Mar 24, 2017

Review of Retail Supermarket Nig. Ltd v. Citibank Nig Ltd & CBN


Background
Following a decision of the Federal High Court in Suit No: FHC/L/CS/1710/2013: Kasmal International Ltd v. Central Bank Nigeria, the Central Bank of Nigeria (CBN) issued a circular dated January 15, 2016 to all Deposit Money Banks to the effect that stamp duties at the rate of N50 for every payment of N1000 and above would be applicable to all receiving accounts in the country with immediate effect.


The drastic decline in the price of crude in the international market has adversely affected Nigeria's economy in the last few years due to its dependence on revenue from sale of crude oil to fund its budget. Revenue from non-oil sectors have not been significant enough to mitigate this harsh effect of fall in crude prices as the Federal and State Governments have not been able to successfully diversify the nation's economy after decades of dependence on oil.

One of the major sources of non-oil revenue for the Country is taxes and levies by Government at all levels. Accordingly, the directive of the CBN is clearly an attempt to shore up revenue for the Federal Government.

In 2013, Kasmal International Services Ltd sued the CBN in Suit No: FHC/L/CS/1710/2013: Kasmal International Ltd v. Central Bank Nigeria and the Deposit Money Banks in Suit No: FHC/L/CS/1462/2013. In both cases, judgement was awarded in favour of Kasmal International Services Ltd to the effect that stamp duty of N50 was payable on every deposit or fund transfer of N1000 and above; and the CBN and Deposit Money Banks were obliged to implement the deduction.

Following the decision in FHC/L/CS/1462/2013, Standard Chartered Bank Nigeria Ltd brought an appeal vide Suit no: CA/L/437A/2017: Standard Chartered Bank Nigeria Limited v. Kasmal International Services Ltd & 22 Others challenging the decision of the lower court. The Court of Appeal upheld the Appeal of Standard Chartered Bank and set aside the decision in Suit No: FHC/L/CS/1462/2013.

Despite these decisions, the policy of deducting N50 for every bank transaction above N1000 has continued unabated. In 2016, Retail Supermarkets Nigeria Limited brought a fresh action against Citibank and Central Bank of Nigeria vide Suit No: FHC/L/CS/126/2016: Retail Supermarkets Nigeria Limited v. Citibank Nigeria Limited & Central Bank of Nigeria wherein it challenged the collection of N50 surcharge for every N1000 transaction. A summary of the case which is the subject of this review follows.

Facts of the case
Retail Supermarkets Nigeria Ltd (owners/operators of Shoprite retail outlets across Nigeria) instituted an action against Citibank and Central Bank of Nigeria on the 8th of July, 2016 praying the Federal High Court for the following orders:

1.                  A declaration that the provisions of the 2nd Defendant’s (CBN) circular reference GEN/CBN/DMB/02/006 of 15th January, 2016 are inconsistent with Schedule 1 of the Stamp Duties Act, Cap S8 Laws of the Federation of Nigeria and are invalid, null and void;

2.                  An order setting aside the provisions of the circular reference GEN/CBN/DMB/02/006 of 15th January, 2016;

3.                  An order of perpetual injunction restraining the first Defendant (Citibank) either by itself, its agents, servants, privies, assigns or any person claiming through or deriving authority from it from taking any step to implement or from further implementing the 2nd Defendant’s circular reference GEN/CBN/DMB/02/006 of 15th January, 2016 in relation to the Plaintiff’s bank accounts.

The argument of the Plaintiff was that implementation of the 2nd Defendants circular reference GEN/CBN/DMB/02/006 of 15th January, 2016 by the 1st Defendant i.e. deduction of the sum of N50 for every deposit into its account from N1000 upwards would expose it to several financial losses.

Decision
In arriving at its decision, the Federal High Court (Coram: Obiozor J.) relied heavily on the Court of Appeal decision in Suit no: CA/L/437A/2017: Standard Chartered Bank Nigeria Limited v. Kasmal International Services Ltd & 22 Others  based on the settled principle of stare decisis i.e. that lower courts are bound by decisions of Superior Courts. In its decision, the Court of Appeal held inter alia as follows (paraphrased):

1.                  A court of law can only enforce and apply provisions of the law which are in existence and in force in Nigeria;

2.                  There is no provision in the Stamp Duties Act nor the Amendment to the Act conferring powers on licensed banks in Nigeria to collect the sum of N50 for teller deposit or fund transfer of N1000 and above. Accordingly, in the absence of any contrary provision, the provisions of the Schedule to the Stamp Duties Act especially item 4 clearly show that documents which evidence receipts of monetary deposits by a bank are exempted from Stamp Duties Act. Thus, there is no obligation to deduct stamp duty from deposits or transfers at all.

In view of the above decision of the Court of Appeal, the Federal High Court in the case under review decided as follows:

1.                  A declaration that the provisions of the 2nd Defendants circular reference GEN/CBN/DMB/02/006 of 15th January, 2016 are inconsistent with the provisions of the Stamp Duties Act Cap S8 Laws of the Federation of Nigeria, 2004 and are invalid, null and void.

2.                  An order setting aside the provisions of the 2nd Defendant’s circular reference GEN/CBN/DMB/02/006 of 15th January, 2016.

3.                  An order of perpetual injunction restraining the first Defendant (Citibank) either by itself, its agents, servants, privies, assigns or any person claiming through or deriving authority from it from taking any step to implement or from further implementing the 2nd Defendant’s circular reference GEN/CBN/DMB/02/006 of 15th January, 2016 in relation to the Plaintiff’s bank accounts.

Comment
Nigerians have been moaning since the commencement of the implementation of the CBN circular reference GEN/CBN/DMB/02/006 of 15th January, 2016. Although the policy has been perceived by many as bad, insensitive and illegal, there appears to have been no public interest law suit challenging the implementation of the directive which has now gone on for over one year. It is important to note that the case in review is only for the benefit of Retail Supermarkets Nigeria Limited and so no one else can benefit from the judgement as it was not a class action. Invariably the deduction of illegal stamp duty charges will continue on all other accounts in the Country. It is hoped that this decision will spur a more definitive action on this issue to restrain all the banks from continuing with the directive of CBN with regards to illegal stamp duties deduction from all bank accounts. A class action by citizens will be more encompassing.

Corporate Governance & AML Practitioner
@iamtennygee


Ed’s Note – Article was first published here.
Share:

1 comment:

  1. I am currently looking to fill the position of Immigration Lawyer for one of our clients a multinational engineering firm . The candidate must have atleast 5-10years experience with good knowledge of quota management and immigration Law. The role is based in Victoria Island,Lagos.If you are interested ,kindly send me an updated copy of your resume to boluwatife.akinyemi@aldelia.com

    ReplyDelete

The Nigerian blawg

Disclaimer:- Posts and comments by the publishers of this blog do not constitute legal advice or create an attorney-client relationship.

Follow by Email

Advertise your property

Property Listings

  • SALE-4bedroom duplex With 3 living rooms. Located at Opic Harmony Estate. Asking 80m Title Global C of O/ consent in progress. 08055424566
  • FOR SALE 8bedroom duplex 2 living rooms With 2 rooms BQ N150m Located off CMD Road Magodo Registered Title Contact 08055424566
  • Property for Rent – New Building, 4 unit luxury 2 bedroom flat available at Rafiu Ipaye Street, Ijesha, Surulere. Ground floor back flat- 700k per anum, First floor back flat – 750k per anum, 2nd floor back flat – 750k, 2nd floor front flat – 800k. Service charge - 75k per anum. Refundable caution – 70k. Call 08055424566 for details.
  • Property For Sale!!! A fenced and gated uncompleted 3 bedroom site on a full plot of land is available for sale at Igbetu via Awoyaya, behind Mayfair Gardepn Estate, Ibeju-Lekki, Lagos for sale. Price is N20million and Title Documents include, Family Receipt,  Deed of Assignment and Global C of O. Contact 08055424566 for more information
  • PROPERTY FOR SALE!!!!!!!!  A 5 Bedroom Duplex with 2 room BQ formerly used for a Nursery & Primary school is available for sale in Iyana Ipaja, Lagos  Building contains 9 CLASSROOMS, 2 OFFICE SPACES, 1 LARGE RECEPTION, 8 TOILETS, 5 BATHROOMS, KITCHEN,PLAY AREA. The seller's title is a certificate of Occupancy and the asking price is 35 million Naira.  Contact 08055424566 for more details 
  • List your property for rent or sale here

Blog Archive

ORDER NOW

CONTACT US

Name

Email *

Message *

Powered by Blogger.