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.
[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.
[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.
[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.
[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.
No comments:
Post a Comment