Court declares stamp duty charges on bank deposits, transfers illegal



Court declares stamp duty charges on bank deposits, transfers illegal

Drama in Osun court as lawyers flee as accused coughs

The deduction of stamp duty charges by Nigerian banks has been declared as illegal by a federal high court in Asaba.



The judge, Nnamdi Dimgba gave the verdict on Wednesday in a suit marked FHC/ASB/CS/139/2019 filed by one Rupert Irikefe.

The Central Bank of Nigeria (CBN), Zenith Bank PLC and the attorney general of the federation were joined as defendants in the suit.

Electronic transfers above N10,000 through the Money Deposit Banks (MDBs) attract a stamp duty of N50 which the MDBs are obliged to remit to the Federal Inland Revenue Service (FIRS).

In the suit, Irikefe who operates a current account, domiciled in Zenith bank submitted that the bank made several deductions of N50 and N100 from his account as stamp duties charges between 2016 and 2018.

He said he proceeded to visit the bank’s office at Asaba and Warri on September 14, 2018, and October 11, 2018, respectively to inquire as to the basis of the stamp duty charges.

Irikefe said he was told that the bank has legal backing to “enabled them to deduct the said amounts as stamp duties charges on teller deposits or electronic transfers from N1000 (One Thousand Naira) upward.”

The bank had relied on the decision of a federal high court in “Suit No. FHC/L/CS/1462/2013 between Kasmal International Service Limited v. Standard Chartered Bank Nig Ltd & 22 Ors.”

However, the plaintiff said he is aware of a subsisting decision the court of appeal in suit No. CA/L/437A/2014 delivered on April 21, 2016, and of the federal high court in suit No. FHC/L/CS/126/2016 delivered on March 13, 2017, in which CBN and Zenith bank were co-defendants in each suit, “wherein the courts found that there was no express provision in the Stamp Duties Act or any other law imposing any obligation on the 2nd defendant to collect and remit N50 as stamp duties charges on teller deposits or electronic transfers from N1000 upward.”

Irikefe submitted that the bank’s continuous deduction of stamp duty charged is in contempt of court.

He, therefore, prayed the court to declare that the bank’s continuous deduction despite subsisting court orders “is arbitrary, unlawful, illegal, dismissive and contemptuous of the lawful orders of superior courts of competent jurisdiction, condemnable, null and void and of no effect.”

He also prayed the court for an order “directing or mandating the 1st and 2nd  defendants to refund to him the total cumulative sum illegally, unlawfully and wrongfully deducted as stamp duty from his account domiciled with the 2nd  defendant from the commencement of the deductions on 31/01/2016 to the date of filing of this suit.”

The plaintiff also asked the court to award a cost of N50 million as general damages against CBN and Zenith bank for “grievous mental and psychological agony, unnecessary costs, inconveniences and pains caused by the unlawful, illegal and arbitrary imposition and deductions of a non-existent charge of N50 naira as stamp duty from his account” and an order of injunction restraining “the defendants, their servants, officers, privies or whomsoever from further deducting the sum of N50 naira as stamp duty on teller deposits or electronic transfers on money transaction from N1, 000.00 upwards” from his account unless authorized by law.

In urging the court to dismiss the suit, CBN argued that by virtue of sections 52(1) and 53(1) of the CBN Act and BOFIA it has immunity from suits, liability or adverse claims or any demand from anybody, including the plaintiff for actions it did in “good faith”.

They also contended that the Plaintiff failed to show any contractual relationship that he has with the CBN which gave rise to the suit.

On their path, Zenith Bank opposed the suit on the grounds that the plaintiff “wrongly instituted the suit by way of an originating summons instead of by way of a writ of summons requiring oral evidence.”

However, in giving judgment, the judge ruled in favour of the plaintiff.

He dismissed the preliminary objection of CBN on the grounds that it “cannot be shielded on the provisions of the law it relied on.”

He said that CBN’s argument that there is no contractual relationship between them and the plaintiff, “gathers no traction”

Dimgba held that “the 2nd  defendant (Zenith Bank) became a wrongdoer when they willfully disobeyed the judgment of courts.”

“They should therefore suffer the consequence,” he said.

“The truth is that when it comes to obedience to the law, everybody is on his own and should exercise independent judgment. It is my view that the 2nd defendant acted recklessly, and at its own peril, when it continued to deduct stamp duties charges from the plaintiff’s account, in the face of clear and binding judicial decisions arising from judicial proceedings which the 2nd defendant itself participated in.

The judge said the defendants also failed to place before the court “any judgment or orders of a superior court overriding the decisions in Suit Nos. CA/L/437A/2014 and FHC/L/CS/126/2016 that the Plaintiff is relying on, and which authorities empowered them to continue to make the deductions.”

“Nor have they provided the court with any amendment to the Stamp Duties Act empowering them to continue to make the deductions,” he stated.

“In the absence of any of the above, it is irresistible to say that the suit has merit and should succeed.

“I hereby resolve the questions posed in the originating summons in favour of the plaintiff.

I enter judgment in favour of the plaintiff on the following terms: Reliefs 1, 2, 3, 4, 5 and 8 are hereby granted.

Although the court refused to grant the N50 million request as general damages for the plaintiff’s mental distress, Dimgba ordered that the plaintiff be paid N2 million as exemplary damages.

“This relief is granted to set an example that it is reprehensible conduct to willfully disobey decisions of competent courts of law,” the judge said.

The post Court declares stamp duty charges on bank deposits, transfers illegal appeared first on Within Nigeria.



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