Eti-osa Local Government V. Mr. Rufus Jegede & Anor (2007)
LawGlobal-Hub Lead Judgment Report
MONICA. B. DONGBAN-MENSEM J.C.A, JP+
Before the High Court of Lagos State Coram Hon. Justice J. O. Pedro (Mrs.), Respondents took out an originating summons on the 1st August 2001, pursuant to the provisions of Order 42 Rules 1 and 3 of the High Court of Lagos (Civil Procedure) Rules of 1994.
Four issues were placed before the trial Court for determination and these are:-
“1. Whether Eti-Osa Local Government can collect taxes and levies outside the area Specified in Part III Taxes and levies to be collected by the Local Government, Taxes and Levies (Approved list For Collection) Decree No. 21 1998.”
“2. Whether the Respondent’s demand Notice dated 3rd July 2001 served on the Applicants shops B – 106 and B-107 Ikota Shopping Complex, Lagos is not in conflict with the provisions of Part III Taxes and Levies to be collected by the Local Government Taxes and Levies (approved list for collection) Decree No. 21 1998.”
“3. Whether Eti -Osa Local Government has the power and capacity to legislate, determine and demand whatever taxes and levies it deems fit from time to time outside the provisions of Part III Taxes and Levies to be collected by the Local Government Taxes Levies (Approved list for collection) Decree No. 21 1998.”
“4. Whether Eti-Osa Local Government BYE-LAWS NO. 10 1998 (Corporate Outfit Bye-Laws) is inconsistent with the provisions of PART III Taxes and Levies to be collected by the Local Government Taxes and (Approved list for Collection) Decree No. 21 1998.”
In a well considered Ruling, the learned trial Judge granted all the four reliefs sought by the Applicants.
The Appellants are irked by the decision of the trial Court and have come to this Court upon seven grounds of appeal – seeking two reliefs. The reliefs sought are:
“(a) An order setting aside the Ruling of the High Court delivered on the 15th January 2002,
(b) An order striking out and or dismissing the Respondent’s case.”
Five issues were formulated by the Appellant for determination and these are:
“1. Whether the Honourable Court had jurisdiction to entertain the suit from the facts and circumstances of this case in view of the provisions of the Local Government Law (No 16) 1976 as Amended by the Local Government (Consequential Amendments and Repeals) Edict No 7 of 1985.”
“2. Whether the mere fact that a particular type of tax is not mentioned in the list of tax contained in Decree No 21 of 1998 ipso Facto means that a level of Government (the Appellant) in this suit cannot levy and or collect such a tax.”
“3. Whether it is impossible for the Appellant to go outside the list of taxes contained in schedule III of Decree No 21 of 1998.”
“4. Whether there is a conflict between the Corporate Trade Permit Levy Bye Law and the provisions of Decree No 21 of 1998 such as to make the former Void in view of the allege conflict with the latter.”
“5. Whether the Appellant derives its power to impose the tax and levies only and exclusively form the provisions of Decree No 21 of 1998 and from no other source or base whatsoever.”
The issues were not each tied to the six grounds of appeal filed. Nonetheless, all the issues flow from the grounds of appeal.
The Respondents based their argument on the issues formulated by the Appellants but argued issues 2, 3, 4 and 5 together as all the issues address one and the same point, says the learned Counsel to the Respondents.
I agree with the submission of the learned Counsel to the Respondents that there are actually only two issues in this appeal. The issues are whether the suit of the Respondents was competent, in view of the fact that no pre-action notice was issued pursuant to the provisions of the Local Government (Consequential Amendments and Repeals) Edict No 7 of 1985.
The second issue is whether the Local Government can impose taxes outside the provisions of Decree No 21 of 1998 which now form the provisions of schedule II part III of the 1999 Constitution of the Federal Republic of Nigeria. A determination of these two issues will address all the issues raised by the Appellant. I intend to proceed in that manner in determining this appeal.
Issue One –
It is the submission of the learned Counsel for the Appellant that the Respondents failed to comply with the requirements of the provisions of section 168 and 169 of the Local Government Laws (No 16) of 1976 as amended by the Local Government (Consequential Amendments and Repeals) Edicts No 7 of 1985. The said law requires every intending Plaintiff proceeding against the Local Government, the Appellant in this appeal, to serve on the Local Government, one month’s Notice of its intention to sue the Local Government.
This, contends the learned Counsel to the Appellant is a condition precedent and non compliance takes away the competence of the trial Court to assume jurisdiction in the suit of the Respondents.
The learned Counsel cites some cases to buttress his submission that judicial proceedings no matter how well and beautifully decided or conducted, become a nullity once decided without jurisdiction. The cases are:
- Attorney-General of Anambra State and 13 Others Vs. Attorney-General of the Federation and 16 Ors (1953) 6 N.W.L.R. (Pt.302-737).
- Madukuoln Vs Nkemdilim (1962) 2 SCNLR 342 and
- Ajao Vs Popoola (1986) 5 N.W.L.R. (Pt.45-802).
The learned Counsel urges us to uphold the appeal on this issue and set aside the Ruling of the trial Court.
It is the response of the learned Counsel to the Respondent that the lack of pre-action notice is of no consequence for two reasons. The reasons are that the Appellant did not raise the point at the trial Court and that the Local Government Law (No 16) of 1976 has been repealed and the new law does not have a pre-action Notice. The learned Counsel cited the following cases and laws to support his submission:-
“1. Mobil Vs LASEAA (2002) 798 N.W.L.R (Pt.1)
2, Katsina LA VS Makudawa (1971)7 NSCR 119 and
- Section 176 (1) of the Local Government Law No 1 of 1980
- The Laws of Lagos State 1994 Vol. 1 at xxxvii 2003 Vol. At iv – 7.
- Local Government (Administration) Law No 7 of 1999 Cap L 73 Laws of Lagos State 2003.”
The contention of the learned Counsel to the Appellant that the Appellant did not participate in the proceedings at the trial Court and could not therefore raise the issue of pre-action notice is rather porous. The learned Counsel relies in vain on the following cases:-
“1. Attorney-General of Anambra State & 13 others V. Attorney-General of the Federation and 16 others (1993) 6 N.W.L.R. Part 302.
- Madukuolu Vs Nkemdilim.(1962) 2 SCNLR 342.
- Ajao V. Popoola (1986) 5 N.W.L.R. Part 45.”
Although these are authorities to say that the issue of jurisdiction is a fundamental and a threshold issue and can be raised even for the 1st time on appeal or even at the Supreme Court, the circumstances are different. In the instant appeal, the learned trial Judge found that the Appellants were duly served with the originating processes but elected to stay away from the Court. (Refer page 16-17 of the Records for this appeal).
In my humble opinion, a party cannot ignore the processes of a Court of trial and then come to the Appellant Court and fly the kite of jurisdiction for non-compliance with a pre-action notice a mere procedural requirements which can be resolved. The party must at least enter a conditional appearance which signals its protest and then follow up with a preliminary objection (refers Saude v.Abdullahi
(1989) 4 NWLR (Pt. 116) 387). If it fails to do that, then at the appellate Court, it must file a preliminary objection and with the leave of the Court, move the preliminary object first before the appeal is argued.
None of these steps was taken by the Appellant who can be rightly presumed to have waived the said requirement.
The apex Court had in the case of Mobil Producing Nigeria Unlimited V Lagos State Environmental Protection Agency and 3 Ors (2002) 18 NWLR (Pt 798) p.1 at 32, 41 clearly drawn the requisite distinction between a procedural requirement and an issue of substantive law in relation to the jurisdictional competence of a Court.
The Supreme Court declared that: –
“The procedure for invoking the jurisdiction of the Court should not be confused with the authority of the of the Court to decide matters which on the face proceedings have been properly presented in the formal way for its decision and which are within its jurisdiction.” (Refer Katsina Local Authority v. Makudawa (1971) 7 NSCC p. 119).
In further expatiation of the legal status of a pre-action notice, the Supreme Court held as follows: “A pre-action notice which is for the benefit of the person or agency on whom or on which it should be served is not to be equated with processes that are an intergral part of the proceedings – initiating processes. Rather, its purpose is to enable that person or agency to decide what to do in the matter, to negotiate or reach a compromise …” (Refer Mobil Producing (supra) at p. 36)
It has also not been shown that the Appellant joined this suit at the appellate stage as an interested party. The Appellant was the direct Defendant in the trial Court. It failed to raise the point at the earliest opportunity.
It is the learned Counsel and not the learned trial Judge nor any Judge at all, who is paid to fish out the loophole in the opponent’s suit. The solemn duty of the Judge is to be a dispassionate umpire.
The submission of the learned Counsel for the Appellant that the trial Judge should have raised the issue of non-compliance with pre-action notice is therefore untenable and misplaced. It is only when the issue of jurisdiction is so manifest, apparent ex facie the processes before the Court may the Judge raise it suo motu (Refer Awoyemi V Fasuan (2006) 13 N.W.L.R. (Pt.996) page 86 at 119. The Supreme Court had also, Per Ayoola JSC cautioned that:-
“A mechanical approach to the issue of competence of Court which tends to ignore the distinction between jurisdictional incompetence which is evident on the face of the proceedings and one which is dependent on ascertainment of facts, leads to error … “(Refer Mobil Producing supra at p. 31-32).
The issue of pre-action notice does not therefore avail the Appellant.
Issue Two
Under this issue are compressed issues 2, 3, 4 and 5 all of which relate to the question of the competence of a Local Government to make a law imposing taxes outside the provisions of the fourth schedule of the 1999 Constitution of the Federal Republic of Nigeria.
It is the submission of the learned Counsel to the Appellant that the power to impose taxes is inherent in every government which is free to make laws imposing any form of tax it desires at any time. The learned Counsel posits that the Appellant’s source of power to make law to collect tax or levy within its area of jurisdiction enures to it by the provisions of the Constitution of the Federal Republic of Nigeria of 1999. Decree No 21 of 1998 is therefore not the exclusive source of the power of the Appellant to create and impose taxes and levies.
Counsel maintains that the fact that a particular type of tax, is not mentioned in Decree No 21 of 1998 does not mean that such tax/cannot be imposed by the Appellant.) It is the opinion of the learned Counsel that Decree No 21 of 1998 is not, by its modeling, expected to be exhaustive of all taxes chargeable and collectable by the different levels of and tiers of government in Nigeria.
The learned Counsel maintains that in tax matters, the general principle are that what is not expressly prohibited is deemed allowed. The learned Counsel argues that to hold that the power of a level of Government to impose tax is only as are stated in Decree No 21 of 1998 would be to circumscribe, limit, and gag the initiative, discretion and exercise of power of a level of Government to impose taxes within the limit of its powers. It is the position of the learned Counsel for the Appellant that each tier of Government is free to impose taxes under whatever name depending on the social, economic and fiscal realities of the level of government at a particular point.
The learned Counsel for the Respondent cited the case of SPDC V BURUTU LOCAL GOVERNMENT (l998} 565 N.W.L.R. 318 as the authority to say that a Local Government can pronounce on the issue of taxation only as explicitly mandated by what is now in the 4th schedule of the 1999 Constitution of the Federal Republic of Nigeria.
The learned Counsel maintains that to the extent that the by-law which imposes the corporate levy does not come within the said schedule, it is invalid. Nor it is authorised by Part 111 of the 1998 Decree No. 21. Also cited in support is section 1(4) of the 1999 Local Government (Administration) Law which the learned Counsel submits, makes it clear that Local Governments in Lagos State are confined to what the 1999 Constitution mandates them to do.
By the provisions of section 1(i) of the 1998 Decree, couched in the terms “not withstanding anything to the contrary in any other law.” The learned Counsel submits that the Decree has covered the field as was held in the case of Attorney-General of Ogun V Abeniagba (1985) 3 N.W.L.R. (Pt. 395). Further, and upon the authority of Aderawos Timber Trading Company V FBIR (1966) L.L.R. 195 (Pt. 200), any statute which seeks to impose a tax must to do so in clear terms. Counsel urges that the 1976 Law having not clearly imposed the corporate out fit Permit tax nor does it authorite the Local Government to impose same, the Appellant is incompetent to so impose the tax.
While I agree with the learned Counsel to the Appellant that the purpose of Decree No 21 of 1998 is to delineate the respective sphere of authority for each of the three tier of Government in the Federal Republic of Nigeria, I differ on the point that such is the sole purpose of the said Decree, now Act in the democratic dispensation.
The learned Counsel for the Appellant argues that the corporate Trade Permit Levy was not “conferred on either the state or the Federal Government.” Also, that the Decree No. 21 of 1998 has not prohibited the imposition of the tax by the Appellant.
That, however, is not the issue. The crux of the matter is whether the Appellant has the authority to impose the said tax outside the items in schedule III of the 1999 Constitution and Part 111 of Decree No. 21 of 1998 and without reference to the Joint Tax Board as provided for in section 1 (2) of Decree No. 21 of 1998. Section 4 of the Decree established the Joint Tax Board.
In a well considered Ruling, the learned trial Judge held that the Appellant as Defendant, has no power to legislate and impose/he said tax. Part of the Ruling is reproduced for the ease of reference (at page 21 of the Records for this appeal.):-
“…The Respondents in this case which is the Eti -Osa Local Government has no legislative power of their own to impose or determine taxes and levies, outside the enable Law Decree No. 21 of 1998 which is of general application and which was promulgated to check indiscriminate levies and taxes imposed on the citizens by the three tiers of Government. Where such residual power to collect taxes is given by the State Government, to the Local Government, it must be in conformity with the provisions of the enabling Law. Thus the Power of the Local Government to make Bye Laws are subject to the enabling Law which gives the Local Government Power to collect taxes. Any attempt to act outside the ambit of Part III of Taxes and Levies (Approved list for collection) Decree NO.21 of 1998 will be futile.
I therefore hold that the Respondent that has no power to legislate and demand whatever taxes arid levies it deems fit outside the provisions of Taxes and Levies Approved List for Collection-Decree No. 21 1998.”
The learned trial Judge cited the case of DIN V Federal Attorney-General (1988) 4 N.W.L.R. (Pt. 87) page 151 to buttress this formidable Ruling. I cannot possibly fault this well garnered decision of the trial Court.
No doubt, government, especially of a nation and taxation are essential bed fellows. Indeed, it is said that Government has two sources of funding viz:- taxation and loan. (Refer per Harvey S. Rosen, “Tax1tion,” an article 2005).
It follows therefore that Government has the inherent power to legislate on and impose tax. However, this inherent power cannot be left at large in a huge federating union like our great nation Nigeria.
The central Government has the controlling machined. It is the orbit around which all the states of the federation are anchored. Distribution of the mass resources of the nation reposes with the central Government which alone necessarily has the inherent power to determine and legislate as to what kind and quantum of taxes and levies should be imposed by each tier of Government. The other tiers of Government are however part of the body which makes the recommendation. The Joint Tax Board is the said body. To leave taxation at large at the whim and caprice of the different tiers of government would expose the entire citizenry to undue multiple and over lapping taxes and levies.
Taxation should be a tool of social engineering, of societal class structural adjustment in the hands of a responsive and sensitive government.
This method can however be effective only in an economy where good records are kept, where the Government is truly responsible and answerable for the welfare of the people.
In a situation where the Constitution of the Federal Republic of Nigeria renders basic social services non- justiciable (chapter Two of the 1999 Constitution), the Government must be weary of over burdening the citizens with all manner of levies and taxes. It accordingly accords, with the spirit and principle of the Constitution that taxation should be controlled and vetted by the Join Tax Board.
While taxation is the life wire of Government expenses, from which a responsible government provides for the welfare of its people, over taxation resulting from a lessez-affaire tax doctrine could be counter productive.
The establishment of a Joint Tax Board is therefore a good attempt at coordinating the types and nature of taxations allowable within the peculiar circumstances of each unit of the Federation.” It is therefore in furtherance of the Federal nature of the 1999 Constitution that all taxes chargeable be channelled through the Joint Tax Board. Accordingly, I find nothing unconstitutional with the requirement of the local Government, the third tier of Government to root its taxes through the Joint Tax Board.
For these reasons, I find no good reason to overturn the decision of the learned trial Judge.
The Appellant has no inherent powers to legislate nor create and impose taxes outside the scope of Decree No. 21 of 1998 nor the 4th schedule of the 1999 Constitution.
This appeal is without merit and is accordingly dismissed.
A cost of N10, 000.00 is awarded to the Respondents.
Other Citations: (2007)LCN/2595(CA)
