences at or in the place in question. It may be limited in time from the outset or it may be indefinite or so far as it is thought of, unlimited. On the lower level the expressions involving residence should be distinguished, as I think they are in ordinary speech from the field of stay or visit

The above definition is consistent with the common law rule for determining an individual’s residence, which is based on a person’s link or connection with a country. Thus, once the link or connection is strong, the courts, generally, consider the nexus sufficient enough to hold the individual a resident of that country, Weymyss v. Weymyss’s Trustees (1921) Sess. Cas. 30. However, the sufficiency of a connecting factor or nexus depends entirely on the facts and circumstance of each individual case. This type of residence is generally described as “factual residence.”

The most important factor considered in determining factual residence is whether or not the person leaving a tax jurisdiction maintains residential ties with the said jurisdiction, Thomson v. Minister of National Revenue (supra). In this connection, it has to be noted that certain residential ties are considered very significant in establishing “factual residence.” Some of these ties are: maintaining a dwelling place, spouse or common-law partner, and or dependents in the said jurisdiction, Thomson v. Minister of National Revenue (supra).
The PITA only defines two phrases relevant to the term, “residence.” They are “place of residence” and “principal place of residence.” The term “place of residence” is used to describe the residence status of a taxpayer who has only one place of residence while “principal place of residence” is used to determine the residence status of a taxpayer who claims or has more than one place of residence. The instant case is, only, concerned with the residence status of the expatriate workers on whose behalf ECODRILL Nigeria Limited has not claimed any other place as their place of residence. per. CHIMA CENTUS NWEZE, J.C.A.

TAX LAW: RESIDENCE; THE PROVISION FOR “DEEMED RESIDENCE” ACCORDING TO THE PERSONAL TAX PAYER ACT (ACT)

Instructively, there is no specific provision in the PITA that, expressly, or pin-pointedly defines the term “deemed residence.” This apparent lacuna would, perhaps, explain why counsel find it fashionable to rely on section 10 (1) (a) (ii) of PITA as an authority for the provision of deemed residency in Nigeria. This argument is premised on the fact that once a person has stayed for up to 183 days or more in any twelve month period, commencing in a calendar year and ending either within that same year or the following year, s/he is considered a “deemed resident.” In our humble view, this provision does not, directly, deal with “deemed residence” notwithstanding that it contains the ingredients for determining deemed residence.
For purposes of clarity, section 10(1)(a) provides that:
(1) The gain or profit from an employment shall be deemed to be derived from Nigeria if –
(a) the duties of the employment are wholly or partly performed in Nigeria, unless –
(i) the duties are performed on behalf of an employer who is in a country other than Nigeria and the remuneration of the employee is not borne by a fixed base of the employer in Nigeria; and
(ii) the employee is not in Nigeria for a period or periods of amounting to 183 days (inclusive annual leave or temporal period of absence) or more in any twelve month period commencing in a calendar year and ending either within that same year or the following year; and
(iii) the remuneration of the employee is liable to tax in that other country under the provisions of the avoidance of double taxation treaty with that other country.
We take the view that a proper construction of the above provision will reveal that it refers to “deemed derivation” and not “deemed residence.” Sub-paragraphs (i), (ii) and (iii) above describe the conditions a taxpayer needs to prove to show that certain gains or profits that ordinarily would be treated as gain or profit derived from Nigeria are not so derived. They do not refer to deemed residency per se. However, they contain a veritable ingredient of deemed residency under section 10 (1) (a) (ii) – though it does not strictly, refer to it.
In our view, however, the term “deemed residence” could be inferred from a harmonious and community interpretation of sub-paragraphs 10 (1) (a) (ii) and paragraph 3 to the First Schedule to the PITA; paragraph 4 (3) of the second schedule to the PITA; and paragraph 6 (2) of the Third Schedule to the PITA. From these provisions, we deduce that a person is deemed to be resident in Nigeria for a year of assessment if s/he is in Nigeria for a period(s) amounting to 183 days or more in any twelve-month period commencing in the calendar year and ending either in the same year or the following year. This is the 183- day rule, traditionally, employed for determining “deemed residence.” per. CHIMA CENTUS NWEZE, J.C.A.

Before Their Lordships

UZO I. NDUKWE-ANYANWUJustice of The Court of Appeal of Nigeria

CHIMA CENTUS NWEZEJustice of The Court of Appeal of Nigeria

ONYEKACHI A. OTISIJustice of The Court of Appeal of Nigeria

Between

ECODRILL NIGERIA LIMITEDAppellant(s)

AND

AKWA IBOM BOARD OF INTERNAL REVENUERespondent(s)

CHIMA CENTUS NWEZE, J.C.A. (Delivering the Leading Judgment): At the Revenue Court of Akwa Ibom State, the respondent in this appeal (as complainant) filed a criminal charge against the appellant herein (as corporate accused person). It was arraigned on a three count charge as follows:
Count I
That you on the 15th day of February, 2012 in Mbo Local Government Area being Pay as You Earn collecting agent, without sufficient cause, did fail to pay the sum of N45, 234,124.34, being Pay As You Earn Taxes/deductions/under payments and penalty for late payment/non remittance for the period 1999 to 2000 and thereby committed an offence punishable under section 81 of the Personal Income Tax Act Decree (sic) 104 of 1993.
Count II
That you on the 15th day of February, 2002 in Mbo Local Government Area, being a withholding tax collecting agent in accordance with the provision of Section 68, 69, 70, 71 and 72 of personal Income Tax Decree (sic) 104 of 1993, without sufficient cause, did fail to pay the sum of N400, 000. 00 being withholding taxes deducted by you for the period 1999 to 2000 and thereby committed an offence punishable under section 73 of the same Decree (sic).
Count III
That you on the 15th day of February, 2002 in Mbo Local Government Area, having been assessed to pay the Economic Development Levy Edict (sic) 1996, did fail to pay the said levy and thereby committed an offence punishable under section 6 of the said Edict (sic).
FACTUAL BACKGROUND
The appellant is the respondent’s Pay As You Earn (PAYE, for short) collecting agent of withholding taxes which it deducted from its employees resident and earning income from the respondent’s State, (Akwa Ibom State). The appellant, allegedly, failed to remit to the respondent the sum of N45, 234,124.34, being PAYE taxes/deductions/under payments and penalty for late payment/non remittance for the period of 1999 to 2000. It was arraigned before the said Revenue Court on February 18, 2002.

The learned trial Magistrate, sitting at the Revenue Court of Akwa Ibom State, (henceforth to be referred to as “the learned trial Magistrate”), at the close of evidence, struck out Counts two and three of the charge on the ground that it (the company) was not liable to remit Economic Development levy charges on its employees as that was not in the letter or spirit of Law No.1 1996 of Akwa Ibom State. The said court held the appellant liable only in respect of Count 1. Aggrieved by that decision, it appealed to the High Court of Akwa Ibom State.

The appellate High Court, on April 20, 2012, upheld the judgment of the learned trial Magistrate (sitting at the Revenue court); affirmed the appellant’s conviction and dismissed the appeal accordingly. Still dissatisfied, the appellant appealed against the judgment of the appellate High Court (hereinafter referred to the lower court) to this court. The two issues for determination were framed thus:
ISSUES FOR DETERMINATION
1. Whether the learned trial court was right in his (sic) application of the concept of deemed residency against the appellant so as to hold the appellant liable to pay PAYE tax to the Respondent (sic) this matter?
2. Whether the learned High Court Judge was right in his application of section 149 (d) of the Evidence Act in relation to the appellant’s local employees?
The respondent adopted the said issues. We shall, equally, adopt them in the determination of this appeal.
ARGUMENTS ON THE ISSUES
ISSUE ONE
Whether the learned trial court was right in his (sic) application of the concept of deemed residency against the appellant so as to hold the appellant liable to pay PAYE tax to the Respondent (sic) this matter?
APPELLANT’S ARGUMENTS
when this appeal came up for hearing on March 31, 2014, counsel for the appellant, Chukwudi Eze adopted the appellant’s brief filed on November 30, 2012. He, equally, adopted the reply brief filed on January 30, 2014. In the said brief, he submitted that for an individual to be liable to remit personal Income Tax (such as PAYE) to any State Government within Nigeria, it must be shown that (a) the individual has earned income chargeable to tax within the State and (b) that the individual was resident in the relevant State for a continuous period of 183 days within the relevant years of assessment, citing Sections 2 (2) and 10 of the personal Income Tax Act Cap P 8 Laws of the Federation of Nigeria, 2004.

He contended that the bases of tax liability to the government of any State are residency and income within that state. He took the view that the lower court should have discharged the appellant on the first count (non-remittance of PAYE tax) since the respondent could not establish the fact that appellant’s employees were resident within the State between 1999-2000. He called attention to the fact that the evidence on record showed that the appellant had two classes of employees, namely, expatriates and Nigerians. He pointed that the undisputed evidence showed that the expatriate staff worked on two vessels: “Agbani” and “K. Taggart.” There was, however, no evidence as to the length of time they worked on these vessels. This notwithstanding, the lower court still affirmed the finding of the learned trial Magistrate that the respondent established the residency criterion of tax liability as regards the said expatriate employees, citing pages 239-240 of the record for the decision of the appellate High Court.
Counsel submitted that the lower court was wrong in its affirmation of the findings of the learned trial Magistrate. First, he noted that tax laws are given strict interpretation, 7up Bottling Company Plc v Lagos State Board of Internal Revenue (2000) 3 NWLR (pt.650) 560, 561. Against this background, he urged this court to adopt the strict approach in interpreting the provisions of the Personal Income Tax Act (hereinafter, simply, called “PITA”). He pointed out that, if this court adopts this strict approach, the errors of the lower court would be manifest under the categories listed hereunder.

WANT OF EVIDENCE IN PROOF OF RESIDENCE OF APPELLANT’S STAFF
Under this category, he observed that there was no piece of evidence before the learned trial Magistrate (the court of first instance) or the appellate High Court Judge to establish the residence of the appellant’s employees in this matter. He noted that the only evidence on record, which the appellant provided, was that it had staff working from two motor vessels, “Agbani” and “K. Taggart.” In his view, this did not satisfy the test of residency, citing the First Schedule to PITA which defined “place of residency.”

He drew attention to the evidence of the respondent’s only witness, Eshabi Pius Kukong, pages 41-52 of the record. He pointed out that, throughout the evidence-in-chief of this witness, he never volunteered any scintilla of evidence, whether oral or written, relating to the residence of the appellant’s employees. He noted that there was neither documentary nor oral evidence showing respondent’s request for information in relation to the residence of the appellant’s employees. In his view, the trial court could only, justifiably, have raised the presumption of withholding evidence against the appellant upon its refusal to comply with such a request. He referred to page 49 of the record where, under cross examination, PW1 admitted that there was no document to show that the respondent made any such request. Contrariwise, the appellant’s witness testified that the employees were not resident in Akwa Ibom State, pages 54-55 of the record.

He submitted the respondent (as prosecution) had a duty to establish every element of the offence for which the appellant was charged, failing which the appellant was entitled to a discharge and acquittal, section 138 of Evidence Act Cap EB LFN 2004 (then applicable, now Section 135 of Evidence Act 2011; Asake v Nigerian Army Council (2007) All FWLR (pt.396) 720,747; Ubanatu v Cop (1999) 7 NWLR (pt 611) 512; Adeyemi v State (1991) 6 NWLR (pt 195) 1.
Next, counsel turned to what he christened “Judicial Assumptions or Speculations.”

JUDICIAL ASSUMPTIONS OR SPECULATIONS
On this question, he canvassed the view that there was no evidence to prove that the vessels “Agbani” and “K Taggart” had lodging facilities to warrant the imputation of residency in Akwa Ibom State on the appellant’s employees or to justify the invocation of the alleged “concept of deemed residence.” He maintained that the only evidence before the learned trial Magistrate was that which pointed to the fact that the appellant had some expatriate employees working on two vessels.

He impugned the learned trial Magistrate’s finding that the “two vessels must have lodging facilities” as a product of speculations and assumptions. He pointed out that the lower court, equally, placed heavy reliance on the said evidence that the said expatriate staff worked on the said vessels. He observed that the said lower court, improperly, categorised the learned trial Magistrate’s assumptions or speculation as the “concept of deemed residence” in upholding the said finding.

He submitted that, by section 138 of the Evidence Act, the prosecution had a duty to establish its case by positive evidence. He maintained that this obligation could not be discarded by the wrongful application of such concepts as that of “deemed residence.”

He cited section 2 of the First Schedule to PITA which defines the concept of “deemed residency” for foreign employees. He canvasses the view that foreign employees are deemed resident in the place where their employer had his/its principal place of business on the relevant year of assessment. He noted that, in the instant case, it was an undisputed fact that the principal place of business of the appellant is at Port Harcourt, Rivers State. In his submission, the lower court, wrongly, applied the concept of deemed residency.

He submitted that since the assumptions in this matter were judicial assumptions, not backed up by any evidence, the conclusions flowing from them were wrong in law. This, in his submission, was even more irksome as the court’s finding in favour of the appellant’s liability eventuated from that wrong conclusion. He prayed in aid Orhue v NEPA (1998) 7 NWLR (pt.557) 187, 200; Overseas Construction Ltd v Creek Enterprises Ltd (1985) 3 NWLR (pt.13) 407, 415 as authorities which demonstrate that such an approach was anathema in law. He maintained that such perverse findings, which, invariably, occasion a miscarriage of justice, grounds for disturbing concurrent findings of lower courts.
SHIP OR VESSEL DOES NOT QUATIFY AS A PLACE OF RESIDENCE
Counsel posited that, even if the said vessels had lodging facilities, such facilities in a vessel could not constitute “place of residence” as defined in the schedule to PITA (supra). This must be so for, in his submission, a vessel, by its very nature, is a means of transportation, Mobil Producing (Nig) Unltd v Ayeni (2010) 4 NWLR (pt 1185) 586, 608. He, therefore, contended that whatever lodging facilities that are provided in any vessel could only be temporary in nature. He submitted that, on a strict interpretation of PITA provisions relating to residence, such temporary facilities in a vessel could not constitute places of residence for purposes of taxation.

WRONGFUL TRANSFER OF BURDEN OF PROOF
Learned counsel, citing section 138 (1) and (2) of the Evidence Act (then applicable), submitted that the appellant (as the corporate accused person) had no obligation to prove its innocence or to establish the presence or absence of an element of the offence it was charged with, citing section 141 (3) (a) of the Evidence Act (then applicable, now section 139 (3) (a) of the Evidence Act, 2011).
He maintained that the lower court was wrong to have shifted the burden of proof to the appellant to show that its expatriate staff were resident in a more permanent place other than the vessels. He urged the court to hold that the presumptions ordained in section 149 of the Evidence Act were, totally, inapplicable to this case because of the criteria for their application existed in the circumstances of the appellant’s case.

WANT OF JURISDICTION
On this question, counsel explained that a court could only exercise jurisdiction over persons within its territorial limits, Nwabueze v Okeye (1988) 4 NWLR (pt.91) 664. Accordingly, he submitted that, before any exercise of jurisdiction for the purpose of finding in favour of the appellant’s liability to the respondent for PAYE tax, the respondent (as prosecution) had an obligation to show that its expatriate staff were, properly, resident within the jurisdiction of the court, namely, within Akwa Ibom State, section 10 (1) of PITA.

He contended, therefore, that jurisdiction could only be assumed over the appellant’s expatriate staff where the respondent was able to show that (a) the expatriate staff derived income from employment wholly or partly in Nigeria; and (b) the expatriate staff were resident in Nigeria for a period of 183 days, about six months. He pointed out that there was no evidence to the effect that the expatriates were resident in Nigeria for the said period of 183 days in 1999-2000. He maintained that exhibit C, upon which the learned trial Magistrate based its decision (and which decision was affirmed by the lower court) did not show the length of time the expatriates worked on the said vessels, “Agbani” and “K. Taggart.”

He canvassed the view that, in the absence of such evidence as to the length of time that the said expatriates were resident in Nigeria, the lower court, wrongly, affirmed the learned trial Magistrate’s assumption of jurisdiction over a matter concerning the said expatriate staff. He urged the court to hold that the issue of residency of the appellant’s employees was not proved. He further urged the court to hold that the concept of deemed residency or indeed any legal presumption was inapplicable in the matter since there was no evidence that the said vessels had lodging facilities. He entreated the court to find that the lower court erred in affirming the learned trial Magistrate’s finding that the appellant was liable to the respondent for the PAYE tax in this matter.

RESPONDENT’S SUBMISSIONS
On his part, learned counsel for the respondent, Usen Usen, A. D., MOJ, Uyo, with Titi Akinladu, adopted the respondent’s brief filed on October 23, 13. In the said brief, he argued that it was an undisputed that an individual’s liability for the remittance of personal income tax, such as PAYE, to any state Government within Nigeria, only arises if he is resident in the relevant state and gains or profits from an employment derived from Nigeria. In his view, the law does not contemplate the individual’s residence in the relevant state for a continuous period of 183 days, as contended by the appellant’s counsel.

He disclaimed the applicability of section 10 (1) (a) (ii) of PITA. He contended that the above provisions could not be sufficient warrant for exempting an individual, who gains or earns income from an employment in Nigeria, from PAYE tax liability. He explained that the provisions are the exceptions available to a taxable individual who had neither been resident in the relevant state nor earned income derived from Nigeria for such period of time, that is, 183 days. He maintained that the appellant was neither protected nor qualified to take advantage of the said section.

He canvassed the view that section 81 of PITA, under which the appellant was charged in count one, (page one of the record), did not place any burden on the respondent to establish the duration of the residency of the taxable individual within the relevant state, in this case, Akwa Ibom State, before he could be demanded to pay tax and or before the appellant, in the instant appeal, could remit to the respondent the PAYE taxes accrued from its employees under the period of assessment.

He maintained that the respondent, rightly, arraigned the appellant (under PITA) for failure to remit PAYE tax to Akwa Ibom State Government. He took the view that the appellant’s employees, whose taxes the appellant deducted but failed to remit, were, at the material time, resident in Akwa Ibom State. Thus, the income they earned was chargeable to tax within the State. He submitted that the respondent established the two elements (residence and income or profit) beyond reasonable doubt. He noted that the appellant’s employees, at the material time, were resident and earning income within the said State; hence, they were liable to PAYE tax. He pointed out that the appellant had its office at Ebughu, Mbo Local Government Area. He, equally, observed that transactions and correspondences were exchanged between the parties at the said address without objection without any objection from the appellant, pages 143-145 and 158 of the record.

He contended that the lower court was right in upholding the findings of the trial court on the issue of deemed residency. He explained that the appellant had its office at Ebughu, Mbo L.G.A. It had operated a business concern at Ebughu, Mbo L.G.A. In addition, it had sometime made part remittance of PAYE taxes to the respondent at Egbuhu. It had admitted that its oil servicing production facility platform, Agbani and Nok Taggart were located closest at James Town in Mbo Local Government Area of the State, page 58 of the record. It had, equally, admitted that some of its employees were living in Akwa Ibom. He maintained that, against background, the trial Magistrate was right in invoking the concept of deemed residency in respect of its employees working on the vessels in question. According to counsel, the appellant conceded and refused or failed to disclose any other evidence relating to the residence of its employees.

In his submission, section 2 (2) of PITA envisaged the concept of deemed residency. As such, it was not incumbent on the respondent to prove that the appellant was resident in the State beyond every shadow of doubt. He canvassed the view that once there was evidence, oral or documentary, to the effect that a taxable individual gained or earned profit in an employment derived from Nigeria, provided he had not been away from Nigeria for 183 days or more, his residence would be deemed to be in the location where he is so employed.

He contended that an individual cannot and no employer would choose to incur such unreasonable cost over an employee by allowing him to reside at Port Harcourt and be shuttling daily to work at a place closest to James Town, Mbo L.G.A., Akwa Ibom State. He observed that the appellant neither testified nor disclosed at the trial that its employees were attending to their duties at Agbani and Nok Taggart from Port Harcourt. According to him, it was, therefore, right for the trial court to have deemed their residency. The appellate High Court was, equally, in his view, right to have upheld that position, citing page 158 of the record for the evidence of payment/remittance which the appellant made to the respondent. He submitted that proof of any given fact could be deduced or obtained from direct oral evidence or from inference of facts or acts.

Counsel contended that, under the Tax laws, PAYE, in particular, residency cannot be interpreted to the exclusion of the conduct of business or derivation of income within the relevant State. He pointed out that the appellant conducted its business and its employees were resident and earned income while in the respondent’s State at the time of assessment. As such, the trial court was right to have deemed its employees’ residence in Akwa Ibom State. He maintained that it was not in doubt that the appellant transacted its business and had its office at Mbo Local Government Area in Akwa Ibom State, citing pages 143, 145 of the record.

He referred to the evidence of Gideon Etieri. He pointed out that, while testifying as DW1, this witness confessed under cross-examination that the appellant had paid for business premises at Mbo, specifically, Ebughu. The witness, according to counsel, conceded that Agbani platform location had not been ceded to cross River state and that it was undisputed that the appellant had staff resident in Akwa Ibom State, James Town, Mbo Local Government Area, being the closest town to where the said Agbani and K. Taggart were located, citing pages 62 et seq of the record.

He maintained that both the trial court and the lower court were right on the issue of deemed residency. This, according to counsel, was in view of the fact that the appellant had admitted that its foreign employees worked on the “Agbani and K. Taggart” oil service floating production facility platform, which were located in Akwa Ibom State, (page 53, lines 25-25 of the record) and had paid taxes before it defaulted. He urged the court to affirm the judgment of the lower court on this ground.

He canvassed the view that the respondent had no obligation to prove the length of the residence of the foreign staff with its employer, the appellant. In his view, these were facts, especially, within its knowledge: facts it failed to disclose. He submitted that its failure to disclose facts within its knowledge or even challenge the tax assessment on such ground at the trial court was fatal to its case, citing section 140 of the Evidence Act; Igbinovia v UBTH (2001) FWLR (pt.50) 1745.

Citing section 1, First schedule of PITA, he submitted that the lower courts were right in the application of the concept of deemed residency. He observed that the appellant did not proffer any contrary evidence to the fact that its foreign/local employees either resided in a hotel, rest house or lodged in other temporary facility. He further pointed out it did not disclose the place which its staff used as a domestic place while working at Agbani and K. Taggart located at Mbo Local Government Area. He wondered where the said staff resided while working on those oil service facility platforms, citing the First Schedule of PITA “…unless no one permanent place is available for its use.”

He submitted that there was no more permanent place available for use by the appellant’s staff at the material time other than the platforms, Agbani and K. Taggart. He contended that the appellant bore the burden of proving otherwise, that is, that the residence of its staff had shifted, section 136 (1) (2) of the Evidence Act, 2011; Iwok v UNIUYO (2011) 6 NWLR (pt.1243) 211.

In his submission, the purport of the concept of deemed residence is to ensure that an individual, in the absence of evidence of a known actual residence for his domestic use in Nigeria, is nonetheless presumed to be so resident even in the temporary facility he is using to earn income. He canvassed the view that a court, by nature of its adjudicatory functions, could draw inferences from stated facts in a case. By such inferences, it could arrive at conclusions. In his view, such inferences, legitimately, drawn from facts, were proper, Olorunkunle v Adigum (2012) 6 NWLR (pt. 1297) 406, 420.

He submitted further that the issue of deemed residency under PITA had no criminal content upon which the respondent could be required to prove beyond every reasonable doubt. In his view, Asake v Nigerian Army Council (supra) was inapplicable. He maintained that, from the totality of evidence before the trial court, it has the jurisdiction to entertain the matter and the lower court, rightly, upheld its assumption of jurisdiction.

He contended that the jurisdiction of the trial Magistrate court, sitting as the Revenue Court of Akwa Ibom State, was not determined by the allegation or otherwise that the expatriate employees were not resident in Nigeria for a continuous period 183 days, (about 6 months). He maintained that there was a positive presumption of fact that Agbani and K. Taggart had lodging facilities, citing section 145 (1) and (2) of the Evidence Act, 2011. In his view, the lower court was right in assuming the concept of deemed residency as it related to the foreign employees.

He explained that the appellant’s foreign employees were not assessed based on the first day of January or any part of the year when they first gained employment in the appellant’s principal place of business. He pointed out that they had already worked at the appellant’s principal place of business. Thus, upon their subsequent residence in the respondent’s state, stilt in the course of their employment, the respondent, rightly, assessed them for tax payment. He took the view that section 2 of the First Schedule of PITA did not avail the appellant.
He canvassed the view that the burden of ascertaining when the foreign employees, actually, commenced duty with the appellant, for the purpose of ascertaining the commencement period of the assessment and proving the facts of deemed residency otherwise, were within the knowledge of the appellant. This, it failed to disclose, Iwok v UNIUYO (2011) 6 NWLR (pt. 1243) 211. He took the view that, in the circumstance, the lower court was right in adopting the doctrine of deemed residency of the appellant’s foreign employees to be the respondent’s state. He opined that Agbani and K. Taggart, being oil service facilities, had a platform used to house workers and machinery, Mobil Producing Unlimited Nig. v Ayeni (2010) 4 NWLR (pt.1185) 586, 609. He submitted that Agbani and K. Taggart were neither ships nor vessels. He ventured the opinion that they were not meant to transport passengers, cargo or equipment from place to place across navigable waters, Mobil Producing Unlimited Nig. v Ayeni (supra).
APPELLANT’S REPLY
As noted earlier, counsel for the appellant, also, adopted the reply brief filed on January 30, 2014. In it, counsel re-iterated the submission that the concept of deemed residency (in section 2, First Schedule, PITA) attaches only to the territory where the employer-company (the appellant, in the instant appeal) has its principal office (registered office). Section 2 (supra), therefore, does not envisage an affiliate business premises or location or outpost.

He drew attention to the fact that there was clear evidence before the lower court that the appellant’s registered office was at 34 Aba-Port Harcourt Road, Port Harcourt. He observed that this evidence was not contradicted. He, also, drew attention to the court processes served at the appellant’s aforesaid principal office, (pages 34, 36 and 39 of the record, George v S. B. N. Plc (2009) 5 NWLR (pt 1134) 302. He, accordingly, maintained that the lower courts, wrongly, applied section 2 (supra) in coming to the conclusion that the concept of deemed residence tied the appellant’s employees’ deemed residence to Akwa Ibom on the grounds that it (appellant) operated at Ebughu or that its expatriate employees worked on the said vessels.

Counsel ruled out the relevance of Olorunkunle v Adigun (supra) as it only referred to valid inferences from the facts before the court. He submitted that the address of counsel cannot be substitute for evidence, Niger Construction Ltd v Okugbeni (1987) 4 NWLR (pt 67) 787. He pointed out that there was evidence that Agbani and K. Taggart were ships or vessels, citing page 112 of the record for the finding on this issue. He urged the court to discountenance the respondent’s arguments.
RESOLUTION OF THE ISSUE
Unarguably, the appellant’s appeal was woven around the concurrent findings of two lower courts, namely, the trial Magistrates’ court and the lower court (High Court of Akwa Ibom State). It is, thus, self-evident that what it has entreated us to do in this appeal is to upset the concurrent findings of fact of these lower courts.

To be able to ascertain whether the appellant, successfully, discharged this onus, we now turn to counsel’s instantiation of the grounds for his ascription of perversity to the said findings. Our first port of call is the residency criterion of tax liability as regards the said expatriate employees. We, entirely, agree with the appellant’s counsel that the First Schedule to PITA sets out the said criterion of residency in these trenchant provisions:
place of residency in relation to an individual, means a place available for his domestic use in Nigeria on a relevant day, and does not include any hotel, rest-house, or other place at which he is temporarily lodging unless no more permanent place is available for his use on that day

The question, then, is whether the respondent, in proof of the charge against the appellant, established that the said employees were resident within the jurisdiction of the trial Magistrate, as affirmed by the lower court (High Court). Indubitably, the said residency criterion constitutes an irrefragable ingredient or element of the offence under section 81 of PITA. One Eshabi Pius Kukong, the sole prosecution witness testified, pages 41 – 52 of the record, and was cross examined, page 49 of the record. We have perused the five pages of his evidence-in-chief. Like the appellant’s counsel, we were unable to locate any evidence relating to this essential ingredient of the offence charged, that is, the residency of the said employees. Indeed, under cross examination, the following questions and answers were recorded at page 49:
Q. Do you have the question as to place of residency in Akwa Ibom State?
A. The audit report does not carry such questions.
Q. On what basis do you assess defendant to be liable?
A. On residency
Q. What document produced before court (sic) establishes that residence of these expatriates?
A. I have to explain
Q. I don’t want an explanation
A. The demand notice, exhibit “C”.
Q. Can you point that out?
A. It is not pointed (sic) in demand notice but gotten from oral questions and answers
(Italics supplied)

On the other hand, at page 54 of the record, one Gideon I. Etireri, DW1 was subjected to cross examination. Listen to the following questions and answers.
Q. What categories of employees do you have?
A. Nigerian and expatriate staff.
Q. Do you have records rerating to the residences of ail the staff?
A. Yes
Q. Speaking of expatriate staff, is any of them resident in Akwa Ibom State?
A. None of them is resident
(Italics supplied)

Now, in the absence of this essential element, the trial Magistrate’s Court invoked the concept of deemed residency in finding the appellant liable. The appellate High Court affirmed this finding. The findings of the learned trial Magistrate (which were affirmed by the High Court) could be found at pages 112 of the record. Hear the views of the said court:
It has been shown that (sic) defendant company’s expatriate list (sic) staff as per worked on vessels called ‘Agbani’ and ‘K. Taggart’. I have shown from the evidence that these two vessels were located closest to Mbo Local Government in Akwa Ibom State. Defendant Company admittedly also paid for business premises in Mbo Local Government Area. It was for the defendant company to show that these expatriates had more permanent place available for their use at the relevant time.

On its part, the appellate High court, at pages 239-240 of the record, affirmed the above findings. The said court affirmed that:
The undisputed evidence before the trial Magistrate is that employees of the appellant worked on the vessels Agbani and K. Taggart. Appellant witness describing the operation of the appellant at page 53, lines 25-29, said:
We are an oil service company and our major operation is in the area of deep water well testing or extended well services, Akwa Ibom State floating or temporary production facility
Against the background of the foregoing, was the learned trial Magistrate right in calling in aid ‘the concept of deemed residence’ in respect of employees of the appellant working on the vessels in question?
If the employees of the appellant lived other than on the vessel, who had the burden to supply evidence? The burden was certainly on the appellant. The purport of the concept of deemed residence is to ensure that an individual in the absence of evidence of a place available for his domestic use in Nigeria is nonetheless presumed in the eyes of the law to be resident even in temporary facility he uses.
I therefore hold that the findings of trial Magistrate regarding the residence of the appellants’ employees on the vessels in question were proper. I find no reason to disturb same.

RESIDENCE AS CRITERION FOR TAX LIABILITY
With profound respect, the lower court (that is, the appellate High Court) erred in so doing. In Nigeria’s tax jurisprudence, the bases for the imposition and or collection of personal income tax are twofold: “residence” and “source.” This case is concerned only with the former, that is, residence. Under our tax law regime, one of the bases of tax liability, on the part of a taxpayer, and the power of an appropriate tax authority to collect personal income tax, is “residence”.
Simply put, the principle of residence relates primarily to the existence of sufficient connection between a relevant tax authority and a taxable person. If it is shown that a taxpayer resides in any state in Nigeria, that State’s Board of Internal Revenue is the appropriate authority conferred with the power to collect personal income tax from such taxpayers resident in that state, section 2 (2) PITA. These taxpayers, i.e. resident taxpayers, are expected to give account of their worldwide earnings to the state tax authority, Section 3 (1) PITA.

Against this background, therefore, the phrase “place of residence” seems more apposite apropos the legislative technique employed in PITA. Paragraph 1 of the First schedule to the PITA defines the “place of residence” of an individual as “…a place available for his domestic use in Nigeria on a relevant day, and does not include any hotel, rest-house or other place at which he is temporarily lodging unless no permanent place is available for his use on that day,” (italics supplied for emphasis).

We note that the principal factor here is “a place available for the (person’s) domestic use in Nigeria.” We, therefore, take the humble view that “rest-house, hotels and other temporal places of abode – such as residing in a vessel” cannot, under PITA, serve as a place of residence, except if there is no permanent place available for the taxpayer’s domestic use in Nigeria. In this limited instance, such temporal place(s) could serve as a place of residence. The definition intended here by the PITA is factual residence. It does not cover “deemed residence.”

The question now is: was evidence presented to the learned trial Magistrate to show that the expatriates have stayed either in the vessels or elsewhere in Nigeria for a period(s) amounting to 183 days or more for the period(s) in question? Above all, did the prosecution prove that the point(s) at the High Sea where the vessels were stationed were within the State’s boundary? From the records, we could not find any such proof. Yet, the lower court affirmed the conviction of the appellant.
We cannot conclude our exploration of the PITA provisions without making brief comments on some of the provisions of the said Act which the parties, wrongly, cited. With respect, the appellant’s counsel, wrongly, placed reliance on paragraph 2 of the First Schedule to the PITA at paragraph 3.14, page 8 of the appellant’s brief. This paragraph provides that:
An individual not being a person to whom subsection (1)(b) of section 2 of this act applies, who holds a foreign employment on the 1st day of January in a year of assessment, or who first becomes liable to income tax in Nigeria for that year by reason of his entering that employment during that year, shall be deemed to be resident for that year in the territory in which the principal office of his employer is situated on that day or on the day his foreign employment commences, as the case may be.

We take the humble view that the above provision does not refer to “foreign employees” as, counsel for the appellant, erroneously, argued.
It, first, mentioned individuals who are not covered by subsection (1) (b) of section 2 of the Act. A review of subsection (1) (b) of section 2 of PITA shows that it refers to: persons employed in the Nigerian Army; the Nigerian Navy; the Nigerian Air Force; the Nigerian police Force other than in a civilian capacity; officers of the Nigerian Foreign service; every resident of the Federal capital Territory, Abuja; and a person resident outside Nigeria who derives income or profit from Nigeria – that is, non-Nigerian resident who derives income or profit from Nigeria.

Indeed, subsection (1) (b) of section 2 of PITA refers to those classes of people whose income taxes are payable to the FIRS, section 2 (2) of PITA and Part 1 of the Schedule to the Taxes and Levies (Approved List for Collection) Act, LFN 2004. The people in this group are excluded by paragraph 2 of the First Schedule to the PITA.

The term “foreign employment” in paragraph 1 of the First Schedule to the PITA is defined as “an employment, the duties of which are wholly performed outside Nigeria save during any temporary visit of the employee to Nigeria”. This definition refers to employment that is wholly performed outside Nigeria, except if performed in Nigeria during a temporary visit of the employee in the country. In our view, therefore, any employment wholly performed in Nigeria is not covered by this paragraph.

To that extent, an employment held by an expatriate wholly and or partly performed in Nigeria is not contemplated by this paragraph because a Nigerian employment cannot be a foreign employment. “Nigerian employment” is defined in the same paragraph 1 of the First Schedule to the PITA as “any employment, not being a foreign employment, the duties of which are wholly or partly performed in Nigeria.”

It follows that paragraph 2 of the First Schedule to the PITA, which appellant’s counsel relied on, applies to Nigerian residents, other than those covered by section 2 (1) (b) of PITA, who hold a foreign employment, that is, employment wholly performed outside Nigeria, on the 1st day of January in a year assessment or who … In effect, that paragraph does not refer to foreign employees or expatriate workers in Nigeria.

On the other hand, we find that counsel for the respondent was in error when he canvassed the view that the doctrine of deemed residency, especially as it applies to non-Nigerian residents, is covered under section 2 (2) of PITA. This section does not stipulate any condition to be satisfied before one is deemed a resident of a state. The section also covers individuals [under section 2(1)(b)] whose taxes are collectible by FIRS, which includes non-Nigerian residents.

In all, the question whether the expatriate staff of the appellant were residents of Akwa Ibom State, for purposes of taxation, was a question of fact which had to be established in evidence. This was not done. Against this background, we entertain no doubt that the lower court (the appellate High Court) was in error when it affirmed the learned trial Magistrate’s invocation of the concept of deemed residence and, in particular, situating the deemed residence of the appellant’s expatriate employees in Akwa Ibom State.

That is not all. At page 112 of the record, the learned trial Magistrate found that the appellant’s expatriate staff worked on vessels called “Agbani” and “K. Taggart.” It, expressly, acknowledged them as “these ships and vessels.” somewhat, surprisingly, at page 8, (paragraph 4. 17) of the respondent’s brief, counsel took the view that “Agbani and K. Taggart, the appellant’s oil servicing production facility platform, were neither a ship or (sic) vessel…” In all, we find considerable force in the submission of the appellant’s counsel that the said “Agbani” and “K. Taggart” were means of transportation, Mobil Producing (Nig) Unltd v Ayeni (supra).

From the PITA provisions highlighted above, we take the view that the appellate High Court, wrongly, disregarded the evidence before the learned trial Magistrate to the effect that the said expatriate staff worked on the said vessels which were means of transportation, Mobil producing (Nig) Unltd v Ayeni (supra). Above all, the respondent having failed to prove an essential element of the offence charged, the said appellate High Court was, equally, wrong in its conclusion that the appellant had the obligation to prove that material and important element, namely, the residency criterion of tax liability of the expatriate staff of the appellant. In all, therefore, we endorse the submissions of the appellant’s counsel that, in the absence of proof of the residency element of the offence, the learned trial Magistrate, wrongly, assumed jurisdiction to try and convict the appellant. A fortiori, the lower court (the appellate High Court) was, equally, in error in affirming the posture of the trial Magistrate’s court.

In all, we are satisfied that the appellant has shown that the findings of fact of the said lower courts were perverse, in the sense that, they were unsupported by the evidence before the trial court. It has, thus, made out a case for the disturbance of the said findings, Enang v Adu (supra); Nwadike v Ibekwe (supra); Igwego v Ezeugo (supra); Lamai v Orbih (supra); Woluchem v Gudi (supra); Ike v Ugboaja (supra); Chinwendu v Mbamali (supra). We, accordingly, set aside the said findings of the lower court (the appellate High Court). In their place, we enter an order discharging and acquitting the appellant.

ISSUE TWO
Whether the learned High Court Judge was right in his application of section 149 (d) of the Evidence Act in relation to the appellant’s local employees?
Learned counsel devoted paragraphs 3. 30 – 3.34, (pages 12 – 14) of the appellant’s brief to the elucidation of his principal proposition that the lower court erred in its affirmation (at page 243 of the record) of the trial Magistrate’s invocation of the presumption in section 149 (d) of the Evidence Act. He contended that the presumption did not apply where the party involved had voluntarily tendered the evidence to that effect but the court itself rejected the evidence on technical grounds.

He drew attention to pages 54 – 55 of the record. He explained that the certified true copy of the record of proceedings before the learned trial Magistrate on June 13, 2002, showed the appellant’s efforts to tender the document which exhibited the list of the appellant’s Nigerian staff and their residence, that is, their contact addresses and homes. He explained that when the appellant tried to tender the said document through its witness, namely, Gideon Etireri, the learned trial Magistrate rejected it on technical grounds and yet failed to make findings on the residence of the Nigerian employees. He observed that this notwithstanding, the court entered judgment for the respondent in respect of these employees, citing Musa v Yerima (1997) 7 NWLR (pt.511) 27, 49 -50 on the criteria for the invocation of the said presumption.

He contended that, having regard to the principles which the apex court enunciated in the above case, the appellate High Court, wrongly, affirmed the learned trial Magistrate’s invocation of the presumption in section 149 (d) (supra). He urged the court to allow the appeal; set aside the judgment of the High Court delivered on April 20, 2012 and discharge the appellant on count 1 of the charge.

RESPONDENT’S SUBMISSIONS
On his part, counsel for the respondent submitted that the lower court was right in its application of section 149 (d) (supra) in relation to the appellant’s local employees. He pointed out that the appellant failed to tender any evidence which linked its employees to it. He observed that the appellant’s voluntary confession relating to its local employees’ resident in Akwa Ibom State needed no further proof or evidence from the respondent before the trial court could act in it. In his view, Musa v Yerima (supra) was inapplicable in the instant appeal. He urged the court not to disturb the concurrent findings of the courts below. On the other hand, it should uphold and affirm the judgment of the lower court and dismiss the appeal for being unmeritorious.
RESOLUTION
We, entirely agree with counsel for the appellant on this issue. The transcripts, pages 54 – 55 showed the appellant’s efforts to tender the document which exhibited the list of the appellant’s Nigerian staff and their residences, that is, their contact addresses and homes. When the appellant tried to tender the said document through its witness, namely, Gideon Etireri, the learned trial Magistrate rejected it. In the circumstance described above, we take the view that the invocation of the said presumption was improper. The appellate High Court was in error in sustaining the trial court’s invocation of the presumption. The presumption could only have been invoked if the appellant, deliberately, excluded the said exhibits and failed to explain away their reason for doing so, Muhammed Buhari and Anor v Obasanjo and Ors (2005) 50 WRN 1, 186; Aremu v Adetoro (2007) 49 WRN 1, 16; Onuwaje v Ogbeide (1991) 3 NWLR (pt 178) 147; Udo v Okupa (1991) 5 NWLR (pt 191) 365; UBA Ltd v Ibhafidon (1994) 1 NWLR (pt 318) 90; Tsokwa Motors (Nig) Ltd v Awoniji (1999) 1 NWLR (pt 586) 199; Ogwuru v CCB Nig Ltd (1994) 8 NWLR (pt 365) 685. From what transpired in court, pages 54 – 55 of the record, the appellant could not be said to have, deliberately, excluded the said exhibits. We resolve this issue in favour of the appellant. In all, having set aside the said findings of the lower court (the appellate High Court), and having entered an order discharging and acquitting the appellant, we, in consequence, allow this appeal. Appeal allowed.

UZO I. NDUKWE-ANYANWU, J.C.A: I had the privilege of reading before now, the Judgment just delivered by my learned brother C. C. Nweze, JCA. I agree with his reasoning in the lead Judgment that the residence of the expatriate workers of ECODRILL can only be in Port Harcourt where their headquarters is situate. See S.2 of the First Schedule of P.I.T.A.

It was therefore, wrong for the trial Magistrate Court and the High Court sitting on appeal to hold that the expatriate workers were residence in Akwa-Ibom State merely because of the vessels “Agbani” and “K. Taggart”. These vessels were moving and cannot be classified as a place of residence.

For this and the more robust reasoning and conclusions in the lead Judgment, I also hold that the appeal has merit. It is therefore allowed. I abide by all the consequential orders contained in the lead Judgment.

ONYEKACHI A. OTISI, J.C.A: My learned Brother, Chima Centus Nweze, JCA, advanced a draft copy of the Judgment just delivered, allowing this appeal.
In his characteristic erudite manner, all issues raised in this appeal have been comprehensively addressed. I am in complete agreement with the reasoning and the conclusions reached; which I adopt as mine.
I also allow the appeal and abide by the orders made in the lead Judgment.

Appearances

Chukwudi EzeFor Appellant

AND

Usen Usen, A. D., MOJ, Uyo, with Titi AkinladuFor Respondent