Nigeria: More Trouble as States Drag FG to Supreme Court Over Stamp Duties Collection

It now appears that more states of the federation have woken up from slumber and are now determined to  achieve fiscal federalism, following the institution of a legal action against the federal government over its continued collection of stamp duties in the country.

The state governments in the suit filed last month at the apex court is claiming specifically that the right to collect stamp duties on financial transactions between persons or individuals in a state is the exclusive reserves of the states, hence the apex court should intervene and restrained the federal government from further collection of the monies.

Also, a few months ago, the state governments had dragged the same federal government to court over its failure to remit to the federation accounts, trillions of naira received from recovered assets.

In the same stretch, the Rivers State government, last week, secured a court victory over the federal government in the collection of Value Added Tax (VAT) in the state.

Justice Stephen Pam of a Federal High Court in Port Harcourt had in a judgment delivered on august 9, held that the Rivers State Government and not the federal Inland Revenue Services (FIRS), had the right to collect VAT, Personal Income Tax in the state.

Justice Pam, in the judgment, subsequently restrained the Attorney General of the Federation and FIRS (1st and 2nd defendants) from collecting VAT in Rivers and directed the state government to take charge of the duty.

As a result, the Lagos State government, has also commenced move to stop the collection of VAT by the FIRS in the state and it is believed that in the nearest future, more states would follow suit.

In the current legal action dated August 19, 2021 and filed 24th, the 36 state governments in an 18-paragraph affidavit deposed to by one Chijioke Chuku, Director Legal Services of the Nigerian Governors Forum (NGF), claimed that FG’s collection of stamp duties and retention of same in financial transactions between individuals was contrary to the provisions of the law.

Plaintiffs in the suit marked SC/CV/690/2021, claimed that between 2015 to 2020, the federal government had collected and retained a total sum of N 176,067,400,000,00 from stamp duties on individual persons’ transactions within their respective states.

The Attorney General of the Federation and Minister of Justice, Malam Abubakar Malami, was the sole defendant in the suit filed by Mr Yusuf Alli, SAN ,on behalf of the plaintiffs.

Alli stated that his client resorted to the court action after efforts to resolve the issue with the defendant failed to yield desired result. The plaintiffs attached a copy of their letter dated September 16, 2020 to the federal government asking it to stop both the FIRS and NIPOST from collection of the said monies accruing to them as exhibit A.

According to the senior lawyer, some of the issues brought before the apex court for determination were that whether “having regard to the mandatory provisions of Section 4(2) of the Stamp Duties Act Cap. S8 Laws of the Federation of Nigeria (LFN), the plaintiffs (all the state attorneys) are not the sole authority to administer and collect stamp duties on all transactions involving individuals/persons within their respective states?”

Alli also wanted the court to determine, “whether having regard to the provisions of Section 4(2) of the Stamp Duties Act Cap. S8 of the Laws of the Federation of Nigeria read in conjunction with the provisions of Section 163, items 58 and 59 of the Second Schedule part I and items 7 (a) and (b) of the second Schedule part II and other provisions of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), the defendant (Malami) could claim, retain, distribute or in any other manner deal with the monies or sums collected as stamp duties on individual persons transactions within the respective states of the plaintiffs without reference to, concurrence of, input or agreement of the plaintiffs?”

Furthermore, the plaintiffs wanted to know whether or not they were “entitled to 85% of all stamp duties collected on electronic money transfer levy, on electronic receipts or electronic transfer for money deposited in deposit money banks and financial institutions, on any type of account to be accounted for and expressed to be received by the person to whom the transfer or deposit is made in the plaintiffs’ respective states”.

In the event, the questions raised by the plaintiffs were determined in their favour, even as they urged the Supreme Court to declare that they “are the sole authorities entitled to administer and collect stamp duties on all transactions involving individuals within their respective states.

“A declaration that the defendant is not entitled to collect, administer, or keep the proceeds of any stamp duties on transactions involving individuals within the respective states of the plaintiffs or any manner interfere with the Plaintiff’s right and authority in the administering the provision of Section 4(2) of the Stamp Duties Act Cap. S8 Laws of the Federation of Nigeria,” they prayed.

“A declaration that the plaintiffs are entitled to all the sums of money collected by the defendant as stamp duties through whatever source or means in their respective states from 2015-2020 and thereafter till the time of the judgment of this court with respect to individual persons’ transactions.

“A declaration that the plaintiffs are entitled to 85% of all stamp duties collected on electronic money transfer levy, on electronic receipts or electronic transfer for money deposited in deposit money banks and financial institutions, on any type of account to be accounted for and expressed to be received by the person to whom the transfer or deposit is made in the plaintiffs’ respective states.”

Consequently, they wanted the court to make an order directing the AGF to account for and pay back all monies collected by way of stamp duties on individual persons’ transactions within the respective states of the Plaintiffs from the period 2015-2020 and thereafter till the time of the judgment.

Specifically, they wanted the court to order the defendant “to pay over to the Plaintiffs all the sum of monies amounting to One Hundred and Seventy Six Billion, Sixty Seven Million, Four Hundred Thousand Naira (N 176,067,400,000,00) representing ascertained and admitted collected stamp duties on individual persons’ transactions within their respective states for the period of 2015- 2020 and thereafter till the time of the judgment of this court or any other sum as the plaintiffs may be found entitled by the court.

“An order of perpetual injunction restraining the defendant by himself, privies, agents or any persons by whatever name or how so ever called from appointing anyone for the purpose of collecting Stamp Duties on individual persons’ transactions within the respective states of the plaintiffs henceforth.”

The defendant, however, has 21 days to respond to the suit starting from the date it was served.

Alex Enumah in Abuja

 

Follow us on: