Saturday, October 30,2021/06:20AM/ by AELEX/ Header Image Credit: AELEX

Introduction

The Nigerian Postal Service (NIPOST)and the Federal Inland Revenue Service (FIRS) have been locked in a controversyregarding which of the agencies is charged with the responsibility to collectstamp duties on receipts, electronic transfers, and teller deposits on behalfof the Federal Government under the Stamp Duties Act, Cap S8 Laws of theFederation of Nigeria, 2004 (As amended by the Finance Act 2019 and 2020)(Stamp Duties Act).

This controversy has been the subjectmatter of disputes before the courts[1]and has, in some cases, received judicial pronouncements.2 The controversy was further deepened by thedirectives issued by the Central Bank of Nigeria (CBN) mandating Deposit MoneyBanks and other Financial Institutions ("DMBOFI") to charge stamp duty of N50in respect of electronic transfer andteller deposit from N1,000 and aboveand remit same to a NIPOST designated account.3

Interestingly, with the recent passageof the Nigerian Postal Service (Repeal and Re-enactment) Bill, 2021 (the "NIPOSTBill 2021") 4 by the Nigerian Senate, this battle between both Federal Government agenciesappears to have an end in sight.

The Agency Responsible for Collection of Stamp Duties under theExtant Laws

In determining the agency charged withthe responsibility to collect stamp duties on receipts, electronic transfersand teller deposits, it is important to consider the relevant provisions of theNigerian Postal Services Act, Chapter N127, Laws of the Federation ofNigeria, 2004 (NIPOST Act); Stamp Duties Act, Chapter S8 Laws of the Federationof Nigeria, 2004 (As amended by the Finance Act 2019 and 2020) (Stamp DutiesAct); and the Federal Inland Revenue Service (Establishment) Act (As amended bythe Finance Act 2020) (FIRS Act).

As it pertains to NIPOST, Section 1(2) of the NIPOST Act provides that NIPOST shall have the exclusive privilegeof-

(a)             conveying allletters from one place to another where postal communication
have been established: and

(b)             performing allthe incidental services of receiving, collecting, sending, des-
patching and delivering written and printed matter, parcels and like materials,from anyone place to another, where postal communications shall have beenestablished.

Additionally, Sections 4 and 5 of theNIPOST Act which provide for the functions and powers of the NIPOSTrespectively, limit the powers of NIPOST to providing various types of mailingservices; collection and delivery of mails; provision of postage stamp andother evidence of payment of postages and fees; provision of philatelicservices; as well as other miscellaneous services as may be authorized by theFederal Government, among other powers.

Specifically, section 5 (c) and (d) ofthe NIPOST Act provides as follows:

"In the exercise of its functions underthis Act, the Postal Services shall have the following specific powers:

(c)             to prescribe the amount of postage stamps andthe manner in which it is to be paid

(d) to provide postage stamps andother stamped papers, cards and envelopes and to provide such other evidence ofpayment of postage and fees as may be necessary or desirable"

From the above, it appears thatNIPOST's power pertains to production, sale of postage stamps and providingevidence of payment of postage and fees 5 as there is no express provision in the NIPOST Act empowering NIPOST to collectstamp duties. This notwithstanding, NIPOST has interpreted the aboveprovisions, among others, as empowering it to collect stamp duties in respectof all receipts, electronic transfers, and teller deposits on behalf of theFederal Government.

FIRS

Section 4(1) and (2) of the StampDuties Act states the responsibility for collection of duties on corporateinstruments as follows:

"(1)   TheFederal Inland Revenue Service shall be the only competent authority to impose,charge and collect duties upon instruments specified in the Schedule to thisAct if such instruments relates to matters executed between a company and anindividual, group or body of individuals;

(2)    Therelevant tax authority in a State shall collect duties in respect ofinstruments executed between persons or individuals at such rates to be imposedor charged as may be agreed with the Federal Government"

Furthermore, Section 8 of the FIRS Actclearly empowers the FIRS to assess, collect, account and enforce payment oftaxes as may be due to the Federal Government or any of its agencies as itconcerns taxes; and to collect any tax under any provision of the FIRS Act or anyother enactment or law. For the avoidance of doubt, tax is defined in Section69 of the FIRS Act to include "any duty,levy or revenue accruable to the government in full or in part under this Act,the laws listed in the First Schedule to this act or any other enactment or law".

In addition, Section 25(1) of the FIRSAct clearly empowers the FIRS to administer all the enactments listed in theFirst Schedule to the FIRS Act and any other enactment or law on taxation inrespect of which the National Assembly may confer power on the FIRS. It ispertinent to note that the Stamp Duties Act is one of the legislations listedunder item 6 of the First Schedule to the FIRS Act.

Furthermore, Section 2 of the StampDuties Act defined "instrument" to include "everywritten document and electronic documents". Thus, receipts, electronictransfers, and teller deposits will qualify as instruments over which the FIRSis vested with authority to collect duties.

Consequently,from the combined reading of the provisions of Sections 2 and 4(1) of the StampDuties Act as well as Section 8, Section 25(1), and Section 69 of the FIRS Act,it is clear that the agency responsible for collecting tax, including stampduties on any transaction involving companies, on behalf of the FederalGovernment is the FIRS.

Thus, it is the view of thisauthor that the controversy between NIPOST and FIRS on this subject isunnecessary, as the position of the relevant laws appear to be clear on theagency that is charged with the duty to collect taxes, including stamp duties,on behalf of the Federal Government. Although, the CBN circular:CBN/GEN/DMB/02/006 requested that stamp duties on electronic transfer andteller deposit be remitted to a NIPOST designated account, it appears tocontradict the provisions of the law on the agency responsible for collectingstamp duties.

Possible Resolution Provided by the NIPOST Bill 2021

On Tuesday, 8 June 2021, the NigerianSenate passed the Nigerian Postal Service (Repeal and Re-enactment) Bill, 2021(The Bill). The Bill appears to, among other things, restrict NIPOST'sauthority to postal operations in Nigeria; thereby putting an end to thelingering controversy between NIPOST and FIRS regarding the agency that isstatutorily empowered to collect stamp duties on behalf of the FederalGovernment. 6

Although the Bill makes no provisionregarding which agency is to collect stamp duties, Section 2 (1) - (3) of theBill barred NIPOST from engaging in tax collection. For ease of reference,Section 2 of the Bill reads as follows:

"Thereis hereby established a body to be known as the Nigerian Postal Service (herebydesignated as the Public Postal Operator) which (a) shall be a body corporatewith perpetual succession and a common seal…

"The Postal Operator shall be chargedwith the responsibility of providing Universal Postal Service in Nigeria.

"In carrying out its Universal PostalService Obligations, the provisions ofany enactment, law or regulation relating to taxation of companies, agencies ortrusts funds shall not apply to the Public Postal Operator save for itsobligation as a collecting agent of Government." [Emphasis mine]

From the quoted provisions of theBill, it appears that the long-standing controversy between NIPOST and FIRSover the agency with the responsibility to collect stamp duties on behalf ofthe Federal Government has been laid to rest in favour of FIRS. The Bill isawaiting harmonisation by the National Assembly and assent by the President.Indeed, there is an end in sight.

Conclusion

The dispute between NIPOST and FIRS onthe right to collect Stamp duties in respect of all receipts, electronictransfers, and teller deposits has been fierce and intense over the years andthe issue of whether NIPOST can collect such stamp duties at all and/orretrospectively is currently pending before the Supreme Court.

Even though the CBN circular:CBN/GEN/DMB/02/006 deepened the rift between both agencies, this disputeappears settled in the light of relevant provisions of the NIPOST Act, StampDuties Act, FIRS Act, and Finance Acts 2019 & 2020-whose combined effectrecognises FIRS as the agency that is statutorily empowered to collect thestamp duties.

However, the changes introduced by theNIPOST Bill 2021, if passed into law, may introduce more clarity to the law,especially as it relates to the function of NIPOST as a postal agency.  The Bill further reaffirms the currentposition of the extant laws regarding the agency clothed with the statutorypowers to collect stamp duties on behalf of the Federal Government. It isbelieved that this clarification and reaffirmation would now give both warringagencies clarity of purpose and the opportunity to focus on their respectivestatutory mandates.

Similarly, if eventually signed intolaw, the Bill would affect a lot of actions that are currently pending beforethe court on this subject matter. Most of the issues raised in those actionswould have become mere academic exercise, as the question for which they soughtanswers would have been answered by the "new law" and so would be finally laidto rest.

Footnotes

1.     RetailSupermarket Nigeria Limited v. Nigerian Postal Service & 3 Others - SuitNo: FHC/L/CS/547/16

2.    StandardChartered Bank v Kasmal International Services Limited - Appeal No: SC/524/2016delivered on April 21, 2016; Retail Supermarkets Nigeria Limited v. CitibankNigeria Limited & Central Bank of Nigeria -Suit No: FHC/L/CS/126/2016delivered on 13 March 2017.

3.    Thedirective was issued through CBN circular: CBN/GEN/DMB/02/006 - Collection andRemittance of Statutory Charges on Receipts to Nigerian Postal Service underthe Stamp Duties Act dated 15 January 2016

4.    Thisis an amendment to the Nigerian Postal Services Act, Cap. N127, Lawsof the Federation of Nigeria, 2004

5.    Section64 of the NIPOST Act defines "Postage article" to include any letter, postcard,newspaper, book, parcel, package or other article whatsoever transmissible bypost.

6.    https://nairametrics.com/2021/06/08/just-in-senate-passes-bill-to-unbundle-nipost-restricts-its-operations/

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