NIGERIAN BREWERIES PLC. V. OYO STATE BOARD OF INTERNAL REVENUE (2012)

NIGERIAN BREWERIES PLC. V. OYO STATE BOARD OF INTERNAL REVENUE

(2012)LCN/5481(CA)

In The Court of Appeal of Nigeria

On Thursday, the 21st day of June, 2012

CA/I/M.25/2007

RATIO

TAX: WITHHOLDING TAX/RETENTION TAX: MEANING AND USE

Withholding Tax (WHT) or retention tax is really a term of art/generic expression (or sui generis) devised by tax authorities for tax administration through the method of deduction of tax at source from income including payments due to a benefiting party, by the paying party, for onward remittance to the appropriate tax authority of the benefiting party – See 7Up Bottling Company Plc v. L.S.I.R.B. (supra) at pages 617 – 618 thus:
“The way I understand it, is that the withholding Tax (WHT) system is a form of tax administration which enables tax authorities to recover at source from taxable persons tax from payment made for certain services which such persons render to another. What is deducted by the person who pays for the services is a percentage of this payment. Now if so deducted, when the taxable person’s tax for the year is duly assessed, whatever had been deducted is credited to him in a manner that he does not pay tax twice on the same income accruing from that payment.
Under both PAYE and the WHT systems, the employer or payer who pays for the services of his employee/taxable person, by way of emolument or the cost of supplies or other services to a taxable person, is obliged to deduct and remit tax so deducted (from source) to the authority. He is the Agent of the tax authority as it were. This is the effect of section 72(5) of Decree 104 (supra) and Section 4 of the Regulations of 1997. We are unable, with respect to agree with the appellants that there is no statutory provision for WHT.
It must be realized that the employer/person deducting the tax from source is not the assessable person or tax-payer under the tax laws. As earlier stated, if anyone needs object to the assessment or deduction, it should be the tax payer or tax assessable person.”
In other words, WHT or retention tax occurs in any of the statutorily provided transactions respecting goods and services when payments from one person to another, including corporate bodies, are expected to be deducted at source on specified percentage on the total value of the transactions and remitted to the relevant tax authority within the statutory period on pain of penalty, in the event of default by the payee. In effect WHT or retention tax is required by tax legislation to be withheld by a party acting as a conduit or handler of the tax authority from each payment made to another contracting party from income or services rendered and/or arising from such transactions and remitted to the tax authority by the withholder within the fixed statutory period. By the procedure the payee of an item of income temporarily withholds tax from the payments and pays same in lump sum to tax authority which acts as check against tax evasion and delinquency in filing tax returns by the payee.PER JOSEPH SHAGBAOR IKYEGH, J.C.A

TAX: INTERPRETATION OF TAX LAWS
Tax laws are strictly or narrowly interpreted from the bare words used in the enactment. There is no presumption or equity about a tax – See Ahmadu & Anor. v. The Governor of Kogi State & Ors. (2002) 3 NWLR (Pt.755) 502 at 522 thus –
“In a taxing legislation, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption about a tax. Nothing is to be read in and nothing is to be implied, one can only look fairly at the language used. But the strictness of interpretation may not always enure to the subject’s benefit, for “if the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind” – Per Lord Cairns- in Partington v. Attorney-General (1869) L.R. 4 H.L. 100 at P. 122. See Maxwell on the Interpretation of Statutes 12th Edition by P. St J, Langan at p.256.”
See also Okupe v. Federal Board of Inland Revenue (1974) 4 S.C. 93, Aderawos Trading Co. Ltd. v. F.B.I.R. (1966) L.L.R. 195 at 200 or (1966) 2 ALR (Commercial) 219, Ormond Investment Co. v. Betts (1928) A.C. 143.PER JOSEPH SHAGBAOR IKYEGH, J.C.A

GOVERNMENT CIRCULARS: PURPOSE OF A GOVERNMENT CIRCULAR

APPEAL: AN APPELLATE COURT CAN ONLY REFUSE THE FINDINGS OF A TRIAL COURT WHEN ITS IS PERVERSE
See Coker v. Olukoga & Ors. (1994) 2 NWLR (Pt.328) 648 at 664 thus –
“It is trite that an appellate court has no jurisdiction to reject the findings of a trial judge unless such findings are perverse. See Dom v. Jov. (1992) 6 NWLR (Pt. 246) 195; Ogunbiyi v. Ogundipe (1992) 9 NWLR (Pt. 263) 24; Okuzua v. Amosu (1992) 6 NWLR (Pt.248) 416; Fadiora v. Abonde (1992) 6 NWLR (Pt.246) 221; Akibu v. Oduntan (1992) 2 NWLR (Pt.222) 210.”PER JOSEPH SHAGBAOR IKYEGH, J.C.A

JUSTICES

ADZIRA GANA MSHELIA Justice of The Court of Appeal of Nigeria

MODUPE FASANMI Justice of The Court of Appeal of Nigeria

JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria

Between

NIGERIAN BREWERIES PLC. Appellant(s)

AND

OYO STATE BOARD OF INTERNAL REVENUE Respondent(s)

JOSEPH SHAGBAOR IKYEGH, J.C.A.: (Delivering the Leading Judgment): The tax appeal is from a judgment of an Oyo State High Court holden at Ibadan (the court below) empowering the respondent to distrain the movable and immovable property of the appellant for non-payment of N21,233,213 (Twenty-one Million, Two Hundred and Thirteen Naira) unremitted deduction in respect of Withholding Tax until settlement of the tax liability by the appellant.
Skeletally put, the appellant is a public liability company engaged in the business of brewing and selling inter alia alcoholic beverages with its branch office in Ibadan, Oyo State; a disputed withholding tax (WHT) assessment made and served by the respondent on the appellant for the 1998 tax year in respect of trade transactions between the appellant and individual contractors caused the respondent to launch an action on originating summons to determine the dispute. In the course of hearing the originating summons, the dispute became controversial or hostile, and evidence was tendered by the appellant and the respondent towards settlement of the dispute. At the end of the day, the court below accepted the respondent’s case that it is the appropriate tax authority to collect or recover WHT from the appellant which it adjudged to be N21,233,213. The court below accordingly ordered the movables and immovables of the appellant to be distrained by the respondent until liquidation of the adjudged sum of WHT liability by the appellant.
Aggrieved, the appellant filed a notice of appeal containing three grounds of appeal on 13.10.06. In a well prepared appellant’s brief of argument dated and filed on 7.12.07, but deemed properly filed on 22.2.10, Mrs. Akeredolu for the appellant identified one issue for determination on the appeal thus-
“Whether based on the evidence adduced, the Respondent substantiated its claim to the sum allegedly owed it (Respondent) as withholding Tax by the Appellant herein or to the amount held by the lower court to be owed by the Appellant to the Respondent.” (Grounds 1, 2 and 3).”
Section 1 of the Taxes and Levies (Approved List for collection) Decree No. 21 of 1998, section 63(1) and (7) of the Companies Income Tax Act (CITA) cap 60 Laws of the Federation, 1990, the Companies Income Tax (Rates, etc. of Tax Deducted at Source (withholding Tax) Regulations 1997, section 72(1) and (6) of Personal Income Tax Decree No. 104 of 1993, the Personal Income Tax (Rates, ETC. of Tax Deducted at source (Withholding Tax) Regulations 1997, part B sections 653 and 659 of the companies and Allied Matters Act (CAMA) were collectively cited for the propositions that Income Tax assessable on corporate bodies in respect of any payments made by any person to such company or corporate body is WHT collectable by the Federal Government; while Income Tax assessable on a person in respect of any payments made by any person to such person (Withholding Tax) is collectable by the State Government.
The appellant’s brief also contended that by Exhibit ‘AO3’ at pages 22-25 of the record of appeal (the record) relied upon by the respondent and the appellant as the transactions between the appellant and some other persons resident in Oyo State to whom the appellant had made payments in 1998 listed in entries numbers 1-199 thereof upon which the WHT was assessed by the respondent vide page 45 of the record, the total sum of the transactions was N229,210,209; that the respondent having relied on the entries number 1-199 in Exhibit ‘AO3’ to make the assessment, sections 19 and 20 of the Evidence Act and the cases of Olatunji v. Adisa (1995) 2 SCNJ 90, Adebambo v. Olowosayo (1985) 4 NWLR (Pt. 2) 740, Akinola & Ors. v. Oluwo & Ors. (1962) 1 ALL NLR 224 at 227, Okafor V. Idigo (1984) 1 SCNLR 481 at 512, Akintola v. Solano (1986) 2 NWLR (Pt.24) 598 and Law and Practice Relating to Evidence in Nigeria (1st Edition) at page 54 by Aguda the reliance of the respondent on the said entries was an admission against interest beneficial to the appellant’s case that only N225,197,974 attracted WHT of 5% thereon amounting to N12,759,889.70, not the N21,233,213 adjudged by the court below.
It was further argued that the entries listed in Numbers 1-708 are in respect of transactions comprising freight payment, grains supplied, medical bills etc. With individuals and corporate bodies not resident within Oyo State mixed with some residents in Oyo State valued N180,213,511 attracting 5% WHT thereon of N9,010,675 collectable by the Federal Government in respect of third parties resident in Oyo State vide section 63(1) of CITA and the 1997 Regulations made thereunder directing collection of WHT respecting transactions with corporate bodies by the Federal Government, consequently the respondent is not entitled to recover or collect the N9,010,675 collectable by the Federal Government and that the judgment of the court below should have excluded the said N9,010,675 limiting the judgment debt on WHT liability of the appellant to N12,759,889.70.
The respondent’s brief of argument settled by Mr. Ganiyu, Deputy Director, Civil Litigation (Ministry of Justice, Oyo State) identified three issues for determination to wit –
“(i) Whether the place of residence is relevant in determining the withholding Tax liability of an individual contractor.
(ii) Whether having regard to the evidence on record, the Lower Court was not justified in his decision, awarding judgment in the sum of N21,233,213.00 millions in favour of the Respondent.
(iii) Whether or not based on the evidence before the lower court, the respondent substantiated the judgment sum awarded in its favour and/or the sum being claimed by it”
It was submitted that in determining WHT liability the residence of the individual contractors listed in numbers 1-66, 1-99 and 1-708 of Exhibit ‘G’ is immaterial, as the dominant factor is their engagement in contracts with a corporate body like the appellant in Oyo State and payments made by the latter to the former vide Section 2(2) Personal Income Tax Decree No.104 of 1993, section 72(1) of the Personal Income Tax Act read with the cases of Elf Oil (Nig.) Ltd. v. O.S.B.I.R. (2003) FWLR (Pt.138) 1352, Total (Nig.) Plc. v. Akinpelu (2004) ALL FWLR (Pt.214) 141 at 151 – 152, 7Up Bottling Co. Plc. v. L.S.I.R.B. (2000) 3 NWLR (Pt.650) 565 at 576, Shittu v. Nigeria Agric and Coop. Bank Ltd. (2001) 10 NWLR (Pt.721) 298 at 307; therefore the contracts in question which were executed by the appellant with sundry individuals in Oyo State attracted 5% WHT of N18,972,134.00 with 10% penalty of N1,897,213.40 and 22.5% interest of N4,695,603.17k for delayed payment making grand total of N25,564,950.57K outstanding WHT for 1998 tax year, consequently the uncontradicted and unchallenged evidence of the DW1 at page 61 of the record established the WHT liability of the appellant, ail the more so the appellant did not appear to have a cause of action to sue to determine its indebtedness to the respondent vide Uzor v. Anyika & Co. (2002) FWLR (Pt. 107) 1155 – 1157 and U.B.N. Ltd. v. Penny MRT Ltd. (1992) 5 NWLR (Pt.240) 228 at 231.
It was submitted on the second issue that by section 1 of the Taxes and Levies (Approved List for collection) Act, CAP, T2 and paragraph 2 of the Personal Income Tax Decree No. 104 of 1993, the respondent is empowered to collect WHT from proceeds of contracts entered into by the appellant with individual contractors such as the “majority” of those listed in numbers 1-66, 1-99 and 1-708 of Exhibit ‘G’; that the Federal Inland Revenue Service (FIRS) information circular No. 9801 dated 1.10.98 and section 1 of the Taxes and Levies (Approved List for Collection) Decree No. 21 of 1998 relied upon by the respondent at pages 52 -54 of the record also enjoined the respondent to collect WHT from the appellant in circumstances evidenced by part of the DW1’s evidence at page 62 lines 1 – 4 of the record, Exhibit ‘A’ at pages 52 – 54 of the record, and the evidence of the PW1, one Mr. Sikiru Tunji Mojoyinola, at pages 47 lines 14-16 and 57 lines 8 – 15 and 21 – 28 of the record; and that Exhibit ‘AO3’, at 20 – 40 of the record is Exhibit ‘G’ which the respondent is entitled to use as part of the record of the court vide A-G Anambra State v. Okeke (2002) FWLR (Pt.112) 175 at 188 – 189.
The respondent contended on the third issue that the uncontradicted evidence of its witness, one Mr. Sikiru Tunji Mojoyinola, at pages 45 lines 6-12, 57 lines 21-28 and 58 lines 8 – 13 of the record grounded the WHT liability of the appellant in line with the respondent’s amended originating summons dated 1.11.05 and filed on 7.11.05, which the court below disregarded in favour of the evidence of the appellant’s witness at page 46 of the record that WHT liability of the appellant was N21,233,213 instead of the N25,504,950.57k testified to by the respondent’s witness; that WHT liability of the appellant was not limited to items 1-199 in Exhibit ‘G’ but extended to items 1-66 and 1-708 attached to Exhibit ‘G’ and 10% penalty thereon together with 22.5% interest for delayed payment of WHT liability; that the appellant did not canvass WHT liability of only N11,460,510.45k at the court below and should not be allowed to do so here, especially as the claimed sum of N25,564,950.57k WHT arose form three sets of documents kept by the appellant -1-66, 1-99, 1-708 of Exhibit ‘G’ upon which the respondent based its assessment of WHT liability of the appellant vide pages 20 – 21 (numbers 1-66 names), 22-25 (1-199 names) and 26-40 (1-708 names) based on the verified names of individual contractors contained in the whole of Exhibit ‘G’, upon which WHT liability of the appellant for the 1998 tax year was anchored.
The appellant’s reply brief dated and filed on 16.4.10, but deemed properly filed on 4.5.11, argued that the third issue formulated by the respondent is not related to ground 3 of the appellant’s grounds of appeal and arguments on the said third issue on the quantum of the judgment sum, whether or not it was substantiated by the respondent, should be disregarded as ground 3 of the grounds of appeal attacked only the assessment of Exhibit ‘G’ by the court below vide Animashaun v. U.C.H. (1996) 10 NWLR (Pt.476) 65 at 70, Udom v. Micheletti and Sons (1997) 8 NWLR (Pt.516) 187 at 199 – 200, Atanda v. Ajani (1989) 3 NWLR (Pt.111) 511 at 543 – 544, Okumodi v. Sowunmi (2004) 2 NWLR (Pt.856) 1 at 26, B.C.C.I. v. D. Stephens Industries Ltd. (1992) 3 NWLR (Pt.232) 772 at 783 and Ogundare v. Ogunlowo (1997) 6 NWLR (Pt.509) 360 at 368; that Elf Oil Nigeria Ltd (supra) was WHT on leased property located within the tax jurisdiction of the particular taxing authority and is inapplicable to this case, while Shittu (supra) does not assist the respondent’s case, especially as the Personal Income Tax Decree No. 104 of 1993 and the Personal Income Tax (Rates, etc. of Tax Deducted at source( (Withholding Tax) Regulations 1997 by item 4 read with the companies Income Tax Cap. 60 LFN, the Companies Income Tax (Rates, etc of Tax deducted at source (Withholding Tax) Regulations 1997, together with the Taxes and Levies (Approved List for Collection) Decree No. 21 of 1998 state clearly the types of WHT collectable by a State Government from individuals resident within the state to avoid the absurdity of a state government imposing tax on an individual not resident in the state in question, especially WHT, a sui generis specie of tax, for tax administration of the Personal Income Tax Decree No. 104 of 1993 (Decree No. 104 of 1993) particularly section 72(1) thereof augmented with the Personal Income Tax (Rates, etc. of Tax Deducted at source (Withholding Tax) Regulations 1997 (WHT Regulations of 1997) read with the case of 7Up Bottling Co. v. L.S.B.I.R. (2000) 3 NWLR (Pt.650) 565.
The reply brief submitted that the Federal Inland Revenue circular No. 9801 dated 1.10.98 is a mere guide-line for administration of WHT by relevant state and Federal Government tax authorities without imposing WHT on companies in respect of transactions with individuals not resident within the state concerned vide Decree No.104 of 1993 and WHT Regulations of 1997; that the entries listed as “Nos. 1-708″ in Exhibit ‘G’ speak for themselves and cannot be contradicted by the oral testimony of the respondent’s witness vide First African Trust Bank Ltd. v. Partnership Investment Co. Ltd. (2003) 18 NWLR (Pt.851) 35 at 74, therefore the oral testimony of the respondent’s witness in that regard should be disregarded; that the complaint of the appellant was not on whether judicial notice cannot be taken of a document in the record of the court, but, that if the court below had properly evaluated Exhibit ‘G’ it would not have arrived at the adjudged WHT liability; nor would the court below, upon proper evaluation of the entries numbered 1-708 in Exhibit ‘G” have arrived at a decision that limited liability companies and individuals not resident in Oyo State are liable to the respondent in respect of WHT.
The respondent’s reply brief referred to part of the judgment of the court below at page 212 of the record covered by ground 3 of the notice of appeal to contend that the entries numbered 1-708 in Exhibit ‘G’ were for limited liability companies outside the WHT authority of the respondent, consequently the judgment based on the entries listed numbers 1-199 in Exhibit ‘G’ alone is not supported by the said schedule as the 5% WHT on it should have been N11,460,510 .45, while 5% on the transactions listed numbers 1-708 in Exhibit G is N12,759,889.70; and that the court below failed to evaluate the schedule of entries numbered 1-708 in Exhibit ‘G’ before awarding the judgment sum in question establishing that the said judgment is against the weight of evidence, consequently the appeal should be allowed.
The single issue formulated by the appellant is composite and fit for the resolution of the appeal and, I most respectfully adopt it for the discourse. As aptly pointed out by Mrs. Akeredolu for the appellant in the reply brief, the respondent strayed outside the scope of grounds 2 and 3 of the notice of appeal in its discussion on the third issue for determination in the respondent’s brief of argument rendering arguments thereon redundant, which I hereby disregard following the cases of Animashaun (supra), Udom (supra), Atanda (supra) Okumodi (supra), B.C.C.I. (supra), and Ogundare (supra) cited on the issue by appellant’s learned counsel.
Withholding Tax (WHT) or retention tax is really a term of art/generic expression (or sui generis) devised by tax authorities for tax administration through the method of deduction of tax at source from income including payments due to a benefiting party, by the paying party, for onward remittance to the appropriate tax authority of the benefiting party – See 7Up Bottling Company Plc v. L.S.I.R.B. (supra) at pages 617 – 618 thus:
“The way I understand it, is that the withholding Tax (WHT) system is a form of tax administration which enables tax authorities to recover at source from taxable persons tax from payment made for certain services which such persons render to another. What is deducted by the person who pays for the services is a percentage of this payment. Now if so deducted, when the taxable person’s tax for the year is duly assessed, whatever had been deducted is credited to him in a manner that he does not pay tax twice on the same income accruing from that payment.
Under both PAYE and the WHT systems, the employer or payer who pays for the services of his employee/taxable person, by way of emolument or the cost of supplies or other services to a taxable person, is obliged to deduct and remit tax so deducted (from source) to the authority. He is the Agent of the tax authority as it were. This is the effect of section 72(5) of Decree 104 (supra) and Section 4 of the Regulations of 1997. We are unable, with respect to agree with the appellants that there is no statutory provision for WHT.
It must be realized that the employer/person deducting the tax from source is not the assessable person or tax-payer under the tax laws. As earlier stated, if anyone needs object to the assessment or deduction, it should be the tax payer or tax assessable person.”
In other words, WHT or retention tax occurs in any of the statutorily provided transactions respecting goods and services when payments from one person to another, including corporate bodies, are expected to be deducted at source on specified percentage on the total value of the transactions and remitted to the relevant tax authority within the statutory period on pain of penalty, in the event of default by the payee. In effect WHT or retention tax is required by tax legislation to be withheld by a party acting as a conduit or handler of the tax authority from each payment made to another contracting party from income or services rendered and/or arising from such transactions and remitted to the tax authority by the withholder within the fixed statutory period. By the procedure the payee of an item of income temporarily withholds tax from the payments and pays same in lump sum to tax authority which acts as check against tax evasion and delinquency in filing tax returns by the payee.
The WHT dispute at hand is in respect of transactions made by appellant as a corporate body with third parties for the 1998 tax year. Exhibit AO3 at pages 22-40 of the record contained the transactions that attracted the WHT liability. I agree with the appellant’s learned counsel that Exhibit AO3 prepared by the appellant and conceded to by the respondent is an admission by the respondent that the WHT liability of the appellant is as recorded in Exhibit AO3 – See sections 19 and 20 of the Evidence Act and the string of cases cited on the issue (supra) by the appellant.
Tax laws are strictly or narrowly interpreted from the bare words used in the enactment. There is no presumption or equity about a tax – See Ahmadu & Anor. v. The Governor of Kogi State & Ors. (2002) 3 NWLR (Pt.755) 502 at 522 thus –
“In a taxing legislation, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption about a tax. Nothing is to be read in and nothing is to be implied, one can only look fairly at the language used. But the strictness of interpretation may not always enure to the subject’s benefit, for “if the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind” – Per Lord Cairns- in Partington v. Attorney-General (1869) L.R. 4 H.L. 100 at P. 122. See Maxwell on the Interpretation of Statutes 12th Edition by P. St J, Langan at p.256.”
See also Okupe v. Federal Board of Inland Revenue (1974) 4 S.C. 93, Aderawos Trading Co. Ltd. v. F.B.I.R. (1966) L.L.R. 195 at 200 or (1966) 2 ALR (Commercial) 219, Ormond Investment Co. v. Betts (1928) A.C. 143.

Government circulars convey Government Policy and serve as the mouth-piece of Government on such issues and cannot be ignored by the Court – See C.B.N. v. Amao & Ors. (2007) ALL FWLR (Pt.1614) 1490 at 1522-1525. One of such circulars is contained at pages 52 – 54 of the record helpfully referred to by Mr. Ganiyu for the respondent. It is Federal Inland Revenue Circular No. 9801 dated 1.10.98, stating inter alia at page 54 of the record that-
“….where the trader enters into contract for the sale of the goods, he is no longer acting within his ordinary course of business, that is trading, but has made an adventure into another business, that is contracts.
Further, a manufacturer who makes contractual sale or purchase is no longer acting within his ordinary course of business that is contract. Although the manufacturer may use the items purchased or sold in his manufacturing business, the contractual arrangement for the sale or purchase will be subject to 5% withholding Tax.” (My emphasis.)
The circular (supra) appears to me to be explanatory of the Schedule to the WHT Regulations of 1997 made pursuant to section 63(7) of CITA and section 72(6) of PITA which provides 5% WHT for –
“All types of contracts and agency arrangements, other than outright sale and purchase of goods and property in the ordinary course of business.” (My emphasis.)
In my opinion, on the strength of the circular (supra), all transactions of buying produce and/or goods by the appellant from individuals and corporate bodies for the purpose of commercial production within the 1998 taxable year that brought income chargeable to tax in Oyo State attracted WHT rate of 5% on the purchases. The unshaken evidence of the PW1 at page 47 lines 14 – 16, page 57 lines 8-15 and 21-28 of the record referred to by respondent’s learned counsel conformed to the said circular in proof of the respondent’s case that the appellant was liable for WHT on such transactions.
The evidence of the DW1 for the respondent denying liability on the ground stated in part of his testimony at page 61 of the record that the grains were bought by the appellant in the ordinary course of business flies in the face of the circular (supra) and was rightly discountenanced by the court below which properly utilized the evidence of the PW1 that was in line with the circular (supra) to hold at pages 211 – 212 of the record that the transactions in question attracted WHT liability. I cannot fault the said findings of fact – See Coker v. Olukoga & Ors. (1994) 2 NWLR (Pt.328) 648 at 664 thus –
“It is trite that an appellate court has no jurisdiction to reject the findings of a trial judge unless such findings are perverse. See Dom v. Jov. (1992) 6 NWLR (Pt. 246) 195; Ogunbiyi v. Ogundipe (1992) 9 NWLR (Pt. 263) 24; Okuzua v. Amosu (1992) 6 NWLR (Pt.248) 416; Fadiora v. Abonde (1992) 6 NWLR (Pt.246) 221; Akibu v. Oduntan (1992) 2 NWLR (Pt.222) 210.”
It is clear to me that the residence of third parties engaged in transactions attracting WHT with a payee is not material. The significant factor is the venue or place the transactions were effected. Once it is shown the transactions with third parties were implemented in Oyo State by way of supplying the transacted items or goods or services in Oyo State, whether the supplier or group of suppliers are not resident in Oyo State, the transactions that arose from the contractual arrangement for the sale or purchase of the goods or services would be the items subject to 5% WHT liability, not the manufacturing business of the payee itself. The WHT is therefore on the goods and services contracted for, not on the manufacturing concern of the payee.
Because in levying WHT on companies, the tax authority is not gunning (permit the expression) for corporate tax imposed on companies in virtue of their existence and status as companies, but for the collateral engagements of companies in contractual arrangements outside the normal and ordinary course of business of the companies. For instance, in respect of a brewer like the appellant, the WHT is not on its brewing business, but on its entry in contractual pursuits outside its primary function of brewing alcoholic beverages.
So the WHT targets 5% value of the goods and services contractually undertaken by the payee with third parties which, in my respectful opinion, is an item of income – See Longsdon v. Minister of Pensions and National Insurance (1956) 1 ALL E.R. 83 defining “income” inter-alia as “that which comes in.” While Lord Chetwode v. IRC (1977) 1 ALL E.R. 638 held inter-alia that “income” means gross income as reduced for the purpose of tax assessment by deductions specified in the tax code. Consequently, any contractual transaction in which something of exchangeable worth proceeding from the property, severed from the capital, is drawn by the recipient for separate use or benefit is “income” – See Goodrich v. Edwards 255 U.S. 527 referred to in the authoritative work titled Encyclopedia of Taxation Law and Practice (First Edition) page 138 by Sir T.A. Nwamara, and 7up Bottling Company (supra) on the sugar transaction between the company and third parties which was held to attract WHT liability in that case.
By Exhibit ‘AO3’, at pages 22 – 40 of the record the transactions recorded therein were made in Oyo State bringing “Income” within the meaning of “that which comes in” vide Longsdon (supra) and brought the taxable transactions under WHT liability recoverable by the respondent, as what is crucial to WHT liability is the place of performance of the transaction, not necessarily on the residence of the third parties involved in the transaction.
The appellant made the point that the WHT liability assessed and served her by the respondent was N19,688,486 before the dispute went to litigation in the court below. There is an official correspondence from the respondent to the appellant at page 41 of the record confirming the appellant’s point in these words –
“On the withholding tax element of liability (N19,688,486), the position of the Board remains the same. You are therefore implored to arrange settlement of the liability.”
The PW1 testifying for the respondent at the court below also stated at page 46 of the record that –
“By Exhibit ‘A’ the plaintiff demanded for N19,688,486 from the Defendant. But in our claim before the court, we are asking for N26,205,374.86. This happened because we wrote series of letters of objection. The defendant said some of their employees were not resident in Oyo State and other complaints. It is after looking into the complaints that we arrive at the figure of N19,688,486.”
In my respectful view, the respondent was bound to limit its claim to the sum assessed and served by it on the appellant as the WHT liability of N19,688,486 which the parties disagreed upon, resulting in the litigation. The point made by Mrs. Akeredolu that the claim and the award made by the court below exceeded the amount of money assessed by the respondent as WHT liability is well taken and is hereby countenanced. The respondent cannot, therefore, be allowed to approbate and reprobate at the same time.
Limiting the WHT liability assessed and served on the appellant by the respondent to the said N19,688,486 and, having been satisfied that the WHT liability assessed by the respondent was in respect of transactions done within Oyo State that attracted WHT recoverable by the respondent, not the Federal Government, I would dismiss the appeal on liability for lacking in merit but reduce the judgment debt to N19,688,486 as the just entitlement of the respondent representing the WHT liability of the appellant for the 1998 tax year. No order as to costs. Both Mrs. Akeredolu for the appellant and Mr. Ganiyu for the respondent are commended for the impressive briefs prepared by them for their respective clients on the appeal.

ADZIRA GANA MSHELIA, J.C.A.: I had a preview of the lead judgment just delivered by my learned brother Ikyegh J.C.A. I completely agree with his reasoning and conclusion. I also dismiss the appeal and abide by the consequential orders made in the lead judgment cost inclusive.

MODUPE FASANMI, J.C.A.: I had the opportunity of reading in draft the lead Judgment of my learned brother Ikyegh J.C.A. just delivered.
I agree entirely with the reasoning and conclusion. I adopt same and dismiss the appeal too. I abide by the consequential orders contained therein.

Appearances

Mrs. Abimbola AkeredoluFor Appellant

AND

Mr. L.A. Ganiyu, Deputy Director – Civil Litigation and Advisory Services, (Ministry of Justice, Oyo State)For Respondent