A Federal High Court sitting in Lagos has held that it is illegal for the Economic and Financial Crimes Commission (EFCC), to ‘assume the statutory powers for the assessment, collection and enforcement of payment of taxes in Nigeria.’
The court also held that the ‘Federal Inland Revenue Service (FIRS) is the only body empowered and vested with statutory duty for assessment, collection and enforcement of company tax in Nigeria’.
Justice Akintayo Aluko delivered this judgment in a suit brought before him by a firm, Wheatbaker Investment and Properties Limited (operators of Wheatbaker Hotel) against the EFCC and FIRS, who were listed as first and second defendants respectively.
The plaintiff, Wheatbaker Investment and Properties Limited, had approached the court for the interpretation of the relevant provisions of the Federal Inland Revenue Service (Establishment) Act, 2007 and the Taxes and Levies (Approved List for Collection) Act, 1998, wherein it asked for the determination of the following; “Whether having regard to the provision of Section 8 of the Federal inland Revenue Service (Establishment) Act, 2007 and Section 2(1) Taxes and Levies (Approved List for Collection) Act, 1998, it is the legal and statutory responsibility of the EFCC to undertake the assessment, enforcement and collection of taxes on behalf of the government of the Federal Republic of Nigeria.
“Whether having regard to Section 8 of the Federal Inland Revenue Service (Establishment) Act, 2007 and Section 2(1) Taxes and Levies (Approved List for Collection) Act, 1998, it would not amount to an illegality and double jeopardy to allow the EFCC and FIRS subject the Plaintiff to the same process of assessment, collection and enforcement of tax.
“Whether having regard to the fact that the statutory powers for assessment, collection and enforcement of tax (including the general and specific powers for the administration of tax) in Nigeria has been statutorily vested in the FIRS under Section 8 Federal Inland Revenue Service (Establishment) Act, 2007, the EFCC can legally exercise the same powers and whether the said powers can be delegated to or be exercised by the EFCC.
“Whether it is not ultra vires its powers and the usurpation of the powers of the FIRS for the EFCC to question or harass the Plaintiff or any of its agents, privies and representatives under any guise in regard to the assessment, enforcement of collection of tax.”
The plaintiff had also argued that should the above issues be resolved in its favour, it is entitled to be protected against any further harassment by the EFCC, and consequently asked for the following: “a declaration that the FIRS is the only body empowered and vested with statutory duty for assessment, collection and enforcement of company tax in Nigeria.
“A declaration that it is illegal for the EFCC to assume the statutory powers for the assessment, collection and enforcement of payment of taxes in Nigeria contrary to the combined provisions and effects of Section 8 of the Federal Inland Revenue Service (Establishment) Act, 2007 and Section 2(1) of the Taxes under Levies (Approved List for Collection) Act, 1998.
“A declaration that any attempt by EFCC to subject the Plaintiff to any form of tax assessment for the purpose of computing and enforcing payment of tax is ultra vires its powers under the relevant laws of State in Nigeria.
“A declaration that the EFCC’s interrogation of the plaintiff’s representatives, on January 13 and 27, 2021, and the subsequent unilateral assessment and computation of new and/or additional tax against the Plaintiff for any period whatsoever is illegal and unconstitutional.
“An Order of injunction restraining the EFCC and its agents, privies and representatives from any further interrogation, harassment, intimidation or coercion of the plaintiff and its agents into accepting (the EFCC) unilateral assessment and enforcement of tax after the plaintiff has complied with its tax obligations through the FIRS. And the sum of N10 million against the EFCC as General Damages.”
The EFCC in opposition to the suit filed a 29-paragraph counter-affidavit, and a further affidavit of 10 paragraphs.
In the counter-affidavit and further affidavit, the EFCC maintained that it is statutorily empowered to conduct an investigation and prosecute all economic and financial crimes with a view to identifying individuals, corporate bodies or groups involved and determining the extent of financial loss and such other losses by the government, private individuals or organizations.
It also contended that ‘being a special creation of the law’, it was given statutory powers to investigate economic and financial crimes, arrest and apprehend perpetrators of such crimes.
The anti-graft agency also argued that it received intelligence alleging economic sabotage and tax evasion and found same worthy of investigation. It added that the plaintiff filed the suit to shield itself against investigation and possible prosecution and urged the court not to give judicial support to the plaintiff.
Also, the second respondent, FIRS, in its counter-affidavit to the suit argued that it is the statutory body charged with the responsibility among others to assess and collect taxes on behalf of the Government of the Federation.
FIRS also stated that by the law establishing it, it is vested with the exclusive and sole responsibility over Tax matters (especially the assessment and enforcement of same) stressing that no other agency of government is empowered or entitled to undertake the same functions.
In determining the suit, Justice Aluko after examining all the processes filed by parties, the arguments canvassed by their lawyers, and the plethora of authorities cited, resolved all the issues in favour of the plaintiff.
The judge held: “I have examined the affidavit evidence and documentary exhibits before the court. What is in contention is the correct and true interpretation of the provisions of section 8 of the Federal Inland Revenue Service (Establishment) Act, 2007 and section 2(1) of the Taxes and Levies (Approved List for Collection) Act, 1998 over who between the first and second defendants, has the statutory mandate and responsibility to undertake the assessment, enforcement and collection of taxes on behalf of the Federal Government of Nigeria.
“The exhibit attest to the claim of the plaintiff that the commission unilaterally assessed and computed the taxes solely with the sole aim of causing or coercing the Plaintiff to pay such additional taxes as unilaterally assessed and calculated by the commission.
“Besides, the second defendant who has the statutory mandate and responsibility for the assessment, collection and enforcement of payment of taxes on behalf of the Federal Government of Nigeria stated in its counter affidavit that it had extensively dealt with and audited the financial documents of the Plaintiff and that it did not delegate or donate its powers of assessment and enforcement of collection/payment of taxes to the Commission.
“The second defendant stated explicitly that the EFCC went and acted beyond its statutory powers or authority by making further assessment and enforcement of payment of additional taxes against the Plaintiff.
“Apart from the established evidence before the court that the first defendant went outside its statutory mandate and usurped the statutory powers and responsibility of the second defendant, it has also failed to lay before the court any evidence or complaint to show that the plaintiff was involved In any tax evasion or fraud to have prompted its letter of invitation and interrogation of the Plaintiff’s staff and the call for the physical presence of the Plaintiffs managing director.
“There is nothing before the court to suggest that anyone ever made an allegation of tax fraud/evasion against the plaintiff or that there is any reasonable ground justifying the commission’s harassment of the Plaintiff’s officials.
“Going by the evidence before the court, I hold that the first defendant engaged in assessment of taxes based on cash flow into the Plaintiffs accounts to compute, assess additional taxes and deplored its coercive powers to compel the Plaintiffs representatives and its managing director to pay its unilaterally assessed new additional taxes under the guise of investigative activities in violation of section(s) 8 of FIRS (Establishment) Act and section 2(1) of the Taxes and levies (Approved List for Collection) Act, 1998 and therefore acted illegally without any lawful basis.
“I have seen, read and thoroughly gone through the provision of section 8 of the FIRS Act. It is true and correct that by the provisions of section 8 (e) of the Act, the 2nd Defendant is empowered by the Act to work in collaboration with the relevant law enforcement agencies like the 1st Defendant for the purpose of carrying out examination and investigation with a view to enforcing compliance with the provisions of the Act.
“There is however nothing before the court showing that the second defendant ever called the commission for the purpose of any collaboration.
“I hold the view that the acts and decision of the first defendant to subject the plaintiff to a second and another tax assessment and auditing, unilaterally covering substantially the same period which the second defendant admitted the plaintiff had already complied with payment of its taxes amount to double jeopardy, unfair, illegal and unconscionable.
“It is trite law that a public body like the EFCC invested with statutory powers must take care not to exceed or abuse its powers. It must keep within the limits of the authority committed to it.
“Coming from the above, the questions subscribed in the originating summons and the issue arising therefrom are well grounded.
“The lone issue formulated from the questions in the originating summons, is resolved in the affirmative in favour of the Plaintiff.
“To this end, question 1 is answered in the negative. Question 2 is answered in the positive. Question 3 is answered in the negative. Questions 4 and 5 are answered in the positive. All the questions are resolved in favour of the Plaintiff against the first defendant.
“Consequently, there is merit and substance in the instant case and judgment is accordingly entered for the Plaintiff as follows:
“That the declarations in reliefs (a) (b) (c) and (d) in the originating summons are hereby made.
“That an Order of injunction against the first defendant in relief (e) is hereby granted.
“That general damages assessed in the sum of N500,000 is hereby awarded in favour of the plaintiff against the first defendant.
“That cost of the action assessed in the sum of N200,000 is awarded in favour of the Plaintiff against the first defendant.”
(TNT)
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