Facts:

The appellant is a Federal Government agency saddled with the responsibility of assessing, evaluating and collecting tax on behalf of the Federal Government of
Nigeria. The 2nd respondent was a holder and beneficiary of Oil Prospecting
Licence (OPL) 246. On the 19th, March 1998 the 2nd respondent entered into a
farm-in agreement with Total Upstream Limited (TUPNI) and Brassoil Services
Company for the purpose of joint exploration and production of oil wherein 24%
and 16% participating interest were assigned respectively. In 2005, OPL 246
was converted to Oil Mining Lease (OML) 130 pursuant to the Deep Water Block
Allocation to Companies (Back-Rights) Regulations, 2003 in which the Federal
Government, through the Ministry of Petroleum Resources acquired 50%
participating interest which was vested in the Nigerian National Petroleum
Corporation (NNPC). Consequently, the parties executed a Production Sharing
Contract (PSC) to reflect the new position. Pursuant to the PSC, the 2nd
respondent on 6th April, 2009 sent a letter to the appellant to confirm the fiscal
incentive to apply to the transaction between the parties. The appellant on 13th
July, 2009 replied but erroneously stated in the letter that the fiscal incentive that
was to apply is Investment Tax Credit (ITC) instead of Investment Tax Allowance
(ITA) as stipulated by the Deep Offshore and Inland Basin (Production Sharing
Contract) Act concerning a PSC executed before 1st July, 1998 and that executed
after that time. By another letter dated 13th June, 2012 sent to the respondents,
the appellant reversed itself and stated that the fiscal incentive to apply to the
transaction is the ITA.

The respondents were aggrieved by the new position of the appellant and
consequently filed a suit at the Federal High Court, Lagos Division for an order
to quash the decision of the appellant to apply ITA in the assessment of the OML
130 contract area for the purpose of taxation, an injunction to restrain the appellant
from applying Investment Tax Allowance in assessing the PSC and an order of
mandamus to compel the appellant to continue to apply Investment Tax Credit in
the assessment of the PSC. After hearing the parties, the trial judge ruled in
favour of the respondents on the ground that even though the law states that the
Investment Tax Allowance is to apply to the PSC, the appellant was estopped
from denying its earlier position that Investment Tax Credit applies to the
transaction.

The appellant was dissatisfied with the ruling of the trial judge and filed a notice
of appeal at the Court of Appeal, Lagos Division for judicial review of the decision
of the trial court. The sole issue for determination is whether section 4 of the
Deep Offshore and Inland Basin Production Sharing Contracts Act, makes
Investment Tax Allowance applicable to the case.