Taxes, levies from Centenary Free Zones Company illegal – Court

July 8, 2023

23

Abuja, July 8, 2023: The Federal High Court, Abuja has declared the charges and deductions to the tune of over N16 million from the accounts of the Centenary City Freezones Company and Prime Properties FZE by the Federal Inland Revenue Service(FIRS) as illegal and unconstitutional.

The deduction were regarded as withholding and value added tax.

Justice Donatus Okorowo, in a judgment, on July 7, 2023 in Abuja held that the plaintiffs were exempted from the payment of all federal, state and local government taxes, levies and rates by virtue of their registration and operations within the Centenary Economic City Zone.

He said this was in accordance with the provisions of Section 8 of the Nigeria Export Processing Zones Act.

Justice Okorowo, consequently, restrained the FIRS and Standard Chartered Bank of Nigeria from further charging, levying or deducting any tax, levies or duties from the two companies.

The judgment delivered on June 23 was in respect of suit no FHC/ABJ/CS/78/2022 filed by the plaintiffs and argued by their counsel, Nkemakolam Okoro.

According to the certified true copy of the judgment dated July 5, 2023, the judge directed the defendants to refund forthwith, N14, 616, 289.06 as withholding tax and N2,164, 659.00 as value added tax, illegally deducted from the accounts of Prime Properties FZE (2nd plaintiff), domiciled with Standard Chartered Bank (both Naira and Domiciliary) between 2015 to 2018.

Justice Okorowo held that; “Section 10 (2), the Export Processing Zone Act that grants licence to operate within the zone, by the authority shall constitute registration of the company within the zone.

“The 2nd plaintiff is an enterprise within the Centenary Economic City freezone. Section 8 of the Act provides that ‘operating within a zone shall be exempted from all federal, state and local government taxes, levies rates and rates.

“As submitted by the plaintiff counsel, the provision of Section 8 of the NEPZA Act is couched in mandatory form, hence ought to be complied with, by the defendants, especially given the use of the word shall in the status,” he said.

The judge also directed the FIRS to pay the 2nd plaintiff N5, 034, 284.42 being 10 per cent interest on N14, 616, 289. 05 deducted from the 2nd plaintiff’s account as VAT, by the FIRS from 2015 to 2020.

He equally made an order directing the defendants to pay exemplary damages in the sum of N5 million jointly and severally in favour of the plaintiffs.

FULL JUDGEMENT

IN THE FEDERAL HIGH COURT OF NIGERIA

IN THE ABUJA JUDICIAL DIVISION

HOLDEN AT ABUJA

ON_FRIDAY THE DAY OF JUNE, 2023

BEFORE HIS LORDSHIP, HON. JUSTICE D. U, OKOROWO

JUDGE

SUIT NO:

BETWEEN:

1. CENTENARY CITY FREEZONE COMPANY

2. PRIME PROPERTIES FZE } PLAINTIFFS

1. FEDERAL INLAND REVENUE SERVICE }

2. STANDARD CHARTERED BANK OF NIGERIA DEFENDANTS

LIMITED

JUDGMENT

The Plaintiffs brought this action by Originating Summons dated 24%

January 2022 and filed on 25″ January 2022. The summons is brought

pursuant to Sections 8, 10 and 12 of the Nigerian Export Processing Zone

Authority Act; Order 3 Rule 6 of the Federal High Court Civil Procedure

Rules 2019, and under the inherent jurisdiction of this Honourable Court as

preserved by Section 6(6) (A & B) of the Constitution of the Federal

Republic of Nigeria, 1999 (as amended). In the summons the Plaintiff seek the determination of the following

i

questions, namely:

A DECLARATION that the Plaintiffs are exempted from the payment

of all Federal, State and Government taxes, levies and rates, by

virtue of their registration and operation within the Centenary

Economic City Free Zone, in accordance with the provisions of

Section 8 of the Nigeria Export Processing Zones Act.

2. that the conduct of the Defendants by charging and

deducting the sum of Fourteen Million, Six Hundred and Sixteen

Thousand, Two Hundred and Eight-Nine Naira, Five Kobo (N14, 616,

289: 05) as withholding Tax and the sum of Two Million One

Hundred and Sixty Four Thousand, Six Hundred and Fifty-Nine Naira

(N2, 164, 659: 00) between 2015 — 2018, as Value Added Tax,

against the following accounts of the 2™ Plaintiff domiciled with

Standard Chartered Bank; account number 0002068329 (Naira) and

0002068336 (Domiciliary) and account number 0002615541 (Naira)

and 0002061539 (Domiciliary), is illegal, unlawful, wrongful,

unconstitutional, null, void and of no effect whatsoever.

AN ORDER of this Honourable Court directing the 1% Defendant to

refund forthwith the sum of Fourteen Million, Six Hundred and |

Sixteen Thousand, Two Hundred and Eight-Nine Naira, Five Kobo

(N14, 616, 289: 05) as withholding Tax and the sum of Two Million

One Hundred and Sixty Four Thousand, Six Hundred and Fifty-Nine

Naira (N2, 164, 659: 00) as Value Added Tax, illegally deducted from

the accounts of the 2″ Plaintiff domiciled with Standard Chartered

Bank between 2015 2018.

AN ORDER of this Honourable Court directing the 1% Defendant to

pay to the 2™ Plaintiff the sum of Five Million, Thirty Four Thousand,

Two Hundred and Eighty-Four Naira, Forty-Two Kobo (N5, 034, 284:

42) being 10% interest on the sum of Fourteen Million, Six Hundred

and Sixteen Thousand, Two Hundred and Eight-Nine Naira, Five Kobo

(N14, 616, 289: 05) deducted from the 2″ Plaintiff’s accounts as

VAT, by the 1% Defendant from 2015 to 2020.

5. AN ORDER of this Honourable Court directing the 1% Defendant to

pay to the 2″ Plaintiff 10% interest on the sum of Fourteen Million,

Six Hundred and Sixteen Thousand, Two Hundred and Eight-Nine

Naira, Five Kobo (N14, 616, 289: 05) deducted from the 2″ Plaintiff’s

accounts as withholding Tax, and the sum of Two Million One

Hundred and Sixty Four Thousand, Six Hundred and Fifty-Nine Naira

(N2, 164, 659: 00), deducted from the 2″ Plaintiff’s account as VAT

from 2020 till Judgment is delivered.

AN ORDER of injunction restraining the Defendants whether by

themselves, staff, employees, agents, servants and/or privies is

howsoever called, from further charging, levying or deducting any

tax, levies or dues from account of the claimants domiciled with the

Defendant, in contravention of the provisions of Section 8 of the

Nigeria Export Processing Zones Act.

7. Punitive and Exemplary damages in the sum of N250, 000, 000: 00

(Two Hundred and Fifty Million Naira) against the Defendants jointly

and severally.

The cost of this action assessed at N5, 000, 000: 00 (Five Million

Naira) against the Defendants jointly and severally.

9. Interest on the entire judgment sum, calculated at the rate of 10%

from the date the judgment is delivered till the judgment sum is fully

liquidated by the Defendant.

10. Other reliefs as the Honourable Court may deem fit to grant in the

circumstance of the case.

In support of the Summons is a 40 paragraphs affidavit deposed to on

behalf of the Plaintiffs by Ikechukwu Michael Odenigwe, Managing Director

of the Centenary Free Zone Company the 1% Plaintiff in this suit and the |

Zone Management of the Centenary Economic City Free Zone, where Prime

Properties Free Zone Enterprises the 2″ Plaintiff herein operates. Attached

are Exhibits PPFZE 1-17. The Plaintiffs also filed a written address.

The lone issue formulated by the Plaintiffs in the address is:

“Whether the Plaintiff given the suffusing facts and the

circumstances of this case, they are entitled to the reliefs |

sought in this action. Question 1 and 2 for determination.”

The 1 Defendant in reaction to the Plaintiffs case filed 24 paragraphs

counter affidavit deposed on their behalf by Hauwa Ibrahim, a legal officer |

in the Legal, Advisory and Litigation Department of the 1% Defendant.

Attached is exhibit FIRS 1. The 1% Defendant also filed a written address.

The following issues for determination were formulated in the address,

namely:

Whether or not by proper interpretation and combine

effect of the provisions of Sections 8, 10 and 12 of the

Nigeria Export Processing Zones Act, the 1% Defendant

has the power to charge the Plaintiff any Federal Tax

such as Value Added Tax and withholding Tax in

Nigeria on any business carried out outside the zone.

2. Whether or not from the circumstances and the facts is |

right in charging the Plaintiff a withholding Tax on |

accrued Interest to the sum of Fourteen Million, Six

Hundred and Sixteen Thousand, Two Hundred and

Eight-Nine Naira, Five Kobo (N14, 616, 289: 05)

3. Whether or not from the circumstance and the facts of

this case the Plaintiffs are entitled to the reliefs

sought.”

The 2″ Defendant in reaction to the case of the Plaintiff filed 4 paragraphs

counter affidavit to which is attached exhibit SCBC 1. The 2™ Defendant

formulated by the Plaintiffs in the Originating Summons.

In reaction to the 1% Defendant’s counter affidavit and address, the

Plaintiffs filed 35 paragraphs “Plaintiffs’ Further Affidavit in response to the

Counter Affidavit of the which is attached exhibits A — C.

The Plaintiff also filed “Reply on Points of Law to the written address of the

Defendant”.

The Plaintiff also reacted to the Defendants counter affidavit with the

filing of 30 paragraph further affidavit in response to the counter

affidavit of the Defendant” and “Reply on Points of law to the written

address of the 2″ Defendant”.

I have perused the processes herein identified which are incorporated as |

part of this judgment. It will be unwieldy to reproduce the addresses of the

parties and the contents of the affidavit when they from part of the records

of this Court.

It is trite law that action commenced by Originating Summons are resolved

by issues submitted for determination by the Plaintiff. See Shoboyede Vs

Ministry of Land and Housing, W.N. (1974) 5 SC P.13; Obansanya V.

Babafemi (2000) 15 NWLR (Pt. 689) P.1 and Achu C.S.C. Cross River State |

(2009) 3 NWLR (PT 1129) P475. I shall therefore on the state of the law

rely on issues formulated by the Plaintiff and in addition adopt also the 3″

issue for determination formulated by the 1% Defendant as issues for |

determination in this case.

the combined provisions of Sections 8, 10 and 12 of the

Nigerian Export Processing Zones Act, the registration of

the 2″ Plaintiff as an enterprise operating within the

Centenary Economic Free Zone, managed by the

Plaintiff, which exempt it from all Federal taxes and

levies, by either State or the Federal Government of

Nigeria, the Plaintiff is still liable to and subject to be charged for and required to pay Value Added Tax,

withholding Tax and Stamp Duty, in Nigeria?

The relevant provisions of the Act that the Plaintiff seek for interpretation

in this case are Sections 8, 10 and 12 of the Nigerian Export Processing

Zones Act which are reproduced as follows:

“Approved enterprises operating within the zone, shall

be exempted from all Federal, State and Government

taxes, levies and rates”

“1. The Authority may grant a license for any

approved activity in a zone to an individual or

business is incorporated in the customs territory.

2. The grant of a license by the authority shall

constitute registration for the purpose of company registration within the zone”

Section 12

“The Authority and any approved enterprise shall be

entitled to import into a zone, free of custom duty, any

capital goods consumer goods, raw materials,

components, or articles intended to be used for purpose

of and in connection with an approved activity, including Section 12

“The Authority and any approved enterprise shall be

entitled to import into a zone, free of custom duty, any

capital goods consumer goods, raw materials,

components, or articles intended to be used for purpose

of and in connection with an approved activity, including

The Plaintiffs are contending that by virtue of the clear provisions of the

Act they are not to be charged various sums deducted from its accounts by

Defendants as VATS, and withholding Taxes. The Plaintiff had averred in

paragraphs 8 — 10 of the affidavit in support that 2″ Plaintiff opened

accounts numbers 0002068329 (Naira), 0002068336 (Domiciliary/ and

accounts with Standard Chartered Bank, using certificate of registration as

a Free Zone Enterprise with account numbers 0002615541 (Naira) and

0002061539 (Domiciliary) in respect of its foreign capital. Also that the Plaintiff had approval of the Central Bank of Nigeria to bring its Foreign

Direct Investment (FDI), via validly issued Certificate of Capital Importation

(CCI) (Number 068044477) through the 2″ Defendant as shown in Exhibit

PPFZE 3.

The Plaintiff averred in paragraph 13 of the affidavit in support that:

“That sometime in December 2018, the 2″ Plaintiff

received a letter from Standard Chartered Bank wherein

it informed the Plaintiff of restrictions on its account

numbers, 0002068329 (Naira) and 0002068336

(Domiciliary), 002615541 (Naira) and 00020615390

(Domiciliary) over tax indebtedness of about N40, 565,

287.67. A copy of the said letter is herewith attached as

Exhibit PPFZES.”

The Plaintiffs averred in paragraphs 15 and 16 of the affidavit in support of

the summons that 2″ Plaintiff wrote a letter to the Executive Chairman of

the 1″ Defendant to intimate him of the exemption of the Centenary

Economic City from payment of taxes in Exhibit PPFZE7. And further, on Plaintiff had approval of the Central Bank of Nigeria to bring its Foreign

Direct Investment (FDI), via validly issued Certificate of Capital Importation

(CCI) (Number 068044477) through the 2″ Defendant as shown in Exhibit

PPFZE 3.

The Plaintiff averred in paragraph 13 of the affidavit in support that:

“That sometime in December 2018, the 2″ Plaintiff

received a letter from Standard Chartered Bank wherein

it informed the Plaintiff of restrictions on its account

numbers, 0002068329 (Naira) and 0002068336

(Domiciliary), 002615541 (Naira) and 00020615390

(Domiciliary) over tax indebtedness of about N40, 565,

287.67. A copy of the said letter is herewith attached as

Exhibit PPFZES.”

The Plaintiffs averred in paragraphs 15 and 16 of the affidavit in support of

the summons that 2″ Plaintiff wrote a letter to the Executive Chairman of

the 1″ Defendant to intimate him of the exemption of the Centenary

Economic City from payment of taxes in Exhibit PPFZE7. And further, on March 2019, the Nigeria Export Processing Zones Authority, wrote the

Executive Chairman of the 1% Defendant in Exhibit PPFZES on the |

provisions of Section 8 of NEPAZA Act which exempts the Plaintiffs from

payment of taxes and the restrictions were lifted.

The Plaintiff averred in paragraph 18 of the affidavit thus:

“That consequent upon the foregoing, the Plaintiff

requested for the refund of the said sums illegally

deducted from its accounts by the Defendants between 2015 — 2020. Copies of the said letter requesting the

funds of monies illegally deducted from the accounts of

the 2″ Plaintiff domiciled with the 2″ Defendant are

attached herewith and collectively marked Exhibit

The Plaintiff averred that the 1% Defendant requested Plaintiff to

provide further documents to enable it process and refund the sum to the

2″ Plaintiff in Exhibit PPFZE11. That despite furnishing the Defendant

with the said documents for release of the illegally deducted funds

forwarded by Plaintiff in Exhibit PPFZE 13 and exhibit PPFZE 15, the 1

Defendant wrote the 2″ Plaintiff in exhibit PPFZE 16 stating that the

Plaintiff is not entitled to various sums of money deducted from the 2″

Plaintiff account.

In particular in exhibit PPFZE 16 the 1% Defendant stated that Prime

Properties FZE is liable to withholding tax on the interest earned on its fixed deposit with Standard Chartered Bank and is ineligible for refund

because Section 8 applies to enterprises within a zone. That banking

service rendered to Prime Properties FZE by the 2™ Defendant was

performed and consumed in the custom territory and within the Free Zone.

In paragraphs 15, 16, 17, 18, 21 and 22 of its counter affidavit, the

Defendant admitted that the restriction was placed on accounts of the

Plaintiff by the 2″ Defendant on its instruction, and admitted that the

deductions were made. The Defendant however denied that the tax was

on the imported capital but on accrued interest on Plaintiffs deposit.

The 1%

Defendant denied the illegality of their conduct alleging that Plaintiff placed nothing to prove that payment of withholding tax on interest that accrued

on deposit of the Plaintiff with 2″ Defendant is illegal. That the decision

to charge the tax is in accordance with our law.

The 2″ Defendant in paragraphs 3(c — h) of their counter affidavit

admitted that it was appointed a collection agent to deduct and remit tax

liabilities of the 2″ Plaintiff as assessed by the 1% Defendant in exhibit

SCB1 and placed lien for the sum of N40, 565, 289.67 and notified the

Plaintiff of its action on 19″ December 2018 in Exhibit PPFZE 5. It was also

its claim that deductions were made from 2″ Plaintiff’s account of

withholding Tax and VAT (Value Added Tax) based on TIN provided by the

2″ Plaintiff which made it eligible for it to pay withholding tax.

The questions remains whether by the afore mentioned provisions of

Sections 8, 10 and 12 of the Export Processing Zone Act the Plaintiff is

liable to pay taxes. As shown earlier Exhibits PPFZE 1 and 2 are proof that

the Plaintiffs are registered in the Nigerian Export Processing Zones Act,

and that 2″ Defendant is an enterprise in Centenary Economic City Zone.

By Section 10(2), the Act states that grant of license to operate within the

zone, by the Authority shall constitute registration of the company within a

zone. 2″ Plaintiff is an enterprise within the Centenary Economic City Free |

Zone, Section 8 of the Export Processing Zone Act provides that “approved

enterprises operating within a zone shall be exempted from all Federal,

State and Government taxes, levies rates, and rates.” In Amaechi V. INEC

& Ors (2008) LPELR — 446(SC) The Supreme held thus:

“The principles as to compliance with the requirements of

law made is that where a statute has made provision for the

step to be taken, no other step than those presented must

be followed. See U.N. THMB V. Nwoli (1994) SNWLR (Pt.

567); Kamba V. Bawa (2005) 4NWLR (PT 914) at 46.”

As submitted by the Plaintiff counsel the provisions of Section 8 of NEPZA

Act is couched in mandatory form, hence ought to be complied with, by the

Defendants, especially given the use of the word shall in the sections. In

Ogidi V. State (2005) SNWLR (PT 918) 286 the Supreme held thus:

“The word “shall” is used to express futurity or promise,

intention or command. As used in statute, contracts or the

like, the word is generally imperative and mandatory. In

common or ordinary parlance, and its ordinary signification,

the terms “shall” is a word of command and one which has

always or which must be given a compulsory meaning as

denoting obligation. The word in ordinary usage, means

“must” and is inconsistent with the concept of discretion. statute or in ordinary parlance it means a command to do

or not to do a particular act. There is no question of

exercise of discretion to do or not to do the envisaged act.”

From these authorities, the use of expression leaves no room for discretion

as it is a command. It is therefore obligatory on the Defendants to comply

with the provisions of Section 8 of the Nigerian Export Processing Zone Act,

by reason of which the Plaintiffs should not be subjected to payment of any form of tax by virtue of its registration in the Free Zone. This is the

intendment of the law.

In paragraph 32 the Plaintiffs averred that the monies upon which the

withholding Tax and VAT were charged were from Imported Direct

Investment of the Plaintiff. Exhibit PPFZE3 is the sum of 4.3m USD

which was approved to the 2™ Plaintiff as an Enterprise in the Centenary

Economic Free Zone, and 2″ Plaintiff had approval of the Central Bank of

Nigeria to bring in the Foreign Direct Investment FDI with Certificate of

Capital Importation (CCI) (Number 0680 444 77) through the 2m

Defendant. The Export Processing Zone Act is protective statute, which

seek to protect foreign investors, by encouraging foreign Direct Investment

and create Foreign Direct earning for the Federal Republic of Nigeria. The

provisions of NEPZA ought not to be interpreted in such a way as to defeat

the objective of the Act.

In Egbe V. Alhaji, the Supreme Court per NnaEmeka Agu JSC (Reported) in

(1990) 1 NWLR (PT 128) P. 546 at 600 paras A — B held thus:

“Beneficial statutes which are desired to protect a section

of public ought to be construed in such a way as to meet

that objectives.”

In this regard, I agree with the submission of the Plaintiff counsel that

subjecting the capital imported by the 2″ Plaintiff to be used in free zone,

to Value Added Tax and withholding Tax charges will be oppressive and

contradictory to the intendments of the provisions of Section 8 of the

NEPZA.

Other facts that enure to the favour of the Plaintiff is the response in

Exhibit PPFZE 8 attached to the Originating Summons wherein the Export

Processing Zone Authority through the Head Legal Services Communicated

to the 1% Defendant the exemption of payment by the Plaintiff in all taxes.

The 1% Defendant averred in paragraph 9 of its counter affidavit that:

9 I know that the letter of the 1 Defendant dated January,

2020 has addressed issues under consideration, as the said

letter explicitly indicated that the only tax which the Plaintiff

shall be liable is withholding Tax or interest accrued on deposits |

by Plaintiff with the 2″ Defendant”

10 Pursuant to paragraph “9” above that the 1% Defendant had

since dropped the issue regarding the VAT element of this case,

but only insist that the Plaintiff is liable to withholding Tax”

The Plaintiff in reaction stated in paragraphs 9 — 12 thus:

“9 That I know as a matter of fact that paragraph 9 of

the counter affidavit of the 1″ Defendant, is incorrect

false and denied.

10 That in further response to the denied paragraph 9 of

the counter affidavit of the Defendant, I know as

a matter of fact that the 2″ Plaintiff is exempted

from all taxes in Nigeria including withholding taxes

on the interest accruable from the 2″ Plaintiff’s

imported capital deposited in the 2 Defendant Bank.

11 That I know as a fact that the Defendant had

issued a circular in 2006, wherein it clearly stated

that companies registered and operating in the Free

Trade Zones are exempted from payment of

withholding taxes. A copy of this circular is attached

herewith as Exhibit A

12 That contrary to paragraph 10 of the counter affidavit

of the Defendant I know as a matter of fact that

the 1° Defendant is yet to refund the monies illegally

collected to pay VAT, by virtue of Section 8 of the

NEPZA Act.”

I have seen Exhibit “A” attached to the further counter affidavit of the

Plaintiffs in response to the counter affidavit of the 1% Defendant

originating summons. It is Headed Federal Inland Revenue Service

information No. 2006/02 circular published February, 2006. In clause 4.4

as it relates to enterprises operating within Free Zone, it stated as follows:

“These companies are granted exemption from the

payment of Nigerian Taxes by virtue of their status as

operating outside the Country. Even where they make

purchases outside the Free Trade Zones such companies

that they deal with are presumed to be resident within the

Nigerian Customs territory and such transactions are also

not liable to Nigerian taxes. |

By paragraph 4.4 of Exhibit A attached to the further affidavit, the 1%

Defendant cannot charge withholding Tax on the Plaintiffs by virtue of

registration in Free Trade Zone. The provision in paragraph 4.4 of Exhibit

reinforce the exemption provided in Section 8 of the Act. In Duke V. Global

Excellence Community Ltd (2007) 5 NWLR, it was held that:

carries a similar meaning with immunity so

that when one is exempted from existing legal relations he

will be said to have immunity or exemption. In other words

the doctrine of immunity turns out to the correlation

disability and the negative liability. Again immunity is

clearly analogous to disability tending to no liability”

“Immune” means exempt; not liable to danger, free from

obligation. (P.122 — 123 paragraphs G

With this interpretation of the Exemption, it is not in dispute that Section 8

is exculpating of the Plaintiffs.

Exhibit A attached to Plaintiffs Further Affidavit is a document made by the

1% Defendant holding out that the Plaintiff as one of the companies in the

Free Trade Zone is exempted from taxation. The 1% Defendant failed to

caution itself that having held a position in that circular which constitutes its policy that Plaintiff and companies in that class are exempted from

taxation. The conduct of the Plaintiff having failed to apply the policy in the

case of the Plaintiff is estopped by doctrine of estoppel by conduct under

Section 169 of the Evidence Act 2011 (As Amended) from denying the

existence of that policy. It is unconscionable for a party to be allowed to go

back on a policy or conduct which it has encouraged investors to believe with respect to Free Trade Zone. See ONOMADE V. ABC LTD (1997) LPELR

-2671 (SC). This issue is resolved against the Defendants.

Issue 2 — “whether by a calm reading of the combined provisions of

Section 8, 10 and 12 of the Nigerian Export Processing

Zone Act, the fact of the registration of the 2″ Plaintiff as

an enterprise operating within the Centenary Economic

City Free Zone, managed by the 1 Plaintiff which

exempts it from all Federal and State taxes, levies, the

Defendants can lawfully charge and deduct the sum of

Fourteen Million, Six Hundred and Sixteen Thousand, Two

Hundred and Eight-Nine Naira, Five Kobo (N14, 616, 289:

05) as withholding Tax and the sum of Two Million One

Hundred and Sixty Four Thousand, Six Hundred and Fifty-

Nine Thousand Naira (N2, 164, 659: 00) as withholding

Tax and the sum of Two Million One Hundred and Sixty

Four Thousand, Six Hundred and Fifty-Nine Thousand

Naira (N2, 164, 659: 00) as Value Added Tax, against the sum of Four Million Three Hundred Thousand, United

State Dollars (4, 300, 000: 00 USD) between 2015 —

2018, representing the Plaintiff’s Equity Foreign Direct

Investment, which had the approval of the Central Bank

of Nigeria.”

From the resolution of issue No. 1 the answer is obvious that by combined

provisions of Sections 8, 10 and 12 of the Nigerian Export Processing Zone

Act, the fact of registration of the 2″ Plaintiff as an enterprise operating with Centenary Economic City Free Zone Management by the Plaintiff

exempts the Plaintiff from all Federal and State levies, taxes and duties.

We have earlier shown in this Judgment that the 1% Plaintiff is licensed to

operate as Free Zone and other operating companies registered being

registered enterprises in the Centenary Economic City Free Zones enforcing

immunity provided under Section 8 of the Nigerian Export Processing Zones

Act.

I have perused argument of the 1% Defendant against the exemption

provided by the Act to the Plaintiffs. Contrary to perception of the 1

Defendant the powers of the 1% Defendant under the Federal Inland

Revenue Service Establishment Act, 2007 in Section 1 and 8(1)(b) to

control and administer different taxes tax laws and to assess, collect,

account and enforce payment of taxes due to government or its agencies,

is not in doubt. To import the provisions of Section 55 of FIRS Act in to

EPZA Act is to defeat the aim. Exhibit A furnished by the Plaintiff have

shown that funds in the account of Company subject to free zone operation

is custody under its custody as if it is operating in its own (foreign) Country.

Further by construction placed on Sections 8 and 10 of the Act the

exemption is against all Federal and State taxes and levies or duties. Tax |

on any aspect of the accounts including the fixed deposit by Section 8 of

the EPZA Act is on assets of the company operating within the Free Trade

Zone.

1 have read through the authorities of cases decided by Tax Appeal

Tribunal cited by the Defence, it is my humble that the authorities are not

binding on this Court.

In line with my decision in issue 1 and other expressions made in issue 2, I

hold that the 1% Defendant was in error to instruct the 2″ Defendant to

place restriction on the Plaintiff’s account and make deductions having

been exempted by EPZA Act, from Federal and State Taxes. The

Defendant cannot lawfully charge and deduct the sum of N14, 616, 289. 05

as withholding tax and N2, 164, 659.00 as Value Added Tax against the

sum of 4.3m USD belonging to the Plaintiffs between 2015 — 2018 being

equity foreign Direct Investment approved by Central Bank of Nigeria for

company in Export Free Zone.

This is issue resolved against the Defendants

On issue 3(three) which is:

“Whether or not from the circumstances and facts of this

case the Plaintiffs are entitled to the reliefs sought”

The Defendant had maintained that interpretation to be placed on the 1 have read through the authorities of cases decided by Tax Appeal