Wilbros Nigeria Limited V. Attorney General of Akwa Ibom State & Anor. (2007)
LawGlobal-Hub Lead Judgment Report
VICTOR AIMEPOMO OMAGE, J.C.A.
This is an appeal by Wilbros Nigeria Limited, the applicant to a motion filed in the Federal High Court sitting in Uyo – Akwa Ibom State. The motion arose from the writ of summons and statement of claim filed by the plaintiff in which he claimed against;
1) The Attorney General of Akwa Ibom State
2) Akwa Ibom State Board of Internal Revenue, thus:
“i) A declaration that the government of Akwa Ibom State has no right or authority to impose, charge or collect either directly or indirectly any pay as you earn tax, withholding tax, and development levy from the plaintiffs and its employees whether national or expatriates.
ii) An order of injunction to restrain the defendants, their agents and or privies from imposing, charging or collecting any pay as you earn tax, withholding tax and or development levy from the plaintiffs.
iii) An order of injunction to restrain the defendants, their servants, agents and or privies from seizing the property or interfering in any manner whatsoever with the plaintiffs operations in an attempt to enforce the payment of the said pay as you earn (PAYE) tax, withholding tax and or development levy.”
The respondents filed a memorandum of appearance, and the respondent filed an application for accelerated hearing which was withdrawn, the defendants/respondents filed their statement of defence; and hearing commenced on 23/1/04.
In the said statement of defence filed on 13/1/04, the defence raised in its paragraph 16 the issue of the jurisdiction of the court to hear the suit whereupon the applicant filed a notice for determination of the jurisdiction of the court. The trial court fixed hearing of the motion on notice for interlocutory injunction for 23/1/04. In it the plaintiff/applicant urged the court to hold that there are many serious issues to be considered in the substantive suit; one of which is whether the plaintiff/applicant is liable to pay withholding taxes, development taxes, PAYE deductions from its employees to the defendants/respondents especially against the backdrop of the fact that the plaintiff/applicant is not resident in Akwa Ibom State, but in Port Harcourt, Rivers State; and that the employers of the applicant went to Akwa Ibom State to do a temporary work. The said issue submitted for determination by the applicant in the motion is that the applicant are entitled to the protection of the court from extortion, freedom from payment of double compensation. Balance of convenience which the applicants submits is in their favour. The applicant seeks the maintenance of status quo pending the hearing of the suit. The respondents filed a counter affidavit in which they deny the averments contained in the affidavit and counter affidavit in support of the applicants’ motion. They argued at the hearing in response to the issue raised by the respondent of a preliminary objection to the jurisdiction of the Court … submitted that the issue controversy is whether or not the tax demanded of the applicant is a personal income tax accruable to the State or the Federal Government and that if the demand of respondent/applicant is a personal income tax or pay as you earn, development levy for the State, then the Federal High Court has no jurisdiction to hear the suit of the plaintiff.
In response the plaintiff object and say that the objection of jurisdiction by the respondent should have been brought by motion. The respondent submitted that the application objecting to the jurisdiction of the court need not be taken by a written motion, and that the objection may be made orally. In its ruling, which is the subject of this appeal, the learned court ruled thus per; the Hon. Justice G. E. Olotu on 17/3/2005 that the argument and submission of defendants are:
“(1) That the jurisdiction of this court to entertain tax matters under section 251(b) of the 1999 Constitution does not extend to matters relating to personal income tax due to States;
(2) That the jurisdiction of this court to entertain tax matters under section 251(b) of Constitution is limited to companies income tax and taxes subject to income tax of persons subject to the Federal Government;
(3) That the subject matter of this suit relates to personal income tax of the plaintiff’s employees resident in Akwa Ibom State and withholding taxes of individuals.”
The respondent’s counsel referred to the applicable law, or sections 2(1)(b) and 77 of the Personal Income Tax Act, and to the applicant’s writ of summons. The respondent also submitted that the issue of jurisdiction of the court may be made orally. See Icheoku v. Ebai (2001) WRNL III at 113. The plaintiff responded that the subject matter of this suit is illegal taxation imposed by the defendant on the plaintiff and further submitted thus:-
That the defendant exceeded its revenue portfolio by demanding development levy from the plaintiff, and that the expatriate staff demand from the plaintiff is outside the defendant’s portfolio of taxes.
That by Section 7(1)(b)(i) and C(3) of the Federal High Court Act, section 230 (1)(b) of the 1979 Constitution, this Court, Federal (High Court) has original jurisdiction to hear and determine matter pertaining to the taxation of companies which includes the development tax and expatriate levies imposed by the defendant on the plaintiff, plaintiff refused to pay. He submitted that in S.P.D.C. (Nig.) Ltd. v. H. B. Fisherman (2002) 4 NWLR (Pt.758) 505, pg 509; S.P.D.C. (Nig.) Ltd. v. Maxon (2001) 9 NWLR (Pt.719) 541, it was held that the defendant should have challenged the jurisdiction of the court by a motion on notice and referred to Onye v. Ikema (1999) 4 NWLR (Pt.598) 198 at 201. The plaintiff asked that the court may transfer the suit to an appropriate court if it finds that the objection was properly taken.
In the court below, the Federal High Court held that the objection to jurisdiction is improperly taken, and that the proper court with jurisdiction over the matter of pay as you earn is the High Court of a State the Akwa Ibom State to which it transmitted the plaintiff’s claim.
The plaintiff was not satisfied with the ruling of the court it filed three grounds of appeal, and formulated three issues namely;
“(a) Whether the learned trial Judge was right in declining jurisdiction to hear and determine the suit.
(b) Whether the learned trial Judge was right in holding that the subject matter of the suit which involved illegal imposition of non-existent and Federal taxes on the appellant was in respect of taxes and levies accruable to Akwa Ibom State.
(c) Whether the learned trial Judge properly evaluated the documentary affidavit evidence before him and if he did not whether that did not affect his said ruling subject of this appeal.”
I have considered the submission of the appellant in the brief filed on 13/01/06 and the issues for determination formulated by the respondent in his brief of the issues which read in part thus:
a) Whether the learned trial Judge was right in declining jurisdiction to hear and determine this suit having properly evaluated the evidence before the court.
b) Whether the learned trial Judge was right remitting the matter to the High Court of Akwa Ibom State for hearing.”
Clearly, the two sets of issues overlap each other only in semantics not in substance and the prompt answer to both sets of issues is yes, the learned trial court was right in declining jurisdiction for issues of the appellant (A) and (C). The same answer for issue A and B of the respondent/appellant’s issue the answers require some clarification in what the trial court decided. The trial court did not decide that the issue before the court included illegal imposition of taxes, and such matter was not before the court below. What is contained in the submissions of the defendant who raised orally the preliminary objections and which the trial court has carefully considered on the writ of summons filed by the appellant are in respect of revenue accruable to Akwa Ibom State in respect of taxes and levies due from the plaintiff’s employees to the Akwa Ibom State which is not in any way taxation on a company.” The contents of part of issue B of the appellants brief to wit “whether the learned trial Judge was right in holding that the subject matter of the suit which involved illegal imposition was ill infact of taxes and levies accruable to Akwa Ibom State.” The learned trial Judge certainly did not rule on any illegal taxes and denied that there was an illegal imposition of tax.
“My Lords, to identify the issue in controversy, a recourse has to be made to the claim of the plaintiff on page 2 in the court below. It states thus in the endorsement. The plaintiff’s claim as reproduced in the earlier page of this judgment the subject matter being a declaration that the Akwa Ibom State has no right, power or authority to impose, charge or collect either directly or indirectly any pay as you earn (PAYE) tax, withholding tax, development levy from plaintiff’s employees whether national or expatriate.” Two prayers for injunction to restrain the defendants.
To determine the issue the learned trial Judge of the Federal High Court considered the provision of the Personal Income Tax as contained in Decree No. 104: an imposition of tax and income chargeable in Section 2, 1(a). It provides for liability for the person who shall pay tax in a prescribed year and to the State where the person resides for that year.
The applicant has submitted that section 251 1(b) of the Nigerian Constitution 1999, prescribed that the payment of tax incident relating to, arising from an ancillary to matters mentioned in subsection of the Constitution are taxes due to the Federal Government, and that such matters are within the jurisdiction of the Federal High Court.
“My Lord, a recitation of the provision of section 251(1) of the 1999 Constitution of Nigeria will show the case in the submission of the appellant it reads;
“Notwithstanding anything to the contrary contained in this constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in civil cases and matters;
(a) relating to revenue of the Government of the Federation in which the said government … is a party;
(b) connected with, pertaining to, the taxation of companies and other bodies, etc.”
It is apparent from the writ of summons filed by the appellant that his claim is not in respect of a claim on the revenue of the Federal Government. Furthermore, the expressed letters to the appellant contained in the record of proceeding, dated 20/8/2001, 22/7/02, 3/7/2002, 22/7/2002 show that the respondent demand from the appellant is in respect of inadequate remittance of expatriate tax, which is personal PAYE (Pay as you earn for workers of the appellant who work within the Akwa Ibom State.
My Lords, I will probe no further lest I inadvertently prematurely determine the matter in dispute. It is clear that the confusion and error of the appellant is a fracture to recognize that section 251(1)(b) of the Constitution qualifies the provision of section 251. This, at the same time excludes the tax accruable to the State and the eligible court to determine issues of tax accruable to the Federal Government.
My Lords, I have considered and discussed in the judgment above the ruling of the Federal High Court on this appeal, I find no error in the decision and I affirm it in its entirety when I say yes to the principal issues in this appeal, that issue of tax before the Court is on personal income tax, PAYE and the eligible court to try the issue is the State High Court, Akwa Ibom State.
It is settled law, that an objection may be raised of the jurisdiction of the court at any stage of the proceedings and decided authorities do not rule out objections made orally. The court also allows such an application to be made by motion. The appeal fail, it is dismissed. The matter is directed to be remitted to the High Court Akwa Ibom State for hearing and final determination.
There will be costs of N2,500 in favour of the respondent.
Other Citations: (2007)LCN/2245(CA)
