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Stamp duty: CBN objects Kasmal International Services’ suit against disbursement of ‘trillions’ in commercial banks

The Central Bank of Nigeria (CBN) has filed a preliminary objection against a legal action instituted by Kasmal International Services which sought a court order barring it from disbursing all accrued deposits paid into the CBN NIPOST stamp duty collection account by all commercial banks.

Counsel for the CBN and the Attorney-General of the Federation, Chief Adeniyi Akintola SAN, told the Federal High Court Abuja that the purported appointment of the Plaintiff by the Nigerian Postal Service (NIPOST) was void at the onset on the ground that stamp duties charges on bank transfers and deposit is a tax that is exclusively administered by the Federal Government through the Federal Inland Revenue Services (FIRS).

NewsTimes previously reported that the court in Abuja had three weeks ago, declined restraining the CBN as requested the plaintiff’s lawyer, Dr Alex Izinyon SAN, in a motion ex-parte in the suit marked FHC/ABJ/CS/335/2024.

Justice Inyang Ekwo rather adjourned the matter and directed  Kasmal International Services to serve the processes on the defendants so they could show cause why its request against CBN should not be granted.

Stamp Duty claims

The applicant’s lawyer, Dr Alex Izinyon SAN submitted that his client was appointed by the Nigerian Postal Service to represent NIPOST in the collection of 50 naira on all receipts given by any bank or financial institution in acknowledgement of services rendered in respect of electronic transfers and teller deposits from N1,000 and above in compliance with the Stamp Duties Act and the Nigeria Financial Regulations 2009.

He added that the terms of the agreement between NIPOST and the plaintiff included the remuneration of N7.50 from every 50-naira deduction.

In his motion seen by NewsTimes, the lawyer stated that his client’s percentage has not been fully paid as agreed.

He argued that if disbursement is done to the exclusion of the plaintiff’s percentage, the plaintiff will be highly prejudiced and will suffer irreparable losses.

The motion reads,”

  • “The Plaintiff has become aware by public disclosures of the Governor of the 1st Defendant that after the initial payment of N10.367 billion to the Plaintiff which did not reflect the total value of all accrued deposits which ought to have been paid into the 1st Defendant NIPOST Stamp Duty Collection Account No. 3000047517 within the period of 1st January 2015 till 31st January 2020, further remittances were made from the DMBs’ NIPOST STAMP DUTIES ACCOUNTS to the 1st Defendant NIPOST Stamp Duty Collection Account No. 3000047517 7 in the tune of over N370.7 billion which were amounts that accrued within the period of 1st January 2015 till 31st January 2020.
  • “Currently, a total of 3.8 trillion naira stands in the Stamp Duty Collection Account ready for distribution between the Federal Government, State Government, Local Governments, the Federal Inland Revenue Service (FIRS), Coordinating Consultants and other bodies.
  • “That the Plaintiff’s 15% which is NGN 579,130,698,440 is part of the 3.8 trillion naira in the Stamp Duty Collection Account.
  • “The defendants/respondents have started taking steps to disburse and transfer the whole of the 3.8 trillion Naira in the Stamp Duty Collection Account without consideration of the outstanding payments due to the Plaintiff.”

The applicant prayed for the following orders against the CBN,

  • “An order of interim injunction restraining the 1st and 2nd Defendants, either by themselves, agents, privies, assigns or whatsoever so called, from disbursing, distributing, transferring, depleting or doing anything whatsoever with all accrued deposits paid into or which ought to have been paid into the CBN NIPOST Stamp Duty Collection Account by all Deposit Money Banks (DMBs) pending the hearing and the determination of the Motion on Notice.
  • “An order of interim injunction restraining the 1st and 2nd Defendants, either by themselves, agents, privies, assigns or any person or persons or body howsoever described or whatsoever so called, from attempting any transfer, payments, relocation, alienation, or tampering or doing anything whatsoever in respect of all accrued deposits paid into or which ought to have been paid into the CBN NIPOST Stamp Duty Collection Account by all Deposit Money Banks (DMBS) pending the hearing and the determination of the Motion on notice.”

In the alternative, the applicant also prayed for an “order of this Honourable Court directing the Defendants/Respondents to appear before this Honourable Court to show cause why the reliefs sought ought not to be granted.”

CBN, AGF objects

In their preliminary objection dated dated March 21,2024 and seen by NewsTimes on Monday, their counsel Akintola told the court that the agency contract the Plaintiff allegedly had with NIPOST is illegal, adding that only the Federal, State and Local Governments are entitled to sharing the revenue in the federation account.

He contended that NIPOST is not the revenue collection agency on stamp duties hence has no authority to appoint the Plaintiff to represent as collection agent for the Federal Government.

More so, he stated that NIPOST lack the powers to appoint the plaintiff as a revenue generating collector with respect to stamp duty hence the legitimacy of the underlying contract is faulty.

He referred the court to a subsisting judgement which did not bind CBN to any contract deals between NIPOST and the plaintiff.

He also urged the court to dismiss the case while faulting the plaintiff for not joining NIPOST as a defendant in the matter.

The lawyer urged the court to hold that It is the responsibility of the Accountant General of the Federation  to disburse, distribute, allocate or transfer all such accrued revenues in the Federation Account.

He stated,

  • “That on 17th April 2013 this Honourable Court delivered a judgement in suit no: FHC/L/CS/1 710/2023 wherein the 1st Defendant was directed to comply with the provisions of the Stamp Duties Act, NIPOST Act and the Central Bank of Nigeria (Establishment) Act, Cap C4 with respect to collection of stamp duties and not for the recognition and compliance with the terms and conditions of the purported Plaintiff’s agency contract with NIPOST which was never an issue in the said judgement.
  • “The non-joinder of NIPOST who purportedly appointed the Plaintiff as collection agent robs the Honourable Court of requisite jurisdiction to entertain the claims as presently constituted;
  • “The purported agency contract between NIPOST and the Plaintiff which is the basis for the authority of the Plaintiff is not placed before the Court, hence the Court cannot give effect to the said agency contract only because it was merely mentioned in passing in paragraph 5(e) of the Plaintiff’s Affidavit in support of the Originating summons.
  • “This Honourable Court is bound to consider the contract itself and the aim of the contract and this cannot be possible without the purported agency contract be placed before the Court.
  • “The plaintiff lacks the locus to seeking the reliefs as endorsed on the Originating summons as the purported agency contract appointing it is void ab initio.
  • “The revenue being challenged belongs to the whole Federation which collection and remittance goes to the Federation Account and any amount standing to the credit of the Federation Account can only be distributed among the Federal, States, and Local Government Councils in each State.
  • “The court lacks jurisdiction to entertain this suit, in relation to sharing the said money in the federation account.”
  • “The Stamp Duties Act makes no provision for the delegation of collection of stamp duties by any other body other than NIPOST under the NIPOST act and subsequently, the said stamp duties relate only”

NewsTimes reports that April 16 has been fixed by the court as the next adjourned date for hearing.

More insight

  • Stamp duty is an indirect tax imposed on several financial transactions.
  • In 2023, NewsTimes recalls that a former CBN governor, Godwin Emefiele revealed that the total revenue collected as stamp duty on behalf of the Federal Government in 6 years, between 2016 and 2022, was N370.686 billion.
  • The applicant approached the court to determine its percentage from the agreed terms with relevant agencies particularly NIPOST.

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