FG’s N5trn tax drive suffers setback

A major drive by the Federal Government to generate N5trillion from stamp duty tax suffered another major setback in Abuja on Thursday, following an order of a Federal High Court in Abuja the drive.

Justice Gabriel Kolawole in a judgment held that the tax drive was unconstitutional, illegal, unlawful and set the drive aside.

Delivering judgment in a suit filed by the Nigerian Bottling Company (NBC) against the Nigerian Postal Services (NIPOST) and a private firm, Kasmal International Services, the judge held that NIPOST, under the law was not a tax collecting establishment of the federal government.

The contract awarded by NIPOST to Kasmal International Service to collect the tax on its behalf through the compulsory use of N50 stamps on official receipts and other documents of the bottling company among others was voided and set aside.

Kasmal Internal Services is owned by a Senator representing Ogun East in the Senate, Prince Buruji Kashamu.

Justice Kolawole said, having carefully gone through the Stamp Duties Act 2004, he could not see where NIPOST was empowered by the law to impose stamp duty tax on the bottling company, banks and other various establishments.

He held that where the Act recommended 2kobo stamp to be affixed on certain categories of documents, the NIPOST cannot arbitrarily increase the 2kobo to N50 without first amending the Act through the National Assembly.

“A law is a law and has to be obeyed or implemented as it is. Section 89 of the stamp Duties Act, which recommended the use of adhesive 2kobo stamp on certain categories of receipts and document is the law in force.

“The NIPOST as a defendant in this suit acted unlawfully, illegally and ultra-vire by unilaterally increasing the 2 kobo stamp to N50 without any back up law and under the guise that 2 kobo stamps are no longer in circulation in Nigeria.

“Under section 89 of this Act, the NIPOST has no power to compel the plaintiff (NBC) to affix N50 stamp on its receipts and other documents. By this, NIPOST has no business or authority in sending Kasmal International Services on illegal errand to compel the plaintiff on the N50 stamp duty tax.

Justice Kolawole issued an order of injunction against the NIPOST and Kasmal International Service stopping them from further harassing, embarrassing, intimidating, coercing or disrupting the business operation of the company in the name of unlawful stamp duty tax until the extant laws are reviewed.

“The extant law is for 2 kobo stamp. No law has amended the Stamp Duties Act 2004 to increase it to N50. At any rate, NIPOST is not a tax collecting establishment and as such, cannot exercise any power not expressly donated to it by law.

He recalled a Court of Appeal, Lagos division judgment on the same issue adding that a federal high court, being a lower court cannot afford to depart from the precedent of a Superior Court as regards the judgment until such a precedent has been set aside by the highest court in the country.

NBC, through its counsel Mr Ayokunle Adesomoju, had dragged NIPOST and Kasmal International Services before the Judge praying for an order to declare the stamp duty tax as illegal, unlawful and ultra-vire.

The company also applied for a perpetual order of injunction stopping the two defendants from invading, harassing, embarrassing and disrupting its business operations across the country on the pretext of seeking internal revenue for the Federal Government.

The NIPOST through its counsel Salihu Wakawa had argued that it will be injustice for the court to grant the prayers of the plaintiff.