Aeromaritime Nigeria Ltd V. Lagos State Internal Revenue Board (2001)

LawGlobal-Hub Lead Judgment Report

 O. ADEREMI, J.C.A., 

By an originating summons, the respondent who was the applicant at the court below (High Court of Lagos State sitting at Lagos: coram Alabi J.) claimed against the appellant who was the respondent in that court as follows:-

(a) a declaration that by virtue of the provision of Section 50 and Section 56 of the Personal Income Tax Law Lagos State 1994 Cap 142, the applicant is empowered to distrain the the respondent of his goods chattels, land or premises etc for non-payment of Tax; being unremitted deductions in respect of P.A.Y.E. and W.H.T. under the said law or/and under Personal Income Tax Decree No. 104 of 1993.

(b) an order distraining the respondent of its goods, chattels, land, premises etc for non-payment of N10,445,637.75k (ten million for hundred and fifty-five thousand six hundred and thirty seven naira seventy-five kobo) being outstanding tax payable by the respondent to the applicant under the Pay As Your Earn (PAYE) deductions and withholding taxes for the year 1995 until the settlement of the tax liability.

The originating Summons was supported by a 17 – paragraph affidavit to which it attached some documents as exhibits. The appellant, in opposition, filed a 14 – paragraph counter-affidavit to which it attached a number of documents as exhibits. The appellant subsequently filed a Notice of Preliminary Objection to the suit contending that the court below lacked the jurisdiction to entertain the suit: The preliminary objection was argued and the learned trial judge dismissed it. In a considered judgment after entertaining arguments of counsel from both sides on the originating summons, the learned trial judge on the 2nd of October 1997 granted all the reliefs sought by the applicant.

Being dissatisfied with the judgment the respondent/appellant with leave of court entered an amended a Notice of Appeal which carries two grounds of appeal. Three issues were distilled for determinating and as set out in the appellant’s brief of arguments, they are as follows:-

(1) Can the High Court of Lagos State enter judgment to distrain for tax under the Personal Income Tax Law of Lagos State when there is a pending appeal against assessment before the Body of Appeal, Commissioners created under the law?

(2) was the judge right to adopt the originating Summons procedure in a claim to recover tax when there were sharp conflicting evidence in the numerous affidavits filed by the parties?

(3) was the judge right to make an order to distrain for tax when assessment was not yet final and conclusive as provided by the law?

For its part, the respondent raised, through its brief of argument, three issues for determination and they are as follows:-

(1) whether there is a pending valid appeal against tax assessment under the Personal Income Tax Law Cap. 124 before the commencement of this action in respect of the tax claimed?

(2) whether the learned trial judge erred in law when he decided the case on the Originating Summons and affidavit evidence alone?

(3) whether the learned trial judge was right to have made a distraining order against the appellant for non-payment of the tax claimed?

I shall take issues one and three together. On issue one the appellant argued that the State High Court cannot entertain a claim to distrain for tax when a notice of objection or an appeal against assessment is pending, it placed reliance on Section 47(2) of the Personal Income Tax Law of Lagos State 1991. According to it, ‘the effect and consequence of Section 47(2) of the afore-mentioned law are better explained by an examination of the provisions of Sections 36, 37, 38, 39, 40, 41, 42, 43 and 44 of the said law. Arguing, further, it contended that going by the facts of this case, the appeal in this matter could not be said to have arisen, under Section 43 of the Law because that appeal is still pending and no decision has been reached by the Body of Appeal Commissioners. It was its further submission that an action to recover tax under Sections 49 and 50 cannot be entertained by the High Court of Lagos State having regard to the provisions of Section 47 which stipulates that such recovery action must be put in abeyance pending the decision on the appeal by Body of Appeal Commissioners. It urged this court, on this 8 issue, to hold that the lower court was lacking in jurisdictional power to entertain a tax recovery action and make a distraining order against the appellant whilst its (appellant) appeal against assessment was still pending before the appeal Commissioners. On issue three, it was the contention of the appellant that having regard to the procedure for tax assessment as set out in Sections 36 to 43 of the Personal Income Tax Law the assessment placed on the respondent could not be said to be final and conclusive. And, therefore, an action will not lie to distrain for tax based on an incomplete assessment process, he founded this argument on Section 44(1) and (2) of the Law.