The Abuja district of the Federal High Court has announced 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 withholding and value-added tax as illegal and unconstitutional.
Consequently, the court has deterred the Federal Revenue Service and Standard Chartered Bank of Nigeria from further charging, levying, or deducting any tax, levies, or duties from the Centenary City Freezones Company and Prime Properties FZE.
Justice Donatus Okorowo who delivered the judgment held that the plaintiffs are exempted from the payment of all Federal, State, and Local Government taxes, levies, and rates by their registration and operations within the Centenary Economic City Zone, by the provisions of section 8 of the Nigeria Export Processing Zones Act.
The judgment provided on June 23, 2023, 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, Justice Okorowo has further made an order directing the defendants to repay forthwith, the sum of N14, 616, 289.06 as withholding tax and the sum of 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 a license to regulate within the zone, by the authority shall comprise registration of the company within the zone. 2nd plaintiff is an enterprise within the Centenary Economic City free zone. Section 8 of the Act provides that ” operating within a zone shall be freed from all Federal, State and Government taxes, levies rates and rates.
“As submitted by the plaintiff’s 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.
From these authorities, the use of expression leaves no room for discretion as it is a command. It is therefore obligatory for the defendants to comply with the provisions of section 8 of the NEPZA Act, because of which the paragraph of any form of tax by its registration in the free zone. This is the intendment of the law.
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” I agree with the submission of the plaintiff’s counsel that subjecting the capital purported by the 2nd plaintiff to be used in the free zone, to value Added Tax and Withholding Tax charges will be oppressive and contrary to the intendment of the power of section 8 of the NEPZA.
“It is my finding that the defendant by subjecting the 2nd 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 charges,” Justice Okorowo held.
The court also directed the FIRS to pay the 2nd plaintiff the sum of N5, 034, 284.42 being 10% interest on the sum of N14, 616, 289. 05 deducted from the 2nd plaintiff’s account as VAT, by the FIRS from 2015 to 2020.
Another order directing the FIRS to pay to the 2nd plaintiff 10% interest on the sum of N14, 616, 289.05 deducted from the 2nd plaintiff’s accounts as withholding tax and the sum of N2, 164, 659.00, deducted from the 2nd plaintiff’s account as VAT from 2020 till the date of judgment.
It equally made an order directing the defendants to pay exemplary damages in the sum of N5m jointly and severally in favor of the plaintiffs.
Edited by Damilola Adeleke
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