Tax holiday: Appeal Court dismisses NLNG’s case against NIMASA

Steve Agbota

The Court of Appeal, Lagos Division, last week set aside the judgement of the Federal High Court, which had exempted the Nigerian Liquefied Natural Gas Limited (NLNG) from levies payable to the Nigerian Maritime Administration and Safety Agency (NIMASA) under the NIMASA Act, Cabotage Act, Marine Environment (Sea Protection Levy) Regulations, and other laws of the federation. The Appeal Court based its ruling on the fact that NIMASA, the country’s maritime regulatory agency, was not given fair hearing at the lower court.

Justice Mohammed Lawal Garba, who delivered the judgement, ordered the return of the case to the Federal High Court for fresh trial under a different judge. The ruling restores the status quo, reaffirming NIMASA’s powers to continue to collect the levies.

According to lead counsel of NIMASA, Mr. Lateef Fagbemi (SAN), the effect of the ruling is that the Federal High Court is ordered to revert to the fundamental issue of fair hearing while NLNG continues to pay the statutory levies, pending another ruling by the lower court on the matter.

The dispute between NLNG and NIMASA is based on the refusal by NLNG to pay 3 per cent of the gross freight on all international outbound and inbound cargo carried by ships chartered by NLNG and its wholly-owned subsidiary company as contained in the NIMASA Act 2007; its refusal to pay the 2 per cent surcharge on cabotage trade undertaken by its vessels within 200 nautical miles of the baselines and Nigerian coastal and inland waters as contained in the Coastal and Inland Shipping (Cabotage) Act 2003; and the NLNG refusal to comply with the Marine Environment (Sea Protection Levy) Regulations of 2012 and the Merchant Shipping (Ship Generated Marine Waste Reception Facilities) Regulations 2012.

 NIMASA had in 2010 commenced an action against NLNG, wherein it sought for an interpretation of relevant provisions of the Nigerian LNG (Fiscal Incentives, Guarantees and Assurances) Act, CAP N87, Laws of the Federation of Nigeria 1990, and the NIMASA Act of 2007.