Binance Holdings Ltd. has urged the Federal High Court in Abuja to set aside the ex-parte order granted to the Federal Inland Revenue Services (FIRS) for substituted service of all court documents on the company.
Binance’s lawyer, Chukwuka Ikwuazom, SAN, informed Justice Inyang Ekwo shortly after the matter was called on Monday that a motion challenging the order had already been filed on Friday.
He contended that the rules of the court for such service had not been properly adhered to before the order was granted.
Earlier, counsel for the FIRS, Chief Kanu Agabi, SAN, told the court that the cryptocurrency firm had served them with the motion in the morning, seeking to vacate the substituted service order, and expressed his intention to respond to the application.
Justice Ekwo noted that the copy of the motion was not yet in the court file. Ikwuazom apologised to the court, explaining that the application had only been filed on Friday.
The judge adjourned the matter to 30th April to allow the FIRS to respond appropriately.
It is worth recalling that Justice Ekwo, on 11th February, granted leave to the FIRS to serve its originating summons and accompanying documents on Binance through substituted means, by sending the processes via the email address: Eleanor-huges@binance.com.
The FIRS, in its suit, dragged Binance, Tigran Gambaryan, and Nadeem Anjarwalla (representatives of the company) to court, demanding $79.5 billion over alleged economic losses caused by their operations in Nigeria.
In the originating summons, marked FHC/ABJ/CS/1444/2024 and filed on 30th September 2024 by Chief Kanu Agabi, SAN, Nigeria’s tax regulatory body sought the court’s determination on whether, pursuant to Section 13(2) of the Companies Income Tax (CIT) Act Cap. C21, LFN, 2024 and Order (1)(a) and (c) of the Companies Income Tax (Significant Economic Presence) Order 2020, the defendants were liable to pay annual corporate income tax to Nigeria for having significant economic presence in the country between 2022 and 2023, among other issues.
While moving the ex-parte motion, the agency had argued that Binance, which neither has a physical office nor employees in Nigeria, could only be served by substituted means.
However, Binance, in a motion on notice filed on 4th April by Ikwuazom, sought orders to set aside the ex-parte order and the purported substituted service of the originating processes on Binance through the provided email.
Ikwuazom, in his nine-point argument, submitted that Binance is a company registered under the laws of the Cayman Islands and resident there. He further argued that, under the rules of the court, an originating process or any other court-issued document 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 company’s registered office.
He maintained that the originating processes of the court cannot be served on a company such as Binance 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 the FIRS failed to follow the procedure prescribed by the court rules for serving the originating processes on Binance outside jurisdiction.
“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.
According to him, “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 is intended to be served certifies to this Honourable Court that efforts to serve the process have failed.”
Binance’s counsel prayed the court to grant their request to set aside the orders.
The FIRS has asked 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 also seeks a declaration that Binance and its representatives are liable to file their income tax returns with the agency for the years 2022 and 2023 respectively, from the time they began to exercise significant economic presence in Nigeria.
Furthermore, the FIRS seeks a declaration that it is entitled, under Section 87(1) of the CIT Act Cap. C21, LFN, 2004, as well as 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 from the defendants for 2022 and 2023.
The agency 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 pay an additional 10 per cent per annum on the tax due but not paid for the years 2022 and 2023.
The FIRS has therefore sought an order mandating the defendants to pay the plaintiff the sum of $2,001,000,000.00 for 2022 and 2023 respectively, representing the unpaid income tax due to the plaintiff from the defendants for the respective years, among other reliefs.
In an affidavit deposed to by Jimada Yusuf, a member of the Special Investigation Team from the Office of the National Security Adviser (ONSA), the Federal Government stated that Binance had been operating in Nigeria for over six years without proper registration.
He further disclosed that, in a letter dated 20th February 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.
Yusuf accused Binance and its executives of multiple infractions, including offering financial services without the necessary licences, operating without required permits, non-compliance with the Money Laundering Act, and providing currency speculation services without proper authorisation.
He also averred that Binance engaged in Virtual Asset Service Provider (VASP) activities in Nigeria, offering trading and custodial services to Nigerian users without proper registration with the relevant regulatory authorities, among other violations.
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Binance asks Court to set aside FIRS’ ex-parte order – Tribune Online
