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On 8th May 2020, the Federal High Court, Lagos Division, delivered judgment in a matter between The Registered Trustees of Hotel Owners and Managers Association of Lagos (suing for itself and on behalf of all its members) (“the Plaintiff”) v The Attorney General of the Federation & the Minister of Finance (“the Defendants”).

The matter bordered on the constitutionality of the Taxes and Levies (Approved List for Collection) Act (Amendment) Order 2015 (Minister Order 2015) issued by the Minister of Finance pursuant to the provisions of Section 1(2) of the Taxes and Levies (Approved List for Collection) Act, Cap T2, LFN 2004 (Approved List for Collection), which grants the Minister of Finance the powers to amend the Schedule to the Approved List for Collection. The court held the Ministerial Order 2015 to be unconstitutional, null and void.

Highlights of the Case

The Plaintiff contended the power bestowed on the Minister of Finance under Section 1(2) of the Approved List for Collection. It claimed that the power conferred on the Minister of Finance encroached on the powers of the National Assembly under Section 4 of the Constitution, and the delegation of the power to amend the Schedule of the Approved List of Collection to the Minister of Finance is unconstitutional.

On the other hand, the Defendants argued that the Minister of Finance has the statutory power to amend the Schedule to the Approved List for Collection and that such exercise is not inconsistent with the provision of Section 4 of the Constitution.

The court held that the:

i. Power confined on the Minister of Finance under Section 1(2) of the Approved List for Collection, does not qualify as delegated legislation, as the exercise of the power affects the terms and wordings of an enactment, and the Minister of Finance cannot validly exercise such power.

ii. Ministerial Order 2015 seeks to add to the text of and change the main legislation. The power to legislate lies with the Parliament and cannot be shared with another body.

iii. Power exercised by the Minister of Finance was not under Section 315 of the Constitution but under Section 1(2) of the Approved List for Collection. The Minister does not fall under scope of Section 315 as it is not the appropriate authority with powers to reverse or rewrite the laws of the Federation.

iv. Ministerial Order is null, void and unconstitutional.

Our Thoughts

We agree with the reasoning of the court that the Minister of Finance or any other person (other than the National Assembly) does not have the power to amend or add to existing laws. Consequently, all the taxes and levies contained in the Ministerial Order 2015 can no longer be enforced as they are not contained in the Approved List for Collection or any other relevant tax legislation.

The decision of the FCT High Court in the case between Abuja Electricity Distribution Company (AEDC) v Kuje Area Council (KAC), also reiterates that the Government or any of its agencies have no legislative power to create or impose any tax or levy outside the ambits of the Constitution and the Approved List for Collection. The Court of Appeal in Eti-Osa Local Govt. v Jegede (2007) also confirms this fact when it held that taxes cannot be enforced, except they are contained in Part III of Decree No. 21 of 1998.

This judgement also reinforces our concerns as to the validity of the penalties imposed by the Federal Inland Revenue Service (FIRS) in the Income Tax (Transfer Pricing) Regulation 2018 and other Regulations issued by FIRS, as we are of the view that the tax authorities do not have the powers to add to or change the main legislation.
This recent judgment has made redundant the provisions of the Ministerial Order of 2015. Until this decision is upturned by a superior court, it remains the position of the law. Therefore, all taxes introduced by the Ministerial Order 2015 have become null and void and cases decided on its strength may be contested.

We hope that in line with this judgment, other delegated legislative powers exercised beyond limits will be rendered unconstitutional.