Federal Board of Inland Revenue V. Integrated Data Services Limited (2009)

LawGlobal-Hub Lead Judgment Report

HELEN MORONKEJI OGUNWUMIJU, J.C.A.

This is an appeal against the ruling of Auta J., sitting at the Federal High Court, Benin Division delivered on 21-3-02 in which the learned trial Judge after hearing a motion to decide a point of law proceeded to dismiss the appellant’s claim. The Appellant was the Plaintiff at the lower court and the Respondent was the Defendant.

The facts which led to this appeal are as follows:

On 16/11/2000 the Appellant filed a writ against the Respondent endorsed as follows:-

“1. The Plaintiff’s claim is for N15, 202,397.00 (Fifteen Million, Two Hundred and Two Thousand, Three Hundred and Ninety Seven Naira Only) being unremitted penalty and interest on Value Added Tax (VAT) which accrued as a result of late filing of monthly VAT returns from January 1994 to October 1999.

2. The Total relief which the plaintiff now claims against the Defendant is the sum of N15, 202,397.00 being unremitted Value Added Tax penalty and interest between January 1994 to October 1999 which has now become a debt and payable by the Defendant to the Federal Government of Nigeria plus the cost of prosecuting this action.”

Paragraph 14 of the statement of claim states as follows:

“WHEREOF the plaintiff’s claim against the Defendant is the sum of N15,202,397.00 being unremitted Value Added Tax’s penalty and interest for the period of January 1994 to October 1999. Plus the cost of prosecuting this suit.”

The Respondent filed a statement of defence inclusive of counterclaim as follows:-

“WHEREFORE the Defendant Counter-Claims against the Plaintiff thus:

i. A declaration that the Plaintiff is not entitled to the penalty and interest imposed by the Plaintiff on the defendant as the conditions precedent under the VAT Decree No. 102 of 1993 has not arisen.

ii. A declaration that failure to render monthly Returns does not attract monetary penalty and interest under the VAT Decree No. 102 of 1993.

iii. A declaration that the penalty of “best judgment” Assessment in S. 14 and imposition of penalty and interest in S. 25 both of the VAT Decree No. 102 of 1993 cannot be imposed at the same time for the same neglect or default as it will be amount to double punishment contrary to the Constitution of the Federal Republic of Nigeria, 1999.

ALTERNATIVELY

iv. A declaration that this is a proper case for a waiver of all penalty found due if any, as the amount is accruing to the same Federal Government from whom the funds will be sought to effect the payment.”

Issues were joined by the parties. On 31/1/2001 the Respondent by motion on notice pursuant to Or. 25 r 2 (1) of the Federal High Court Civil Procedure Rules 2000 applied that points of law raised in paragraph 3 of its statement of defence and counter claim be set down for hearing.

The Appellant opposed the application, filed a counter-affidavit and the application was taken. The trial court found that the Appellant had no power to impose penalty and interest on the Respondent for flouting the provisions of the Decree. His Lordship accordingly dismissed the Appellant’s claim.

On 23/4/02 the Appellant filed a notice of appeal on one ground with particulars as follows:-

“The learned trial judge erred in law when His Lordship held that:

“It is therefore necessary to look at the VAT law for a solution and the relevant section is Section 14 of the VAT Decree, here under reproduced.

“S.14 ‘where a taxable person fails to render return or renders an incomplete or inaccurate returns, the Board shall assess, to the Best of its Judgment, the amount of tax due on the taxable goods and services purchased or supplied by the taxable person. It is clear from the provision of the above section that the Plaintiff has no power to impose penalty and interest on the Defendant for flouting the provisions of the Decree. The penalty therefore impose on the Defendant in this case is not supported by the VAT Decree No. 102 of 1993. It is to be observed that while the pleading of the Plaintiff is talking about returns, Exhibit FBIRI, the letter addressed to the Managing Director of the Defendant, the content as per paragraph two of the letter, accused the Defendant for failure to remit the tax collected as and when due which is obviously different from failure to render returns. I therefore find that the Plaintiff imposed the wrong penalty on the Defendant. The case of the Plaintiff is dismissed accordingly.”

PARTICULARS

The combined effect of Section 12, 13, 15 and 31 of the Value Added Tax Act No. 102 of 1993 as amended empowers the appellant to impose penalty for failure to render returns as at when due and also interest for failure to remit the tax within the specified period by the Act.”

On 13/11/03 leave was granted to the Respondent/Cross Appellant to file a cross appeal. The grounds of cross appeal shorn of their particulars are stated below:-

“1. The learned trial Judge erred in law and occasioned grave miscarriage of justice when he held that the Defendant is not a subsidiary of the NNPC contrary to S. 75 of the Evidence Act Cap 112 LFN 1990, Or 26 r 9 of the Federal High Court Civil Procedure, the pleadings and evidence on record.

2. The learned trial Judge erred in law when he held that the Defendant is not protected by the Public Officers Protection Act Cap. 379 LFN 1990.

3. The learned trial Judge erred in law when he held that the action was not statute barred.”

Parties filed and exchanged briefs of argument.

The Respondent filed a notice of preliminary objection and proffered arguments in aid of same in the Respondent’s brief. The Appellant answered the points raised in the reply brief. Let me deal with the preliminary objection first.

The objection of the Respondent to the hearing of the Appellant’s appeal are predicated on the grounds that the sole ground of appeal violates Or. 2 r (2) & (4) of the Court of Appeal Rules 2002 and that the ground and issue formulated thereon set up a different case from the case as pleaded and decided by the lower court.

Respondent’s counsel is of the view that the sole ground of appeal and Issue formulated thereon are outside the case tried and the ratio of the decision appealed against. He cited DANGOTE v. CIVIL SERVICE COMMISSION, PLATEAU (2001) 86 LRCN 1204 AT 1247. In The Appellant’s reply brief, counsel argued that the sole issue is consistent and fall within the scope of the ground of appeal filed and is a challenge to the ratio of the ruling. He cited EGBE v. ALHAJI (1990) 1 NWLR Pt. 127 Pg. 547 at Pg. 589.

My Lords, it is clear from the sole ground of appeal with its particulars showing the ratio of the ruling of the lower court already set out above that the ground of appeal challenging the ruling of the lower court was derived from the said ruling of the lower court and the sole issue distilled therefrom is properly before this court. Both parties joined issues at the lower court to put the question of law before the Judge for adjudication. The ruling of the learned trial Judge sought to answer that question. It is the reasons for the answer given by the learned trial Judge that the Appellant is challenging by the sole ground of appeal and issue distilled therefrom. See DALEK NIG. LTD. V. OIL MINERAL PRODUCING AREAS DEVELOPMENT COMMISSION (OMPADEC) (2007)2 SCNJ 218. The preliminary objection is misconceived and it is hereby dismissed.

The Appellant’s counsel Mr. J. I. Ajakaye who settled the brief identified one sole issue for determination as follows:-

“Whether the Federal Board of Inland Revenue has powers pursuant to Value Added Tax Act No. 102 of 1993 as amended to impose penalty and interest on the Defendant/Respondent for its failure to file Tax returns and remit the Tax collected as and when due?”

Respondent’ counsel A. P. A. Ogefere who settled the brief opined that the proper issue for determination is-

“whether the lower court was right when it held that the plaintiff imposed the wrong penalty on the defendant for failure to render monthly returns contrary to the plaintiff’s claim”.

In my view the difference in the issue as formulated by counsel on both sides is a matter of at the best different focus and at the worst semantics. I am of the view also that the issue as couched by learned Appellant’s counsel more pointedly highlights the question to which the Appellant claims the lower court gave a wrong answer. I therefore adopt the Appellant’s sole issue which to repeat is whether the Respondent has powers pursuant to the VAT Act 102 of 1993 as amended to impose penalty and interest on the Respondent’s failure to file Tax returns and remit tax collected as and when due.

Learned Appellant’s counsel argued that Value Added Tax is collected on behalf of the Federal Government by businesses and organizations which have registered with the Federal Inland Revenue Service, the operating arm of the Appellant’s local VAT office for VAT purposes. He explained further that all Government agencies, ministries, parastatals or wholly owned government companies, shall at the time of making payment to a contractor remit the tax charged on the contract to the nearest Value Added Tax office. Every vatable person must also make a return on form VAT 002. He has to fill in details all supplies made and received during the period and pay the net VAT due to the Local VAT office or claim a refund if Tax is owed to him. Also every Vatable person is to remit to the relevant local VAT office the net Vat payable which is the excess of the output Tax over the input Tax while filing the Vat returns.

Learned counsel submitted that the combined effect of S.12 (1) and S. 13 is to that when a taxable person is filing its monthly return, it will attach together with the return form VAT 002, the amount being remitted as VAT. The two go together. It is impossible to make a return without remitting VAT collected, and if the return form is to the effect that the taxable person is claiming a refund from the Board, the returns will say so, but in the instant case, the returns were never filed as and when due and therefore no remittance were also made as at when due in conformity with S. 12(1) and S. 13(1) of VAT Act No. 102 of 1993 as amended.

Learned Appellant’s counsel submitted that Sections 15(1) and 31 of the Value Added Tax Act No. 102 of 1993 as amended empowers the Appellant to impose penalty and interest on the Respondent for failure to file and remit the VAT collected to the Appellant as and when due within the time limit as stipulated by Sections 10, 12 and 13 of the Act.

Counsel argued that the learned trial Judge wrongly concluded that the case made by the Appellant was failure to render returns or render an incomplete or inaccurate return under S.14 of the Act in which case the Board would have been able to assess the Respondent on the “best of its judgment”. He opined that such was not the claim of the Appellant. Best of judgment assessment only arises where the taxable person does not file returns and remittance to the Board at all.

Counsel further argued that the Respondent filed returns and remitted VAT collected but always in arrears by several months contrary to the provisions of S.12 & 13 of the VAT Act and punishable under S.15 and 31 of the VAT Act. The Appellant made a claim to impose penalty for failure to render returns as and when due with a view to discourage taxable persons from engaging in fraudulent practices with tax payers money by trading with VAT collected before remitting same to the Federal Government. Counsel cited the following cases: (1) FEMI IKUOMOLA v. ALHAJI GANIYU ALANI IGE & ORS. (1998 – 1999) 1 NRLR Pg. 83; CAPE BRANDY SYNDICATE v. COMMISSIONER OF INLAND REVENUE IKB 64 at 71; MOBIL OIL v. BOARD OF INLAND REVENUE (1997) 1 NCLR 1 at Pg. 17; PHOENIX MOTORS v. NPFM BOARD (1993) 1 NWLR Pt. 272 pg. 718; AGWUNA v. A. G. FEDERATION (1995) 5 NWLR Pt. 396 Pg. 418.

Learned Respondent’s counsel agreed that paragraphs 6 – 8 of the Appellant’s claim show that the Appellant’s claim is for penalty and interest for late filing of VAT returns. Counsel submitted that in its defence and counter-claim, the Respondent had joined issues on the question of whether the Appellant has statutory power to impose penalty and interest as claimed. He submitted that parties are bound by their pleadings. He cited LAIBRU LTD. V. BUILDING & CIVIL ENGINEERING CONTRACTORS (1962) ANLR Pt. 2 Pg. 387 at 399 and NJEMANZE v. SHELL B. P. PORT HARCOURT (1966) ANLR at 10; AYOOLA & ORS. V. OGUNJINMI (1964) 1 ANLR 364 at 371; IDAHOSA & ANOR v. OROSANYE (1959) 4 F. S. C 166 at 173; NATIONAL INVESTMENT at 142.

Counsel argued that the position of the Appellant that a taxable person who renders late returns should be penalized by imposition of penalty and interest while a person who does not file returns and remit to Appellant at all be accorded best judgment assessment is an inhuman interpretation and a negation of the Act. He cited BOARD OF CUSTOMS AND EXERCISE v. BOLARINWA (1968) 1 NMLR 350 at 354.

He submitted that the provisions of the VAT Act are mutually exclusive and clear and that various sanctions under different circumstances are provided. He cited MOBIL OIL v. FBIR (1977) 3 SC pg. 53 at 74; ADERAWOS TIMBER TRADING CO. v. FBIR (1996) LLR 88 at 95.

My Lords, paragraphs 6 – 8 and 14 of the Appellant’s statement of claim are set out below:

6. “That for the period of January 1994 to October 1999 years of assessment the defendant failed, neglected and or refused to deliver its VAT returns, in the way and manner prescribed by the law.

7. That consequent upon the perpetual habit of the Defendants in filing VAT returns always between 4 to 43 months in arrears, the plaintiff decided to enforce the provisions of Decree 102 of 1993 as amended on the Defendant.

8. That at the conclusion of the exercise the Tax liability of N15, 202,397.00 comprising penalty and interest was established against the Defendant and due notice of assessment were served on the Defendant. The break down of the particulars of the said liabilities is as shown in the table below:

14. WHEREOF the plaintiff claims against the Defendant is the sum of N15, 202,397.00, being unremitted Value Added Tax’s penalty and Interest for the period of January 1994 to October 1999. Plus the cost of prosecuting this suit.”

Paragraph 8 is of particular interest as it shows the various months of returns, the months of submission of the returns, the numbers of months in arrears, the penalty, the interest on the penalty and the sum total for each month which consisted of the interest and penalty. It was the aggregate of the addition of penalty and interest between 1994 – 1999 which amounted to the sum of N15,202,379.00 claimed by the Appellant.

Methinks the statement of claim is quite clear as to the prayers sought before the court. The claim was for penalty and interest for failure to deliver VAT returns in the way and manner prescribed by law. What is the way and manner prescribed by law? As the learned trial Judge did, I shall have to look at the provisions of the Value Added Tax Act No. 102 of 1993. That was the substantive law when the cause of action arose in 1999. All amendments in the Act between 1994 – 1999 particularly the finance Miscellaneous Taxation Provisions No. 1, 2 & 3 of Act No. 30, 31 and 32 of 1996 respectively which amended the 1993 Act have been reflected.

The learned trial Judge was of the view on pg. 48 of the record and pg. 9 of the ruling that the applicable provision of the law is S. 14 which provides for where a taxable person fails to render returns or renders an incomplete and inaccurate returns.

I have looked into the VAT Act and I cannot bring myself to agree with the learned trial Judge that the claims of the Appellant tabulating instances of late filing of returns falls under the provision for failure to file returns or filing of inaccurate returns. Let us look more closely at the relevant sections.

S. 12(1) of the VAT Act provides as follows:-

“A taxable person shall render to the Board on or before the 30th day of the month following that in which the purchase or supply was made, a return of all taxable goods and services purchased or supplied by him during the proceeding month in such manner as the Board may, from time to time determine”

S. 15(1) If a taxable person does not remit the tax within the time specified in section 13 of this Decree, a sum equal to five percentum per annum (plus interest at the commercial rate) of the amount of Tax remittable shall be added to the tax and the provision of this Decree relating to collection and recovery of unremitted Tax, penalty and interest shall apply”

S.13 (1) (a) provides that a taxable person shall on rendering a return on Form 002 also remit the tax to the Board.

S. 31 of the same Act provides that” A taxable person, who fails to submit returns to the Board is liable to a fine of N5, 000.00 for every month in which the failure continues”

I agree with the submission of learned Appellant’s counsel that the combined effect of all the various sections of the VAT Act is that the returns and the money remittances for any month must be rendered to the board by the taxable person on or before 30th day of the month following that in which the purchase or supply was made. That is the law. Anything contrary to that procedure would be in violation of S. 12(1) of the Act.

Paragraphs 9 & 10 of the statement of defence state that the Respondent made individual monthly returns and block/combined returns. Particularly paragraph 10 of the statement of defence concedes quite clearly the fact that the Respondent was in arrears of filing returns and remittance of tax by several months between 1994 – 1999. The Respondent gave their own tabulation of the months in arrears.

In IKUOMOLA v. ALH. IGE supra the court held that tax paid later than the prescribed period would be regarded as not having been paid as and when due. See also RIMI v. INEC (2005) 6 NWLR Pt. 920 Pg. 56 at 84.

I am of the view that in accordance with S. 12(1) of the VAT Act of 1993, the return and remittance as and when due, the tax period was interpreted in S.42 the interpretation section to mean one calendar month commencing from the beginning of the month to the end of the month. Thus the tax collected during a tax period must be paid to the Board on or before the 30th day of the month following that in which the purchase or supply was made.

In AHMADU v. GOV. KOGI STATE (2000)3 NWLR Pt. 755 Pg. 502 at 519 per Muntaka-Coomassie JCA (as he then was) this court held as follows:-

“The court is not supposed to add any thing to the law if the wordings therein are clear and un-ambiguous. The natural meaning shall prevail. What it ought to be interpretation has no place where the words used in the legislation are clear. One should not lose sight of the fact that the purposes of interpretation exercise are principally to discover the intention of law makers. To achieve this goal one has to fall on the language or words used. Where the words used are clear, precise and unambiguous, they should be given their plain and grammatical meaning. Ifezue v. Mbadugha (1984) 1 SCNLR 427”

We are bound by that interpretation. Since tax is deemed to be a debt recoverable by action, I do not agree that interest and penalty imposed on such a debt constitute an inhuman interpretation of the law. The law imposes punishment for non remittance of Value Added Tax as and when due. That is the nature of tax legislation. See SHELL PETROLEUM v. FBIR (1996) 9 – 10 SCNJ 231.

At pg. 522 of Pt. 755 Ahmadu V. Gov. Kogi, Oduyemi JCA had the following to say on the nature of tax legislation.

“The law in question is, in its nature, a law which imposes pecuniary burden and is under the rules of interpretation, subject to the rule of strict construction. It is a well-settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language because in some degree they operate as penalties; the subject, is not to be taxed unless the language of the statute clearly imposes the obligation. Russel v. Scott (1984) A.C. 422 per Lord Simonds. Language must not be strained in order to tax a transaction which had the legislature thought of it, would have been covered by appropriate words.

In a taxing legislation, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption about a tax. Nothing is to be read in and nothing is to be implied. One can only look fairly at the language used. But the strictness of interpretation may not always enure to the subject’s benefit, for “if the person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind” – Per Lord Cairns in Partingon v. Attorney-General (1869) L. R. 4 H. L. 100 at p. 122 – See Maxwell on the Interpretation of Statutes 12th Edition by P. St J. Langan at p. 256.”

Furthermore, on interpretation of Tax Law, the Supreme Court in the case of MOBIL OIL NIGERIA LIMITED v. BOARD OF INLAND REVENUE (1977) 1 N.C.L.R. 1 at page 17 while delivering the majority decision – Mohammed Bello J.S.C. (as he then was) said

“In construing a statute, regard shall be given to the cause and necessity of the Act, then such construction shall be put upon it as would promote its purpose and arrest the mischief which it is intended to deter some companies have been manipulating their accounts with intent to hide their true assessable profits and in that manner have been avoiding tax which they ought to have paid. The purpose of Section 30A (of the Companies Income Tax) is to deter companies from engaging in such a fraudulent practice”.

I agree with learned Appellant’s counsel that the purpose of S. 15(1) and S. 31 of VAT Act No. 102 of 1993 as amended is to deter companies or taxable persons from engaging in fraudulent practice e.g. collecting VAT and keeping or trading with it for some time before remitting same to the Federal Government.

The above judgment was also followed by the Court of Appeal in the case of PHOENIX MOTORS LTD. V. NATIONAL PROVIDENT FUND MANAGEMENT BOARD (1993) 1 NWLR Pt. 272 Pg. 718, where Tobi JCA (as he then was) while delivering the lead judgment held that:-

“If a statute is revenue based or revenue oriented, it will be part of sound public policy for a court of law to construe the provisions of the statute liberally in favour of revenue or in favour of deriving revenue by Government, unless there is a clear provision to the contrary. This is because it is in the interest of the generality of the public and to the common good and welfare of the citizenry for Government to be in revenue and affluence to cater for the people. That is the only way it can distribute wealth to the people to facilitate development to all and sundry. And this is more so in a country such as ours, where most citizen open their mouths with all gluttony to receive assistance and welfare packages from government in all most all sectors of development in our very frail and febble economy. No court of law should lend its hands to a person or body bent on beating the efforts of Government at collecting revenue by relying on technicalities of the law with a frugal aim to cheat Government of its legitimate income.”

I am of the view that the Appellant was right in imposing penalty and interest on the Respondent in accordance with S. 15(1) of the VAT Act for being in violation of S. 12 and S. 13 of the Act.

With the greatest respect, it was completely misconceived of the learned trial Judge to conclude that S. 14 was the applicable law having regard to the claim of the Appellant and the admission of the Respondent in the statement of defence that their returns were not filed as at when due.

The learned trial Judge’s conclusion that “the plaintiff has no power to impose penalty and interest on the defendant for flouting the provisions of the Decree” is in any humble view wrong as the applicable law is S. 15 which provides for failure to remit tax within the time provided by law rather then S. 14 which provides for application of best judgment assessment where a company refuses to remit tax or hides its remittable tax.

With the greatest respect, I find it particularly objectionable the argument of learned Respondent’s counsel that because the Respondent is supposedly wholly owned by NNPC a federal government corporation and as the penalty imposed by law would be derived from the same federal government corporation to be paid to federal government then such penalty should not be imposed. The VAT is supposed to be used for the benefit of all Nigerians. It was extracted from companies and individual Nigerians for goods and services rendered. It is not to be illegally kept for months on end without giving same over as and when due for the use of the common good.

The fact that the Respondent is claiming to be a Federal Government agent is not a good reason to cheat Nigerians.

The sole issue adumbrated by Appellant’s counsel is resolved in favour of the Appellant.

Now to the cross appeal. The grounds of cross appeal have already been set out in this judgment. Respondent/Cross Appellant’s Counsel Mr. Ogefere Esq adumbrated two issues for determination as follows:-

“1. Whether in view of Section 22 of the NNPC Act Cap 320 LFN 1990, its pleadings and affidavits evidence in this proceedings the trial court was right in holding that the defendant was not proved to be a subsidiary of N.N.P.C.?

2. Was the trial court right when it held that “the action is therefore Dot Statute barred”?

Learned Cross Respondent identified 3 issues which are the same as those set out by the Cross Appellant except that they are a proliferation of the 2 issues identified by the Cross Appellant. I will adopt the issues as identified by Cross Appellant’s counsel.

The learned trial Judge on pg. 4 of the ruling and pg. 47 of the Record put his opinion on the two issues as follows:-

“It is pertinent to note that the Plaintiff in paragraph 4 of the Statement is a limited liability company, created by law. The defendant in their statement of defence paragraph 2 admitted paragraphs 1 – 5 of the statement of claim. It is therefore settled that the defendant is a limited liability company with the power to sue and be sued. The defendant also stated that it is a subsidiary wholly owned by the NNPC and therefore are entitled to be given the pre action notice of intention to commence this suit in accordance with section 12(2) of the NNPC CAP 320 LFN 90. It is to be observed that the defendant did not tender any document or law to show that the defendant is a subsidiary of the NNPC. Also section 2(2) of the NNPC Act did not state that Integrated Data Service Ltd (IDSL) is not; but a limited liability company as admitted under paragraph 2 of the statement of defence. It therefore follows that the defendant is not a public officer and therefore does not enjoy the protection of the Public Officers Protection Act CAP 39 of LFN 90. The action is therefore not statute barred.”

Learned Respondent/Cross Appellant’s counsel argued on the first issue that since there was no denial of the averment that Respondent/Cross Appellant is a wholly owned subsidiary of the NNPC then the Appellant/Cross Respondent is deemed to have admitted that fact and it need no further proof by virtue of S. 75 of the Evidence Act. Counsel argued that paragraph 1 of the affidavit stating the legal status of the Cross Appellant as a wholly owned subsidiary of NNPC and therefore protected by the Public Officers Protection Act was not challenged by the Appellant/Cross Respondent. Thus the court was obliged to act on the unchallenged evidence of the Cross Appellant. He cited AZEEZ v. THE STATE (1986)2 NWLR pt. 23 Pg. 541 at 545; OMOREGBE v. LAWANI (1980)2 SC 108; UBN LTD v. OGBOH (1995)2 NWLR Pt. 380, 647 at 669. Counsel argued that the lower court was obliged to take judicial notice of the Cross Appellant’s status as stated by the NNPC Act wherein the corporation was defined to include “any wholly owned subsidiary thereof”

Counsel submitted that the lower court erroneously held that the Cross Appellant did not tender any document to show that the Cross Appellant was a subsidiary of NNPC. In reply learned Appellant/Cross Respondent’s counsel argued that paragraph 2 of the Cross Appellant’s statement of defence has admitted to the fact that the Cross Appellant is a limited liability company who can sue and be sued and thus the learned trial Judge was right in acting on the admission of the Cross Appellant in this regard. He cited ADEYE v. ADESANYA (2001) 6 NWLR Pt. 708 Pg. 1 at Pg. 9. He argued further that a limited liability company cannot claim to be a public officer and to be entitled to the protection provided by the Public Officers Protection Act. He argued that the Cross Appellant is a separate corporate entity and even if the NNPC were proved to have controlling shares therein, it has a separate legal existence. He cited OKOMU OIL PALM CO. LTD. V. ISERHIENRHIEN (2001) 6 NWLR Pt. 710 Pg. 660 at Pg. 686.

The question now arises, what is the legal implication of the pleadings of the parties and the affidavit evidence filed in support and against the motion filed pursuant to Or. 25 r. 2(1) of the Federal High Court Rules 2000 to set down for trial the points of law raised in paragraphs 3, 5, 6, 8, 10, 19, 22 (i) – (iii) of the Cross Appellant statement of defence at the lower court.

Paragraph 1 of the affidavit in support of the motion filed by the Cross Appellant which was not denied by the Cross Respondent by counter affidavit states as follows:-

“That I am an employee of Integrated Data Services Ltd (the applicant in this suit) a wholly owned subsidiary of the Nigerian National Petroleum Corporation (NNPC) and therefore protected under the Public Officers Protection Act Cap 379, LFN 1990”

Paragraph 5 of the Cross Respondent’s affidavit specifically denied only paragraphs 3, 4, 5, 6, 7, 8 and 9 of the affidavit in support of the motion. There is no gainsaying that points of law can be pleaded. The general principles of law are as follows:-

Only facts material to the law shall be stated not the legal consequences. See NWADIARO v. SHELL (1990) 5 NWLR Pt. 150 Pg. 332- 4; ONAMADE v. ACB (1997) 1 NWLR Pt. 480 Pg. 123.

A Plaintiff’s averment of facts must be met frontally and categorically. Once a traverse is not met directly, the Defendant is taken to have admitted it. See OWOSHO v. ADEBODELE DADA (1984)7 SC 149.

However, does a close look at the affidavit show that the Cross Respondent was obliged to make a rebuttal of paragraph I of the affidavit in support of the motion set out above? I think not. Pt. V. Sections 78 – 131 of the Evidence Act regulates documentary evidence. The combined effect of S. 86, 87, 88, 89, and 90 of the Evidence Act is to the effect that no extraneous matter shall be relevant in an affidavit.

Extraneous matters include an objection, a prayer, a legal argument or a legal conclusion. The assertion in paragraph I that the Cross Appellant is a wholly owned subsidiary of NNPC and protected as a Public Officer is both a matter of fact and law. It is not merely a matter of fact to be deposed to in an affidavit. If a party deposes to an erroneous legal state of affairs, there is no need for a rebuttal from the other side.

The fact that a party does not rebut a legal assertion in an affidavit does not make it so. I cannot agree with learned Cross Appellant’s argument that the learned trial Judge was wrong not to have taken judicial notice of the fact that Cross Appellant is a wholly owned subsidiary of NNPC. I have looked at S. 22(1) the Interpretation Section of the NNPC Act Cap 320. “Corporation” is defined therein to mean the NNPC and to include “any wholly owned subsidiary thereof and, subject to the provisions of this Act includes the Inspectorate.” There is no schedule to the Act which states the fact that the Cross Appellant is one of the wholly owned subsidiaries of NNPC. The learned trial Judge cannot be faulted for not taking judicial notice of what was not contained in the Act. In the circumstances of this case, the Cross Appellant was obliged to support the legal averment in the affidavit that it is a wholly owned subsidiary of NNPC with an exhibit showing its legal status. The legal conclusion contained in paragraph 1 of the affidavit that the Cross Appellant is a public officer did not also need any rebuttal. It is either there is a law which makes it a public officer or not. If one exists, it was the duty of the Cross Appellant to attach it by way of exhibit to the affidavit in support of the motion. The Cross Appellant in paragraph 2 of its statement of defence admits to being a limited liability company. In any event, the status of a company can only be proved by tendering its certificate of incorporation. See BANK OF BARODA v. IYALABANI LTD. (2002) 7 SCNJ 287; NNPC v. LUTIN INVESTMENTS (2006) 1 SCNJ 131. The tendering of the articles and memorandum of incorporation is also the best evidence of ownership of a company. See. IYKE MED. V. PFIZER (2001) 10 NWLR Pt. 722 Pg. 540.

If the Cross Appellant is a limited liability company, can it claim to be a public officer?

It has been settled that there is a difference in the legal status of a public corporation and its subsidiaries. While a public corporation can claim to be a public officer, its subsidiaries especially limited liability companies cannot claim to be public officers. The legal status of a public corporation and those of a limited liability company registered under CAMA makes them distinct legal entities. See OKOMU OIL PALM CO. LTD v. ISERHIENRHIEN supra; ASO MOTEL KADUNA LTD v. DEYEMO (2006) 7 NWLR Pt. 978 Pg. 87. I agree with the learned trial Judge in his Lordship’s finding earlier set out in this judgment that the Cross Appellant is not a public corporation. The first issue is resolved against the Cross Appellant.

The second issue is whether the trial court was right when it held that the action was not statute barred. The argument of the Cross Appellant on this issue is predicated on the assumption that the Cross Appellant being a public officer, enjoys on the one hand the protection offered by S. 2 (a) of the Public Officers Protection Act Cap 379 LFN 1990 and on the other hand the protection of being “wholly owned subsidiary of the corporation and under the protection offered by S. 12 (1) of the NNPC Act.” The foregoing paragraph of this judgment on the cross appeal has clearly stated what I humbly believe to be the legal status of the Cross Appellant to wit that the Cross Appellant is a limited liability company simpliciter and is not a public officer. It also has not proved itself to be a wholly owned subsidiary of NNPC to enjoy the protection offered by the NNPC Act.

The argument of learned Cross Appellant’s counsel that the definition of “person” under S. 2(a) of the Public Officers Protection Act includes a limited liability company which the Cross Appellant has admitted to be is with the greatest respect completely misconceived. Iguh JSC in IBRAHIM v. JSC (1998) 14 NWLR Pt. 584 Pg. 1 at Pg. 38 defined “any person” referred to in S. 2(a) of the Public Officers Protection Act as both artificial and natural persons alike. His Lordship laid down the decision law that the Act or law (in the states) protects as distinct entities in certain cases “public officers” holding “public offices” in the “public service” of the state or Federal Government.

A limited liability company as created under CAMA cannot be wholly owned by a single entity by law. Arguably even if wholly owned or partially owned by government surely it cannot be part of the “public service”. If learned counsel’s interpretation is allowed, then a public officer would mean any juristic person including any limited liability company or even more absurd any natural person like Nweke, Ajayi or Bala on the street. The 2nd issue is also resolved against the Cross Appellant.

In sum, this appeal succeeds. The ruling of the lower court delivered on 21st March 2002 is hereby set aside. In essence, the issues of law raised in the Respondent’s motion have all been resolved in favour of the Appellant. We have been asked to make further or other orders as the court may deem fit to make in the circumstances. A proper consequential order has to be made in the circumstances moreso as the case was not decided on the facts at the lower court. I am of the view that this case be sent back to the lower court to try the issue of contentious fact of the specific period wherein the Respondent was allegedly in default of filing and remitting its VAT returns as at when due and the amount of penalty and interest due for those period. I do hereby so order. I make no order as to costs.

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Other Citations: (2009)LCN/3105(CA)