Author: Ibrahim Abusadiq

News Investigators/ Binance Holdings Ltd. has prayed the Federal High Court in Abuja to set aside the ex-parte order granted the Federal Inland Revenue Services (FIRS) for substituted service of all court documents on it.

Binance lawyer, Chukwuka Ikwuazom, SAN, told Justice Inyang Ekwo shortly after the matter was called on Monday.

He informed the court that a motion had already been filed to the effect on Friday.

He said their contention was that the rules of the court for such service had not been complied with before the order was made.

Earlier, counsel to the FIRS, Chief Kanu Agabi, SAN, told the court that the cryptocurrency firm served them with the motion in the morning, seeking to vacate the order for substituted service.

Agabi, however, indicated his interest to respond to the application.

Justice Ekwo said the copy of the motion was not in the court file and Ikwuazom, who apologised to the court, said the application was just filed on Friday.

The judge adjourned the matter until April 30 to allow the FIRS respond appropriately.

Justice Ekwo had, on Feb  11, granted leave to FIRS to serve its originating summons and accompanying documents on the cryptocurrency firm through substituted means by sending the processes via email address: Eleanor-huges@binance.com.

The News Agency of Nigeria (NAN) reports that the agency had, in the suit dragged Binance, Tigran Gambaryan and Nadeem Anjarwalla, who were the company’s representatives, to court, demanding 79.5 billion US dollars over economic losses allegedly caused by their operations in Nigeria.

In the originating summons marked: FHC/ABJ/CS/1444/2024, dated and filed Sept. 30, 2024, by Chief Kanu Agabi, SAN, the country’s’ tax regulatory body sought four questions for determination.

The FIRS prayed the court to determine “whether pursuant to Section 13(2) of the Companies Income Tax (CIT) Act Cap. C21, LFN, 2024 and Order (1)(a) and (c) of Companies Income Tax (Significant Economic Presence) Order 2020, the defendants are not liable to pay annual corporate income tax to the Federal Republic of Nigeria for having had significant economic presence in Nigeria from 2022 to 2023,” among others.

While moving the ex-parte motion, the agency had submitted that Binance, which had neither physical office in Nigeria nor workers, could only be served by substituted means.

A sister court, presided over by Justice Emeka Nwite had, in Oct. 2024, released Gambaryan after the Federal Government withdrew a money laundering charge filed against him and the company by the EFCC.

Besides, Anjarwalla, an executive of Binance who was detained alongside Gambaryan for tax evasion and other offences, escaped from lawful custody earlier on March 22, 2024.

However, Binance, in a motion on notice dated and filed on April 4 by Ikwuazom sought an order setting aside the ex-parte order

He also sought an order setting aside the purported substituted service of the originating processes on Binance through the electronic email.

Giving nine-ground argument, Ikwuazom submitted that Binance is a company registered under the laws of Cayman Island and resident in Cayman Island.

He argued that by the rules of the court, an originating process or any other document issued by the court can only be served on a company by delivering it to a director, secretary or other principal officer of the company or by leaving it at the registered office of the company.

According to him, the originating processes and documents of this court cannot be served on a company such as the applicant by substituted means.

“By the Rules of this Honourable Court, service of originating processes outside jurisdiction can only be made in accordance with the provisions of Order 6 Rule 18 of the Rules of this Honourable Court (in the absence of a service convention) or in accordance with Order 6 Rule 20 of the Rules of this Honourable Court (where a service convention exists) and only after the leave of the Court to serve outside jurisdiction has been sought and granted.”

Ikwuazom argued that FIRS failed wholly to follow the process prescribed by the rules of the court for service of the originating processes on the company outside the jurisdiction of the court.

“The respondent also failed to obtain the required leave of this Honourable Court to serve the Originating Processes on the applicant outside the jurisdiction of this court,” he added.

He said, “substituted service of a process on a defendant outside jurisdiction can only be made where the government or a court of the foreign country where the process was intended to be served certifies to this Honourable Court that the efforts made to serve the process have failed.”

He prayed the court to grant their prayers.

NAN reports that the FIRS had sought nine reliefs in the suit should the court answered its questions in the affirmative.

It wants the court to declare that pursuant to all relevant laws, the defendants are liable to pay annual corporate income tax to the Federal Government for having significant economic presence in the country.

It wants the court to declare that Binance and its representatives are liable to file their income tax to the agency for the year 2022 and 2023 respectively from the time they began to exercise significant economic presence in Nigeria.

FIRS also seeks a declaration that it is entitled, under Section 87(1) of the CIT Act Cap. C21, LFN, 2004; Sections 25(1) and 34(1) of the FIRS (Establishment) Act 2007, to recover from the defendants the cumulative sum of $2,001,000,000.00 being the amount due by way of income tax to the plaintiff from the defendants for 2022 and 2023 respectively.

It also seeks a declaration that pursuant to Section 85(1) of the CIT Act Cap. C21, LFN, 2004 and Section 32(1) of the FIRS (Establishment) Act 2007, the defendants are liable to additional payment of 10 per cent per annum on the tax due but not paid for 2022 and 2023 respectively.

The agency, therefore, sought an order mandating the defendants to pay to the plaintiff the sums of $2,001,000,000.00 for year 2022 and for 2023, being the unpaid income tax due to the plaintiff from the defendants for the year 2022 and 2023 respectively.

“An order mandating the defendants to pay to the plaintiff the 10% addition for non-payment of income tax for year 2022 and 2023 respectively.

“An order mandating the defendants to pay 26.75% interest rate being the prevailing Central Bank of Nigeria (CBN) lending interest per annum from the 1st January, 2023 and 1st January, 2024 respectively when the tax become due and payable until it is fully paid.”

In the affidavit deposed to by Jimada Yusuf, a member, Special Investigation Team from the Office of the National Security Adviser (ONSA), he said he and other officials of FIRS and other regulatory agencies, investigated Binance’s business activities in Nigeria.

Yusuf said the Federal Government discovered that Binance had been operating in Nigeria for over six years without registration.

According to him, this was allegedly confirmed by Gambaryan and Anjarwalla during a meeting with the Securities and Exchange Commission (SEC) in 2024.

He further claimed that in a letter dated February 20, 2024, Binance admitted to having 386,256 active users from Nigeria on its platform, with a trading volume of $21.6 billion and a net revenue of $35.4 million for the calendar year 2023.

He accused Binance and its executives of multiple infractions, including offering financial services without the necessary licenses, operating without required permits, non-compliance with the money laundering Act, providing currency speculation services without proper authorisation, etc.

Yusuf averred that Binance engaged in Virtual Asset Service Provider (VASP) activities in Nigeria, providing trading and custodial services to Nigerian users without proper registration with the relevant regulatory agencies, among others.

NAN reports that the FIRS and the EFCC are also prosecuting the cryptocurrency company in separate charges before Justice Nwite of the same court.

NAN