FIRST BANK OF NIGERIA LIMITED -VS- KANO STATE INTERNAL REVENUE SERVICE- Tax Appeal Tribunal

IN THE TAX APPEAL TRIBUNAL

IN THE NORTH WEST ZONE

HOLDEN AT KADUNA

APPEAL NO: TAT/NWZ/KD/SDT/19/2021

BEFORE THEIR HONOURS:

SAMEERAH ABUBAKAR GWANDU----------------------------- CHAIRMAN

KABIRU ISA DANDAGO ----------------------------------------- COMMISSIONER

BAYERO A.S. MUHAMMAD ------------------------------------- COMMISSIONER

AHMED M. KUMSHE -------------------------------------------- COMMISSIONER

BETWEEN

FIRST BANK OF NIGERIA LIMITED -- APPELLANT

AND

KANO STATE INTERNAL REVENUE SERVICE -- RESPONDENT

JUDGMENT DELIVERED ON THE 12^TH OCTOBER, 2022

The Appellant in this case approached this Tribunal by a Notice of Appeal dated 23^rd August, 2021. The Appellant was dissatisfied with the Demand Notices dated 1^st February, 2021, 26^th February, 2021, 18^th March, 2021 and 24^th May, 2021 served on it by the Respondent requesting for records of deductions and remittances of Stamp Duties for the year 2016-2020 to conduct an Audit.

The Appellant was also dissatisfied with the Demand Notices dated 28^th June, 2021 and 3^rd August, 2021 demanding for the payment of ₦3,222,600,000.00 (Three Billion, Two Hundred and Twenty Two Million, Six Hundred Thousand Naira) being an alleged Best of Judgment deductions of Stamp Duties payable by the Appellant to the Respondent for the period between 2016-2020.

The Appellant’s Grounds of Appeal were as follows:

1. That the Respondent erred in Law when it issued Demand Notices dated 1^st February, 2021, 26^th February, 2021, 18^th March, 2021, 24^th May, 2021 and 2^nd June, 2021 requesting for records of deductions and remittances of Stamp Duties from 2016-2020 to conduct an Audit from 2016-2020 contrary to the provisions of Stamp Duties Act and other legislations governing the charging, deduction and payment of Stamp Duties.

2. That the Respondent erred in Law when it issued Demand Notices dated 1^st February, 2021, 26^th February, 2021, 18^th March, 2021, 24^th May, 2021 and 2^nd June, 2021 on the basis of parties involved in a transaction as against the parties executing the dutiable instruments contrary to the provisions of the Stamp Duties Act and other legislations governing the charging, deduction and payment of Stamp Duties.

3. That the Respondent erred in law when it issued Demand Notices dated 28^th June, 2021 and 3^rd August, 2021 for the payment of ₦3,222,600,000.00 (Three Billion, Two Hundred and Twenty Two Million, Six Hundred Thousand Naira) being an alleged “Best of Judgment” (BOJ) deductions of Stamp Duties payable by the Appellant to the Respondent for the periods of 2016-2020 pursuant to section 163 of the Constitution of the Federal Republic of Nigeria (CFRN) 1999 (as amended) and sections 89 and 89 A of the Stamp Duties Act as amended by the Finance Act, 2020.

The above Grounds of Appeal were all followed by their respective Particulars of Errors.

The Appellant appealed to this Honourable Tribunal seeking the following Reliefs. To wit:

1. A Declaration that upon the correct, precise, accurate and purposeful interpretation of the clear provisions of the Stamp Duties Act 2004 as amended by the Finance Act 2019/2020, the Appellant was not obliged to produce its records of Stamp Duties deductions and remittances to the Respondent to conduct an Audit.

2. A Declaration that upon the correct, precise, accurate and purposeful interpretation of the clear provisions of the Stamp Duties Act 2004, the instruments executed between the Appellant and its customers in Kano State were not instruments executed between two individuals but instruments executed between a corporate body and individual(s) .

3. A Declaration that upon the correct, precise, accurate and purposeful interpretation of the clear provisions of the Stamp Duties Act 2004, the Respondent was not empowered to recover Stamp Duties due from the Appellant between the periods of 2016 to 2020.

4. A Declaration that the Stamp Duties in the Demand Notices raised for the period 2016-2019 cannot be charged retrospectively.

5. A Declaration that upon the correct, precise, accurate and purposeful interpretation of the clear provisions of the Stamp Duties Act 2004 as amended by the Finance Act 2019-2020, the Appellant was not obliged to remit Stamp Duties deductions and remittances to conduct Stamp Duties Audit from 2016-2020.

6. An Order setting aside and or discharging the Demand Notices dated 1^st February, 2021, 26^th February, 2021, 18^th March, 2021, 24^th May, 2021 and 2^nd June, 2021 issued by the Respondent requesting for records of Stamp Duties deductions and remittances to conduct a Stamp Duties Audit from 2016-2020.

7. An Order setting aside and or discharging the Demand Notices dated 28^th June, 2021, 3^rd August, 2021 for the payment of the sum of ₦3,222,600,000.00 (Three Billion, Two Hundred and Twenty Two Million, Six Hundred Thousand Naira) being an alleged “Best of Judgment” deductions of Stamp Duties payable by the Appellant to the Respondent for the period covering year 2016-2020 for being ultra-vires, arbitrary and illegal.

The Appellant’s Notice of Appeal was annexed with the list of Witnesses, Written Statement on Oath and a number of exhibits.

On their part, the Respondent did not file a defence to the Appellant’s Notice of Appeal. Rather, before the commencement of hearing, the Respondent filed a Notice of Preliminary Objection dated 27^th September, 2021 and filed on 4^th October, 2021 challenging the Jurisdiction of the Tribunal to hear and determine the Appeal on the ground that the Appellant lacked the Locus Standi to file the Appeal. The Respondent also filed its address in support of the Notice of Preliminary objection dated 27^th September, 2021.

Thereafter, the Appellant filed its Appellant/Respondents’s Reply to the Notice of Preliminary Objection dated 8^th November, 2021 and filed on the same date following which, the Respondent filed its Reply on points of Law filed on 7^th December, 2021. Both Counsel thereafter, adopted their respective written addresses at the Tribunal’s Sitting on 7^th December, 2021.

The Respondent’s Notice of Preliminary Objection, and Address in support thereof, had been based on the following two (2) grounds:

(i) that the Appellant/Respondent lacks the locus standi to institute this Appeal against the Respondent/Applicant and,

(ii) that this Honourable Tribunal is not competent and therefore lacks the jurisdiction to hear and interpret the provisions of the Stamp Duties Act 2004 as amended and determine the Appellant Appeal as presently constituted. The Address, in support of its Notice of Preliminary Objection, also provided decided cases and statutes to justify its argument. It insisted that the FIRS Press Release was not an Act of the National Assembly and cannot therefore amend, alter or add to the provisions of the Stamp Duties Act 2004 as amended.

On his part, the Appellant/Respondent’s Counsel’s Written Address, in opposition to the Respondent’s Notice of Preliminary Objection which had contended that the Appellant/Respondent lacks the vires to file the Appeal and that the Tribunal lacks the Jurisdiction to hear and Determine the matter are premature, utterly misconstrued and liable to be dismissed. The Appellant Counsel also cited and relied on many decided cases and the provisions of relevant statutes to support its argument.

Thereafter, the Respondent Counsel further canvassed legal arguments on his Reply on points of law to the Appellant’s Written Address in opposition to the Preliminary Objection, with legal authorities to support the issues of determination on whether or not the Appellant has indeed the requisite locus standi to institute this Appeal and whether this Honourable Tribunal has jurisdiction to hear and interpret the provisions of the Stamp Duties Act, 2004 as amended and determine the Appellant’s Appeal as presently constituted.

The Tribunal in its Ruling delivered on 7^th February, 2021 held that the Appellant had Locus Standi and that the Tribunal has Jurisdiction to hear and determine the Appeal. The Preliminary Objection was accordingly dismissed by the Tribunal.

After the Ruling of the Tribunal, the substantive matter was adjourned for commencement of hearing. At the hearing of the Tribunal, the Appellant’s Counsel informed the Tribunal that they had filed an application for extension of time within which to appeal the Ruling of the Tribunal that dismissed the Preliminary Objection. The Tribunal granted the application and further adjourned the substantive matter for hearing.

At the resumed hearing on the 4^th April, 2022, the Respondent Counsel informed the Tribunal that he had filed a Notice of Appeal dated 16^th March, 2022 and filed on 31^st March, 2022 to the Federal High Court, Appealing against the Ruling of the Tribunal delivered on 7^th February, 2021.

The Appellant Counsel however, informed the Tribunal that they were served on the 31^st day of April, 2022. Upon an application brought pursuant to Order X Rule 3, of the TAT Rules, prayed for an Order for the Applicant to file out of time also attached thereto a 6 Paragraph affidavit deposed to by Hafsat Abdurrafuf and a Written Address.

Thereafter, the Tribunal granted the Leave sought for by the Applicant for extension of time to file the Notice of Appeal dated 17^th March, 2022, and the Applicant prayed the Tribunal to deem as properly filed the Notice of Appeal dated 16^th March, 2022 and filed on the 31^st March, 2022 deeming it properly filed and served. In the absence of any objection by the Appellant, same was granted by the Tribunal.

On the adjourned date, the Respondent’s Counsel were neither in Court nor did they notify the Tribunal of the reason for their absence despite being aware of the sitting of the Tribunal on that date. In view of the fact that there was no Order stopping the proceedings of the Tribunal pending the determination of the Appeal filed by the Respondent at the High Court, the Tribunal proceeded to hearing and took the testimony of the Appellant’s witness.

In his testimony, the Appellant’s witness, Micheal Ayo Adefila testified that he is a Tax Consultant with the Firm of Ijewere & Co., the Appellant’s Tax Consultants with an office situate at Hamza Zayyad House, Muhammadu Buhari way, Kaduna. He adopted his Written Statement on Oath which he identified by his name and signature. The Written Statement on Oath was admitted in Evidence.

In paragraph 4 of the Witness Statement on Oath, the Witness testified that the Respondent by its letter dated 1^st February, 2021 demanded that the Appellant produce records of Deductions and Remittances of Stamp Duties from 2016-2020 to enable it conduct an audit of the Stamp Duties payable by the Appellant to the Respondent. The Respondent’s Letter dated 1^st February, 2021 was tendered and admitted in evidence as Exhibit 1.

In paragraph 5, the Witness testified that his employer wrote a letter to the Respondent communicating the Appellant’s objection to the Demand on the grounds, amongst others that only the Federal Inland Revenue Service (FIRS) and not the Respondent had the power to demand the Document sought by the Respondent. The Letter of objection was tendered and admitted in evidence as Exhibit 2.

In paragraph 6, the Witness also testified that by its letter dated 26^th February, 2022, the Respondent insisted on its demand for the records of the deductions and remittances on the grounds that it was beneficial owner of the revenue derived from Stamp Duties collected within the territory of Kano State. The letter dated 26^th February, 2022 was tendered and admitted in evidence as Exhibit 3.

In paragraph 7, the Witness stated that his employer wrote another letter dated 8^th March, 2021 to the Respondent maintaining the Appellant’s objection on the demand of the Respondent in the light of the provisions of the Stamp Duties Act. The letter was tendered and admitted in evidence as Exhibit 4.

The Witness further testified in paragraph 8 that the Respondent by its letters dated 18^th March, 2021, 24^th May, 2021 and 2^nd June, 2021 persistently demanded for the records of the deductions and remittances on the grounds earlier mentioned. The letters dated 18^th March, 2021, 24^th May, 2021 and 2^nd June, 2021 were tendered and admitted in evidence as exhibits 5a, 5b and 5c respectively.

In paragraph 9, the Witness testified that his employer objected to the Respondent’s letters 18^th March, 2021, 24^th May, 2021 and 9^th June, 2021 via letters to the Respondent. The letters of objection were tendered and admitted in evidence as Exhibits 6a and 6b.

The witness in paragraph 10 stated that the Respondent by its letter dated 22^ndJune, 2021 demanded the payment of ₦3,222,600,000.00 (Three Billion, Two Hundred and Twenty Two Million, Six Hundred Thousand Naira) being an alleged “Best of Judgment” (BOJ) deductions of Stamp Duties payable by the Appellant to the Respondent for the period covering year 2016-2020 for being ultra-vires. The letter was tendered and admitted in evidence as Exhibit 7.

The Witness further testified in paragraphs 11 that his employers in its letter dated 1^st July, 2021 to the Respondent, his employer objected to the BOJ assessment. The letter was tendered and admitted in evidence as Exhibit 8.

In paragraph 12, the Witness stated that by its letter dated 3^rdAugust, 2021, the Respondent demanded the payment of the BOJ amount within 14 (fourteen) days and threaten enforcement of compliance. The Respondent’s letter was tendered and admitted in evidence as Exhibits 9.

The Witness in paragraph 18 of the exhibit stated that the Appellant was not statutorily required to remit or account for Stamp Duties to the Respondent under any legislation made by the National Assembly and that the Respondent should demand its share of Stamp Duties derived or generated in Kano State from FIRS.

The Witness also testified that the Appellant had disputed the BOJ of ₦3,222,600,000.00 (Three Billion, Two Hundred and Twenty Two Million, Six Hundred Thousand Naira) served on it by the Respondent.

After examination in Chief of the witness by the Appellant, the matter was adjourned for the Respondent to cross examine the witness.

On the adjourned date, the Respondent Counsel informed the Tribunal of their intention to resolve the matter out of court. Although the Appellant Counsel assured the Tribunal that it had not been approached by the Respondent Counsel and was not aware of any move as to an amicable resolution of the matter, the Respondent Counsel insisted that plans were underway and assured the Tribunal of their willingness to settle amicably out of Court.

However, after series of adjournments to enable the out of court settlement of the matter, the Respondent’s Counsel informed the Tribunal that they would neither file defence nor cross examine the witness. That led the Appellant’s Counsel to address the Tribunal and urged it to enter judgment in its favour and grant the reliefs sought by the Appellant.

The Appellant Counsel In marshalling his legal argument cited and relied on many decided cases and the provisions of relevant statutes to support its argument that the Respondent, having neither defended the matter nor cross-examined the witness means the Appellant’s Appeal becomes undefended and the evidence before the Tribunal becomes unchallenged because of the Respondent’s failure to defend the matter.

After a most careful consideration and scrutiny of all the issues raised for determination in this matter and the arguments marshalled, together with the cited legal authorities and statutes as canvassed, this Honourable Tribunal has formulated 3 (three) issues for proper determination of the case. To wit:

a. Whether the Appellant is responsible to the Respondent on Stamp Duties collected within the Territory of Kano State and for the remittance of same.

b. Whether there is sufficient evidence before the Tribunal to enter Judgment in favour of the Appellant”.

c. Whether by the evidence before the Tribunal, the Appellant has established its claim as to be entitled to the reliefs sought.

ISSUE NO.1 (ONE)

Whether the Appellant is responsible to the Respondent on Stamp Duties collected within the Territory of Kano State and for the remittance of same.

By virtue of Section 4 (1) of the Stamp Duties Act (SDA), it is only the Federal Government that has the competent authority to impose and collect duties upon instruments executed between a company and an individual, group or body of individuals.

These instruments referred above, no doubt include deposit slips, receipts and other documents issued by bank for any deposits. Where the bank collects duties upon instruments executed by individual and corporate body (individual and bank), such duties are by the above provisions, required to be remitted to the Federal Government or any authority designated by the Federal for that.

Section 111 of the SDA provides that all duties, fines, penalties and debts due to the Government of the Federation imposed by the SDA shall be recoverable in a summary manner in the name of the Attorney General of the Federation.

The Community effect of the above two provisions of SDA is that State Government has no power whatsoever on the collection of stamp on instruments executed between Individual and Corporate bodies and only the Federal can recover any duty not remitted or demand documents for audits.

ISSUE NO. 2 (TWO)

In proving its case, the Appellant called a sole witness and tendered exhibits which were admitted in evidence. The unchallenged testimony of the Appellant’s witness and exhibits admitted were the evidence before the Tribunal.

The position of law is that when evidence adduced by the plaintiff (Appellant in this case) established his claim and that evidence is not rebutted by the Defendant, the Plaintiff is entitled to Judgment and the Trial Court has a duty to enter Judgment in the Plaintiff’s favour.

Also, where evidence given by a party to any proceedings is not challenged by the opposite party who had an opportunity to do so, it is open to the Court seized of the matter to act on the unchallenged evidence. See the cases of ADEYEMI Vs LAN AND BAKER (NIGERIA) LTD (2000) 7 NWLR (pt 663) 33, USMAN V. ABUBAKAR (2001) 12 NWLR (PT. 728) 685 AT 706, OGOEJEOFO V. OGOEJEOFO (2006) LPELR- SC- 146/2001 (2006) 3 NWLR (PT. 966) 205) AND LEADWAY ASSURANCE CO. LTD. V. ZECO NIG. LTD (2004) LPELR- SC 4/2000.

In the case of NWOKOLO V. NWOKOLO (2018) LPELR- 45035 (CA), the Court of Appeal held that;

“a piece of evidence is said to be uncontroverted, un- impeached and unchallenged when the opposing party led no credible evidence to the contrary or discredited same as untruth under the heat of cross examination”.

In the instant case, the Respondent neither led any evidence in opposition to the testimony of the Appellant’s witness nor cross-examined the witness.

It is also a trite Law that where a party fails or refuses to respond or react to issues raised or submissions made by his opponent in his process, he is deemed to have no answer and therefore, conceded such points to his opponent. See the cases of ADESANYA Vs. OTUEWU (1993) 1 NWLR (PT.270) 414 AT 456, OKOYE Vs. NCF & CO (1991)6 NWLR (PT.199) 501 and AYOLOGU Vs. AGU (1998)1 NWLR (PT.532) 129.

Therefore, a respondent who fails to challenge the depositions of an applicant is deemed to have admitted the truth of the depositions in support of the application. See the cases of OGOEJEOFO Vs. OGOEJEOFO (2006) LPELR-2308 (SC) and MABAMIJE Vs. OTTO (2016) LPELR-26058 (SC).

The Court also in the case of A.G. OGUN STATE Vs. BOND INVESTMENT & HOLDINGS LIMITED (2021) LPELR-54245 (CA) held that the implication of failure of a party to file counter affidavit to controvert the averments in the applicant’s affidavit filed in support of the Originating Summons means that the party has admitted the facts deposed therein.

It is on record that the Respondent had been served with all the Processes in this case and was afforded the opportunity to defend itself but failed to utilise the opportunity. Instead, the Respondent informed the Tribunal of their decision not to file any defence or cross examine the Appellant’s witness. The Respondent is therefore, deemed to have admitted the Appellant’s claim.

Arising from the foregoing therefore, this Tribunal is bound by the established principles of law and the evidence as stated above.

ISSUE NO. 3 (THREE)

The general principle of law by the provisions of Sections 131, 132 and 133 of the Evidence Act 2011 is that, the burden of proving the existence and non-existence of a fact is on the party who would fail if no evidence is adduced in his favour. Similarly, it is also established principle of law that in civil cases, he who asserts bears the burden of proving that which he asserts and the success of a party seeking for declaratory relief depends on the strength of his case and not on the weakness of the defence. SEE NWAVU V. OKOYE (2008) LPELR- 2116 (SC), IMONIKHE V. UNITY BANK PLC (2011) 12 NWLR (PT. 1262) 624 AT 630, OSCAR V. ISAH (2014) LPELR – 23620(CA) AND FALEYE V DADA (2016) LPELR - 40297 (SC).

From the evidence before the Tribunal, the Appellant has discharged the burden of proving their claim and the balance of probability tilted in their favour.

Accordingly, this Honourable Tribunal hereby grants the following Reliefs to the Appellant as sought:

4. A Declaration that the Stamp Duties in the Demand Notices raised for the period 2016-2019 cannot be charged retrospectively.