GOVERNMENT OF AKWA IBOM STATE v. BARRISTER LIVINUS UDOFIA
(2010)LCN/4078(CA)
In The Court of Appeal of Nigeria
On Thursday, the 2nd day of December, 2010
CA/C/176/2008
RATIO
STATUTORY PROVISION: PROVISION OF SECTION 4 OF THE 1999 CONSTITUTION. ITEM 9 AS IT RELATES TO THE POWER OF THE HOUSE OF ASSEMBLY TO PROVISIONS FOR THE COLLECTION OF ANY TAX, FEE OR RATE OR FOR THE ADMINISTRATION OF THE LAW PROVIDING FOR SUCH COLLECTION BY A LOCAL GOVERNMENT COUNCIL
pursuant to Section 4 of the Constitution. Item 9 provides that – “A House of Assembly may, subject to such conditions as it may prescribe, make provisions for the collection of any tax, fee or rate or for the administration of the Law providing for such collection by a local government council.” Ideally the Akwa Ibom State House of Assembly should have enacted a Law empowering the Consultants to carry out the functions of investigation and monitoring the collection of the revenue by the Board of Internal Revenue and also provide for the commission payable to the consultants. PER KUMAI BAYANG AKAAHS, J.C.A.
JUSTICES
KUMAI BAYANG AKAAHS Justice of The Court of Appeal of Nigeria
MASSOUD ABDULRAHMAN OREDOLA Justice of The Court of Appeal of Nigeria
ISAIAH OLUFEMI AKEJU Justice of The Court of Appeal of Nigeria
Between
GOVERNMENT OF AKWA IBOM STATE Appellant(s)
AND
BARRISTER LIVINUS UDOFIA Respondent(s)
KUMAI BAYANG AKAAHS, J.C.A. (Delivering the Leading Judgment) The Plaintiff now Respondent took out an Originating Summons seeking a determination whether by the provisions of Section 1(1) and Section 2(1) of the Taxes and Levies (Approved List for Collection) Act Cap T2 Vol. 14 Laws of the Federation of Nigeria 2004 the Government of Akwa Ibom State is entitled to engage the services of consultants to collect the revenue accruing to her. He then sought the following reliefs:-
1. A DECLARATION that the Government of Akwa Ibom state is not entitled to use Revenue consultants or consultants by whatever name called to collect revenue accruing to her.
2. AN ORDER of perpetual injunction restraining the Government of Akwa Ibom State from using consultants in the collection of revenue.
The Summons was supported with an affidavit of 18 paragraphs to which was annexed Exh. “A” which is a document prepared by Olusola Adekanola & Co. being commission for revenue purportedly collected for the Akwa Ibom State Government. A conditional appearance was entered on behalf of the Defendant/Appellant. Notice of Preliminary objection dated 10th December, 2007 was filed on 17/12/2007 and on7/1/2008, a 14 paragraph counter-affidavit was filed challenging the locus of the Plaintiff in initiating the action. In a well considered Ruling delivered on 16/4/08 the learned trial Judge held overruling the objection, that the plaintiff had the requisite power and interest to invoke the jurisdiction of the court to determine whether or not the use of Consultants by the Defendant to collect the revenue complained about is in the spirit and within the ambit of Taxes and Levies (Approved List for Collection) Act Cap. T2 Vol. 14, Laws of the Federation of Nigeria 2004. He accordingly dismissed the objection. Aggrieved by this decision the Defendant filed its Notice of Appeal dated 21/7/2008 on 23/7/2008 containing one ground of appeal from which the following issue was distilled for determination:
“Whether the Respondent as Plaintiff in the lower court had disclosed sufficient interest over and above that of every other citizen of Akwa Ibom State to clothe him with overriding right and/or locus standi to sue the Appellant in respect of the Appellant Government Policy with regard to Section 1(1) and 2(1) of Taxes and Levies (Approved List for Collection) Act, Cap T2Vol. 14 Laws of the Federation of Nigeria 2004.”
The Respondent also formulated the following lone issue for determination:
“Whether the learned trial Judge was right in holding that the Respondent has the locus standi to bring the action against the Appellant.”
Arguing the appeal, Anietie Inyang, Chief State Counsel submitted by citing ABRAHAM ADESANYA v PRESIDENT OF NIGERIA (1981) 5 SC 112; (1981) 12 NSCC 146 that the Plaintiff will have locus standi in the matter only if he has a special legal right, or alternatively, he has sufficient or special interest in the performance of the duty sought to be enforced, or where his interest is adversely affected. He submitted that the depositions in support of the originating summons are self contradictory and the entire suit of the respondent is hinged on paragraphs 6, 7 and 8 of the affidavit in support. He contended that the respondent has not disclosed he is a tax payer and that the use of tax consultants to collect revenue has affected him personally or his business over and above all other citizens of Akwa Ibom State. He further contended that since the action is to assert or protect a public right, it is only the Attorney-General of the Federation that has the requisite locus to sue, and the Respondent had to obtain the Attorney-General’s fiat to institute the action. He is therefore totally disqualified to have the standing to bring an action to enforce the performance of a public duty.
The Respondent submitted in his own brief that the issue of special right or interest is to be looked at holistically and in the instant case he has shown that there is a clear breach of the federal enactment that the appellant is under an obligation to obey. He said that the consultants are not in anyway engaged in the collection of the revenue, yet they are earning commission for work not done.
Since he disclosed he is an indigene of Akwa Ibom State and residing thereat, the money paid as commission to consultants for work not done is illegal and has caused a deliberate and insidious leakage in the treasury of the appellant and he has therefore suffered detriment since the money which ought to have been used to provide basic amenities to him and others has been deliberately wasted. In the locus classicus of ADESANYA v PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA (1981) 5 SC 112, Fatayi-Williams, CJN, stated the law on locus standi at page 140 as follows:
‘…… in cases where a plaintiff seeks to establish a “private right” or “special damage” either under the common law or administrative law, in non-constitutional litigation, by way of an application for certiorari, prohibition, or mandamus, or for a declaratory or injunctive relief, the law is now settled that the plaintiff will have locus standi in the matter only if he has a special legal right or alternately, if he has sufficient or special interest in the performance of the duty sought to be enforced, or where his interest is adversely affected.”
The Respondent in the instant appeal is challenging the Akwa Ibom State Government policy in the appointment of consultants who are being paid commission on the taxes that accrue to the State Government on P.A.Y.E. Contrary to the argument of the respondent that the decision of the State Government in using revenue consultants to collect its taxes is a clear breach of the Taxes and Levies (Approved List for Collection) Act, there is noting in the Act that stipulates the manner in which those taxes accruable to the State should be collected. Rather the complaint is that the Tax Consultants play no role whatsoever in the collection of the P.A.Y.E. to be entitled to a commission since the said taxes are deductable at source and remitted by the employers to the State Government. So the question to be settled is: Does the Respondent have the legal standing to challenge the policy? In his affidavit in support of the Originating Summons, the Plaintiff/Respondent deposed to the following facts in paragraphs 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 therein:
“2. I am an indigene of Akwa Ibom state of Nigeria and I am resident in Eket where I am engaged in the business of legal practice.
3. The revenue accruing to the Government of Akwa Ibom state is meant to used (sic) to in
Akwa Ibom State including myself.
4. The Akwa Ibom State Government is purportedly using consultants to collect internally generated revenue and one of these consultants is Olusola Adekanole and Company.
6. The Consultant plays no role whatsoever in the collection of pay as you earn tax from employees of banks and companies operating in Akwa Ibom State.
7. The consultant no role in the collection of filling fees from litigants in the District Courts, Magistrate Courts and High Court across the State.
8. The consultants play no role in the collection personal income tax from Local Government employees. 9. These companies, banks and the various Local Government (sic) drew cheques for monies deducted as income from employees and they pay same directly into account designated by the Internal Revenue Service of Akwa Ibom State.
10. I know as a fact from my vantage position as a lawyer in legal practice that staff of these consultants do not play any role in the collection of revenue generated by the Judiciary.
11. These consultants are paid commission from monies paid into these designated account by various obligors.
12. The amount paid out as commissions to the various consultants every month for work not done by them is over N80,000,000,00. (Eighty Million Naira).
13. The annual sum that is deliberately or inadvertently lost to these consultants by the Government of Akwa Ibom State is enormous.
14. This sum if properly utilized could cause water to run from the taps in the premises and houses of Akwa Ibomites in the urban centers across the State.
15. I know as a fact that the use of consultants or by whatever name called is unlawful and forbidden ”
Mrs. Grace J. Akpan, Principal Litigation Officer in the chambers of the Attorney-General, Ministry of Justice, Uyo, deposed to a 14 paragraph affidavit in opposition to the Originating Summons.
While conceding to the fact that the Plaintiff is an indigene of Akwa Ibom State resident in Eket, and the revenue accruing to the Government of Akwa Ibom State is meant to be used to improve the welfare and well-being of the people of Akwa Ibom State, went on to deny that the Plaintiff is engaged in the business of Legal Practice and that the consultants are paid not for revenue collected but for investigating and monitoring the collection of revenue. In paragraphs 4,5,7,8, 10, 11,12 and 13 of the counter-affidavit, she deposed to the following facts:
“4. That paragraph 2 of the Plaintiff s affidavit is true only to the extent that he is an indigene of Akwa Ibom State and resident in Eket. In further answer to paragraph 2, I state that he Plaintiff does not carry on the business of Legal Practice, because he has no Registered Law Firm in Eket or elsewhere in Nigeria. I further state that Essence Chambers located at No. 73 Atabong Road, Eket is not registered under the Companies and Allied Matters Act, 1990.
5. That Mr. Clement E. Bassey, Tax Assessment Authority, Eket, has informed me and I verily believe him that the Plaintiff, Barrister Livinus Udofia has not been paying his tax to Akwa Ibom State Government and has been using every method to evade payment of his tax to the extent that he was charged to court for tax evasion.
7. That paragraph 4 of the Plaintiffs affidavit is false. That I have been informed by the Chairman, .Board of Internal Revenue, Akwa Ibom State, Mr. Inyang T. Etuk, and I verily believe him that Olusola Adekanola and Company does not collect revenue for Akwa Ibom State Government rather they investigate and monitor the collection of revenue by the Board of Internal Revenue on behalf of the Akwa Ibom State Government.
8. That paragraph 5 of the Plaintiffs affidavit is hereby denied. I have been informed by the aforementioned Chairman of Board of Internal Revenue, Akwa Ibom State, that. Exh. “A” is not evidence of collected commission rather it is evidence of tax payment investigation and monitoring of level of compliance of remitted revenue into Government.
10. That paragraphs 11 and 12 of the plaintiff’s affidavit are false. That I have been informed by the Chairman, Board of Internal Revenue, Akwa Ibom State, Mr. Inyang T. Etuk and I verily believe him that it is not the obligors that pay commission to the consultants rather it is the Government of Akwa Ibom State that pays commission to the Consultants. I am further informed by the said Mr. Inyang Etuk and I verily believe him that the amount paid out as commission does not amount to N80,000,000.00 per month even as we are not in a position to disclose the remuneration of the consultants. There is no proof payment (sic) of N80 million to the Consultants as commission every month for work not done.
11. That paragraphs 13 and 14 of the Plaintiffs affidavit are false. I have been informed by the Chairman, Board of Internal Revenue, Akwa Ibom State, Mr. Inyang T. Etuk and I verily believe him that no amount of money is lost to the Consultants by the Government of Akwa Ibom State as the Consultants only earn their pay and no amount of money is wasted as a result of contracting Olusola Adekanola and Co. as consultants for investigating and monitoring revenue generation in Akwa Ibom State.
12. That paragraph 15 of the Plaintiff’s affidavit is false I am informed by A. Odokwo, Esq. counsel to the Defendant and I verily believe him that the use of Consultants is lawful especially where they are contracted to investigate and monitor compliance.
13. That paragraphs 16 and 17 are false. I am informed by A. Odokwo Esq. counsel to the defendant and I verily believe him that the plaintiff has no mandate of Akwa Ibom people to commence this action and that the plaintiff is not acting in the overall interest of the people of Akwa Ibom State but looking for ways to avoid payment of tax to the Akwa Ibom State Government.”
The standing of the Plaintiff to commence this action was therefore called into question in paragraph 13 of the counter-affidavit.
It does appear to me that the concession made in paragraphs 4 and 6 of the counter-affidavit has completely knocked the bottom from the Defendant’s case in challenging the Plaintiff’s standing to sue. He does not have to show that he is a tax payer to entitle him to the judicious use of the revenue accruing to Akwa Ibom State in improving the welfare and well-being of the indigenes of Akwa Ibom State. He is so entitled by virtue of the fact that he is an indigene of the State and resides in the State. He has Sufficient interest in the management of the revenue of the State and that interest will be adversely affected if the said revenue is not properly managed.
Section 2(1) of the Taxes and Levies (Approved List for Collection) Act Cap T2 Laws of the Federation of Nigeria, Vol. 14 of 2004 states as follows:
“2(1) Notwithstanding anything contained in Constitution of the Federal Republic of Nigeria 1979, as amended, or in any other enactment or law, no person, other than the appropriate tax authority shall assess or collect, on behalf of the Government, any tax or levy listed in the Schedule to this Act, and members of the Nigeria Police Force shall only be used in accordance with the provisions of the tax laws.”
The taxes and levies to be collected by the State Government are spelt out in Part II to the Schedule and they are:-
“1. Personal Income Tax in respect of –
a) Pay-As-You-Earn (PAYE); and
b) Direct taxation (self assessment).
2. Withholding tax (individuals only)
3. Capital Gains tax (individuals only).
4. Stamp duties on instruments executed by individuals
5. Pools betting and lotteries, gaming and casino taxes
6. Road taxes.
7. Business premises registration fee in respect of-
a) urban areas as defined by each State, maximum of –
b) N10,000 for registration; and
ii) N5,000 per annum for renewal of registration and
b) rural areas-
i) N2,000 for registration and
ii) N1,000 per annum for renewal of registration.
8. Development levy (individuals only) not more than N100 per annum on all taxable individuals.
9. Naming of street registration fees in the State Capital.
10. Right of Occupancy fees on lands owned by the State Government in urban areas of the State.
11. Market taxes and levies where State finance is involved.”
Part II of the Second Schedule to the1999 Constitution lists the items that are in the Concurrent Legislative List
pursuant to Section 4 of the Constitution. Item 9 provides that
“A House of Assembly may, subject to such conditions as it may prescribe, make provisions for the collection of any tax, fee or rate or for the administration of the Law providing for such collection by a local government council.”
Ideally the Akwa Ibom State House of Assembly should have enacted a Law empowering the Consultants to carry out the functions of investigation and monitoring the collection of the revenue by the Board of Internal Revenue and also provide for the commission payable to the consultants.
The arguments presented by learned counsel on either side have not made reference to any such law. I hope it is an omission. If such a Law does not exist, it is about time the Akwa Ibom State Legislature wakes up to its constitutional responsibility.
I feel it is pertinent to comment on paragraph 10 of the counter affidavit.
The deponent has missed the essence of the complaint in bringing the suit. The complaint is not about the obligor paying commission to the consultants but rather that there is no justification for deducting a huge amount of revenue which accrues to the State as commission to the consultants for work not done.
Since the Board of internal Revenue has admitted the arrangement of paying the Consultants for the work it has engaged the Consultants, it is incumbent on the Board to make a full disclosure of the amount involved and not to be dodgy about it since it is an item of public expenditure.
The learned trial Judge was right in his conclusion that if the Respondent is a victim of Government Policy then he has the standing which vests him with the requisite power to invoke the jurisdiction of the court to hear his case. The preliminary objection was properly overruled and accordingly dismissed. I find no merit in the appeal and it is equally dismissed. I make no order as to costs.
The appeal was deemed argued on the briefs filed.
MASSOUD ABDULRAHMAN OREDOLA, J.C.A.: I have had the privilege of reading before now, the judgment of my learned brother K. B. Akaahs, JCA, and for the same reasons so elucidating adumbrated and discussed in the said judgment, which I also adopt as mine, I also find no merit in this appeal and the same is accordingly dismissed by me. I also make no order regarding costs.
ISALAH OLUFEMI AKEJU, J.C.A.: I read in advance the judgment just delivered in this appeal by my learned brother, K. B. Akaahs, JCA. I agree that the preliminary objection before the lower court lacked merit and was properly overruled. I too dismiss this appeal without an order as to costs.
Appearances
Anietie Inyang, Chief State Counsel, Ministry of Justice, Akwa Ibom State, UyoFor Appellant
AND
Respondent’s brief was settled by the respondent himselfFor Respondent
