Nigeria: FHC Upholds The Illegality Of Stamp Duty Deductions Prior To Amendment Of The SDA

The Federal High Court (FHC or "the Court") Asaba Division, on Wednesday 9 December 2020 held in the case between Mr. Rupert Irikefe (trading as Abimbola Energy Ventures (the Plaintiff) and Central Bank of Nigeria (CBN), Zenith Bank Plc ("the Bank") & Attorney General of the Federation (AGF), collectively referred to as ("the Defendants") that collection of stamp duties on teller deposits or electronic transfers of monies prior to the amendment of the Stamp Duty Act, Cap. S8, Laws of the Federation of Nigeria (LFN), 2004 (as amended) (SDA) was arbitrary, unlawful and illegal and contemptuous of the lawful orders of superior courts of competent jurisdictions.

Further, the FHC awarded exemplary damages against the CBN and Bank to set an example to tax and regulatory authorities that wilfully flout decisions of the courts of law.

Facts of the Case

The Plaintiff operates a current account with the Bank and observed several deductions of ?50 and ?100 from his current account between 2016 to 2018. In 2018, the Plaintiff approached the Bank's offices in Asaba and Warri to inquire the basis of the stamp duties charged on his current account. The Bank referred him to the FHC's decision the case between Kasmal International Service Limited (KISL) vs. Standard Chartered Bank Nig. Ltd & 22 Ors (SCB &Ors) (Suit No.: FHC/L/CS/1462/2013), which the Bank claimed supported the deduction of the said amounts.

The Plaintiff informed the Bank of the subsisting decisions of the Court of Appeal (COA) in the same case between KISL vs SCB & Ors (Suit No : CA/L/437A/2014) and the FHC's decision in the case between Retail Supermarkets Nigeria Limited vs Citibank Nigeria Limited and the CBN (Suit No: FHC/L/ CS/126/2016), wherein the courts held that there was no express provision in the SDA or any other law imposing any obligation on the Bank to collect and remit ?50 as stamp duties on teller deposits or electronic transfers from ?1,000 upward. Consequently, the Plaintiff requested the Bank to refrain from deducting stamp duties from his account and to refund the amounts deducted thus far. However, the Bank refused to refund the deducted amounts and continued to charge stamp duties on the Plaintiff's account.

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