Attorney-General of Lagos State v Attorney-General of the Federation (SC/245/2017)
This is a Report of an ongoing case now at the Supreme Court, between the Attorney-General of Lagos State and the Attorney-General of the Federation, concerning Lagos State’s claims of entitlement to net proceeds collected as duties, with regard to agreem
“IT IS THE POSITION OF LAGOS STATE GOVERNMENT, ...... LAGOS STATE GOVERNMENT IS ENTITLED TO THE NET PROCEEDS COLLECTED AS DUTIES, IN RESPECT OF AGREEMENTS BETWEEN COMPANY AND INDIVIDUAL OR GROUP OR BODIES OF INDIVIDUALS IN LAGOS, WHILE THE DEDUCTION OF =N=50.00 ON EVERY DEPOSIT IN RESPECT OF TRANSACTIONS BETWEEN INDIVIDUALS BOTH BY DEPOSIT AND ELECTRONIC TRANSFER, IS PAYABLE TO STATE GOVERNMENT”
Facts
The Joint Tax Board, which is a body responsible for the administration of taxes in the Federation, had since the year 2009 come out with the directive that the sum of =N=50.00 (Fifty Naira Only) shall be chargeable on every instrument of transaction with value of =N=1,000.00 (One Thousand Naira Only) and above.
The Commercial Banks in Nigeria have over some years complied with the directive of Central Bank of Nigeria on the implementation of this aspect of the provisions of Stamp Duties Act, and a certain sum was remitted to the Central Bank of Nigeria, while another certain sum are still with the Banks.
The Lagos State Government fully aware of the provisions of the Stamp Duties Act which empowers the State to collect the sum deducted in respect of transactions by individuals carried out within the territory of Lagos State, has written to the Commercial Banks including the Central Bank of Nigeria to render accounts of all monies due to the State Government and forthwith, remit the monthly deductions to the account of Lagos State.
His Excellency, Mr. Akinwunmi Ambode, the Governor of Lagos State has signed the Regulations 2016 pursuant to Section 115 of the Stamp Duties Act which was passed by resolution of the Lagos State House of Assembly under Section 116 of the Stamp Duties Act, Laws of Federation of Nigeria, 2004. The Regulation specifically made provision for electronic money transfer as dutiable, including deposit slips issued to customers.
Issues for Determination
The State Government, through the Office of Attorney-General of Lagos State, has approached the Supreme Court to invoke the original jurisdiction in an Originating Summons for the determination of the following questions:
A. Whether upon the coming into effect of the Constitution of the Federal Republic of Nigeria 1999, the Stamp Duties Act is an existing law within the meaning of section 315 of the Constitution, being a Federal Legislation which is deemed to be an Act of the National Assembly.
B. Whether by the provisions of the Stamp Duties Act Cap S8 Laws of the Federation of Nigeria, 2004 particularly Section 4(1) and (2) as well as other relevant Laws, the stamp duties form part of the public revenue of Government.
C. Whether by the combined provisions of section 4(1) of the Stamp Duties Act and section 163(b) of the Constitution, the Lagos State Government is entitled to the sum equal to the proportion of the net proceeds of the sum collected as duties in respect of instruments executed between a company and individual, group or body of individuals within the territory of Lagos State.
D. Whether the Federal Government has any power to collect and keep money paid as stamp duties on behalf of Federating Units, pursuant to Section 4(1) of the Stamp Duties Act, Cap S8 Laws of the Federation of Nigeria, 2004 contrary to clear provisions of Section 163(b) of the Constitution of Federal Republic of Nigeria, 1999 (as amended) .
E. Whether in view of the provisions of section 4(2) of the Stamp Duties Act, the Lagos State Government is entitled to collect duties in respect of instruments executed between persons or individual transactions within the territory of Lagos State.
F. Whether in view of the clear provisions of section 4(2) of the Stamp Duties Act, the Defendant through its banker, Central Bank of Nigeria (CBN), possesses the power and authority to collect and keep custody of the deducted sum remitted to it by the Commercial Banks operating in the territory of Lagos State from the 15th January, 2016 till date.
G. Whether by the provisions of Stamp Duties Act, especially Sections 115 and 116 of the Act, the Federal and State Governments are so empowered to issue Regulations for the proper implementation of the provisions of the Stamp Duties Act.
H. Whether by the combined provisions of sections 4(2), 115 and 116 of the Stamp Duties Act Cap S8 Laws of the Federation of Nigeria, 2004 and Regulations 4, 5, 6 and 7 of the Stamp Duties (Recovery and Collection) Regulations 2016, the Lagos State Government is entitled to collect duties of =N=50:00 (Fifty Naira) deducted by the Commercial Banks acting on the instruction of the banker to the Defendant, Central Bank of Nigeria, as Stamp Duty on every transaction as receipts on electronic transfer and/or teller deposit of monies from =N=1000:00 (One thousand Naira).
The Attorney-General of Lagos State is authorised by Section 111 of the Stamp Duties Act, Laws of Federation of Nigeria, 2004 to recover all duties including fines and penalties due to Lagos State Government under the Stamp Duties Act.
The position of the State Government, is to recover and collect all deductions of =N=50.00 on every transaction of =N=1,000.00 upwards by Commercial Banks, in respect of stamp duty on deposits already confirmed by the Court of Appeal as receipts of all transactions by individuals within the territory of Lagos State as provided for by the Stamp Duties Act.
In the Lagos State Government brief of argument filed on the 15th of January, 2018 the following issues were distilled for determination:
1. The Stamp Duties Act Cap S8 Laws of the Federation of Nigeria, 2004, being an existing law within the meaning of Section 315 of the Constitution of Federal Republic of Nigeria, 1999 (as amended), whether by the provisions of Section 4(1) and (2) of the Act as well as other relevant Laws the stamp duties form part of the public revenue of Government.
2. Whether the Federal Government has any power to collect and keep money paid as stamp duties on behalf of Federating Units pursuant to Section 4(1) of the Stamp Duties Act, Cap S8 Laws of the Federation of Nigeria, 2004, contrary to clear provisions of Section 163(b) of the Constitution of Federal Republic of Nigeria, 1999 (as amended).
3. In view of the clear provisions of Section 4(2) of the Stamp Duties Act and having the regard to Regulations 4, 5, 6 and 7 of Stamp Duties (Recovery and Collections) Regulations 2016, the Lagos State Government is entitled to collect =N=50:00 (Fifty Naira) deducted by the Commercial Banks acting on the instruction of the banker to the Defendant, Central Bank of Nigeria, as Stamp Duty on every transaction as receipts on electronic transfer and/ or teller deposit of monies from =N=1000:00 (One thousand Naira) in respect of instruments executed between persons or individual transactions within the territory of Lagos State.
4. Whether by the provisions of Section 111 of the Stamp Duties Act Cap. S8 Laws of Federation of Nigeria, 2004, the Plaintiff is not the only appropriate authority to sue for the recovery of any money, penalty or fine due to the State Government under the Stamp Duties Act Cap S8 Laws of the Federation of Nigeria, 2004.
Submissions
The Attorney-General of Lagos State submitted in his brief of argument before the Supreme Court, that by the clear provisions of Section 4(2) of the Stamp Duties Act, LFN, 2004, the State Government is entitled to collect duties in respect of instruments executed between persons or individuals, and the rates to be imposed may be agreed with the Federal Government. It is not in dispute that the State Government collects duties in respect of the provision of Section 4(2) of the Act, but recently there has been deduction of =N=50.00 on every deposit of =N=1,000.00 an above by Commercial Banks, which is premised on the circular issued by Central Bank of Nigeria instructing Commercial Banks to comply. The instruction was pursuant to the Federal Government Financial Regulation directive of 2009, which reviewed upward, the amount chargeable on Receipts in the Schedule to the Stamp Duties Act from four Naira to One Thousand Naira.
It was further submitted, that apart from the directive of the Central Bank of Nigeria acting on the Financial Regulation directive of 2009, the Stamp Duties Act by virtue of Section 92 places a legal obligation on any person to issue a stamped receipt. This further confirms the fact that the obligation to deduct, is statutory and not solely based on the Central Bank of Nigeria Directive.
By virtue of Section 89 of the Stamp Duties Act “Receipts” includes any note,memorandum, or writing whereby any money amounting to four naira or upwards, or any bill of exchange or promissory note for the money amounting to four naira or upwards, is acknowledged or expressed to have been received or deposited or paid, ……….” and also stated in the Schedule are the exemptions which clearly does not include receipts issued by Commercial Banks.
It is the position of Lagos State Government, that by the interpretation of Sections 4(1) & (2), 115, 116 of the Stamp Duties Act and other regulations thereto vis a vis the provision of the Constitution of the Federal Republic of Nigeria, Stamp duties form part of the Public Revenue of the Government, and Lagos State Government is entitled to the net proceeds collected as duties, in respect of agreements between company and individual or group or bodies of individuals in Lagos, while the deduction of =N=50.00 on every deposit in respect of transactions between individuals both by deposit and electronic transfer, is payable to State Government. The Central Bank of Nigeria that has custody of the remittances by the Commercial Banks, should pay to the State Government, the money that accrues from such deductions on individual transactions within the territory of Lagos State.