Abuja, July 8, 2023: The Federal High Court, Abuja has declared the charges and deductions to the tune of over N16 million from the accounts of the Centenary City Freezones Company and Prime Properties FZE by the Federal Inland Revenue Service(FIRS) as illegal and unconstitutional.
The deduction were regarded as withholding and value added tax.
Justice Donatus Okorowo, in a judgment, on July 7, 2023 in Abuja held that the plaintiffs were exempted from the payment of all federal, state and local government taxes, levies and rates by virtue of their registration and operations within the Centenary Economic City Zone.
He said this was in accordance with the provisions of Section 8 of the Nigeria Export Processing Zones Act.
Justice Okorowo, consequently, restrained the FIRS and Standard Chartered Bank of Nigeria from further charging, levying or deducting any tax, levies or duties from the two companies.
The judgment delivered on June 23 was in respect of suit no FHC/ABJ/CS/78/2022 filed by the plaintiffs and argued by their counsel, Nkemakolam Okoro.
According to the certified true copy of the judgment dated July 5, 2023, the judge directed the defendants to refund forthwith, N14, 616, 289.06 as withholding tax and N2,164, 659.00 as value added tax, illegally deducted from the accounts of Prime Properties FZE (2nd plaintiff), domiciled with Standard Chartered Bank (both Naira and Domiciliary) between 2015 to 2018.
Justice Okorowo held that; “Section 10 (2), the Export Processing Zone Act that grants licence to operate within the zone, by the authority shall constitute registration of the company within the zone.
“The 2nd plaintiff is an enterprise within the Centenary Economic City freezone. Section 8 of the Act provides that ‘operating within a zone shall be exempted from all federal, state and local government taxes, levies rates and rates.
“As submitted by the plaintiff counsel, the provision of Section 8 of the NEPZA Act is couched in mandatory form, hence ought to be complied with, by the defendants, especially given the use of the word shall in the status,” he said.
The judge also directed the FIRS to pay the 2nd plaintiff N5, 034, 284.42 being 10 per cent interest on N14, 616, 289. 05 deducted from the 2nd plaintiff’s account as VAT, by the FIRS from 2015 to 2020.
He equally made an order directing the defendants to pay exemplary damages in the sum of N5 million jointly and severally in favour of the plaintiffs.
FULL JUDGEMENT
IN THE FEDERAL HIGH COURT OF NIGERIA
IN THE ABUJA JUDICIAL DIVISION
HOLDEN AT ABUJA
ON_FRIDAY THE DAY OF JUNE, 2023
BEFORE HIS LORDSHIP, HON. JUSTICE D. U, OKOROWO
JUDGE
SUIT NO:
BETWEEN:
1. CENTENARY CITY FREEZONE COMPANY
2. PRIME PROPERTIES FZE } PLAINTIFFS
1. FEDERAL INLAND REVENUE SERVICE }
2. STANDARD CHARTERED BANK OF NIGERIA DEFENDANTS
LIMITED
JUDGMENT
The Plaintiffs brought this action by Originating Summons dated 24%
January 2022 and filed on 25″ January 2022. The summons is brought
pursuant to Sections 8, 10 and 12 of the Nigerian Export Processing Zone
Authority Act; Order 3 Rule 6 of the Federal High Court Civil Procedure
Rules 2019, and under the inherent jurisdiction of this Honourable Court as
preserved by Section 6(6) (A & B) of the Constitution of the Federal
Republic of Nigeria, 1999 (as amended). In the summons the Plaintiff seek the determination of the following
i
questions, namely:
A DECLARATION that the Plaintiffs are exempted from the payment
of all Federal, State and Government taxes, levies and rates, by
virtue of their registration and operation within the Centenary
Economic City Free Zone, in accordance with the provisions of
Section 8 of the Nigeria Export Processing Zones Act.
2. that the conduct of the Defendants by charging and
deducting the sum of Fourteen Million, Six Hundred and Sixteen
Thousand, Two Hundred and Eight-Nine Naira, Five Kobo (N14, 616,
289: 05) as withholding Tax and the sum of Two Million One
Hundred and Sixty Four Thousand, Six Hundred and Fifty-Nine Naira
(N2, 164, 659: 00) between 2015 — 2018, as Value Added Tax,
against the following accounts of the 2™ Plaintiff domiciled with
Standard Chartered Bank; account number 0002068329 (Naira) and
0002068336 (Domiciliary) and account number 0002615541 (Naira)
and 0002061539 (Domiciliary), is illegal, unlawful, wrongful,
unconstitutional, null, void and of no effect whatsoever.
AN ORDER of this Honourable Court directing the 1% Defendant to
refund forthwith the sum of Fourteen Million, Six Hundred and |
Sixteen Thousand, Two Hundred and Eight-Nine Naira, Five Kobo
(N14, 616, 289: 05) as withholding Tax and the sum of Two Million
One Hundred and Sixty Four Thousand, Six Hundred and Fifty-Nine
Naira (N2, 164, 659: 00) as Value Added Tax, illegally deducted from
the accounts of the 2″ Plaintiff domiciled with Standard Chartered
Bank between 2015 2018.
AN ORDER of this Honourable Court directing the 1% Defendant to
pay to the 2™ Plaintiff the sum of Five Million, Thirty Four Thousand,
Two Hundred and Eighty-Four Naira, Forty-Two Kobo (N5, 034, 284:
42) being 10% interest on the sum of Fourteen Million, Six Hundred
and Sixteen Thousand, Two Hundred and Eight-Nine Naira, Five Kobo
(N14, 616, 289: 05) deducted from the 2″ Plaintiff’s accounts as
VAT, by the 1% Defendant from 2015 to 2020.
5. AN ORDER of this Honourable Court directing the 1% Defendant to
pay to the 2″ Plaintiff 10% interest on the sum of Fourteen Million,
Six Hundred and Sixteen Thousand, Two Hundred and Eight-Nine
Naira, Five Kobo (N14, 616, 289: 05) deducted from the 2″ Plaintiff’s
accounts as withholding Tax, and the sum of Two Million One
Hundred and Sixty Four Thousand, Six Hundred and Fifty-Nine Naira
(N2, 164, 659: 00), deducted from the 2″ Plaintiff’s account as VAT
from 2020 till Judgment is delivered.
AN ORDER of injunction restraining the Defendants whether by
themselves, staff, employees, agents, servants and/or privies is
howsoever called, from further charging, levying or deducting any
tax, levies or dues from account of the claimants domiciled with the
Defendant, in contravention of the provisions of Section 8 of the
Nigeria Export Processing Zones Act.
7. Punitive and Exemplary damages in the sum of N250, 000, 000: 00
(Two Hundred and Fifty Million Naira) against the Defendants jointly
and severally.
The cost of this action assessed at N5, 000, 000: 00 (Five Million
Naira) against the Defendants jointly and severally.
9. Interest on the entire judgment sum, calculated at the rate of 10%
from the date the judgment is delivered till the judgment sum is fully
liquidated by the Defendant.
10. Other reliefs as the Honourable Court may deem fit to grant in the
circumstance of the case.
In support of the Summons is a 40 paragraphs affidavit deposed to on
behalf of the Plaintiffs by Ikechukwu Michael Odenigwe, Managing Director
of the Centenary Free Zone Company the 1% Plaintiff in this suit and the |
Zone Management of the Centenary Economic City Free Zone, where Prime
Properties Free Zone Enterprises the 2″ Plaintiff herein operates. Attached
are Exhibits PPFZE 1-17. The Plaintiffs also filed a written address.
The lone issue formulated by the Plaintiffs in the address is:
“Whether the Plaintiff given the suffusing facts and the
circumstances of this case, they are entitled to the reliefs |
sought in this action. Question 1 and 2 for determination.”
The 1 Defendant in reaction to the Plaintiffs case filed 24 paragraphs
counter affidavit deposed on their behalf by Hauwa Ibrahim, a legal officer |
in the Legal, Advisory and Litigation Department of the 1% Defendant.
Attached is exhibit FIRS 1. The 1% Defendant also filed a written address.
The following issues for determination were formulated in the address,
namely:
Whether or not by proper interpretation and combine
effect of the provisions of Sections 8, 10 and 12 of the
Nigeria Export Processing Zones Act, the 1% Defendant
has the power to charge the Plaintiff any Federal Tax
such as Value Added Tax and withholding Tax in
Nigeria on any business carried out outside the zone.
2. Whether or not from the circumstances and the facts is |
right in charging the Plaintiff a withholding Tax on |
accrued Interest to the sum of Fourteen Million, Six
Hundred and Sixteen Thousand, Two Hundred and
Eight-Nine Naira, Five Kobo (N14, 616, 289: 05)
3. Whether or not from the circumstance and the facts of
this case the Plaintiffs are entitled to the reliefs
sought.”
The 2” Defendant in reaction to the case of the Plaintiff filed 4 paragraphs
counter affidavit to which is attached exhibit SCBC 1. The 2™ Defendant
formulated by the Plaintiffs in the Originating Summons.
In reaction to the 1% Defendant’s counter affidavit and address, the
Plaintiffs filed 35 paragraphs “Plaintiffs’ Further Affidavit in response to the
Counter Affidavit of the which is attached exhibits A — C.
The Plaintiff also filed “Reply on Points of Law to the written address of the
Defendant”.
The Plaintiff also reacted to the Defendants counter affidavit with the
filing of 30 paragraph further affidavit in response to the counter
affidavit of the Defendant” and “Reply on Points of law to the written
address of the 2″ Defendant”.
I have perused the processes herein identified which are incorporated as |
part of this judgment. It will be unwieldy to reproduce the addresses of the
parties and the contents of the affidavit when they from part of the records
of this Court.
It is trite law that action commenced by Originating Summons are resolved
by issues submitted for determination by the Plaintiff. See Shoboyede Vs
Ministry of Land and Housing, W.N. (1974) 5 SC P.13; Obansanya V.
Babafemi (2000) 15 NWLR (Pt. 689) P.1 and Achu C.S.C. Cross River State |
(2009) 3 NWLR (PT 1129) P475. I shall therefore on the state of the law
rely on issues formulated by the Plaintiff and in addition adopt also the 3″
issue for determination formulated by the 1% Defendant as issues for |
determination in this case.
the combined provisions of Sections 8, 10 and 12 of the
Nigerian Export Processing Zones Act, the registration of
the 2” Plaintiff as an enterprise operating within the
Centenary Economic Free Zone, managed by the
Plaintiff, which exempt it from all Federal taxes and
levies, by either State or the Federal Government of
Nigeria, the Plaintiff is still liable to and subject to be charged for and required to pay Value Added Tax,
withholding Tax and Stamp Duty, in Nigeria?
The relevant provisions of the Act that the Plaintiff seek for interpretation
in this case are Sections 8, 10 and 12 of the Nigerian Export Processing
Zones Act which are reproduced as follows:
“Approved enterprises operating within the zone, shall
be exempted from all Federal, State and Government
taxes, levies and rates”
“1. The Authority may grant a license for any
approved activity in a zone to an individual or
business is incorporated in the customs territory.
2. The grant of a license by the authority shall
constitute registration for the purpose of company registration within the zone”
Section 12
“The Authority and any approved enterprise shall be
entitled to import into a zone, free of custom duty, any
capital goods consumer goods, raw materials,
components, or articles intended to be used for purpose
of and in connection with an approved activity, including Section 12
“The Authority and any approved enterprise shall be
entitled to import into a zone, free of custom duty, any
capital goods consumer goods, raw materials,
components, or articles intended to be used for purpose
of and in connection with an approved activity, including
The Plaintiffs are contending that by virtue of the clear provisions of the
Act they are not to be charged various sums deducted from its accounts by
Defendants as VATS, and withholding Taxes. The Plaintiff had averred in
paragraphs 8 — 10 of the affidavit in support that 2″ Plaintiff opened
accounts numbers 0002068329 (Naira), 0002068336 (Domiciliary/ and
accounts with Standard Chartered Bank, using certificate of registration as
a Free Zone Enterprise with account numbers 0002615541 (Naira) and
0002061539 (Domiciliary) in respect of its foreign capital. Also that the Plaintiff had approval of the Central Bank of Nigeria to bring its Foreign
Direct Investment (FDI), via validly issued Certificate of Capital Importation
(CCI) (Number 068044477) through the 2″ Defendant as shown in Exhibit
PPFZE 3.
The Plaintiff averred in paragraph 13 of the affidavit in support that:
“That sometime in December 2018, the 2″ Plaintiff
received a letter from Standard Chartered Bank wherein
it informed the Plaintiff of restrictions on its account
numbers, 0002068329 (Naira) and 0002068336
(Domiciliary), 002615541 (Naira) and 00020615390
(Domiciliary) over tax indebtedness of about N40, 565,
287.67. A copy of the said letter is herewith attached as
Exhibit PPFZES.”
The Plaintiffs averred in paragraphs 15 and 16 of the affidavit in support of
the summons that 2″ Plaintiff wrote a letter to the Executive Chairman of
the 1″ Defendant to intimate him of the exemption of the Centenary
Economic City from payment of taxes in Exhibit PPFZE7. And further, on Plaintiff had approval of the Central Bank of Nigeria to bring its Foreign
Direct Investment (FDI), via validly issued Certificate of Capital Importation
(CCI) (Number 068044477) through the 2″ Defendant as shown in Exhibit
PPFZE 3.
The Plaintiff averred in paragraph 13 of the affidavit in support that:
“That sometime in December 2018, the 2″ Plaintiff
received a letter from Standard Chartered Bank wherein
it informed the Plaintiff of restrictions on its account
numbers, 0002068329 (Naira) and 0002068336
(Domiciliary), 002615541 (Naira) and 00020615390
(Domiciliary) over tax indebtedness of about N40, 565,
287.67. A copy of the said letter is herewith attached as
Exhibit PPFZES.”
The Plaintiffs averred in paragraphs 15 and 16 of the affidavit in support of
the summons that 2″ Plaintiff wrote a letter to the Executive Chairman of
the 1” Defendant to intimate him of the exemption of the Centenary
Economic City from payment of taxes in Exhibit PPFZE7. And further, on March 2019, the Nigeria Export Processing Zones Authority, wrote the
Executive Chairman of the 1% Defendant in Exhibit PPFZES on the |
provisions of Section 8 of NEPAZA Act which exempts the Plaintiffs from
payment of taxes and the restrictions were lifted.
The Plaintiff averred in paragraph 18 of the affidavit thus:
“That consequent upon the foregoing, the Plaintiff
requested for the refund of the said sums illegally
deducted from its accounts by the Defendants between 2015 — 2020. Copies of the said letter requesting the
funds of monies illegally deducted from the accounts of
the 2″ Plaintiff domiciled with the 2″ Defendant are
attached herewith and collectively marked Exhibit
The Plaintiff averred that the 1% Defendant requested Plaintiff to
provide further documents to enable it process and refund the sum to the
2″ Plaintiff in Exhibit PPFZE11. That despite furnishing the Defendant
with the said documents for release of the illegally deducted funds
forwarded by Plaintiff in Exhibit PPFZE 13 and exhibit PPFZE 15, the 1
Defendant wrote the 2″ Plaintiff in exhibit PPFZE 16 stating that the
Plaintiff is not entitled to various sums of money deducted from the 2″
Plaintiff account.
In particular in exhibit PPFZE 16 the 1% Defendant stated that Prime
Properties FZE is liable to withholding tax on the interest earned on its fixed deposit with Standard Chartered Bank and is ineligible for refund
because Section 8 applies to enterprises within a zone. That banking
service rendered to Prime Properties FZE by the 2™ Defendant was
performed and consumed in the custom territory and within the Free Zone.
In paragraphs 15, 16, 17, 18, 21 and 22 of its counter affidavit, the
Defendant admitted that the restriction was placed on accounts of the
Plaintiff by the 2″ Defendant on its instruction, and admitted that the
deductions were made. The Defendant however denied that the tax was
on the imported capital but on accrued interest on Plaintiffs deposit.
The 1%
Defendant denied the illegality of their conduct alleging that Plaintiff placed nothing to prove that payment of withholding tax on interest that accrued
on deposit of the Plaintiff with 2″ Defendant is illegal. That the decision
to charge the tax is in accordance with our law.
The 2″ Defendant in paragraphs 3(c — h) of their counter affidavit
admitted that it was appointed a collection agent to deduct and remit tax
liabilities of the 2″ Plaintiff as assessed by the 1% Defendant in exhibit
SCB1 and placed lien for the sum of N40, 565, 289.67 and notified the
Plaintiff of its action on 19″ December 2018 in Exhibit PPFZE 5. It was also
its claim that deductions were made from 2″ Plaintiff’s account of
withholding Tax and VAT (Value Added Tax) based on TIN provided by the
2″ Plaintiff which made it eligible for it to pay withholding tax.
The questions remains whether by the afore mentioned provisions of
Sections 8, 10 and 12 of the Export Processing Zone Act the Plaintiff is
liable to pay taxes. As shown earlier Exhibits PPFZE 1 and 2 are proof that
the Plaintiffs are registered in the Nigerian Export Processing Zones Act,
and that 2″ Defendant is an enterprise in Centenary Economic City Zone.
By Section 10(2), the Act states that grant of license to operate within the
zone, by the Authority shall constitute registration of the company within a
zone. 2” Plaintiff is an enterprise within the Centenary Economic City Free |
Zone, Section 8 of the Export Processing Zone Act provides that “approved
enterprises operating within a zone shall be exempted from all Federal,
State and Government taxes, levies rates, and rates.” In Amaechi V. INEC
& Ors (2008) LPELR — 446(SC) The Supreme held thus:
“The principles as to compliance with the requirements of
law made is that where a statute has made provision for the
step to be taken, no other step than those presented must
be followed. See U.N. THMB V. Nwoli (1994) SNWLR (Pt.
567); Kamba V. Bawa (2005) 4NWLR (PT 914) at 46.”
As submitted by the Plaintiff counsel the provisions of Section 8 of NEPZA
Act is couched in mandatory form, hence ought to be complied with, by the
Defendants, especially given the use of the word shall in the sections. In
Ogidi V. State (2005) SNWLR (PT 918) 286 the Supreme held thus:
“The word “shall” is used to express futurity or promise,
intention or command. As used in statute, contracts or the
like, the word is generally imperative and mandatory. In
common or ordinary parlance, and its ordinary signification,
the terms “shall” is a word of command and one which has
always or which must be given a compulsory meaning as
denoting obligation. The word in ordinary usage, means
“must” and is inconsistent with the concept of discretion. statute or in ordinary parlance it means a command to do
or not to do a particular act. There is no question of
exercise of discretion to do or not to do the envisaged act.”
From these authorities, the use of expression leaves no room for discretion
as it is a command. It is therefore obligatory on the Defendants to comply
with the provisions of Section 8 of the Nigerian Export Processing Zone Act,
by reason of which the Plaintiffs should not be subjected to payment of any form of tax by virtue of its registration in the Free Zone. This is the
intendment of the law.
In paragraph 32 the Plaintiffs averred that the monies upon which the
withholding Tax and VAT were charged were from Imported Direct
Investment of the Plaintiff. Exhibit PPFZE3 is the sum of 4.3m USD
which was approved to the 2™ Plaintiff as an Enterprise in the Centenary
Economic Free Zone, and 2” Plaintiff had approval of the Central Bank of
Nigeria to bring in the Foreign Direct Investment FDI with Certificate of
Capital Importation (CCI) (Number 0680 444 77) through the 2m
Defendant. The Export Processing Zone Act is protective statute, which
seek to protect foreign investors, by encouraging foreign Direct Investment
and create Foreign Direct earning for the Federal Republic of Nigeria. The
provisions of NEPZA ought not to be interpreted in such a way as to defeat
the objective of the Act.
In Egbe V. Alhaji, the Supreme Court per NnaEmeka Agu JSC (Reported) in
(1990) 1 NWLR (PT 128) P. 546 at 600 paras A — B held thus:
“Beneficial statutes which are desired to protect a section
of public ought to be construed in such a way as to meet
that objectives.”
In this regard, I agree with the submission of the Plaintiff counsel that
subjecting the capital imported by the 2″ Plaintiff to be used in free zone,
to Value Added Tax and withholding Tax charges will be oppressive and
contradictory to the intendments of the provisions of Section 8 of the
NEPZA.
Other facts that enure to the favour of the Plaintiff is the response in
Exhibit PPFZE 8 attached to the Originating Summons wherein the Export
Processing Zone Authority through the Head Legal Services Communicated
to the 1% Defendant the exemption of payment by the Plaintiff in all taxes.
The 1% Defendant averred in paragraph 9 of its counter affidavit that:
9 I know that the letter of the 1 Defendant dated January,
2020 has addressed issues under consideration, as the said
letter explicitly indicated that the only tax which the Plaintiff
shall be liable is withholding Tax or interest accrued on deposits |
by Plaintiff with the 2” Defendant”
10 Pursuant to paragraph “9” above that the 1% Defendant had
since dropped the issue regarding the VAT element of this case,
but only insist that the Plaintiff is liable to withholding Tax”
The Plaintiff in reaction stated in paragraphs 9 — 12 thus:
“9 That I know as a matter of fact that paragraph 9 of
the counter affidavit of the 1″ Defendant, is incorrect
false and denied.
10 That in further response to the denied paragraph 9 of
the counter affidavit of the Defendant, I know as
a matter of fact that the 2″ Plaintiff is exempted
from all taxes in Nigeria including withholding taxes
on the interest accruable from the 2” Plaintiff’s
imported capital deposited in the 2 Defendant Bank.
11 That I know as a fact that the Defendant had
issued a circular in 2006, wherein it clearly stated
that companies registered and operating in the Free
Trade Zones are exempted from payment of
withholding taxes. A copy of this circular is attached
herewith as Exhibit A
12 That contrary to paragraph 10 of the counter affidavit
of the Defendant I know as a matter of fact that
the 1° Defendant is yet to refund the monies illegally
collected to pay VAT, by virtue of Section 8 of the
NEPZA Act.”
I have seen Exhibit “A” attached to the further counter affidavit of the
Plaintiffs in response to the counter affidavit of the 1% Defendant
originating summons. It is Headed Federal Inland Revenue Service
information No. 2006/02 circular published February, 2006. In clause 4.4
as it relates to enterprises operating within Free Zone, it stated as follows:
“These companies are granted exemption from the
payment of Nigerian Taxes by virtue of their status as
operating outside the Country. Even where they make
purchases outside the Free Trade Zones such companies
that they deal with are presumed to be resident within the
Nigerian Customs territory and such transactions are also
not liable to Nigerian taxes. |
By paragraph 4.4 of Exhibit A attached to the further affidavit, the 1%
Defendant cannot charge withholding Tax on the Plaintiffs by virtue of
registration in Free Trade Zone. The provision in paragraph 4.4 of Exhibit
reinforce the exemption provided in Section 8 of the Act. In Duke V. Global
Excellence Community Ltd (2007) 5 NWLR, it was held that:
carries a similar meaning with immunity so
that when one is exempted from existing legal relations he
will be said to have immunity or exemption. In other words
the doctrine of immunity turns out to the correlation
disability and the negative liability. Again immunity is
clearly analogous to disability tending to no liability”
“Immune” means exempt; not liable to danger, free from
obligation. (P.122 — 123 paragraphs G
With this interpretation of the Exemption, it is not in dispute that Section 8
is exculpating of the Plaintiffs.
Exhibit A attached to Plaintiffs Further Affidavit is a document made by the
1% Defendant holding out that the Plaintiff as one of the companies in the
Free Trade Zone is exempted from taxation. The 1% Defendant failed to
caution itself that having held a position in that circular which constitutes its policy that Plaintiff and companies in that class are exempted from
taxation. The conduct of the Plaintiff having failed to apply the policy in the
case of the Plaintiff is estopped by doctrine of estoppel by conduct under
Section 169 of the Evidence Act 2011 (As Amended) from denying the
existence of that policy. It is unconscionable for a party to be allowed to go
back on a policy or conduct which it has encouraged investors to believe with respect to Free Trade Zone. See ONOMADE V. ABC LTD (1997) LPELR
-2671 (SC). This issue is resolved against the Defendants.
Issue 2 — “whether by a calm reading of the combined provisions of
Section 8, 10 and 12 of the Nigerian Export Processing
Zone Act, the fact of the registration of the 2″ Plaintiff as
an enterprise operating within the Centenary Economic
City Free Zone, managed by the 1 Plaintiff which
exempts it from all Federal and State taxes, levies, the
Defendants can lawfully charge and deduct the sum of
Fourteen Million, Six Hundred and Sixteen Thousand, Two
Hundred and Eight-Nine Naira, Five Kobo (N14, 616, 289:
05) as withholding Tax and the sum of Two Million One
Hundred and Sixty Four Thousand, Six Hundred and Fifty-
Nine Thousand Naira (N2, 164, 659: 00) as withholding
Tax and the sum of Two Million One Hundred and Sixty
Four Thousand, Six Hundred and Fifty-Nine Thousand
Naira (N2, 164, 659: 00) as Value Added Tax, against the sum of Four Million Three Hundred Thousand, United
State Dollars (4, 300, 000: 00 USD) between 2015 —
2018, representing the Plaintiff’s Equity Foreign Direct
Investment, which had the approval of the Central Bank
of Nigeria.”
From the resolution of issue No. 1 the answer is obvious that by combined
provisions of Sections 8, 10 and 12 of the Nigerian Export Processing Zone
Act, the fact of registration of the 2″ Plaintiff as an enterprise operating with Centenary Economic City Free Zone Management by the Plaintiff
exempts the Plaintiff from all Federal and State levies, taxes and duties.
We have earlier shown in this Judgment that the 1% Plaintiff is licensed to
operate as Free Zone and other operating companies registered being
registered enterprises in the Centenary Economic City Free Zones enforcing
immunity provided under Section 8 of the Nigerian Export Processing Zones
Act.
I have perused argument of the 1% Defendant against the exemption
provided by the Act to the Plaintiffs. Contrary to perception of the 1
Defendant the powers of the 1% Defendant under the Federal Inland
Revenue Service Establishment Act, 2007 in Section 1 and 8(1)(b) to
control and administer different taxes tax laws and to assess, collect,
account and enforce payment of taxes due to government or its agencies,
is not in doubt. To import the provisions of Section 55 of FIRS Act in to
EPZA Act is to defeat the aim. Exhibit A furnished by the Plaintiff have
shown that funds in the account of Company subject to free zone operation
is custody under its custody as if it is operating in its own (foreign) Country.
Further by construction placed on Sections 8 and 10 of the Act the
exemption is against all Federal and State taxes and levies or duties. Tax |
on any aspect of the accounts including the fixed deposit by Section 8 of
the EPZA Act is on assets of the company operating within the Free Trade
Zone.
1 have read through the authorities of cases decided by Tax Appeal
Tribunal cited by the Defence, it is my humble that the authorities are not
binding on this Court.
In line with my decision in issue 1 and other expressions made in issue 2, I
hold that the 1% Defendant was in error to instruct the 2” Defendant to
place restriction on the Plaintiff’s account and make deductions having
been exempted by EPZA Act, from Federal and State Taxes. The
Defendant cannot lawfully charge and deduct the sum of N14, 616, 289. 05
as withholding tax and N2, 164, 659.00 as Value Added Tax against the
sum of 4.3m USD belonging to the Plaintiffs between 2015 — 2018 being
equity foreign Direct Investment approved by Central Bank of Nigeria for
company in Export Free Zone.
This is issue resolved against the Defendants
On issue 3(three) which is:
“Whether or not from the circumstances and facts of this
case the Plaintiffs are entitled to the reliefs sought”
The Defendant had maintained that interpretation to be placed on the 1 have read through the authorities of cases decided by Tax Appeal
Tribunal cited by the Defence, it is my humble that the authorities are not
binding on this Court.
In line with my decision in issue 1 and other expressions made in issue 2, I
hold that the 1% Defendant was in error to instruct the 2” Defendant to
place restriction on the Plaintiff’s account and make deductions having
been exempted by EPZA Act, from Federal and State Taxes. The
Defendant cannot lawfully charge and deduct the sum of N14, 616, 289. 05
as withholding tax and N2, 164, 659.00 as Value Added Tax against the
sum of 4.3m USD belonging to the Plaintiffs between 2015 — 2018 being
equity foreign Direct Investment approved by Central Bank of Nigeria for
company in Export Free Zone.
This is issue resolved against the Defendants
On issue 3(three) which is:
“Whether or not from the circumstances and facts of this
case the Plaintiffs are entitled to the reliefs sought”
The Defendant had maintained that interpretation to be placed on the free customs duty goods intended to be used for the purpose
of or in connection with an approved activity.”
As observed rightly by the Plaintiff Counsel the provision of Act under
consideration, which is Section 8 have no proviso. There is also no link
between Section 10 and Section 8 of the NEPZ Act in relation to exemption
from payment of all the taxes, rates and levies in Nigeria. It is not good
practice or rule of interpretation to import words not intended by
legislature to defeat the purpose of an Act. Laws and statutes are not
interpreted by whims and caprices of the parties. But I have earlier
demonstrated the important feature to be considered here is what the
legislature intended to achieve by establishing export processing zone.
That is to promote, protect and encourage foreign investment in Nigeria.
It is my finding that the Defendant by subjecting the 2™ Plaintiff imported
capital in Nigeria, to Value Added Tax whether by charging withholding Tax
on the interest, is in breach of Section 8 of the NEPZA Act. And where
there is a breach, the party injured have to be assuaged in damages.
The Plaintiff have in the affidavit in support and exhibits attached shown
demands made on the 1% Defendant to remedy the breach without results.
The Defendant even conceded when it stated that it dropped issue of
payment of VAT but still could not refund the monies. The Plaintiff have
shown from the affidavit evidence that it is an enterprise registered within
the Free Zone under the Nigeria Export Processing Zone Authority Act and
are entitled to the remedies under the Act.
The issue 3 for determination is resolved in favour of the Plaintiffs. The
Plaintiff is entitled to the reliefs in the Originating Summons.
The three issues formulated for determination are resolved in favour of the
Plaintiffs. And Judgment is entered for the Plaintiffs in the following terms
1 IT IS HEREBY DECLARED that the Plaintiffs are exempted from the
payment of all Federal, State and Government taxes, levies and
rates, by virtue of their registration and operation within the
Centenary Economic City Free Zone, in accordance with the
provisions of Section 8 of the Nigeria Export Processing Zones Act.
2. IT IS HEREBY DECLARED that the conduct of the Defendants by
charging and deducting the sum of Fourteen Million, Six Hundred and
Sixteen Thousand, Two Hundred and Eight-Nine Naira, Five Kobo
(N14, 616, 289: 05) as withholding Tax and the sum of Two Million
One Hundred and Sixty Four Thousand, Six Hundred and Fifty-Nine
Naira (N2, 164, 659: 00) between 2015 — 2018, as Value Added Tax,
against the following accounts of the 2″ Plaintiff domiciled with
Standard Chartered Bank; account number 0002068329 (Naira) and
0002068336 (Domiciliary) and account number 0002615541 (Naira)
and 0002061539 (Domiciliary), is illegal, unlawful, wrongful, unconstitutional, null, void and of no effect whatsoever.
3. AN ORDER of this Honourable Court is hereby granted directing the
1% Defendant to refund forthwith the sum of Fourteen Million, Six
Hundred and Sixteen Thousand, Two Hundred and Eight-Nine Naira,
Five Kobo (N14, 616, 289: 05) as withholding Tax and the sum of
Two Million One Hundred and Sixty Four Thousand, Six Hundred and
Fifty-Nine Naira (N2, 164, 659: 00) as Value Added Tax, illegally deducted from the accounts of the Plaintiff domiciled with
Standard Chartered Bank between 2015 — 2018.
4. AN ORDER of this Honourable Court is hereby granted directing the
1% Defendant to pay to the 2″ Plaintiff the sum of Five Million, Thirty
Four Thousand, Two Hundred and Eighty-Four Naira, Forty-Two Kobo
(N5, 034, 284: 00) being 10% interest on the sum of Fourteen |
Million, Six Hundred and Sixteen Thousand, Two Hundred and Eight-
Nine Naira, Five Kobo (N14, 616, 289: 05) deducted from the 2nd
Plaintiff’s accounts as VAT, by the 1% Defendant from 2015 to 2020.
5. AN ORDER of this Honourable Court is hereby granted directing the
1% Defendant to pay to the 2″ Plaintiff 10% interest on the sum of
Fourteen Million, Six Hundred and Sixteen Thousand, Two Hundred
and Eight-Nine Naira, Five Kobo (N14, 616, 289: 05) deducted from
the 2” Plaintiff’s accounts as withholding Tax, and the sum of Two
Million One Hundred and Sixty Four Thousand, Six Hundred and Fifty-
Nine Naira (N2, 164, 659: 00), deducted from the 2™ Plaintiff’s
account as VAT from 2020 till Judgment is delivered.
AN ORDER of injunction is hereby granted restraining the Defendants
whether by themselves, staff, employees, agents, servants and/or
privies is howsoever called, from further charging, levying or
deducting any tax, levies or dues from account of the claimants
domiciled with the Defendant, in contravention of the provisions of
Section 8 of the Nigeria Export Processing Zones Act.
