Sampson Daniel Ukpong & Anor. V. Commissioner For Finance And Economic Development & Anor (2006)

LAWGLOBAL HUB Lead Judgment Report

ONNOGHEN, J.S.C.

This is an appeal against the judgment of the Court of Appeal, Calabar Division, in appeal No. CA/PH/267/97 delivered on 13th January, 2000 in which the court allowed the appeal of the present respondents.

The appellants as employees of Mobil Producing Nigeria Unlimited Eket, Akwa Ibom State appealed against the imposition on 12/8/96 of additional taxes on them. Earlier on the Akwa Ibom State Military Government forwarded a debit advice to the employers of the appellants in the sum of N117,806,877.5 as under collection of PAYE tax for 1989-1994 due from the employees (appellants). In reaction Mobil Producing Nigeria Unlimited (hereinafter called Mobil) wrote to the Government on 2/8/1996 arguing that it had no statutory duty to assess or determine the tax payable by its employees not being the taxing authority and that it was not liable for any tax underpayment in amounts it correctly deducted in accordance with official tax card duly prepared, endorsed and stamped by the Tax Authority and finally suggested that the Government should notify the employees directly. In compliance with the suggestion, the Government issued various demand notices to the 292 employees for additional taxes. The notices were issued by the Akwa Ibom State Commissioner for Finance and not the Commissioner for Internal Revenue a.k.a. the Chairman, Board of Internal Revenue, who the appellants contend has the statutory responsibility to impose taxes.

Following the imposition of the additional taxes, the employees – appellants – appealed against same to the Akwa Ibom State High Court, Uyo contending inter alia, that “the demand notices on liability for outstanding PAYE served on the appellants are a nullity in that the same are signed by the State Commissioner for Finance and Economic Development, whereas the person authorized by law to administer the finance law and to be responsible for assessment is the Commissioner for Internal Revenue.

The appeal was allowed by the High Court but the Court of Appeal overruled that decision resulting in the present appeal before this court. It is very important to note that the appellants did raise a preliminary objection to the competence of the appeal then pending before the Court of Appeal which objection was overruled in the judgment of that court.

In the appellants’ brief of argument filed on 13/11/2000 by Ekong Bassey, Esq, SAN and adopted in argument of the appeal on 18/9/2006, by Nella Andem-Ewa (Mrs.) of counsel, the following issues have been identified for determination; namely:

“(1) Whether the High Court of Akwa Ibom State hearing an appeal under the Finance Law by a tax payer against a wrongful imposition of tax or additional tax, exercises original (as opposed to appellate) jurisdiction and whether the appeal before the Court of Appeal was competent when no prior leave of the High Court or the Court of Appeal had been obtained.

(2) Whether the requirements of rule 9(1) of the Finance (Appeals) High Court Rules namely that ‘within 20 days of the service of the statement of grounds of appeal the Commissioner (Chairman Board of Internal Revenue) shall file in the Registry of the Court a written reply and one copy thereof which shall be signed by the commissioner or by his advocate and shall set forth in paragraphs consecutively numbered a concise statement of the facts and the points of law upon which the commissioner intends to rely, are satisfied by the mere filing of a counter affidavit contesting the affidavit filed by the appellants to amplify the points raised in the statement of grounds of appeal.

(3) Whether the respondents’ counter affidavit was competent as a written reply setting forth a conscience statement of the facts and point of law ‘upon which the commissioner intends to rely and whether the Court of Appeal was competent to suo motu invoke the principles of estoppel by conduct (i.e. standing by, waiver or acquiescence) When neither the respondents nor the court raised these points at the hearing.

(4) Whether the Court of Appeal was right when it held that the appellants’ appeal to the High Court was incompetent since the 292 employees of Mobil had 292 separate and distinct causes of action which could not be combined in one cause of action.

(5) Whether the Court of Appeal was right when it upheld the respondent’s contention that there was a conflict between section 57(1) of the Personal Income Tax Decree. 1993 and section 26(1) of the Finance Law of Akwa Ibom State and proceeded to void or nullify section 26(1) of the Finance Law whereas such issue was not raised before the High Court and was raised for the first time in the Court of Appeal without the leave of the Court of Appeal.

(6) Whether the learned Justices of the Court of Appeal were not wrong when they failed to note that the state commissioner for finance had no power to impose taxes and that his purported imposition of additional taxes was an act done without jurisdiction; accordingly, that it was unnecessary to fulfill any ‘condition precedent’ of applying under Decree 104 of 1993 to the appropriate Tax Authority to review an assessment which was ab initio illegal and merely purported.”

On the other hand, learned counsel for the respondents Akin Akintoye II, in the respondents brief of argument deemed filed on 3/4/2003 formulated five issues for determination as follows;

“Issue One: