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SK BABALOLA VS LAGOS INLAND REVENUE SERVICE & 2 ORS

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IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA

IN THE LAGOS JUDICIAL DIVISION

HOLDEN AT LAGOS

 

 

BEFORE HER LORDSHIP HON. JUSTICE E. A. OJI, PhD

DATE: THURSDAY 8TH MARCH 2018                                                                          

SUIT NO. NICN/LA/410/2017

BETWEEN:                                                                     

 

SK BABALOLA

CLAIMANT

AND

LAGOS INLAND REVENUE SERVICE AND 2 ORS

 

DEFENDANT

 

REPRESENTATION:

Emeka Ihebie appears for the Defendants.

 

JUDGMENT

Claimants commenced this action by way of Originating Summons on the 24th of August 2017.  The Claimant’s claim as follows:

  1. A DECLARATION that under section 17 of the Personal Income Tax Act, the Defendants are not empowered to audit withdrawals from contributions remitted to pension funds administrators.
  2. A DELCARATION that by virtue of section 3 (1) (e) of the Personal Income Tax Act, the Defendants cannot recover taxes from remittance to pension funds administrators under the contributory scheme cognizable under the Pension Reform Act.
  3. A DECLARATION that section 5 (8) of the Labour Act does not apply to all kinds of employees.
  4. A DECLARATION that by virtue of section 91 thereof, the Labour Act only applies to employees who engage in manual labour, clerical work and/or personal contracts to execute any work or labour.
  5. A DECLARATION that by virtue of section 4 of the Pension Reform Act 2014, there is no maximum rate of contribution that an employee and/or employer must remit to the pension funds administrators.
  6. A DECLARATION that the Defendants do not have powers to jointly or severally tax voluntary pension contributions in the hands of pensions funds administrators.

 

  1. A PERPETUAL INJUNCTION restraining the Defendants, their agents, privies, representatives, officers and/or servants from taxing the Claimant and other members of his class’ voluntary pension contributions made to their pension funds administrators.
  2. A PERPETUAL INJUNCTION restraining the Defendants, their agents, privies, representatives, officers and/or servants from taxing, auditing and/or charging interest on pension funds in the custody of Pension Funds Administrators in Nigeria.
  3. Such other consequential Order(s) that this honourable court may deem fit to grant in the circumstance.

The following questions/issues are stated for determination:

  1.  Whether or not by the construction of section 3 (1) (e) of the Personal Income Tax Act and section 10(2) of the Pension Reform Act 2014, the Defendants have powers to jointly or severally tax voluntary pension contributions in the hands of Pensions Funds Administrators.
  2. Whether or not by the interpretation and construction of section 17 of the Personal Income Tax Act, the Defendants are empowered to audit withdrawals from contributions made by the claimants and/or his employees to Pension Funds Administrators.
  3. Whether or not by the interpretation and construction of section 3 (1) (e) of the Personal Income Tax Act, the Defendants can recover taxes from the claimant’s remittance to Pension Funds Administrators under the contributory scheme.
  4. Whether or not by the interpretation and construction of section 91 of the Labour Act, the term ‘worker’ applies to all kinds of employees.
  5. Whether or not by the interpretation and construction of section 4 of the Pension Reform Act 2014, there is a maximum rate of contribution that an employee and/or employer must remit to the Pension Funds Administrators under the contributory pension scheme.

The summons is supported by a 19-paragraph affidavit deposed to by Daniel John Daniel with 2 exhibits. In addition and as is required by the Rules, the summons is accompanied by a written address in support of the originating summons.  In his written address, Counsel for the Claimant made the following submissions:   

ISSUE 1 – whether or not by the construction of section 3 (1) (e) of the Personal Income Tax Act, the Defendants have powers to jointly or severally tax voluntary pension contributions in the hands of pensions funds administrators.

Claimants reproduced the relevant section 3(1) of the Personal Income Tax Act thus:

“3. Income chargeable

( 1 ) Subject to the provisions of this Act, tax shall be payable for each year of assessment on the aggregate amounts each of which is the income of every taxable person, for the year, from a source inside or outside Nigeria, including, without restricting the generality of the foregoing-

  1. gain or profit from any trade, business, profession or vocation, for whatever period of time such trade, business, profession or vocation may have been carried on or exercised;
  2. any salary, wage, fee, allowance or other gain or profit from employment including compensations, bonuses, premiums, benefits or other perquisites allowed, given or granted by any person to an employee other than:
  3. ……………..
  4. ……………….
  5. any pension, charge or annuity” (Emphasis mine)

In the same vein, he reproduced section 10(2) of the Pension Reform Act 2014 which provides that:

“All interests, dividends, profits, investment and other income accruable to pension funds and assets under this Act shall not be taxable.”

He argues that from the above, it is evident that the relevant law expressly exempts pension from taxation.  They therefore submit that pension funds are not amenable to tax and the Defendants cannot do otherwise as they are bound by the provisions of the law.

ISSUE 2 – whether or not by the interpretation and construction of section 17 of the Personal Income Tax Act, the Defendants are empowered to audit withdrawals from contributions to pension funds administrators.

Claimant noted that the Defendants relied on section 17 of PITA in their releases to justify their decision to audit pension funds in the hands of pension funds managers. The said section states:

“17 Artificial transactions:

(1) Where a tax authority is of opinion that any disposition is not in fact given effect to, or that any transaction which reduces or would reduce the amount of any tax payable is artificial or fictitious, the tax authority may disregard the disposition or direct that such adjustments shall be made as respects the income of an individual, an executor or a trustee, as the tax authority considers appropriate so as to counteract the reduction of liability to tax effected, or reduction which would otherwise be effected by the transaction”.

He raised the question as to the meaning of artificial transaction under PITA and provided the answer by reference to subsection 3 of the same section thus:

“… transactions between persons one of whom either has control over the other or in case of individuals who are related to each other or between persons both of whom are controlled by some other person, shall be deemed to be artificial or fictitious if in the opinion of the tax authority those transactions have not been made on terms which might fairly have been expected to have been made by independent persons engaged in the same or similar activities dealing with one another at arm’s length.

He argues that an employee’s decision to voluntarily remit a percentage of his income and as mandated by law to a pension funds administrator is fairly done and should not be regarded as artificial transaction.  He submits that the discretion/opinion of the tax authority must not only be done in accordance with reasonable dictates of the law, same must not also be arbitrary.  He relied on the Supreme Court’s decision in Ajao v. Ashiru (1973) 11 S.C. 17 where the Apex Court frowned at the arbitrary use of powers and/or discretion.

ISSUE 3 – whether or not by the interpretation and construction of section 91 of the Labour Act, the term ‘worker’ applies to all kinds of employees.

Claimant argued that the 3rd Defendant cited the provision of section 5(8) of the Labour Act to buttress its position that the amount remitted to the pension funds from an employee’s salary must be pegged. He argued that in that, 3rd defendant assumed that the Labour Act is applicable to all kinds of employees in Nigeria in total disregard of the provision of section 91 of the Labour Act which defines “worker” as:

“ any person who has entered into or works under a contract with an employer, whether the contract is for manual labour or clerical work or is expressed or implied or oral or written, and whether it is a contract of service or a contract personally to execute any work or labour, but does not include:-

  1. any person employed otherwise than for the purposes of the employer’s business; or
  2. persons exercising administrative, executive, technical or professional functions as public officers or otherwise; or
  3. members of the employer’s family; or
  4. representatives, agents and commercial travellers in so far as their work is carried on outside the permanent workplace of the employer’s establishment; or
  5. any person to whom articles or materials are given out to be made up, cleaned, washed, altered, ornamented, finished, repaired or adapted for sale in his own home or on other premises not under the control or management of the person who gave out the articles or the material; or
  6. any person employed in a vessel or aircraft to which the laws regulating merchant shipping or civil aviation apply;

“young person” means a person under the age of eighteen years. (Emphasis mine)

He argues that the definition excludes a whole lot of professionals and office employees who are neither manual nor clerical workers.

ISSUE 4 – whether or not by the interpretation and construction of section 4 of the Pension Reform Act 2014, there is a maximum rate of contribution that an employee and/or employer must remit to the pension funds administrators under the contributory pension scheme.

Claimant on this issue noted that the Defendants major contention as gleaned from their press releases is that there ought to be a maximum cap for the remittance of pension to the pension funds administrator.  He submits however that the position of relevant laws is otherwise.

For the avoidance of doubt, section 4 of the Pension Reform Act 2014 provides thus:

“1. The contribution for any employee to which this Act applies shall be made in the following rates relating to his monthly emoluments –

  1. a minimum of ten per cent by the employer; and
  2. a minimum of eight per cent by the employee.
  3. The rates of contribution mentioned in subsection (1) of this section may, upon agreement between any employer and employee, be revised upwards, from time to time, and the Commission shall be notified of such revision.
  4. Any employee to whom this Act applies may, in addition to the total contributions being made by him and his employer, make voluntary contributions to his retirement savings account.
  5. Notwithstanding any of the provisions of this Act, an employer may agree
  6. on the payment of additional benefits 0 he employee upon retirement; or
  7. elect to bear the full responsibility of the Scheme provided that in such a case, the employer’s contribution shall not be less than 20 percent of the monthly emoluments of the employee.
  8. In addition to the rates specified in subsection (1) of this section, every employer shall maintain a Group -Life’ Insurance ‘Policy’ in’ favour ‘of each employee for a minimum of three times the annual total emolument of the employee and premium shall be paid not later than the date of commencement of the cover.
  9. Where the employer failed, refused or omitted to make payment as and when due, the employer shall make arrangement to effect the payment of claims arising from the death of any staff in its employment during such period.
  10. Subject to such guidelines as may be issued, from time to time by the Commission, the categories of persons covered under section 2(3) of this Act or persons exempted under section 5 of this Act shall be entitled to make voluntary contributions under the Scheme”.(Emphasis mine)

Claimant on this issue submits that above provision only provides for minimum rate to be remitted as pension and nowhere does it provide for the maximum cap.  He also argued that the said provision does not even contemplate any role to be played by the Defendants who are neither regulators nor relevant agencies on issues pertaining to pension deduction and remittance.  He therefore submits that the Defendant’s intrusion into the realm of pension is ultra vires as same is the bit of the National Pension Commission.

In conclusion, claimant submits that:

  1. The Defendants lack powers to tax and/or audit pension remittance.
  2. “Workers” as contemplated under the Labour Act is limited to manual labourers and clerical workers.
  3. The Pension Reform Act does not put a maximum cap on the rate of income that can be remitted as pension.
  4. Section 5(8) of the Labour Act is not applicable to employees who are not manual or clerical workers.

He thereby urged the court to resolve all the issues in his favour.

In response to the originating summons, defendants filed a 12-paragraph affidavit dated the 20th day of September 2017 and deposed to by Temitope Adewale Samuel, and a written address.  The defendant averred that in exercise of its statutory function wrote the Claimant a letter dated 7 August 2017 notifying him of his failure to file his annual returns for the 2016 year of assessment and the attendant civil and criminal consequence(s). On 21st August 2017, (Fourteen-days later) the Defendant, upon the discovery of widespread abuse of the voluntary contribution pension scheme by pension account holders in connivance with the Pension Funds Administrators [PFAs] issued a public notice published in the Punch Newspaper directing that premature withdrawals from pension funds under the voluntary contribution scheme shall henceforth be treated as artificial transactions subjected to audit and tax pursuant to Section 17 of the Personal Income Tax since such withdrawals are not exempted from tax under the Pension Reform Act. The Claimant subsequently brought this present action seeking declaratory and injunctive orders against the Defendant. The thrust of the Claimant’s action is that the Defendant through the aforesaid publication intend to subject pension funds to tax.

Defendants submitted the following issues for determination:

  1. Whether this Honourable Court has jurisdiction to entertain this matter.
  2. Whether this suit as presently constituted reveals any cause of action as against the Defendants herein
  3. Whether the Claimant herein has the requisite locus standi to commence this action.
  4. Whether it is lawful for the 1st Defendant to ask the Claimant to file his returns
  5. Whether the 1st Defendant can lawfully audit withdrawals from contributions remitted to Pension Funds administrators?
  6. Whether the 1st Defendant is empowered to recover taxes from remittance to pension funds administrators under the relevant laws.
  7. Whether the paragraphs of the Claimant’s affidavit in support of the Originating Summons offends the provisions of the Evidence Act.

Issue 1 – Whether this Honourable Court has jurisdiction to try this matter

On the issue of the jurisdiction of this Court to hear this matter, Defendants submit that this Honourable Court lacks the jurisdiction to try this matter because the Claimant’s suit and reliefs are basically in relation to tax matters. Therefore, the suit ought to be filed at the Tax Appeal Tribunal which is the judicial body with the jurisdiction to hear the matter.

They referred to the Claimant/Respondent’s Originating Summons dated 24th August, 20 17 where it sought inter alia the following reliefs as against the 1st Defendant herein:

A Declaration that under section 17 of the Personal Income Tax Act; the Defendants are not empowered to audit withdrawals from contributions remitted to pension funds administrators.

A Declaration that by virtue of section 3(1) of PITA, the Defendants cannot recover taxes from remittance to pension funds administrators under the contributory scheme cognizable under the Pension Reform Act .

A Declaration that the Defendants do not have the powers to jointly or severally tax voluntary pension contributions in the hands of pension funds administrators.

They then submit that a deeper examination of the claims of the Claimant as outlined in the Originating Summons reveals that they are steeped and rooted in tax/taxation. That the suit is basically challenging the powers of the Defendants, particularly the 1st Defendant, in exercise of its powers under the Personal Income Tax Act, Cap P8, Laws of the Federation of Nigeria 2004 [amended], to audit retirement savings accounts [RSAsl and pension funds under the contributory pension scheme for the purpose of subjecting premature withdrawals from RSAs/pension funds accounts to tax. Consequently, since the suit of the Claimant relates to a tax dispute, this Honourable Court lacks the jurisdiction to try it.

Defendants note that the relevant laws have provided for the proper forum to ventilate tax disputes especially those arising under the Personal Income Tax Act. Section 59 of the Federal Inland Revenue Service [Establishment] Act No. 13 of 2007 [FIRSEA] establishes the Tax Appeal Tribunal [TAT] with the power to settle disputes arising from the operation of the laws listed in the 1st Schedule to the Act. The 1st schedule to FIRSEA listed the Personal Income Tax Act as one of the laws. This means that the TAT has the power to settle disputes arising from the operations of the Personal Income Tax Act. The jurisdiction of the TAT to settle disputes arising from the Personal Income Tax is reinforced by the provision of Section 60 of the Personal Income Tax Act which provides that “the Tax Appeal Tribunal established pursuant to Section 59 of the Federal Inland Revenue Service [Establishment] Act 2007 shall have powers to entertain all cases arising from the operations of this Act”

They referred to Paragraph 11 of the Filth Schedule to the FIRSEA which provides as follows:

“The Tribunal shall have power to adjudicate on disputes and controversies arising from the following tax laws …

Defendants therefore submit that the Claimant ought to have filed this matter at the TAT rather than before this Honourable Court since it statutorily lacks jurisdiction to try the matter.  Defendants restated the jurisdiction of this Court as provided by section 254(c)(1)(k) of the 1999 Constitution of the Federal Republic of Nigeria; and section 7 of the National Industrial Court Act 2006 and submit  that nothing in the sections of the laws mentioned empowers this Honourable Court to entertain actions which border on taxation of income.  They note that it is irrelevant what coloration the Claimant has given the matter, the bone of contention is not whether pension has been paid or not [which is what the NIC can exercise jurisdiction over], but rather whether tax is payable on income made upon withdrawal of pension within 5 years of remitting same.

They submit that at best the reference to pension and Labour matters encapsulated in some of the Claimant’s reliefs is merely ancillary to the main issue of taxation and even at that, the National Industrial Court will still lack jurisdiction since it is the main issue and not the ancillary issues that confer jurisdiction on the court. They referred the Court to the decision of the Court of Appeal in ADU & Ors v. Lagos State Task Force on Environment and Special Offences Unit & Ors (2016) LPELR- 40060(CA), where it held that:

The Law is that a Court cannot adjudicate on ancillary reliefs where it has no jurisdiction to entertain the main claim especially where the determination of the ancillary claim must necessarily involve the consideration of the main claim. See: Tukur v. Govt of Gongola State (1989) 4 NWLR (Pt. 117) 517. The corollary to this is that where Court can entertain both the main and ancillary reliefs the Court should go ahead and assume jurisdiction.

Issue 2 – Whether this suit as presently constituted reveals any cause of action as against the 1st  Defendant herein

On the second issue, the defendants relying on the Supreme Court’s definition of cause of action in the case of Ohakim V Agbaso (2010]19 NWLR (PT 1226] PG 172 @ 259 as the aggregate of facts that gives a person right to judicial relief submit that a careful review of the various reliefs sought by the Claimant and the facts as contained in the affidavit in support of the Claimant’s Originating Summons shows that the Claimant’s suit is bereft of any cause of action as against the 1st Defendant. They refer to the Public Notices issued by the 1st Defendant as exhibited in the Claimant’s affidavit in support of his Originating Summons, and state that the notice was directed at the PFAs and pension account holders and not the Claimant who has not shown that he is either a PFA or RSA holder under the contributory pension scheme. They contend that the Claimant is yet to file his tax returns and pay his taxes and that there is no document before the court linking the Claimant with the reliefs that he is seeking from the court.

As further proof that the Claimant’s action herein lacks any cause of action whatsoever as against the Defendants, the Claimant stated at Paragraphs 9-14 of the Affidavit in support of the Originating Summons that a PFA informed him that pensions are to be taxed without stating the PFA in question, the source or authority upon which the said PFA relied on in informing the Claimant that pensions are to be taxed. The Claimant also stated that the intended audit by the 1st Defendant of pension accounts is to his detriment without exhibiting any shred of evidence linking him to any pension account or tax payment. He further stated that the listing of pension on the form attached to the letter from the 1st Defendant evinces an intention to tax pensions. However, there is no evidence adduced by the Claimant proving the intention of the 1st Defendant to tax pensions.

They submit finally on this point that the 1st Defendant did not state either in the public notice or the letter sent to the Claimant that it intends to start imposing taxes on pensions and that it is clear that the intention of the Claimant is not to challenge taxation of pensions since his affidavit, processes and documents he filed in this Court do not disclose anything relating to taxation of pension. Defendants therefore urge the Court to hold that the suit of the Claimant herein lacks cause of action against the Defendants and should be dismissed with costs.

Issue 3 – Whether the Claimant herein has the requisite locus standi to commence this action.

Defendants contend that a careful perusal of the papers filed by the claimant herein would reveal that this action as constituted can only be brought by the PFAs, taxpayers or pension account holders. They contend that the Claimant does not belong to any of this group of persons; he is neither a taxpayer, nor a PFA or RSA holder under the pension contributory scheme. They further contend that the claimant has not shown in the processes he filed before this court that he maintains a pension account with any of the PFAs and will thus be affected by the intended act of the 1st Defendant.

They submit further that while the argument may be made that it is the individual employee or pension account holders who should pay the tax arising from premature withdrawal from pension account, it is however the PFA who has the responsibility to withhold and remit the tax, hence any action with respect to the intended audit and tax imposition must necessarily be brought by either the PFA or the individual pension account holders who will be the ultimate taxpayers. They referred to section 10(4) of the Pension Reform Act 2014 which provides that:

Without prejudice to the provisions of sub-section (2) of this section, any income earned on any voluntary contribution made under section 4(3) of this Act shall be subject to tax at the point of withdrawal where the withdrawal is made before the end of 5 years from the date the voluntary contribution was made.

They conclude that the intended audit and taxation is aimed at the act of PFAs with whom the voluntary pension accounts are domiciled and the individual Pension account owners or Employees. None of them is linked to the Claimant; thus there is no connection between the Claimant and the cause of action he seeks to ventilate, thereby making him a meddlesome interloper lacking locus standi to institute this action.

Issue 4 – Whether it is lawful for the 1st Defendant to ask the Claimant to file his returns

On this issue, defendants contend that Section 41 of the Personal Income Tax Act obligates a taxable person to file returns each year “with or without notice” not later than 31st March of every year; and that Section 46 of the Act also vests the 1st Defendant with power to call for further returns.

They submit that there is nothing unlawful in the act of the 1st Defendant requesting the Claimant to file his tax returns and the placement of public notice on the abuse of the voluntary pension scheme; and that the actions of the 1st Defendant are within its functions as stipulated in Section 88 of the Personal Income Tax Act.

 

Issue 5 – Whether the 1st Defendant can lawfully audit withdrawals from contributions remitted to Pension Funds administrators?

Defendants contend that Section 88(1)(b} of the Personal Income Tax Act vests the relevant tax authorities, including the 1st Defendant with the responsibility of “doing all such things as may be deemed necessary and expedient for the assessment and collection of the tax … “. Furthermore, Sections 32(4} and 33(1} of the Lagos State Revenue Administration Law 2007, empower the 1st Defendant to not only verify the income or profits of any person through audit or investigation but also give notice in writing to any person it considers necessary requiring such a person to deliver within a reasonable time specified in the notice fuller or further returns in respect of any matter relating to the functions of the 1st Defendant. All these provisions give the 1st Defendant power to audit pension accounts of taxpayers or demand that the Pension Fund Administrators provide returns or information relating to the accounts for the purpose of determining the income of taxpayers in Lagos State.

They therefore submit that the 1st Defendant can in the normal course of audit for Pay As You Earn [PAYE] require from the Pension Fund Administrators relevant information on withdrawals made in contravention of the Pension Reform Act.

Issue 6 – Whether the 1st Defendant is empowered to recover taxes from remittance to pension funds administrators under the relevant laws.

Defendants submit on this issue that the 1st Defendant is empowered under the relevant statutory provisions to not only prevent and discourage tax avoidance but also recover taxes from transactions constitution [sic] artificial transactions under the Personal Income Tax Act. They contend that Section 10(4) of the Pension Reform Act [PRA] 2014 makes any withdrawal made from a voluntary contribution into the participant’s Retirement Savings Account taxable at the point of withdrawal. The provision states as follows:

(4) without prejudice to the provisions of sub-section (2) of this section, any income earned on any voluntary contribution made under section 4(3) of this Act shall be subject to tax at the point of withdrawal where the withdrawal is made before the end of 5 years from the date the voluntary contribution was made.

They contend that Premature withdrawals sought to be prevented by the Section 10(4) of the Pension Reforms Act constitute an artificial transaction and thus a form of tax avoidance. They argue that Section 17 of the Personal Income Tax Act empowers the 1st Defendant to adjust artificial transactions and subject any income arising as a result of the adjustment to tax; and that this was the essence of the public notices issued by the 1st and 3rd Defendants. Consequently, they contend that withdrawals made from RSA opened with PFAs are subject to tax, where such withdrawals are made within 5 years of making the contribution into the RSAs. This is because the act not only flouts the provisions of the Pension Reform Act but also constitute artificial transaction in the opinion of the 1st Defendant under Section 17 of the Personal Income Tax Act.

 

Issue 7 – Whether the paragraphs of the Claimant’s affidavit in support of the Originating Summons offends the provisions of the Evidence Act

Defendants argue that paragraphs 12, 13, and 14 of Claimant’s affidavit in support of the originating summons runs contrary to Section 115 of the Evidence Act 2011 by not conforming to the test as laid down by the Supreme Court in the case of Ishaya Bamayi v. The State & Ors (2001) 8 NWLR (Part 715) 270 at 289 C- F.  They urged this Court to strike out paragraphs 12, 13 and 14 of the Claimant’s affidavit same being in contravention of the provisions of the Evidence Act..

In conclusion, defendants urged this court to dismiss this action.

In further opposition to the originating summons, the 2nd and 3rd defendants also deposed to a counter-affidavit dated 21st September 2017 by John Ndubuisi Isaac, and filed a written address in its support.   They raised identical issues for determination as already captured from the 1st defendant’s argument.  In addition, they raised an additional issue, to wit, whether the 2nd Defendant is a juristic person capable of being sued.  They contend that the Claimant in this suit included a non-existent Federal Board of Inland Revenue as the 2nd Defendant.  They submit that the entity formerly known as Federal Board of Inland Revenue no longer exists having become extinct in 2007.  They urge that the suit be dismissed or struck out or at least the 2nd Defendant since it is not a juristic person.

The Claimant filed a Reply on Points of Law to the Defendants’ written address in opposition to their originating summons.

Claimant raised the issue of the competence of the Defendants’ counter affidavit and written address dated 19th September, 2017.  He pointed out that the Defendants’ counter affidavit dated 20th September 2017 was deposed to by one Temitope Adewa1e Samuel who, at paragraph 1, identified himself as a legal practitioner without affixing his NBA seal in clear violation of Rule 10(1) and (2) of the Rules of Professional Conduct 2007 and Section 24 of the Legal Practitioners Act. He contends that the Defendants’ counter affidavit having been signed by a legal practitioner (Temitope Adewale Samuel) without affixing his NBA seal is incompetent and ought to be struck out in its entirety.

They also noted that in the signature page of the Defendants’ written address, the names of two lawyers are listed without indicating who actually signed the process contrary to settled principles of law in this regard. He referred to the case of SLB Consortium v N.N.P.C. (2011) 9 NWLR (Pt. 1252) 317 at 337 Para h, where Rhodes -Vivour, JSC held that:

“What then is so important about the way counsel chooses to sign process. Once it cannot be said who signed a process, it is incurably bad and rules of court that seem to provide a remedy are of no use as a rule cannot override the law”. (Emphasis mine)

They also referred to the cases of Oyeyemi v Mobil Oil Nigeria Plc. (2013) LPELR – 22196 (CA), and the case Onward Enterprises v Olam International (2010) All FWLR (Pt. 531) 1503 where it was held that:

“any attempt to detect the unnamed signatory will amount to converting the court into a forensic laboratory”

Claimant submits that since it is not the duty of court to speculate as held in the case of Enterprise Bank v Amao (2014) LPELR – 22094 (CA), this Court should hold that the Defendants’ written address is not validly signed by an identifiable legal practitioner and thereby incompetent and strike it out.

On whether or not the subject matter of this suit is with respect to taxation of pension and as such divests this honourable court of the requisite jurisdiction, Claimant/Respondent have conceded that there are labour claims in this suit when they submitted at paragraph 4.8 (line 4) that “at best, the labour matters are ancillary and basically flow from the main claim”.  They contend that out of 7 reliefs, only two have something to do with tax.  Claimant argue that assuming but not conceding to the Defendants’ argument that the principal claim in this suit is taxation, that same ought to be interpreted as “taxation of pension” as borne by relief 2.  He argues that from all the reliefs, the predominant factor is the sanctity of pension funds but not taxation.

On whether this suit ought to have been filed at the Tax Appeal Tribunal, the claimant argues answers in the negative.  He contends that the FIRS is not a party to the suit and that the preamble of the FIRSEA contemplates income from pensions and/or taxes deducted from individuals.

 

Claimant noted that Defendants also relied on section 59 and fifth schedule of the Act which lists the laws over which the tribunal can exercise jurisdiction and omitted the Pension Reform Act; buttressing his submission that the Tax Appeal Tribunal lacks jurisdiction to entertain this suit.

On whether the suit discloses any cause of action against the Defendants, claimant submits that their submissions thereunder is only limited to the 3rd Defendant/Objector. Claimant contend that as the 3rd defendant is the regulator of taxation in Nigeria, coupled with the threats it issued in the press release dated 21st august 2017 clearly gives the Claimant a right of action against the 3rd defendant.

On whether or not the Claimant herein possesses the requisite locus standi to institute this suit and whether the suit is an abuse of court process, Claimant contends that Paragraph 2 of the Joint Tax Board’s press release shows that, it was targeted at PFAs, employees and the voluntary contributory scheme. Also, that paragraph I of the LIRS’ press release shows that it was directed at employers, company owners, representatives, employees and other members of the public; and that the Claimant is an employer of labour who has been approached by the 1st Defendant to file his returns; therefore that the Claimant has established his sufficient interest as an employer who was part of the class of persons targeted by the Defendants’ press release by virtue of their contribution to the contributory pension scheme.

Claimant therefore submits that this suit is not an abuse of court process as the Claimant is within his rights to approach this honourable court for the determination of his rights and liabilities under the law.

On the non-juristic personality or otherwise of the 2nd Defendant, claimant submits that the mistake in the name of the 2nd Defendant is a mere misnomer, which does not go the identity of the 2nd Defendant. That the Defendants themselves cannot deny the existence of the Federal Inland Revenue Service Board under section 3(1) of the FIRESEA, the identity of which there is no controversy, and that the parties are on common ground as to the identity of the Board sought to be sued but it was just an issue of mistake of name – Access Bank Plc. v Agege Local Government (2016) LPELR-40491(CA) and that the most that the court can do is to strike out the name of the 2nd defendant, who in any case is a nominal party.

In conclusion, claimant urged the court to resolve all the issues in his favour and discountenance the Defendants’ opposition with heavy cost.

In oral adumbration, Counsel to the Defendant tendered evidence of payment for seal without objection.  This was in response to the objection of the Claimant that the deponent of the Counter Affidavit did not affix his seal.  On the issue of Counsel not ticking who signed the address in support of the counter-affidavit, I find that to be founded on technicality and not one that this court should allow to truncate the case.  In any case, the seal as affixed reveals the Counsel that signed the process and this court was not at any time in doubt

The defendants also brought a Notice of Preliminary Objection dated 19th September 2017 pursuant to Order 13 Rule 11 (5), Order 17 Rule 8, Order 18 Rule 2 of the National Industrial Court (Civil Procedure) Rules, 2017 and Section 254 of the 1999 Constitution, on the grounds that:

  1. The subject matter of the suit as constituted is mainly on taxation and not labour or employment
  2. This matter ought to have been instituted first at the Tax Appeal Tribunal.

iii.                The entire suit/action has been improperly commenced and so same is incompetent.

  1. The suit reveals no cause of action as against the 1st Defendant
  2. The Plaintiff lacks the requisite locus standi to bring this action

By consent of the parties, it was agreed that this application be taken together with the substantive suit as permitted by Order 18 Rule 3.  In pursuance of this, I have gone through the affidavit deposed to by Temitope Adewale in opposition to the Originating Summons, and find them to be founded substantially on the same facts as that deposed by the same person in support of the preliminary objection.  A close study of the written address in support of the counter-affidavit filed in opposition to the originating summons reveal that the issues raised for determination cover the grounds for the preliminary objection, and the arguments made therein are almost identical.  I shall therefore not bother to reproduce the arguments of Counsel with respect to the preliminary objection, as they have been aptly captured by the summary made above.  The same applies to the Reply on Points of Law of the Claimant, in response to the Defendants counter-affidavit to the Originating summons and Claimant’s Counter-affidavit to the defendant’s preliminary objection; where we find the responses of the Claimant on the issues, as raised, to be the same and founded on same authorities.

Court Decision:

I raise the following issues for determination:

  1. Whether the subject matter of this suit is within the jurisdiction of this court;
  2. Whether this suit as presently constituted reveals any cause of action as against the Defendants/Applicants; and
  3. Whether the Claimant is entitled to the reliefs sought.

 

Issue 1 – whether the subject matter of this suit is within the jurisdiction of this court.

The issue of jurisdiction strikes at the root of the competence of the court to determine a suit before it.  It is therefore always necessary to determine it before every other issue that may arise in a suit.  A court’s jurisdiction to hear a suit breaks jurisdiction down into three components: whether there is jurisdiction over the person, whether there is jurisdiction over the subject matter, and whether there is jurisdiction to render the particular judgment sought.  In this case, what has called for determination is whether this court has jurisdiction over the subject matter.  The supreme court in the case of Abubakar & ors V. Nasamu and ors [2012] 5 SCM, 1 held that:

jurisdiction is crucial and radical issue and it is mandatory to first resolve it before proceeding with the suit, the reason behind this being that issue one in the briefs of all the parties in the four consolidated appeals is jurisdictional in nature, it is mandatory to first and foremost resolve it one way or the other before proceeding to considering other issue in the appeals on the merit. The reason being that jurisdiction is a radical and crucial question of competence. Once there is a defect in competence, it is fatal and the proceedings are a nullity.

Then, in Lafia L.G. V. Exec. Govt. Nasarawa State [2013] ALL FWLR (pt 668) 956 S.C. @982 para H per Rhode- Vivour JSC pointed out that:

Jurisdiction is fundamental in every suit. It is a threshold matter, so once raised, must be decided quickly before anything else. This is so because if a court lacks jurisdiction to hear a case, but goes ahead to hear the case, no matter how well the case is decided, the entire proceedings would amount to a nullity. It is the life and soul of a case. It is so important that it can be raised at any time in the court of first instance, on appeal, and even in the Supreme Court for the first time. It can also be raised suo motu provided counsels are given the opportunity to address the court on it before a decision is taken.

A court cannot confer or vest in itself jurisdiction not specifically conferred on it by a statute or the constitution.  Onnoghen JSC in the case of Gafar v. Govt., of Kwara State 4 NWLR (Pt. 1024) 375 puts it this way:

“It is settled law that courts are creatures of statute based on the constitution with their jurisdiction stated or prescribed therein. That being the case, it is obvious that no court assumes jurisdiction except it is statutorily prescribed as jurisdiction cannot be implied nor can it be conferred by agreement of parties; see Ariyo v. Ogele (1968) 1 All NLR 1; Timitimi v. Amabebe (1953) 15 WACA 374; Osadebe v. A.-G., Bendel State (1991) 22 NSCC (Pt. 1) 137 at 160; (1991) 1 NWLR (Pt. 169) 525 at 572.

In Orhena Adugu Gbileve & Anor v. Mrs. NGUNAN Addingi & Anor (2014) LPELR-22141(SC) held that:

 

 

The jurisdictional competence of a court has been well spelt out in the locus clasicus case of Madukolu Vs. Nkemdilim (1962) 1 All NLR (Pt.4); (1962) 2 SCNLR 34 where this court laid down the proper guideline in determining the issue of jurisdiction of a court of law and stating that a court is competent when:-

“(a) It is properly constituted as regards members of the Bench, and no member is disqualified for one reason or another,

(b) The subject matter of the case is within its jurisdiction and no feature in the case which prevents the court from exercising its jurisdiction; and

(c) The case comes before the court initiated with due process of law and upon fulfillment of a condition precedent to the exercise of jurisdiction.”

In this case, what has called for determination is whether this court has jurisdiction over the subject matter.  Section 254(C)(l)(K) of the 1999 Constitution of the Federal Republic of Nigeria and Section 7 of the National Industrial Court Act  state the jurisdiction of this court which are the principal instruments that provide for the jurisdiction of this Court are reproduced hereunder:

Jurisdiction

254 C (I)      Notwithstanding the provisions of sections 251, 257, 272 and anything contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the National Industrial Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters-


(a)      relating to or connected with any labour, employment, trade unions, industrial relations and matters arising from workplace, the conditions of service, including health, safety, welfare of labour, employee, worker and matters incidental thereto or connected therewith;

 

(b)      relating to, connected with or arising from Factories Act, Trade Disputes Act, Trade Unions Act, Labour Act, Employees’ Compensation Act or any other Act or Law relating to labour, employment, industrial relations, workplace or any other enactment replacing the Acts or Laws;


(c)      relating to or connected with the grant of any order restraining any person or body from taking part in any strike, lock-out or any industrial action, or any conduct in contemplation or in furtherance of a strike, lock-out or any industrial action and matters Connected therewith or related thereto;


(d)      relating to or connected with any dispute over the interpretation and application of the provisions of Chapter IV of this Constitution as it relates to any employment, labour, industrial relations, trade unionism, employer’s association or any other matter which the Court has jurisdiction to hear and determine;

 

(e)      relating to or connected with any dispute arising from national minimum wage for the Federation or any part thereof and matters connected therewith or arising there from;

 

(1)      relating to or connected with unfair labour practice or international best practices in labour, employment and industrial relation matters;

 

(g)      relating to or connected with any dispute arising from discrimination or sexual harassment at workplace;

 

(h)      relating to, connected with or pertaining to the application or interpretation of international labour standards;

 

(i)       connected with or related to child labour, child abuse, human trafficking or any matter connected therewith or related thereto;

 

(j)      relating to the determination of any question as to the interpretation and application of any-

(i)       collective agreement;

(ii)      award or order made by an arbitral tribunal in respect of a trade dispute or a trade union dispute;

(iii)     award or judgment of the Court;

(iv)     term of settlement of any trade dispute;

(v)      trade union dispute or employment dispute as may be recorded in a memorandum of settlement;

(vi)     trade union constitution, the constitution of an association of employers or any association relating to employment, labour, industrial relations or work place;

(vii)    dispute relating to or connected with any personnel matter arising from any free trade zone in the Federation or any part thereof;


(k)      relating to or connected with disputes arising from payment or non-payment of salaries, wages, pensions, gratuities, allowances, benefits and any other entitlement of any employee, worker, political or public office holder, judicial officer or any civil or public servant in any part of the Federation and matters incidental thereto;

 

Section 7 of the National Industrial Court Act 2006 provides:

  1. Jurisdiction, etc.

(1)    The Court shall have and exercise exclusive jurisdiction in civil causes and matters-

(a)     relating to-

(i)        labour, including trade unions and industrial relations; and

(ii)       environment and conditions of work, health, safety and welfare of labour, and matters incidental thereto; and

(b)    relating to the grant of any order to restrain any person or body from taking part in any strike, lock-out or any industrial action, or any conduct in contemplation or in furtherance of a strike, lock-out or any industrial action;

(c)    relating to the determination of any question as to the interpretation of-

(i)     any collective agreement;

(ii)    any award made by an arbitral tribunal in respect of a labour dispute or an organisational dispute;

(iii)    the terms of settlement of any labour dispute or organisational dispute as may be recorded in any memorandum of settlement;

(iv)   any trade union constitution; and

(v)    any award or judgment of the Court.

(2) The National Assembly may by an Act confer such additional jurisdiction on the Court in respect of such other causes or matters incidental, supplementary or related to those set out in subsection (1) of this section.

 

The afore-cited Constitutional and statutory provisions show the detailed jurisdiction of this court.  As stated by the Supreme Court in the case of  Skye Bank PLC v. Iwu, (2017) LPELR-42595 Per Aka’ahs JSC

… It was following on this decision that the Constitution was amended by the Third Alteration to the 1999 Constitution which recognized the Court as a specialized Court and provided in Section 254C the exclusive jurisdiction of the Court over all labour and employment issues.

Specialized Courts of limited and exclusive jurisdiction are seen as fulfilling a growing need for expertise in increasingly complex areas of law. The resolution of labour and employment disputes is guided by informality, simplicity, flexibility and speed. Specialized business Courts will no doubt play an important role in the economic development of the country.

Taking the heads of jurisdiction, as listed by the Constitution and the NIC Act, it is obvious that the jurisdiction of the court is narrowed to deal with employment and labour related issues.  From the Originating Summons and the Claims listed therein, employment and labour issues are far-fetched.  The issues raised and the reliefs sought basically border on taxation of income. From my reading of the 7 reliefs sought, 5 of them require the interpretation of the Personal Income Tax.  I have also considered the 2 Reliefs where the Labour Act was mentioned, and find that they do not seek any substantial relief that can stand and/or sustain the jurisdiction of this court over this action.  The two Reliefs only seek declarations as to the status of the claimant’s for the purpose of determining whether their income can be taxed, and goes no further to determine any employment or labour related rights.

Though the NIC Act and the Third Alteration Act to the CFRN provide for a situation when further jurisdiction may be vested in this court by an Act of the National Assembly, or by the fact that an Act or Law relates to labour, employment, industrial relations, workplace issues; I do not find that to be the situation in this case.  Counsel to the Claimant referred to the mention of the NIC as one of the courts of competent jurisdiction contemplated by the Pension Reform Act.  This Court has in the past assumed jurisdiction in matters relating to the application of the Pension Reform Act on issues of payment or non-payment of pension and other aspects of pension arising or connected with labour, employment, industrial relations and the workplace.  However, there is no such factor in the present case, to bring it within the jurisdiction of this court, as this case is principally on taxation.  There is no employment or labour relationship between any of the parties, and no employment or labour rights are in issue.  This is buttressed by the fact that all the defendants are bodies involved with taxation.

I therefore find that the Principal Reliefs in this suit bother on taxation, which is outside the jurisdiction of this court.  Having thus resolved issue 1 as propounded, there is no further need to address the remaining issues.  This is in line with judicial authorities that:

Where the issue of jurisdiction is raised in a matter, once the court determines jurisdiction in the suit, it need not proceed further to consider any other issue since there is no longer the jurisdiction for doing so. It follows therefore that it is only after that that it can proceed to consider other issues raised by the party invoking its jurisdiction (Umannah v. Obong Victor Attah  (2006) 17 NWLR (Pt.1009) 503 at 525 paras D-F, per Tobi JSC)

This has recently been restated by the Supreme Court in Skye Bank PLC v. Victor Anaemem Iwu (2017) LPELR-42595(SC) where it held that, per Peter-Odili JSC:

The situation on ground throws up the matter of jurisdiction of Court and it is trite that jurisdiction is the bedrock of any adjudication to the extent that it affects the very foundation of every cause of action before a Court of law. The reason is simple since without jurisdiction, the decision of a Court or tribunal without the requisite jurisdiction is a nullity, dead on arrival and of no effect whatsoever. The principle applies to Courts whether of trial or appellate. The description is very aptly made in the case of Utih v. Onoyivwe (1991) 1 SC (Pt. 1) 65 at 96-97 per Bello CJN thus”…jurisdiction is blood that gives life to the survival of an action in Court of law and without jurisdiction, the action will be like an animal that has been drained of its blood. It will cease to have life and any attempt to resuscitate it without infusing blood into it would be an abortive exercise.”  See also the decision of the Supreme Court of Nigeria in the old case of Madukolu v. Nkemdilim(1962) 2 SC NLR 341.

On the whole, I find that the subject matter of this suit falls outside the jurisdiction of this Court.  I therefore hold that this Court does not have jurisdiction to hear this suit.  The suit is hereby struck out on that basis.

 

Judgment is entered accordingly. I make no order as to cost.

 

 

 

……………………………………

Hon. Justice Elizabeth A. OJI, PhD

 

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