Bank Not Liable to Remit Stamp Duty Deduction to Abia State IRS – Tax Tribunal

The Enugu- South East Zone of the Tax Appeal Tribunal has declared that Abia State Internal Revenue Service has no legal basis to demand remittances of deductions on electronic receipts from banks, including the Unity Bank PLC, that the Finance Act, 2021 has provided that the arrears of stamp duty collections between 2015 and 2019 should be paid to the States by the Federal Government, and this provision has completely resolved the demand of the Abia State Internal Revenue Service.

The Tribunal held that after painstaking examination of the Stamp Duties Act, 2004, as amended, it could not find among the provisions where the Abia State Internal Revenue Service is authorised to issue to the Bank a Best of Judgment Assessment for alleged unpaid stamp duties.

The Panel led by Hon. Chukwuemeka Eze held that by virtue of sections 4 (1) and (2), 24, 89 and Item 4 under the exemption of receipts in the Schedule to the Stamp Duties Act, Sections 53 and 54 of the Finance Act, 2019, Section 48 of the Finance Act, 2020, Unity Bank is not liable under the prevailing laws or under any obligation in law to remit records of Stamp Duty deductions to the Abia State Internal Revenue Service.

The Tribunal granted an order of perpetual injunction restraining Abia State Internal Revenue Service by itself, servants, agents, privies and/or workmen from doing anything inconsistent with the Unity Bank’s interest including but not limited to distraining or levying warrant of distraint on the Unity Bank’s business premises across the State Territory.

From facts, the Unity Bank PLC had stated that it had already remitted stamp duty deductions before May 2020 to CBN/NIPOST account but from May 2020 to CBN FIRS STAMP DUTY ACCOUNT to the Federal Inland Revenue Service (FIRS) as required by CBN Circulars and was not satisfied with the Abia State Internal Revenue Service demand for records/documents of Stamp Duties deductions and Best of Judgment assessment in the sum of N2,168,259,500.00 (Two Billion, One Hundred and Sixty-Eight Million, Two Hundred and Fifty-Nine Thousand, Five Hundred Naira) for 2016 – 2020 issued against it through various correspondences dated between January 12, 2021, and August 3, 2021.

The Bank maintained that Abia State Internal Revenue Service went contrary to the provisions and interpretation of section 4 (1-2) of the Stamp Duties Act in demanding for remittance of records of Stamp Duty deductions, and having fully complied by remitting the said audit report to the Federal Inland Revenue Service cannot remit same again to the Respondent as same would amount to double taxation, and urged the court to grant the reliefs sought.

In defense, the Respondent- Abia State Internal Revenue Service filed a Preliminary Objection challenging the jurisdiction of the tribunal and the objection was dismissed for lacking merit.

However, despite serving hearing notices on Abia State Internal Revenue Service, it refused to file a reply to the appeal and did not participate in the hearing of the appeal.

In its final submission, Unity Bank submitted that if Abia Internal Revenue Service is aggrieved by the couching of the Stamp Duties Act, as regards to tax due and flowing to the Federal Government, the appropriate step to take, is to institute an action against the Federal Government of Nigeria and not innocent banks who go about in their ordinary course of business. That the Abia Revenue Service can toe the path of other State who has sued the Federal Government of Nigeria in respect of the subject matter and leave the innocent banks alone and urged the Honourable Tribunal to so hold.

In its well-considered judgment after careful evaluation of the evidence and submissions of both parties, the tribunal led by HON. CHUKWUEMEKA EZE, HON. IDE JOHN C. UDEAGBALA, HON. OBRI, FRANCIS OGAR, PROF. JOHN ANYADUBA, HON. (MRS.) ANNE C. AKWIWU held that the Unity Bank’s position that it paid all stamp duties on banking transactions pursuant to section 4(1) of the Stamp Duties Act amended by section 53(a) of the Finance Act, 2019 has posed no loss to Abia State Internal Revenue Service as the Federal Government is bound to give it its share pursuant to section 163 of the Constitution.

The tribunal stated that as for the year 2020, section 54 of the Finance Act, 2019 had amended section 89 of the Stamp Duties Act to remove the lid on the taxation of electronic receipts but placed stamp duty collection on them by the Federal Government.

The tribunal stated that that the issue of collection of stamp duty on electronic receipts from transactions involving individuals resident in a State by banks is the thrust of the issues for determination pending before the Supreme Court, and while Abia State Government is demanding for N4.9 billion for these fateful years, it is simultaneously demanding for an arbitrary sum from the Union Bank which is a clear case of double taxation if it had succeeded.