Thursday, 29 August 2013

Nigerian Taxation and Fawehinmi v. Akilu: Spreading the Dragnet of Tax Compliance


Nigerian Taxation and Fawehinmi v. Akilu: Spreading the Dragnet of Tax Compliance

Introduction

The case of Fawehinmi v. Akilu[1] raises many important issues which will continue to be debated in Nigerian legal circles for a long time.[2] Just like a comet, the case blazes a trail not too often seen in most Nigerian legal decisions and even moreover, it leaves many fallouts mostly undeciphered even till now. The case, for one, has many implications for most aspects of the law[3] but what concerns us here is to examine the implications for Nigerian taxation. The decision is certainly a landmark in Nigeria and before the dust settles (it is assumed that it is only significant in stating categorically the position of the Nigerian law on locus standi and the right of private prosecution), it is pertinent to state that it is also of wide significance to the Nigerian law of taxation.

           

In assessing its significance, we are led to ask a question allied to that decided in the case and it is this if a taxpayer commits tax evasion, can a fellow taxpayer bring an action to prosecute where the body[4] responsible has for one reason or the other refused to prosecute by pleading the authority of Fawehinmi v. Akilu in Nigeria?

           

This question raises other important matters. The first touches the locus standi of the taxpayer to initiate and institute proceedings and the second calls for the determination of whether tax evasion is a criminal offence akin to murder to warrant the application of the Fawehinmi case.

           

The resolution of these issues is important for tax law in Nigeria as we may yet come to hold Justice Eso’s statement that:

 

It is the view of my learned brother Obaseki, which I fully share with respect, that it is the universal concept that all human being are brothers and assets to one another! He applies this to locus standi. That we are all brothers is more so in this country where the socio-cultural concept of ‘family’ and ‘extended family’ transcend all barriers. Is it not right then for the court to take note of the concept of the loose use of the word ‘brother’ in this country? ‘Brother’ in the Nigerian context is completely different from the blood brother of the English languages[5] as the cornerstone upon which we could build our hopes for an improved and increased tax compliance and revenue generation in Nigeria.

The aim of this article is to give a perspective of the tax implications of the Nigerian Supreme Court decision in Fawehinmi v Akilu. The sections which follow this introduction will be:

 

i.          the meaning of locus standi;

ii.         application of locus standi in Taxation;

iii.                the Application of Fawehinmi v. Akilu to Tax Evasion;

iv.                the relevance of Fawehinmi v. Akilu and

v.                  conclusions.

 


 

The doctrine of locus standi is closely connected with the doctrine of ripeness[6] and it operates as a practical limitation on the availability of judicial review of administrative action since it requires that in order to be able to challenge administrative action, a person must have an interest which is sufficiently affected by the administrative action. It is not enough that a person merely claims that he falls within the class of persons for whose general interest the statute was passed, he must go forward to show that he has some personal interest that has been or is most likely or certain to be affected by the action complained of. Moreover, if the quantum of interest demonstrated is held to be legally insufficient, the party might not be able to obtain judicial relief. The crux of the problem then is; what interest would suffice for what remedy?[7]

 

The Nigerian approach to the problem was highlighted in the case of Senator Abraham Adesanya v President of Federal Republic of Nigeria.[8] The Plaintiff/appellant, a member of the Senate of the National Assembly in the second republic, challenged the constitutionality of the appointment of Mr. Justice Ovie-Whisky, by the President, as the Chairman of the Federal Electoral Commission (FEDECO), an appointment which was confirmed by the Senate as required by the Constitution. The contention of the plaintiff/appellant was that Mr Justice Ovie-whisky, at the time of his appointment, was the Chief Judge of the then Bendel State and was, therefore, not qualified by virtue of the fact that he was in the public service of Bendel State of Nigeria. The plaintiff/applicant commenced proceedings in the High Court of Lagos State wherein he claimed both a declaration that the appointment was unconstitutional, null and void and an injunction restraining the first defendant, the President, from swearing-in the appointed chairman.

           

The learned trial judge granted the declaration and set aside the appointment on the grounds that it was unconstitutional and was, therefore, null and void. Being dissatisfied with the judgement, the defendant appealed to the Court of Appeal. It is useful to note that the issue of locus standi was neither raised nor canvassed at the trial but the learned trial judge observed that the plaintiff had no persona interest in the matter. At the Court of Appeal, the Federal Attorney General contended that since the plaintiff had no personal interest in the matter, he had no locus standi to bring the proceedings where the relief sought by him would confer no tangible benefit on him. The counsel for the plaintiff, however, asked that the matter be referred to the Supreme Court for interpretation under the provisions of s. 259(3) which provided for reference to the Supreme Court of “questions involving a substantial question of law”. One of the substantial questions of law referred to the Court was whether the complainant had locus standi. The Chief Justice of Nigeria, at that time, Mr Justice Atanda Fatayi Williams, held that where a law is alleged to be inconsistent with the constitution on grounds other than that it contravenes a guaranteed right, anyone can sue, whether or not his individual interest is adversely affected. The right to sue, he said, derives from the provision of the Constitution declaring invalid and law inconsistent with its provisions. Any person resident in Nigeria has, by virtue of this provision, a civil right, indeed an obligation, “to see to it that he is governed by a law which is consistent with the provisions of the Nigeria Constitution. He went on:

 

In a developing country with a multi-ethnic society and a written Federal Constitution, where rumour-mongering is the pastime of the market places and the construction sites, to deny any member of such a society who is aware or believes, or is led to believe that any law passed by any of our legislative houses, whether Federal or state, is unconstitutional, access to a court of law to air his grievance on the flimsy excuse of lack of sufficient interest is to provide a ready recipe for organised disenchantment with the judicial process... In the Nigerian context, it is better to allow a party to go on to court and to be heard than to refuse him access to our courts. Non-access, to my mind, will stimulate the free-for-all in the media as to which law is constitutional and which law is not! In any case, courts have inherent powers to deal with vexatious litigants or frivolous claims.

 

Thus, the Chief Justice clarified one type of locus standi, that is, in the context of challenging the constitutionality of statutes, even if there is no specific right being claimed. In this case, the complainant has locus standi, even if he has any particular interest and presumably, he would be assumed to be sufficiently affected simply because it is his duty, as a citizen, to see that the government is properly managed.

 

The Supreme Court’s decision in Adesanya introduced a new dimension into the issue of locus standi. The court decided that Senator Adesanya had no locus standi because he was challenging the exercise of the powers of the President and the confirmation powers of the Senate, matters which are not in any way related to his civil rights and obligations as a person. According to the Chief Justice, “they pertain to him, not as an individual exercising his civil rights and obligations, but as a Senator (a political representative) exercising his right to vote in the confirmation proceeding in the Senate.”[9]

           

There has, however, been a further advancement on the position of locus standi in the Fawehinmi v Akilu case. According to Justice Kayode Eso, the case is:

 

...a departure from the former narrow attitude of this court in the Abraham Adesanya case and subsequent decisions for strictly speaking, my Lord Nnaemeka-Agu JCA (as he then was) who no doubt was bound by those decisions at that time was right in his interpretation of the stand of this court and, so, strictly on those authorities of this court, along his judgment with respect, could not be faulted when he said: “In this country, the result of all the cases is that the common law concept that a person who has a locus and can sue is the only one who has a legal right, or whose legal right has been adversely affected or who has suffered, or is in imminent danger of suffering an injury, damage, or detriment personal to himself.” This is the result of all decided cases including Adesanya’s case, Thomas v. Olufosoye 1986 I.N.W.L.R. 669, Attorney-General Kaduna State v. Hassan (1985) 2 N.W.L.R. 433 and Gambioda II v Esezi (1961) An N.L.R. 584.

My humble view, and this court should accept it as such, is that the present decision of my learned brother, Obaseki J.S.C. in this appeal has gone beyond the Abraham Adesanya’s case. I am in complete agreement with the new trend, and with respect, my agreement with the judgment is with my belief that it has gone beyond the Abraham Adesanya’s case.[10]

 

The new trend is well stated by Justice Babasanya Craig in his dissenting judgment that:

 

The novel issue on this appeal is concerned with the legal interest which a private prosecutor must possess before he can commence proceedings. The question therefore, is, what legal interest has the applicant got either in prosecuting suspected criminals or in asking for leave to compel the D.P.P. to permit him to undertake the prosecution? ... My view is that if a private prosecutor has a statutory right to initiate criminal proceedings in Court, it becomes part of civil rights and obligations under section 6, sub-section 6(b) of the constitution of Federal Republic of Nigeria 1979, and he has the right to protect and enforce civil rights by any legal process which he thinks appro­priate. Indeed, if such prosecutor thinks that another person (in this case, the D.P.P.) is trying to prevent him from exercising his statutory right to prosecute, he may bring appropriate proceedings to remove the impediment.

In the instant case, the applicant has applied to the High Court for leave to apply for an order of mandamus to compel the D.P.P. to perform his public duty so that he could proceed to prosecute the suspected felons and I am of the view that he has every right to do so. It is for these reasons as well as for those stated in the lead judgement that I agree that the applicant has a locus standi to bring the present application.[11]

 

The crucial issue in this new trend is the distinction made between locus standi to sue in civil matters and locus standi to prosecute suspected Felons in criminal matters. Numerous authorities have dealt with locus standi in civil matters and therefore do not need further enumeration. However, in respect to locus standi in criminal matters, the law as of now is that a private person is permitted to take up the prosecution of an indictable offence since it is recognised that a crime is an offence against society and any member of that society should be free not only to apprehend a criminal but also to prosecute him on behalf of the rest of the public.

           

We may now turn to consider the application of locus standi in taxation matters.

 

 

 


 

There is no Nigerian authority on this issue; therefore, it is to the United Kingdom authorities we have to turn for relevant illustrations. The law considered here is that following I.R.C. v National Federation.[12] It is clear that this case marks a watershed in this area.[13]

 

           

The starting point is section 31(3) of the United Kingdom Supreme Court Act 1981 which states:

 

... the court shall not grant to make such an application (for judicial review) unless it considers that the applicant has a sufficient interest in the matter to which the application relates.

The question then arises whether that “sufficient interest” was shown at the preliminary leave stage. On that, Aldous and Alder say:[14]

Their Lordships agreed (in the National Federation case) that this ‘sufficient interest’ requirement at the preliminary leave stage was merely a threshold requirement to exclude clearly unmeritorious cases and that locus standi could only be investigated in detail at the subsequent full hearing.[15]

The next question is whether the requirements for locus standi still vary according to the type of Order being sought, that is, Mandamus, Certiorari, Prohibition, Declaration, and Injunction. Again, Aldous and Alder state that:

The same general approach to locus standi now applies to all the remedies. The (National Federation) case concerned mandamus and the declaration, but their Lordships discussed the question of standing in general terms.

All their Lordships emphasised that technical differences between remedies should no longer rigidly be adhered to. However, the nature of the relief sought is clearly a relevant factor and to this extent, the older cases may still provide general guidelines.

It is suggested that the standing requirement is at its most liberal in relation to certiorari, followed, in descending order, by prohibition, mandamus, declaration and injunction. In the case of the injunction, because of the drastic nature of this remedy and the well-established body of law surrounding it, standing may be limited to a person whose legal or equitable rights are affected…[16]

What are the principal criteria applied? Again, Aldous and Alder"[17] state those criteria succinctly:

1. The scope and purpose of the particular statutory power or duty is probably the single most important consideration...;

2. The gravity of the allegations...;

3. The strength of the applicant’s case;

4. The public interest in the governmental act challenged;

5. The nature of the remedy sought; and

6. The nature of the applicant’s injury.

This is the traditional locus standi test. It is reasonably clear that an applicant whose legal rights in the strict sense are affected will rarely be turned away, though such a case is possible. Conversely, the absence of legal right is no longer fatal...

It is clear that the weight to be given to the above criteria is a matter for the discretion of the court.

Turning now to developments since the National Federation case, Aldous and Alder say:

Case decided contemporaneously with and subsequent to the (National Federation) case indicate that a liberal approach to locus standi is now being adopted. Indeed, it will be rare that anyone with a bona fide connection with the case and with allegations of substance will be turned away…[18]

We may now turn to consider the National Federation case. The facts of this case can be stated shortly. It concerned certain casual print workers in Fleet Street. Evasion of tax by such workers, through the use of fictitious names, had become a common practice. Eventually, arrangements to remedy this were agreed between the employers, the unions concerned and the Inland Revenue. As part of that agreement, the Inland Revenue gave an undertaking to the unions that, subject to the arrangements mentioned being generally accepted, if an employee registered with the relevant tax office before April 6, 1979 and co­operate fully and promptly in settling his tax affairs, investigation into tax lost on casual earnings in the past would not be carried out for the years before 1977 - 78. The National Federation was aggrieved by this “amnesty” and sought a declaration that the Inland Revenue had acted unlawfully in granting it. It also sought the order of mandamus directing the Inland Revenue to collect and assess tax from the employees according to law.

           

There was criticism from their Lordships (particularly from Lords Wilberforce and Diplock) both of the Divisional Court of Appeal because they had treated the locus standi issues as a preliminary point. Lord Wilberforce said:

I think that it is unfortunate that this course (taking locus standi as a preliminary point) has been taken. There may be simple cases in which it can be seen at the earliest stage the person applying for judicial review has no interest at all, or no sufficient interest to support the application; then it would be quite correct at the threshold to refuse him leave to apply.

The right to do so is an important safeguard against the courts being flooded and public bodies harassed by irresponsible applications. But in other cases, this will not be so. In these, it will be necessary to consider the powers or duties in law of those against whom the relief is asked, the position of the applicant in relation to those powers or duties, and the breach of those to have been committed. In other words, the question of sufficient interest cannot, in such cases, be considered in the abstract, or as an isolated point; it must be taken together with the legal and factual contents. The rule requires sufficient interest in the matter to which the application relates. This, in the present case, necessarily involves the whole question of the duties of the Inland Revenue and the breaches or failure of those duties of which the Federation complains…[19]

The general principle to be applied in cases such as this is stated by Lord Wilberforce:

The total confidentiality of assessments and negotiations between individuals and the Revenue is a vital element in the working of the system. As a matter of general principle, I would hold that one tax-payer has no sufficient interest in asking the court to investigate the tax affairs for another taxpayer or to complain that the latter has been under-assessed or over-assessed, indeed there is a strong public interest that he should not. And this principle applies equally to groups of taxpayers: an aggregate of individuals each of whom has no interest cannot of itself have an interest. [20]

However, Lord Wilberforce makes it quite clear that there could be exceptions to that principle “in case of sufficient gravity”. “Whether that has happened, he says “must depend upon an examination, on evidence, of what breach of duty or illegality is alleged.”

           

Having examined in some detail the evidence submitted by the Inland Revenue, Lord Wilberforce says:

On the evidence as a whole, I fail to see how any court considering it as such and not confining its attention to an abstract question of locus standi could avoid reaching the conclusion that the Inland Revenue ... were acting in this matter genuinely in the care and management of the taxes, under the powers entrusted to them. This has no resemblance to any kind of case where the court ought, at the instance of the taxpayer, to intervene.[21]

The other Lords of Appeal agreed with Lord Wilberforce, although the late Lord Diplock thought the application should be dismissed, not on the specific ground of no sufficient interest but on the more general ground that it had not been shown that in the treatment of the tax liabilities of the casual workers, the Revenue did anything that was ultra vires or unlawful.

According to R. Bartlett[22] and one must agree with him, this seems not only a sensible decision but also the speeches, especially those of Lords Wilberforce and Diplock, are most helpful in

(a) establishing some general principles about locus standi; and

(b) indicating what is required for a taxpayer to have a “sufficient interest” for the purposes of locus standi.

We may now consider the application of Fawehinmi v Akilu to tax evasion.


Application of Fawehinmi v Akilu to Tax Evasion

In determining the applicability of the Fawehinmi case to tax evasions, we need to be clear about certain issues. First, we need to know the facts of the case and what is decided. Secondly, we need also to know the meaning of tax evasion and whether it is a criminal offence under Nigerian law. Thirdly, what is the degree of locus standi needed for a taxpayer to complain about tax evasion and finally, can we properly say that Fawehinmi applies to cases of tax evasion and may be pleaded where a taxpayer undertakes private prosecution?

 

(i) The Fawehinmi Case

Dele Giwa, a well-known Nigerian journalist and chief executive of a popular magazine called Newswatch, was killed by a letter bomb on 19th October, 1986 at his residence in Lagos. On 3rd November, 1986, the appellant, a legal practitioner who alleged that the deceased was his client and personal friend, drafted an information containing a two-count charge which accused Colonel Halilu Akilu, Director of Military Intelligence and Lieutenant-Colonel A. K. Togun, Deputy Director, State Security Service of the murder of the deceased and submitted it to the Director of Public Prosecutions of Lagos State to request him to endorse thereon a certificate stating whether he is declining to prosecute the accused as the D.P.P. is required to do under section 342 (a) of the Criminal Procedure Law of Lagos State.

On 6th November, 1986, the appellant went to the D.P.P. in order to obtain the requisite certificate but the D.P.P. orally told the appellant that he could not come to a decision whether or not to prosecute the accused persons at public instance on the information and proof of evidence which the appellant submitted to him. He refused to give a written reply.

The appellant then filed in the High Court of Lagos State an originating motion ex-parte on 7 November, 1986 in which he requested an order for leave to apply for an order of mandamus compelling the D.P.P. to exercise his discretion whether or not to prosecute the two accused persons for the murder of Dele Giwa and if he declines to prosecute, to endorse a certificate to that effect on the information submitted to him by the applicant.

The High Court, after hearing the appellant, dismissed the application and refused the leave sought although that court conceded to the appellant that he had the locus standi to bring the application. The High Court held that the D.P.P. had not refused to carry out his statutory duty but had only deferred his discretion and described the application as premature and hasty.

The appeal of the appellant to the Court of Appeal was unsuccessful. In that court, the issue of locus standi was raised by leave and it was held that following Adesanya and some other cases, the appellant did not have locus standi required to enable him bring the action which it struck out. The Court of Appeal also held in the alternative that the application failed on the merits as well and affirmed the decision of the High Court.

The full court of the Supreme Court allowed the further appeal of the appellant to it by a majority of 6 to 1, granted the appellant leave as sought in the motion before the High Court and remitted the matter to the High Court for hearing before another judge after granting the appellant thirty days within which to file an originating motion on notice in the High Court.[23]

(ii) Tax Evasion

The Nigerian tax statutes provide no legislative definition of tax evasion but from the various offences and penalties sections, the offences stated therein provide an insight into what may be regarded as tax evasion. Tax evasion may thus be perpetrated in some of the following ways:

1) Failure to make return for income tax or capital gains tax;

2) Failure to make return for corporation tax; and

3) Incorrect returns or accounts.

The various acts must be done with fraud, wilful default or neglect[24] and knowingly,[25] for them to constitute the offence of tax evasion. This approach of stating acts which constitute tax evasion is common to most common-law countries.[26] In the light of the above, can we confidently say that tax evasion is a criminal offence under Nigerian law?

It must be stated that despite the forceful argument that imposition of penalties are civil sanctions in England[27] and some other countries such as Australia[28] and Canada,[29] the Nigerian Income Tax Acts do not admit such arguments because the use of the word “penalty” does not convey the same meaning or connotation as employed in other jurisdictions except, of course, we are to assume that “civil penalties” mean additional assessments and interest and no more.

The use of the word “'penalty'” does not feature in the sections dealing with civil sanctions but in both Part 11 of the Personal Income Tax Acts 1993 and Part 12 of the Companies Income Tax 1990 under the heading “Offences and Penalties” and its usage no doubt imports a criminal element. Furthermore, the use of certain words in the sections where it is used shows that it is intended to be a criminal sanction.

Firstly, if it was intended that penalties as mentioned in the Income Tax Acts were criminal in nature, why did it not feature in provisions dealing with additional assessments and interests which are civil sanctions or why was its usage brought into sections dealing with offences? The logic of heading a section “Offences and Penalties” would seem to be that the penalties mentioned after offences are supposed to indicate the punishment for offences, if it were otherwise, the word “Penalties” would have come before “Offences” to show that it was distinctive from offences and could be imposed without the commission of an offence.

Secondly, the use of common criminal law terminology like “guilty”, “contravenes”, “conviction”, “fine”, “imprisonment” and “pleads” in the sections under Part 11 of PITA 1993 and Part 12 CITA 1990 confirms that penalties are criminal.

           

Thirdly, the provision in sections 71(3) CITA 1990 and 86(3) PITA 1993 that notwithstanding any of the provisions of the Criminal Procedure Act or Code, a magistrate may dispense with the personal attendance of the defendant if he pleads guilty in writing or so pleads by a legal practitioner, also shows that penalty proceedings are criminal in nature because if it were a civil proceeding, there would have been no need to mention the Criminal Procedure Act or code or even magistrate because, at least in the Northern States, Magistrates hear any criminal cases. But if it were a civil action, then it is a matter for the District Judge.

The only provision which may probably qualify as a “Civil Penalty” is in section 71(4) of CITA and 86 (4) of PITA and it is in the form of a settlement intended to limit prosecution and save time in very clear cases of infraction of the law.

The Nigerian courts have not pronounced on this probably because the Board of Internal Revenue has always brought tax matters including those with a criminal element as civil actions.[30] Therefore, the nature of penalties are to be gleaned from the statutory provisions themselves and the judgements of the courts in similar jurisdictions. In this respect, the judgement of the Indian High Court at Madiya Pradesh in C.lT., H.P. v Punjabhai Shah,[31] that the penalty proceedings, being in their very nature penal, the degree and quantum of proof necessary for adjudging an assessee guilty were the same as the criminal prosecution is quite instructive. The Court stated that:

The assessment proceedings and penalty proceedings are different in their nature. The findings given in assessment proceedings are no doubt relevant and admissible in penalty proceedings, but they do not operate as res judicata, so as to preclude the production of other evidence in penalty proceedings to show (for instance) that the assessee concealed his income or to rebut this charge...

It may be further stated that in some instances, the practice of bringing cases of tax evasion as civil actions to recover penalties is akin to that of India but it nevertheless does not detract from the fact that in incurring such penalties in the first place by committing an act of tax evasion, a criminal offence under the Nigerian Income Tax Acts has been committed.

Next, we may now consider the degree of locus standi needed for a taxpayer to complain about tax evasion.

 

(iii) Locus Standi

It is relevant to consider a hypothetical case here. Assuming that in the Lagos Island Local Government Area of Lagos State, Nigeria, there are 100 government employees earning a flat rate income of N1,000 per annum on which they pay N100 making a total revenue of N10,000 for the Board of Internal Revenue.

Assuming, again, that Mr X now conceals his income by fraudulently filling his income tax declaration form and now pays a tax of N50 instead of N100 making a shortfall of N50 in the revenue of the Board. To make up for the loss, the tax to be paid by the others is now grossed up to accommodate the loss. Can Mr Y or indeed any other fellow taxpayer or a body of them complain that his income has been reduced by Mr X committing an act of tax evasion? Supposing Mr X was an influential man in the community whom the Board of Internal Revenue is not willing to prosecute, can Mr Y not bring an action by way of private prosecution? What is to be done in such cases?

There is no doubt as Lord Diplock put it in I.R.C. v Rossminster Ltd[32] that:

Two competing public interests are involved: that offences involving tax frauds should be detected and punished, and that the right of the individual to the prosecution of the law from unjustified interference with his use and enjoyment of his private property should be upheld. What underlies the questions of law which this House must now determine is how those two competing, and at times conflicting, public interests can be reconciled…

It is only on very rare occasions that the Nigerian courts have cause to consider the question of locus standi in criminal proceedings. It frequently arises for consideration in civil proceedings. Although, it cannot be said that an application for an order of mandamus or the application for the grant of leave to apply for an order of mandamus to compel the Board of Internal Revenue to prosecute is not a civil proceeding, the main purpose of the order sought is to enable the initia­tion of criminal proceeding. Tax evasion has been committed and a prosecution of the offender is desired.

The questions may be asked:[33]

(1) Whose rights are injured when tax evasion is committed?

(2) On whom do our laws and Constitution confer power and impose obligations to prosecute for the offence?

(3) Are these rights and obligations common law rights and obligations or statutory rights and obligations?

When the crime of tax evasion is committed, very many questions must be considered in order to arrive at the correct answer to the issue of locus standi. All recent judicial pronouncements on this issue have found inspiration and guidance from the provisions of section 6 (6) of constitution of the Federal Republic of Nigeria 1979 which reads:

The judicial powers vested in accordance with the foregoing provisions of this section - shall extend to all matters between persons, or between government or authority and any person in Nigeria and to all actions and proceedings relating thereto for the determination of any question as to the civil rights and obligations of that person.

On the issue of locus standi, the only question, on the assumption stated above, is whether the complaining taxpayer or indeed a body of taxpayers can complain of the unlawfulness of the act of the Board of Internal Revenue. Have they a "genuine grievance"? One thing that must be said is that if these taxpayers cannot complain, there is no one else who can. The unlawful conduct of the revenue will go without remedy. The revenue authorities will have obtained dispensing power without it being authorised by law and that by a defect in our procedure - because no one has a locus standi to complain.

Rather than grant the revenue such dispensing power, it is reasonable to allow the whole body of taxpayers a locus standi to complain. Assuredly, the Attorney General will not complain on their behalf. He never does complain against a government department. [34]

A parallel to this is found in the grievance of the beneficiaries in Vestey v. Inland Revenue Commissioners[35] where Walton 1. said:

I conceive it to be in the national interest, in the interest not only of all individual taxpayers - which includes most of the nation - but also in the interest of the revenue authorities themselves, that tax system should be fair ... One should be taxed by law, and not be untaxed by concession... A tax system which enshrines obvious injustice is brought into disrepute with all taxpayers accordingly, whereas one in which injustice, when discovered, are put right (and with retrospective effect when necessary) will command respect and support.' Those eloquent words were quoted and stressed by Lord Wilberforce in 1979 when the case reached the House of Lords (1979) 3 W.L.R. 915, 926, 931. Adapting them here, I would say that if the revenue authorities are found to be exercising a dispensing power... not given to them by parliament ... then it is open to a representative body of taxpayers... representative of the whole... to come to the courts to complain of it: and to seek a declaration as to the rights or wrongs of it...

 

It is fundamental that an applicant for leave to apply for an order of mandamus to compel the Board of Internal Revenue to prosecute a tax evader must have locus standi to make the application before leave can be granted by the court.

Indeed, the party making any claim and bringing any application before the Court must have locus standi.[36] If the plaintiff has no locus standi, the court has no jurisdiction to entertain the matter and it must be struck out.[37] When a party’s standing to sue is in issue, the question is whether the person whose standing is in issue is the proper party to request an adjudication of a particular issue and not whether the issue itself is justiciable.[38] Thus, one has to look at the cause of action and the facts of the case to ascertain whether there is disclosed a locus standi or standing to sue.[39] The cause of action, if any, will disclose facts from which it could be ascertained, there is an infringement of or violation of the civil rights and obligation of the party which, if established before the court, will entitle him to relief or remedy.

In a matter of tax evasion, the contention is that the facts on which an application to the court are based are in respect of a crime and criminal prosecution. The power to initiate criminal prosecution whether by the Attorney­ General or by a private prosecutor or other authority is a right in the broad sense.

It is recognised by the laws and the Constitution of the Federal Republic of Nigeria 1979. It is, in respect of the States, recognised by section 191 of the Constitution and, in respect of the Federation, it is recognised by section 160 of the Constitution. While the right of any other authority or person to institute criminal proceedings is recognised by the two sections, the two sections confer specific powers on the Attorney- General to:

(a)        institute and undertake criminal proceedings against any person before any court of law    in Nigeria other than a court martial;

(b)        take-over and continue any such criminal proceedings that may have been instituted by     any other authority or person; and

(c)        discontinue, at any stage before judgement is delivered, any such criminal proceedings      instituted by him or any other authority or person.

The Criminal Procedure law of the Federation and of the States makes abundant provisions conferring powers of arrest and to undertake and institute criminal prosecution on private persons.[40] This brings one to the consideration of section 6(6) (b) of the Constitution of the Federal Republic of Nigeria 1979. Power as rights, in the wide sense, must be in contemplation of section 6 (6) (b). This section expressly provides that:

The judicial powers vested in accordance with the foregoing provisions of this section in (b) shall extend to all matters between persons or between governments or authority and any person in Nigeria, and to all actions and proceedings relating thereto for the determination of any question relating to the civil rights and obligations of that person.

Can it be said that there is no question relating to the civil rights and obligations of a complaining taxpayer? There is a question raised about his right when the Board of Internal Revenue decline to prosecute at public instance. This question arises as a result of the refusal of the Board to prosecute as required by the tax law and section 342(a) of the Criminal Procedure Law,[41] although the complaint of tax mandamus is a civil proceeding so also the application for leave.

Adesanya v. President of Nigeria and Irene Thomas v. Olufosoye are both in respect of civil causes or matters and provide sound and solid authority for the locus standi of such an application. The barrow confines to which section 6(6)(b) restricts the class of persons entitled to locus standi in civil matters have been broadened by the Criminal Code, the Criminal Procedure Law and the case of Fawehinmi v. Akilu. The powers of arrest and prosecution conferred by the various sections of the criminal Procedure Law and the Criminal Code on “any person” has the magic effect of giving locus standi to any person who cares to prosecute an offender or in this case a tax evader if and only if, he saw him committing the offence or reasonably suspects him of having committed the offence of tax evasion

Criminal Law is addressed to all classes of society. As the rules, they are bound to obey on pain of punishment or penalty to ensure order in the society and maintain the peaceful existence of society who forms the government or the legislative arm of government for the benefit of the society; and the power to arrest and prosecute any person who breaches the rule is also conferred on any person in the society in addition to the Attorney- General and other law officers for the benefit of the society.

           

The peace of the society is the responsibility of all persons in the country and as far as protection against crime is concerned, every person in the society is each other’s keeper and indeed as Justice Obaseki stated:

Since we are all brothers in the Society, we are our brother’s keeper. If we pause a little and cast our minds to the happenings in the world, the rationale for this rule will become apparent.[42]

Not only are we our brother’s keeper in Nigeria but we are also our “Nation’s keeper” in fiscal matters, particularly in these hard economic times. We owe our country a “duty insofar as prevention of tax evasion and punishment of those committing the offence are concerned. The Criminal Code, the Criminal Procedure Law and the authority of Fawehinmi v Akilu have made everyone of us, Nigerians and indeed all those who reside within our shores our “Nation’s keeper” to ensure that no “fiscal murder” is committed on Nigeria’s revenue.

The taxpayer in this situation cannot be described as a busybody with misguided complaints. The Criminal Code, the Criminal Procedure Law and Fawehinmi v Akilu, insofar as prevention of crime and punishment of those committing crimes are concerned, have made everyone of us, nay, all Nigerians, our brother’s keeper.

Despite all these, on whom does the law confer power and impose obligations to prosecute for the offence?

            Sections 91 of PITA and 76 of CITA provide that:

No prosecution in respect of an offence under (this act) may be commenced except at the instance of or with the sanction of the Board.

It is, therefore, the duty of the Board of Internal or Inland Revenue to prosecute. Lord Diplock in I.R.C. v. National Federation comments upon these duties and their alleged breach:

In the exercise of these functions, the Board has a wide managerial discretion as to the best means of obtaining for the national exchequer from the taxes committed to their charge the highest net return that is practicable having regard to the staff available to them and the cost of collection. The Board... are under a statutory duty of confidentiality with respect to information about individual taxpayers' affairs that has been obtained..., and this imposes a limitation on their managerial discretion.

I do not doubt, however,... that if it were established that the Board were proposing to exercise or to refrain from exercising their powers not for reasons of good management but far some extraneous or ulterior reason, that action or inaction of the Board would be ultra vires and would be a proper matter for judicial review if it were brought to the attention of the court by an applicant with a sufficient interest in having the board compelled to observe the law.[43]

The rights and obligations conferred by sections 91 of PITA and 76 of CITA are not common law rights but statutory rights and obligations as Crime is an offence against the state. The ‘person’ to avenge the crime of tax evasion is the Board of Internal Revenue in personal income taxation cases and the Federal Board of Inland Revenue in respect of company taxation. However, the provisions in Sections 92 PITA and 72 of CITA that:

The provisions of this Act shall not affect any Criminal proceedings under any other enactment

also indicate that the other persons to avenge on behalf of the state are (1) the Attorney-General or any other law officer in his department as a public prosecutor, or (2) a private prosecutor.[44]

These provisions leave one in no doubt as to the obligations on every taxpayer to see that any tax evader is brought to justice and that no one helps him to escape justice. Criminal Law is not like the law of procedure meant for lawyers only but is addressed to all classes of society as the rules that they are bound to obey on pain of punishment.

The Nigerian tax laws do not by their provisions confine complaint in respect of the offence of tax evasion to a particular person or class of persons. Any person who has sufficient information in his possession to establish the crime and identify the accused person is not only entitled to lay the charge but is also eminently qualified under the law.


IV.       The Relevance of Fawehinmi v Akilu

Five issues by the Supreme Court in this case bring out its relevance to Nigerian taxation as a proper and eminent authority to be cited by an aggrieved taxpayer.

(1) It is a universal concept that all human beings are brothers and are assets to one another. All human beings living in the same country and being citizens of the same country are more closely related to one another and are in truth and in fact, each other's keeper than those living in countries separated by great distances.

(2) The law imposes a duty on all persons not only to deprive criminals of all hiding places but also to ensure that they are arrested, prosecuted and brought to justice.

(3) The Criminal Code does not by its provisions confine complaint in respect of (an) offence to a particular person or class of persons. Any person who has sufficient information in his possession to establish the crime and identify the accused person is entitled to lay the charge.

(4) If a private prosecutor has a statutory right to initiate criminal proceedings in court, it becomes part of his civil rights and obligations under section 6(6)(b) of the 1979 Nigerian Constitution and he has the right to protect and enforce such civil rights by any legal process which he thinks appropriate. Indeed, if such prosecutor thinks that another person is trying to prevent him from exercising his statutory right to prosecute, he may bring appropriate proceedings to remove the impediment.

(5) The narrow confines to which section 6(6)(b) restricts the class of persons entitled to locus standi in civil matters have been broadened by the Criminal Code, the Criminal Procedure Law and the Constitution of the Federal Republic of Nigeria 1979. The powers of arrest and prosecution conferred by the various sections of the Criminal Procedure Law and Criminal Code on "any person has the magic effect of giving locus standi to any person who cares to prosecute an offender if, and only if, he saw him committing the offence or reasonably suspect him of having committed the offence.

Criminal Law is addressed to all classes of society as the rules that they are bound to obey on pain of punishment to ensure order in the society and maintain the peaceful existence of society. The rules are promulgated by the representatives of society who form the government or the legislative arm of government for the benefit of the society; and the power to arrest and prosecute any person who breaches the rule is also conferred on any person in the society in addition to the Attorney ­General and other law officers for the benefit of the society.


V.        Conclusion

The case of Fawehinmi v Akilu is by no means an ordinary case. It is a case of great constitutional importance which can seriously affect individual liberty. The reasoning of each of their Lordships is worthy of in-depth study. In a matter of this nature, one must agree with the statement of Lord Diplock in I.R.C. v National Federation where he said:

It would, in my view, be a grave lacuna in our system of public law if a pressure group ... or even a single public ... spirited taxpayer, were prevented by outdated technical rules of locus standi from bringing the matter to the attention of the court to vindicate the rule of law and get the unlawful conduct stopped. The Attorney-General, although he occasionally applies for prerogative orders against public authorities that do not form part of central government, in practice never does so against that judicial review of actions of officers or departments of central government is unnecessary because they are accountable to Parliament for the way in which they carry out their functions. They are accountable to Parliament for what they do so far as it regards efficiency and policy, and of that Parliament is the only judge; they are responsible to a court of justice for the lawfulness of what they do, and of that, the court is the only judge.[45]

This, indeed, is the law and the revelation that outdated technical rules are gone.

 




[1]Chief Gani Fawehinmi v Colonel Halilu Akilu and Anor; In Re J.A. Oduneye. D.P.P. Lagos State
(1987) 11-12 SCNJ 151; See M.T. Abdulrazaq (1992) Kwara Law Review Vol. I No.1 pp. 86- 101
[2]Ibid. p. 165.
[3]The case has wide ranging implications in the area of Administrative Law, Constitutional Law, Criminal Law, Criminal Procedure and General Practice and Procedure.
[4] The Federal Board of Inland Revenue for Federal Taxes and the Boards of Internal Revenue for State Taxes. It should be known that in Nigeria, the legal departments of the Revenue Boards are manned by counsels deployed from the Ministries of Justice acting for, under and on behalf of the Federal; or State Attorneys-General. In other words, unlike England, the Revenue does not possess an independent power of prosecution. See SS. 2(3) 71, 72 C.LT.A. 1990 and SS.3 (3) 60, 61 PITA IQ'.
[5] Fawehinmi v Akilu (1987) 11-12 SCNJ. 202.
[6]  In order for a case to be "ripe" for judicial consideration, it must involve issues, which are real, present or imminent, and not those which are abstract, hypothetical or remote: see Olawoyin v Attorney-General for Northern Nigeria (1961) All NLR 269.
[7]  lIuyomade and Eka, Cases and Materials on Administrative Law in Nigeria (1980) University of Ife University Press) P. 273.
[8]  (1981) 2 N.C.L.R.
[9] See J.D. Akande, The Problem of Locus Standi in Judicial Review. (1982) Nigerian Current Law Review. PP. 43; 49, 52.
 
[10] 1987) 11-12 SCNJ PP.201, 202. See also Drogan v. Soremekun (1981) 5.NWLR 688 at P. 700; Egbe v. Adefarasin (1981) I NWLR P. 1 at P. 20. In all the cases, the ratio decidendi is that when a man comes to court and prays the court to look into a dispute between him and any person or body, he must show a legal interest entitling him to ask for the intervention of the court. In the celebrated case of Senator Adesanya v. The President, Idigbe J.S.C. at P. 387 declared “The type of case or controversy which will justify the exercise of the court of its judicial power must be justiciable and based on a bona fide assertion of right by the litigant (or one of them) before it”. All these authorities relate to civil matters and are therefore not difficult to comprehend.
[11] (1987) 11-12 SCNJ pp. 222, 223
[12] I.R.C. v National Federation of self-employed and Small Business Ltd. (1981) S.T.C. 260, (1982) A.C. 617. H.L. This case was cited in the Fawehinmi case.
[13] Barlett, "Judicial Review in Taxation: A Modem Perspective" (1987) British Tax Review, pp.19­
[14] Graham Aldous and John alder. Applications for Judicial Review-Law and Practice (Butterworths) (1985). See also “the new face of judicial review: administrative changes in Order Cooper Q.C. (1982) P.L. 250 and “Procedure and Prerogative in Public Law” by H.W.R. Wade (1985) L.Q.R. 180.
[15] The matter is dealt with in the National Federation case at (1982) A.C. 617, 630,643, and 649,659.
[16] The matter is dealt with in the National Federation case at (1982) A.C. 617, 630,643, and 649, 659. 16 Op cit. at P. 95. .7 Ibid.
[17] Ibid.
[18] Op. cit. at p. 96.
 
[19](1981) S.T.C. 260 at P. 264.
[20] Op. cit. at P. 266.
[21] Op. cit. at P. 268
[22] Op. cit. at P. 23; See also R. v. H.M. Treasury. ex parle Smedley (1985) All E.R 589 especially the judgement of Slade LJ. at 595.
 
[23] (1987) 11-12 SCNJ PP. 152, 153
[24] CITA (1990) S. 73( I) (a)
[25] PITA (1993) S. 54 (2)
[26] M. T. Abdulrazaq, The Legal Nature of Tax Evasion and Avoidance Vol. .4. Ibadan University Law Review.
[27] Halsbury's Law of England 715 (3rd, Simon's Ed. 1957)
[28] S. 237. Part 7 Income Tax Assessment Act, 1939-1978
[29] Alex Pashovitz v. Minister of National Revenue (1961) Ex C.R. 365, 372
[30] See Ola v. F.B.I.R. suit no. FRC/L/IA/73; F.B.I.R. v. West African Pictures Co. Ltd; suit no. FRC/L/873; F.B.I.R. v Solanke., suit no. FRC/L6/73; F.B.I.R. v Blue Pelican Casino Company Ltd., suit no. FRC/PH/2/76.
[31] A.I.R. (1968) M.P. 103 at 106.
[32] (1980) S.T.C. P. 52
 
[33] (1987) 11-12 SCNJ p. 173
[34]  Rt. Hon Lord Denning. The Closing Chapter (1983) ButterWorths, pp. 216, 217
[35] (1979) Ch 177, 197-198
[36]  See Senator Adesanya v President of Nigeria; Irene Thomas v. Olufosoye; Amusa Momoh and Anor v Olotu (1970) All NLR 177.
[37] Oloriode and Qrsv. Oyebi and Ors (1984) SSC I at 28
[38] Ibid. per Obaseki, JSC.
[39]  Adesanya v. President of Nigeria
[40] Salmond on Jurisprudence (12th ed.) at pp. 228, 229 and see (1987) 11-12 SCNJ per Obaseki JSC at pp. 183, 184, 185. 186. 187
[41] See Part 12 CITA 1990; Part II PITA 1993 and S.77 CITA and S.92 PITA which provides that “The provisions of this Act shall not affect any criminal proceedings under any other enactment”
 
[42] (1987) 11-12 SCNJ p. 185
[43] Op cit. at P. 269
[44] S. 12 Criminal Procedure Law Cap 32 laws of Lagos State Vol. 2 and S. 130 Criminal Code of Lagos State Cap 31 Laws of Lagos State 1973. Although, this law has since been amended in Lagos State to exclude the right of Private prosecution except in cases of perjury, similar laws in the other states still hold good and is applicable in similar circumstances. See Criminal Procedure (Amendment) Edict No.7 of 1987. S. 340.
 
[45] (1982) AC 617, 644, H.L.

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