LAGOS STATE INTERNAL REVENUE BOARD V. MOTOROLA NIGERIA LIMITED & ANOR
(2012)LCN/5432(CA)
(2012) LPELR-14712(CA)
In The Court of Appeal of Nigeria
On Friday, the 1st day of June, 2012
CA/L/241/2009
RATIO
JURISDICTION: THE IMPORTANCE OF JURISDICTION
It’s a truism, that the issue of jurisdiction is not only important, but rather fundamental. Jurisdiction is so fundamental that it’s never conferred in obscurity. This is absolutely so, because it’s a power that is so crystally obvious to all beholders of the constitution and the [rule of] law. Thus, microcopic eyes are not at all required to discern it. See BUKAR MANDARA V. AG FEDERATION (1984) 1 SC NLR 311; UTIH V. ONOYIVWWE (1991) 1 NWLR (PT.166) 166; ANPP V. REC AKWA IBOM STATE (2008) 8 NWLR (PT.10900 453 AT 524 PARAGRAPHS A -CA; MADUKOLU V. NKEMDILIM (1962) 2 SCNLR 341.PER KUMAI BAYANG AKAAHS, J.C.A
JURISDICTION: THE PRINCIPLES UPON WHICH A COURT CAN BE SAID TO HAVE JURISDICTION
It’s a well settled doctrine, that the jurisdiction of a court, to entertain and determine a matter or action, is predicated upon certain fundamental factors, viz:
(a) the proper constitution of the court regards
(b) the subject matter of the case is devoid of any feature inhibiting the exercise of jurisdiction thereof; and.
(c) that the case is filed by due process of law.
See MADUKOLU V. NKEMDILIM (1962) 2 SCNLR 341; WESTERN STEEL WORKS LTD V. IRON & STEEL WORKERS UNION (NO.1) (1986) 3 NWLR (PT.30) 617.PER KUMAI BAYANG AKAAHS, J.C.A
JURISDICTION: THE IMPORTANCE OF CLAIMS IN THE DETERMINATION OF JURISDICTION
Normally, where the issue of jurisdiction is raised in a case, the claims, as contained in the writ of summons, statement of claim or other originating processes, should be considered in order to determine whether or not the court has jurisdiction to entertain the matter. See OKAFOR V. IGBO (1991) 8 NWLR (PT.210); MADUKOLU V. NKEMDILIM (supra); AKONO V. NIG. ARMY (2000) 14 NWLR (PT.687) 318; IBORI V. OGBORU (2005) 6 NWLR (PT.920) 102; FGN V. OSHIOMOLE (2004) 3 NWLR (PT.860) 305, et al. PER KUMAI BAYANG AKAAHS, J.C.A
JUSTICE
KUMAI BAYANG AKAAHS Justice of The Court of Appeal of Nigeria
IBRAHIM MOHAMMED MUSA SAULAWA Justice of The Court of Appeal of Nigeria
RITA NOSAKHARE PEMU Justice of The Court of Appeal of Nigeria
Between
LAGOS STATE INTERNAL REVENUE BOARD Appellant(s)
AND
1. MOTOROLA NIGERIA LIMITED
2. CITIBANK NIGERIA LIMITED Respondent(s)
KUMAI BAYANG AKAAHS, J.C.A (Delivering the Leading Judgment): The issue for determination in this appeal is whether the learned trial Judge was right to assume jurisdiction on the premise that Taxation is Item 59 under the Exclusive Legislative List in the Constitution. The 1st respondent put the issue more succinctly thus:
“Whether the Federal High Court has jurisdiction to entertain and determine the present action”
The brief facts that led to this appeal are as follows:
The 1st respondent as Plaintiff commenced an action in the lower court by Writ of Summons and in paragraph 17 of the Statement of Claim sought for the following reliefs:
a) A declaration that the Defendant acted unlawfully in sealing up the offices of the plaintiff on 18th September, 2008 in purport enforcement of the defendant’s notice of tax assessment dated 4th April 2008 and referenced as LA/IRS/SDLM/COLL/DN/MN453703/08 when the plaintiff had served on the defendant on the 3rd of September 2008, a notice of appeal against the rejection by the defendant of the plaintiff’s objection to the assessment.
b) An injunction restraining the 2nd defendant from honouring upon presentation the cheque dated 18th September 2008, issued by the plaintiff in favour of the 1st defendant in consequence of the sealing up by the 1st defendant of the offices of the plaintiff amounting to the sum of N90,649,092.96.
c) An order of perpetual injunction restraining the 1st defendant or its agent from further harassing, intimidating and disrupting the business of the plaintiff in any way or form. In the alternative, an order that pending the determination of the appeal pursuant to the notice of appeal dated 3rd September, 2008 the defendant refunds to the plaintiff the sum of N90,649,092.96 paid to it by the plaintiff on 18th September 2008 consequent upon the sealing up of the offices of the plaintiff by the defendant.
d) Special damages against the 1st defendant at the rate of 21% per annum on the sum of N90,649,092.96 from the date the said sum of N90,649,092.96 leaves the plaintiff’s bank account until the day it is refunded by the 1st defendant.
e) N10,000,000.00 General damages for the disruption of business and embarrassment caused the Plaintiff by the unlawful action of the 1st defendant in sealing up its offices.
f) N10,000,000.00 Aggravated and or Exemplary damages against the 1st defendant for the disregard shown for the rule of law in sealing up of the offices of the Plaintiff in disregard of a pending notice of appeal.”
On 22nd September, 2008 the Plaintiff filed two motions – one ex- parte and the other on notice seeking for interim and interlocutory injunctions respectively restraining the 2nd Defendant from honouring upon presentation of the forty [40] cheques in the total sum of N89,624,043.30 issued by the Plaintiff to the 1st Defendant after the 1st Defendant had distrained the plaintiff of its premises. When the 1st Defendant was served with the motions it entered a conditional appearance and later filed Notice of preliminary objection to the jurisdiction of the Federal High Court to entertain the suit.
The learned trial judge overruled the objection raised, hence this appeal.
In his brief of argument learned counsel to the appellant referred to Item 59 of the Exclusive Legislative List, Part I of the Second Schedule to the Constitution and also Item D paragraph 7 of the Concurrent List in part II of the Second Schedule and argued that even though taxation is listed under the Exclusive Legislative List, the same provision of the Constitution also provides that the National Assembly may prescribe that collection and or administration of any law imposing such tax may be carried out by the State Government or any authority of the state. Despite the fact that the National Assembly has not made any law pursuant to the provision of Item D Paragraph 7 of the concurrent Legislative List part II of the Second schedule of the 1999 constitution, the applicable law which is deemed to have been made by the National Assembly pursuant to section 315 of the constitution is the Personal Income Tax Act. He submitted that the collection of income tax mentioned in Item D Paragraph 7 of the concurrent Legislative List is the constitutional responsibility of the state Government. Therefore the imposition, enforcement and collection of pay As you Earn of employees of companies (including 1st respondent) resident in Lagos is vested in the Appellant by virtue of the combined provisions of section 81 of PITA and Regulation 2 of the operation of Pay As You Earn Regulations (S.L. 18 of 2002). He argued forcefully that the jurisdiction of the court is a matter of law and it is vested on a court by the constitution and the statute establishing the court and under section 25(1)(a) of the constitution, the Federal High court will exercise jurisdiction where the civil causes or matters relate to the revenue of the Government of the Federation in which the said government or any of its agencies is a party. He said that the revenue involved in this suit is the revenue of Lagos State Government and the subject matter has to do with collection and enforcement of taxes due to the state Government. He further contended that the subject matter has nothing to do with the operation of the 1st Respondent’s company and the fact that a company is registered under the companies and Allied Matters Act does not mean that every cause of action in which it is involved must be heard and determined by the Federal High court.
He placed reliance on the following cases for this submission: Progressive Insurance Co. Ltd v. Adepoju (1991) 1 NWLR (Pt.166) 248 at 256; Ministry of Works v. Tomas Nig. Ltd (2002) 2 NWLR (Pt.752) 744 at 776 – 777 and A.M. Shittu v. Nigeria Agricultural & Cooperative Bank Limited & Ors (2001) 10 NWLR (Pt.721) 298 at 317. He urged this court to allow the appeal and strike out the suit for want of jurisdiction.
Learned counsel for the 1st Respondent submitted that the jurisdiction of the Federal High court is not limited to causes and matters relating to the revenue of the Federal Government only. It extends to several other matters as prescribed by section 251(1) of the 1999 constitution of the Federal Republic of Nigeria which further vests the Federal High court with such other jurisdiction as may be conferred on the court by an Act of the National Assembly. This jurisdiction was extended by the Federal High court [Amendment] Decree 1991 as interpreted by the Supreme Court in Shell Petroleum Development Co. Ltd. v. Isaiah (2001) 11 NWLR (pt.723) 168 and Omnia (Nig) Ltd v. Dyke trade Ltd (2007) 15 NWLR (pt.1058) 576.
Learned Counsel while conceding to the fact that personal income tax by each individual is collected as part of the revenue of the government of the state in which the tax payer is resident however argued that the issues raised by the claim concern the law by which personal income tax is imposed and enforced and the resolution of the dispute can only be made by reference to the law governing personal income tax which is the personal Income Tax Act (cap P8 Laws of the Federation of Nigeria 2004). Learned counsel alluded to section 251(1)(b) of 1999 constitution and section 7(1)(c) of the Federal High court Act as amended by the Federal High court Amendment Decree 1991 which contains this provision:
“connected with or pertaining to the taxation of Companies and other bodies established or carrying on business in Nigeria and all other persons subject to Federal taxation”
to submit that the Federal High Court has exclusive jurisdiction. The logic of this argument according to the learned counsel lies in the fact that States of the Federation do not have legislative authority under the Constitution to make laws concerning the income of individuals, and therefore cannot impose on any individual any legal obligation to pay personal income tax. It was submitted, that the obligation of individuals to pay tax on their income and the rate at which the tax will be paid was created by PITA, which is a legislation of the National Assembly. Consequently personal income tax, though collected and kept by the state government, is Federal taxation.
The argument which has been advanced by the learned counsel for the 1st respondent appears quite logical. It exposes the incongruity in our supposed Federal Constitution. This incongruity is informed by our recent political upheavals that almost led to a break – up of the Country and the long periods of military inter regnum. As explained by professor Ayua in his paper titled: ‘Nigerian-Constitutional Scheme on the Sharing of Revenue Resources And Its Implementation: An Assessment:’
“In the history of Nigeria, one issue that has touched off many major political/legal controversies at times bordering on violent upheavals is Revenue sharing which is a fundamental issue in federalism. The sharing of revenue resources between the States inter se is, in the words of Professor Nwabueze, “almost like a matter of life and death, exciting their deepest concern and their strongest emotions.
Hence the intensity of the question concerning it.”……………………….
The constitutional ideas of the Military Government inevitably impacted in no small measure on the making of the 1979 Presidential Constitution, which had radically reshaped the concept of Nigerian Federalism. What the country ended up with is clearly a different kind of federalism – from that practiced under earlier Constitutions.
Thus the provision of the 1979 Nigerian Constitution governing Federal – State relations are the product of the peculiar socio – politico – economic situation that came into existence in Nigeria after the Civil War. In particular those matters which were considered to be of common and general importance and from which people from the different states can benefit in a concerted and common action were, under the 1979 constitution given to the Federal Government.”
It is the 1979 Constitution which has metamorphosed through two other draft constitutions (1989 and 1996) into the current 1999 constitution.
There is no dispute that the provisions of the 1999 constitution give the National Assembly exclusive power to legislate on taxation of income. Section 4(2) of the Constitution provides: –
“The National Assembly shall have power to make laws for the peace, order and good government of the Federation or any part thereof with respect to any matter included in the Exclusive Legislative List set out in Part 1 of the Second Schedule to this Constitution”.
Item 59 of the second schedule part 1 lists the taxation of incomes, profits and capital gains as being covered in the Exclusive Legislative List. Even though taxation of incomes, profits and capital gains are items on the Exclusive Legislative List, the collection of taxes is brought under the Concurrent Legislative List, Specifically Item D7 says:
“In the exercise of its powers to impose any tax or duty on –
(a) capital gains, incomes or profits of persons other than companies; and
(b) documents or transactions by way of stamp duties, the National Assembly may, subject to such conditions as it may prescribe, provide that the collection of any such tax or duty or the administration of the law imposing it shall be carried out by the Government of a State or other authority of the State”.
Learned Counsel for the 1st respondent conceded that the present action does not concern the taxation of companies but the tax which the appellant sought to enforce was the personal income tax of the employees of the 1st respondent who are resident in Lagos State. Although the Personal Income Tax Act Cap P8 Laws of the Federation of Nigeria 2004 is deemed to be an Act of the National Assembly its operation is for the benefit of the states within the Federation. Sections 1 (a) and 2 (1) (a) and (2) of the Act state as follows:
“1. There is hereby imposed a tax on the income –
(a) of individuals, communities and families; and
2.(1) Tax of an amount to be determined from the table set out in the Sixth Schedule (in this Act referred to as “income tax”) shall be payable for each year of assessment on the total income of-
(a) every individual other than persons covered under paragraph (b) of this subsection or corporation sole or body of individuals deemed to be resident for that year in the relevant State under the provisions of this Act.
(2) In the case of an individual, other than an itinerant worker and persons covered under paragraph (b) of subsection (1) of this section, tax for any year of assessment may be imposed only by the state in which the individual is deemed to be resident for the year under the provision of the First Schedule to this Act and in the case of persons referred to in subsection 1
(b) of this section, tax shall be imposed by the Federal Board of Inland Revenue.”
I accept the submission made by learned counsel for the Appellant that the collection of income tax mentioned in Item D7 of the Concurrent Legislative List is the constitutional responsibility of the State Government.
Therefore the imposition and enforcement of Pay As You Earn of employees of companies (including those of the 1st Respondent) resident in Lagos State is vested in the Appellant.
It is a cardinal principle of interpretation of the Constitution that the intentions of the Lawmakers should be to bring them out and not to defeat the aims and objectives of the constitution. See: Nafiu Rabiu v. Kano State Government (1980) 8-11 SC 130. And the intention in the Constitution is to create a division in the administration and collection of taxes between the Federal and State Governments. It should be emphasized that jurisdiction of a court is a matter of law and it is vested on a court by the Constitution and the statute establishing the court. Under Section 251 (1) (a) of the 1999 Constitution the Federal High Court exercises jurisdiction to the exclusion of any other court in causes and matters relating to the revenue of the Government of the Federation in which the said government or any of its agencies is a party. The Court under S.251 (1) (d) Constitution also exercises exclusive jurisdiction in civil causes and matters arising from banking, banks, other financial institutions including any action between one bank and another, any action by or against the Central Bank of Nigeria (CBN) arising from banking, foreign exchange, coinage, legal tender bills of exchange, letter of credit, promissory note and other fiscal measures. See: NDIC v. Okem Enterprises Ltd (2004) 10 NWLR (Pt. 880) 107 at 181 – 182 per Uwaifo, JSC. The subject matter of this suit has nothing to do with the operation of the 1st Respondent’s company and even if the action is to challenge the lawfulness of the act of enforcing an alleged tax liability it is not questioning the power of the National Assembly to make the law and since it is expressly stated that it is the State that can enforce the payment of personal income tax, the challenge should go to the State High Court.
The collection of taxes due to Lagos State Government is definitely not covered by Section 251 (1) of the 1999 Constitution. See: A. M. Shittu v. Nigeria Agricultureal & Cooperative Bank Ltd & Ors (2001) 10 NWLR (pt.721) 298; Progressive Insurance Co. Ltd. Adepoju (1991) 1 NWLR (Pt.166) 248 and Ministry of Works v. Tomas Nig. Ltd (2002) 2 NWLR (Pt.752) 744. In Shittu v. N.A.C.B. Ltd supra it was held that there is no provision express or implied in the Personal Income Tax Decree no. 104 of 1993 (now Act) conferring jurisdiction on the Federal High Court to hear and determine civil causes and matters connected with or pertaining to the revenue accruable to the government of a State by virtue of the provisions of the Decree. The facts in the Shittu’s case supra are similar to those in this appeal and the decision in that case is quite apposite to the resolution of the issue raised in this appeal.
I find that there is merit in this appeal. The learned trial Judge was patently wrong to assume jurisdiction over the matter. I accordingly allow the appeal and strike out the action for want of jurisdiction. I make no order as to costs.
I.M.M. SAULAWA, J.C.A.(DISSENTING): The present appeal is a fall out of the ruling of the Federal High Court, Lagos Judicial Division, delivered by the Hon. Justice Charles Efanga Archinbong on November 3, 2009. By the said ruling the lower court held that it has jurisdiction over the subject matter of the suit No. FHC/C/L/CS/5275/2008, by virtue of the provisions of the Exclusive Legislative List, item 59, part one of the Second schedule to the constitution of the Federal Republic of Nigeria 1999, as amended.
The genesis of the present appeal could be traced to September 22, 2008.
That was the date on which the 1st Respondent filed in the court below a writ of summons and statement of claim against the Appellant and 2nd Respondent. By the statement of claim thereof, the 1st Respondent sought the following reliefs against the Appellant –
a) A declaration that the Defendant acted unlawfully in sealing up the offices of the plaintiff on 18th September 2008 in purported enforcement of the Defendant’s notice of tax assessment dated 4th APRIL 2008 and referenced as LA/IRS/SDLM/COII/DN/MN/45/37/03/08 when the Plaintiff had served on the Defendant on the 3rd of September 2008, a notice of appeal against the assessment.
b) An injunction restraining the 2nd Defendant from September 2008, issued by the Plaintiff in favour of the 1st Defendant in consequence of the sealing up by the 1st Defendant of the offices of the plaintiff amounting to the sum of N90,649,092.96.
c) An order of perpetual injunction restraining the 1st Defendant or its agent from further harassing, intimidating and disrupting the business of the Plaintiff in any way or form.
In the alternative:
An order that pending the determination of the pursuant to the notice of appeal dated 3rd September 2008 the Defendant refunds to the Plaintiff the sum of N90,649,092.96 paid to it by the Plaintiff on 18th September 2008 consequent upon the sealing up of the Plaintiff by the Defendant.
d) Special damages against the 1st Defendant at the rate of 25% per annum on the sum of N90,649,092.96 from the date the said sum of N90,649,092.96 leaves the Plaintiffs bank account until the day it is refunded by the 1st Defendant.
e) N10,000,000.00 General damages for the disruption of business and embarrassment caused the plaintiff by the unlawful action of the 1st defendant in sealing up its offices.
f) N10,000,000.00 Aggravated and or Exemplary damages against the 1st Defendant for the disregarding shown for the rule of law in sealing up of the offices of the Plaintiff in disregard of a pending notice of appeal to coerce compliance with its demands.
However, on October 13, 2008, the Appellant filed in the court below a notice of preliminary objection challenging the jurisdiction of the lower court on the following two grounds:
1. The substance of the case and facts relied upon by the Plaintiff/Respondent indicates that the dispute relates to enforcement’ of taxes due to Lagos State Government.
2. The Plaintiff/Respondent’s action is an abuse of court process.
On 03/11/08, parties addressed the court on the preliminary objection. In consequence of which, the lower court came to the following conclusion:
“COURT:
Rule that the court has jurisdiction by virtue of the Exclusive legislative list item 591, part one of the second schedule of the constitution over the subject matter of this suit”
Not unexpectedly, the Appellant was dissatisfied with the ruling in question. Thus, resulting in filing the notice of appeal thereof on 14/11/08.
The notice of appeal was predicated upon a sole ground, viz:
GROUND 1
The Honourable Judge erred in Law when his Lordship held that the court would assume jurisdiction because taxation is listed as item 59 under the Exclusive Legislative List of the Federal Republic of Nigeria 1999.
PARTICULARS OF APPEAL
1. The claim before the court is on the enforcement of personal income tax of employee of the 1st respondent under the pay As you Earn Scheme of the personal Income Tax Act which is a matter under the concurrent legislative List Constitution of the Federal Republic of Nigeria.
2. The imposition of Tax was not an issue raised either by the 1st Respondent in it’s originating process or part of the grounds of objection arisen (sic) from the process filed by the Appellant before the court.
RELIEF SOUGHT TO allow the appeal and strike out the jurisdiction by the lower court.
The Record of appeal was deemed to have been compiled and transmitted on 26/10/10. Both the Appellant’s and 1st Respondent’s briefs were filed on 18/11/10 and 21/12/10, respectively. In the said brief, the Appellant has raised a sole issue for determination, viz:
“whether the” Learned’ Trial Judge was right to assume Jurisdiction on the premise that Taxation is item 59 under Exclusive Legislative of the constitution.”
On the other hand, the 1st Respondent has in the brief thereof equally distilled a sole issue from the single ground of appeal, thus:
“whether the Federal High Court has entertain and determine the present action.”
I have accorded a critical, albeit dispassionate, consideration upon the nature and circumstances surrounding the appeal, the well articulated submissions of the learned counsel, contained in their respective briefs of argument vis-a-vis the record of appeal, as a whole. Apparently, the sole issue raised in the respective briefs of the Appellant and 1st Respondent are not at all mutually exclusive.”
I have deemed it most appropriate to determine the appeal upon the sole issue raised in the Appellant’s brief. As alluded to above, the issue raises the very vexed question of whether the learned trial judge was right in assuming jurisdiction on the premise that taxation is item 59 under the Exclusive Legislative List of the constitution of the Federal Republic of Nigeria, 1999, as amended.
It’s a truism, that the issue of jurisdiction is not only important, but rather fundamental. Jurisdiction is so fundamental that it’s never conferred in obscurity. This is absolutely so, because it’s a power that is so crystally obvious to all beholders of the constitution and the [rule of] law. Thus, microcopic eyes are not at all required to discern it. See BUKAR MANDARA V. AG FEDERATION (1984) 1 SC NLR 311; UTIH V. ONOYIVWWE (1991) 1 NWLR (PT.166) 166; ANPP V. REC AKWA IBOM STATE (2008) 8 NWLR (PT.10900 453 AT 524 PARAGRAPHS A -CA; MADUKOLU V. NKEMDILIM (1962) 2 SCNLR 341.
It’s a well settled doctrine, that the jurisdiction of a court, to entertain and determine a matter or action, is predicated upon certain fundamental factors, viz:
(a) the proper constitution of the court regards
(b) the subject matter of the case is devoid of any feature inhibiting the exercise of jurisdiction thereof; and.
(c) that the case is filed by due process of law.
See MADUKOLU V. NKEMDILIM (1962) 2 SCNLR 341; WESTERN STEEL WORKS LTD V. IRON & STEEL WORKERS UNION (NO.1) (1986) 3 NWLR (PT.30) 617.
Normally, where the issue of jurisdiction is raised in a case, the claims, as contained in the writ of summons, statement of claim or other originating processes, should be considered in order to determine whether or not the court has jurisdiction to entertain the matter. See OKAFOR V. IGBO (1991) 8 NWLR (PT.210); MADUKOLU V. NKEMDILIM (supra); AKONO V. NIG. ARMY (2000) 14 NWLR (PT.687) 318; IBORI V. OGBORU (2005) 6 NWLR (PT.920) 102; FGN V. OSHIOMOLE (2004) 3 NWLR (PT.860) 305, et al.
In the instant case, it’s obvious from the 1st Respondent’s statement of claim, that the 1st Respondent is a company incorporated in Nigeria and having its principal place of business situated at 6th floor, African Reinsurance House, plot 1679 Karimu Kotun Street, Victoria Island, Lagos. The Appellant, on the other hand, is a statutory body established and empowered, pursuant to the provisions of the Personal Income Tax Act CAP. P.8 Laws of the Federation of Nigeria, 2004 as amended and the personal income Tax Law CAP P.4 Laws of the Lagos State of Nigeria, 2003. The 2nd Respondent is a bank incorporated in Nigeria, which has its principal place of business at 27 Kofo Abayomi Street, Victoria Island, Lagos.
I would like to observe, at this stage, that the basic principle of legal drafting has not been strictly adhered to by the 1st Respondent’s learned counsel, especially in numbering the paragraphs of the statement. I have noted, rather regrettably, that the statement of claim was numbered as “1, 2, 3, 4, 1 2 3 4 5 6 7 8 9. 10. 11.12.13. 14.15. 16 & 17 a) f),” respectively. I must state that the repetition of “1. 2. 3. 4” was rather uncalled for. For ease of reference, I have deemed it expedient to renumber the affected paragraphs as 4(1) – (17) a) – f), respectively.
By virtue bf paragraphs a, (1) – (17) of the statement of claim in question, there is every cogent reason for me to believe that the claim of the 1st Appellant borders on taxation, and matters related thereto.
For ease of reference, paragraphs 4(1), (2),(14), (15) & (16) of the ment of claim are reproduced as follows:
4. sometimes in April and July 2008, officials of the 1st Defendant visited the office of the Plaintiff to carry out a tax audit.
1. After the tax audit, by the latter date 4th April 2008, the 1st Defendant informed the Plaintiff that it was liable for under deduction and under remittance of taxes due to the Lagos State Government. The 1st Defendant by the said letter demanded the sum of N127,677.202,31 from the plaintiff which comprised of N190,649.092.96 as outstanding P.A.Y.E. N5,259,778.87 as Withholding taxes,N5,900.00 as state Development levy; N10,0000.00 as “Business premises”, N9,592,577.18 as 10% Penalty and N22,158,853.29 as 21% interest.
2. The Plaintiff referred to the 1st Defendant’s letter of 4th April to the accounting firm of Pricewatercoopers (herein referred to as “PWC”), who are its accountant and tax consultants, and instructed them to object to the demand made by the 1st Defendant.
14. In order to avoid further intimidation, harassment, a prolong disruption of its business and further embarrassment the plaintiff was forced to issue cheques to the 1st Defendant amounting to a total of N89,624.042,30.
15. The Plaintiff was earning interest from the bankers on the said sum of N89, 624.042.30 at the rate of 13% per annum prior to its being compelled to pay the said sum to the 1st Defendant. The Plaintiff therefore sustains special damages on the loss of the money at the rate of 13% per annum and shall continue to sustain such loss until then said sum of money is refunded to it.
16. The action of the 1st Defendant in purporting to enforce the assessment of tax levied on the Plaintiff despite the fact that it has been served with a notice of appeal and its attention drawn to the relevant provision of the Personal Income Tax Act which provide that collection of tax by the tax authority shall be in abeyance once an appeal has been served, was a deliberate and cynical action disregard of the provisions of the law in favour of brute force. The Plaintiff is therefore entitled to an award of exemplary or aggravated damages against the 1st Defendant.
Instructively, by virtue of the provisions of section, 251(1) of the 1999 Constitution, as amended, the Federal High Court has been conferred with an exclusive jurisdiction, to the exclusion of any other court, in civil cases and matters relating, inter alia, to –
(b) The taxation of companies and other bodies established or carrying on business in Nigeria and all other persons subject to Federal Taxation,
(e) [arising from] the operation of the companies and Allied matters Act or any other enactment replacing that Act or regulating the operation of companies incorporated under the companies and Allied matters Act.
Inarguably, in view of the provisions of section 4(1) of the 1999 constitution, as amended, the legislative powers of the Federal Republic of Nigeria shall be vested in the National Assembly of the Federation, consisting of both the senate and House of Representatives. Section 4(2) & (3) of the constitution is to the effect that the power of the National Assembly to make Laws for peace, order and good government of the Federation, regarding any matter provided in the Exclusive Legislative, List, set out in part 1 of the Second Schedule to the constitution, shall be the exclusion of the Houses of Assembly of states. Incidentally, “Taxation of Incomes and Capital gains,” the subject matter of this appeal, has been listed as item No. 59 -of second schedule, part 1 (Exclusive Legislative List) to the 1999 constitution.
Conversely, paragraph 7, Item D of part II (Concurrent Legislative List) of the Second Schedule to the constitution, is to the following effect:
7. In the exercise of its powers to impose any tax or duty on-
(a) capital gains, incomes or profits on persons other than companies; and
(b) documents or transactions by way of stamp duties,
The National Assembly may, subject to such conditions as it may prescribe, provide that the collection of any such tax or duty or the administration of the law imposing it shall be carried out by the Government of a state or other authority of a State.
8. where an Act of the National Assembly provides for the collection of tax or duty on capital gains, incomes or profit or the administration of any law by an authority of a state in accordance with paragraph 7 thereof, it shall regulate the liability of persons to such tax or duty in such manner as to ensure that such tax or duty is not levied on the same person by more than one state.
9. A House of Assembly may, subject to such conditions as it may prescribe, make provisions of any tux, fee or rate or for the administration of the Law: providing for such collection by a Local Government Council.
10. Where a Law of a House of Assembly provides for the collection of tax, fee or rate or for the administration of such law by a Local Government council in accordance with the provisions hereof it shall regulate liability of persons to the tax, fee or rate in such manner as to ensure that tax fee or rate is not levied, on the same person in respect of the same liability by more than one Local Government Council.
It is instructive, that by virtue of the provisions of section 7(1) (ii) (i) of the Federal High Court Act, as amended, the Federal High Court has been cloaked with the exclusive jurisdiction to entertain to or connected with all matters regarding which the National Assembly has exclusive power to make laws.
The decision of this Court in SHITTU VS. NIGERIA AGRICULTURAL & COOPERATIVE BANK LTD (2001) 10 NWLR (Pt.721) 298, was cited and relied upon by the Appellant. There is no doubt that the facts in Shittu’s case are quite similar to the circumstances of the present case. Thus, I do not think it’s necessary to outline the facts of that case at this point in time. In arriving at the decision thereof “that the Federal High Court has no jurisdiction in personal income tax relating to company employee, this court, at pages 315 – 316 was recorded to have held; inter alia, thus:
the jurisdiction given in section 7(1)(t) and (u) of the Federal High Court Act as amended does not include jurisdiction to try civil causes and matters connected with or pertaining to matters in the concurrent legislative list which the Federal-which the Federal Government has not made law or has made law but does not confer jurisdiction on the Federal High Court in the law. See page 316 paragraphs C – D.
However, with utmost deference to my learned brothers, it’s rather obvious that the provisions of section 7(1) (t) & (u) of the Federal High court Act, 1973 as duly amended by Decree No. 60 of 1991 though conspicuously omitted in section 230(1) of the [defunct] 1979 Constitution, as amended by Decree No. 107 of 1993, is still a validly subsisting law. Undoubtedly, by virtue of the unequivocal provisions of section 315(1) & (4) of the 1999 constitution, as amended, the provisions of the Federal High Court Act 1973 and the Federal High Court (Amendment) Decree No. 60 of 1991 (supra) are indeed existing laws.
The provisions of section 7(1) of the Federal High Court, as amended by Decree No. 60 of 1991 (supra), provide thus:
7.(i) The court shall to be exclusion of any other original jurisdiction to try civil matters connected with or pertaining to:-
(c) The taxation of companies and of other bodies established or carrying on business in Nigeria and all persons subject to Federal taxation . . .
constitution of the Federal Republic of Nigeria, 1979 as “amended, upon which Federal Legislation has passed;
(u) such other civil or criminal jurisdiction as:
(i) relate to any matter with respect to which the Federal Military Government has power to
(ii) the Federal Military Government, from time to time by law or otherwise however confer on the court.”
As alluded to above, the provision of the Federal High Court Act (supra), especially section 7(1) (u) (i) is an existing law by virtue of section 315(1) & [4] of the 1999 constitution, as it has not been repealed. The fact that it has been omitted in both the 1979 and 1999 constitutions, notwithstanding.
It is trite that by virtue of the Second schedule, part I and item No. 59 of the 1999 constitution, the National Assembly has the undisputed exclusive legislative powers to enact any legislation (Act) relating to –
59. Taxation of incomes, profits and capital gains except as otherwise prescribed by this constitution.
My considered view is that, the provision of section 7(1) (u) [i] of the Federal High Court Act as amended (supra) undoubtedly has bearing to item No.59 of the First Second Schedule part I of the constitution (supra).
One other reason which reinforces my conviction on the above view, is the fact that the instant action is between the Lagos State Government (Appellant) and the 1st Respondent, a company duly registered under the companies and Allied matters Act CAP C20, laws of the Federation of Nigeria 2004 as amended.
And by virtue of that law, the Federal High Court has the jurisdictional competence to entertain matters arising from, and relating to issues bordering on management, et al, of companies incorporated under the companies and Allied Matters Act (supra).
In the instant case, as alluded to above, the allegations of the 1st Respondent are, inter alia, that its offices we’re unlawfully sealed up by the Appellant; that the business of the 1st Respondent was distrupted by the Appellant; and that the 1st Respondent was unlawfully made by the Appellant to pay thereto the sum of N90,649,092.96 in consequence of the unlawful sealing up of the latter’s offices.
Instructively, by the provision of section 251, (e) of the 1999 constitution, the Federal High Court has been conferred with the exclusive jurisdiction in civil causes and matters –
“Arising from the operation of the companies and allied matters Act or any other enactments replacing the Act or regulating the operation of companies incorporated under the companies and Allied matters Act;”
My understanding of the provision of section 251(i) (e) of the 1999 constitution (supra) and section 7 (1) (u) (i) of the Federal High Court Act (supra) is that the Federal High court is vested with jurisdictional competence to entertain any matter with regard to which the National Assembly has exclusive Legislative power to make laws under second Schedule, part I of the Exclusive legislative List of the 1999 constitution. Thus, since item No 59 of the second schedule, part I (supra) relates to taxation of incomes et el, there’s no gainsaying the fact, that the Federal High Court is indeed cloaked with jurisdiction to entertain the present case.
As rightly submitted by the Respondent’s learned counsel at page 12 paragraph 5.41 of the brief thereof, it’s rather logical that the express
“any matter with respect to which the Federal Military Government (now National Assembly) has power to make laws”
as couched in section 7 (1) (u) (i) of the Federal High court Act (as amended), should be interpreted to refer to matters in the Exclusive Legislative List of the 1999 constitution, as amend.
In my view, the Appellant having opted to sue the 1st Respondent for non-payment of the alleged income tax of the employees thereof, the 1st Respondent as a company incorporated under the companies And Allied Matters Act (supra), the Federal High court has the jurisdictional competence to entertain the action.
It is trite, that the term “person” as couched in section of the Personal Income Act Cap. P8., Laws of the Federal Republic of Nigeria, 2004 denotes-
“in relation to the carrying on of a business, has the meaning assigned to it by section 108 of this Act but does not include a company.”
However, by virtue of section 108 of the personal Income Tax Act, the term “person” includes as executor, trustee, company, partnership, community family and individual.
The provision of section 78 of the Personal Income Tax Act is to the effect-
(1) Income tax may be sued for and recovered in a court of competent jurisdiction by the relevant tax authority in it official name with full costs of action from the person charged therewith as a debt due to the Government of the Federation or to the relevant tax authority.
Failure by the employer to make deductions from emoluments paid to employees thereof shall be liable to a penalty of 10 per cent per annum of the amount plus interest at the prevailing commercial rate, shall be recovered as a debt due by the employer to the relevant tax authority.
Under the Income Tax Act (supra), its also an offence for any person to contravene, or fail to comply with, the provisions of the Act. See sections 94 – 97 of the Act. What’s more, by virtue of the provisions of sections 92 & 93 of the Act a joint state Revenue committee has been established for each state of the Federation. The composition of the Joint State Revenue Committee is as follows:
92. Establishment and composition of Joint State Revenue Committee There is hereby established for each State of the Federation a Joint State Revenue Committee which shall comprise-
(a) the chairman of the State Internal Revenue Service as the chairman;
(b) the chairman of the Local Government Revenue Committee;
(c) a representative of the bureau of local government affairs not below the rank of Director;
(d) a representative of the Revenue mobilization and Fiscal Commission, as an observer;
(e) the state sector commander of federal road safety commission, as an observer;
(f) the Legal Adviser of the State Internal Revenue Service;
(g) the secretary of the Committee who shall be a staff of the State Internal Revenue Service.
The functions of the Joint State Revenue committee in question shall be to
(a) implement decisions of the Joint Tax Board;
(b) advise the Joint Tax Board and the State and Local Governments on revenue matters;
(c) harmonize tax administration in the state
(d) enlighten members of the public generally on State and Local Government revenue matters;
and
(e) carry out such other functions as may be assigned to it by the Joint Tax Board. See section 93(supra).
The above provisions of sections 92 & 93 of the Income Tax Act clearly show that the fundamental issue of revenue generation vis-a-vis taxation requires a concerted collaborative efforts of the three tiers of Government; Federal, State and Local Governments. In any event its trite that at least 90% of the revenue of the three tiers of Government in question is derived from one single source – oil. Not surprisingly, under chapter vi part 1, (sections 162 – 168) of the 1999 constitution, provisions have been made for public Revenue regarding (i) Distributable pool account; (ii) allocation of revenues; (iii) Federal grants; et al. Most especially, it’s provided under section 163 of the constitution that –
163. where under an Act of the National Assembly, tax or duty is imposed in respect of any of the matters specified in item D of part II of the second schedule of this constitution, the net proceeds of such tax or duty shall be distributed among the states on the basis of derivation . . .
Undoubtedly, the provisions of Sections 162 – 168 (supra) are in line with the aspirations so cherishingly expressed in the preamble of the constitution to the effect thus:
AND TO PROVIDE for a constitution for the purpose of promoting the good government and welfare of all persons in our country on the principles of Freedom, Equlity and Justice, and for the purpose of consolidating the Unity of our people.
Hence, in the light of the above postulations, I am unable accede to the view expressed in the lead judgment delivered by my learned brother, Akaahs, JCA, to the effect, that the Federal High Court lacks jurisdictional competence to entertain the suit. With due respect, it’s rather obvious, that the Federal High court has a concurrent jurisdiction with the state High Court to entertain the instant suit. And I so hold.
It is trite, that one of the far-reaching fundamental tasks of a judge, nay a lawyer is to seek and find out the intention of parliament. He must, by all means possible, discover the meaning of the words used in a statute. The words of a statute may, however, sometimes seem very difficult, if not impossible, to discern. Nonetheless, the judge must not give up. He must endeavour to find some meaning in it. As aptly strongly advocated by Lord Dennings, MR –
The English language is not an instrument of mathetical precision. Our literature would be much the poorer if it were … it would certainly save the judges trouble if Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it, when a defects appears a judge cannot simply fold his hands and blame the drafts man. He must set to work on the constructive task of finding the intention of parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it, and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give force and life to the intention of the legislature.
That was clearly laid down by the resolution of the judges in Heydon’s case (1584 – 3 co. REP. 7a), and it is the safest guide today. Good practical advice on the subject was given about the same time by Plowden …
Put into homely metaphor it is this:
A Judge should ask himself the question: if the makers of the Act had themselves come cross this ruck in the ure of it how would they have Straightened it out? He mist then do as they would have done. A Judge must not alter the material of which it is woven, but he can and should iron out the creases.
See SEAFORD COURTS ESTATES LTD V. ASHER (1949) 2 KB 481.
Instructively, at page 7 paragraph 4.15 of the brief thereof, the appellant’s learned counsel has insinuated that “the learned trial judge has failed to consider the application on the merit.” It is indeed trite, as rightly alluded to by the learned counsel, that it behoves upon the courts, both the trial and appellate, to pronounce on all (material) issues raise by the parties. And that they should not restrict themselves to one or more of the issues which in their opinion may copiously alluded to the ruling of the trial judge. The reason given by the learned trial judge may distastefully be scanty; however, in my view it has satisfied the minimum condition of being a decision within the purview of the provisions of section 294 of the 1999 constitution, as amended. And I so hold. Thus, I have no hesitation whatsoever in answering the sole issue in question in the affirmative, and resolving same against the Appellant. Consequently, I hereby dismiss the appeal for being devoid of merits. The ruling of the court delivered on 03/11/2009, is hereby affirmed.
The Respondent is entitled to a cost of N50,000.00 against the Appellant.
RITA NOSAKHARE PEMU, J.C.A.: I have had the priviledge of reading in draft, the lead Judgment of my learned brother Kumai Bayang Akaahs JCA; and I agree totally with his reasoning and conclusion.
There is no gain saying that the issue of Jurisdiction of a Court is a matter of Law and Law alone. Such Law as is vested on a Court by the Constitution, which is the GRUNDNORM of this Country, and the specific unequivocal Statute establishing the Court. Jurisdiction is the enabling power of the Court to entertain a matter. Without it, a Court labours in vain OLAKIM V. AGBASO 2010 19 NWLR 1226 Page 127 at 269 Paragraph H. The Law is unequivocal, that it is the relevant State that can enforce the payment of personal income tax. It stands to reason that it is the State High Court that should entertain any matter regarding payment or non-payment of personal income tax in a State, by any person or body.
I agree that the collection of taxes due to the Lagos State Government, is not one envisaged by the Legislature, to be covered by Section 251(1) of the 1999 Constitution.
There is no Provision, patent or latent, in the Personal Income Tax Decree No. 104 of the 1993 (Now Act) which confers jurisdiction in the Federal High Court to hear and determine civil cases and/or matters connected with, or pertaining to the revenue accruable to the Government of a State. Ipso facto, Lagos State Government, by virtue of the provisions of the Decree.
The appeal is meritorious and the assumption of Jurisdiction by the learned trial Judge was erroneous in law, and misconceived.
The appeal is consequently allowed by me and the action culminating in this appeal is hereby struck out, for want of jurisdiction.
I adopt the consequential order made in the lead Judgment as to costs, that there shall be no order as to costs.
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Appearances
Adebayo Haroun Asst. Chief State Counsel with M. O. Kadiri state counsel, Ministry of Justice Lagos StateFor Appellant
AND
Obatosin Ogunkeye with Toyosi Odunmbaku for 1st Respondent.
2nd Respondent – absent and not represented.For Respondent
