An Ikeja High Court has dismissed a suit by the Lagos State Board of Internal Revenue against Nigerian Bottling Company for lack of merit.
In his judgment delivered on June 18, on Justice Hakeem Oshodi held that the request by the LSBIR for payment of sales tax and value Added Tax was tantamount to to double taxation.
A true copy of the judgment was made available to our correspondent in Lagos on Wednesday.
The LSBIR had gone to court, claiming N210m from the NBC as sales tax arrears and interest, at the rate of 21 per cent between June 1 2001 and the time of a judgment. The claimant also joined the Manufacturers Association of Nigeria, as co-defendants to the suit.
In its statement of claim through by the Board’s Assistant Director, Mr. Fatai Abbas, the LSBIR claimed that the NBC was obliged under the Sales Tax Law to collect sales tax from the consumers of its products and remit same to the claimant.
But the NBC had in its statement of defence by its Area Finance Manager, Mr. Idowu Akinwande, said prior to the imposition of N243, 075, 000m as sales tax and penalty, the claimant never requested NBC to produce for examination its record books, receipt, and accounts in respect of sales of its products.
It added that based on the above, the estimated amount contained in the Notice of Assessment dated July 12, 2001 was unconscionable, arbitrary and did not represent its correct sales.
According to the NBC, Sales tax and VAT tax were the same and imposition of both taxes on the company amounted to double taxation.
The judge said, “As a rule tax statutes are interpreted very strictly; there is no common law of taxation, hence no general principle of law can displace the true meaning and effects of a tax statute which has been validly passed. For tax liability to arise, there must be a clear linkage between the charging provisions and the intended tax payer. This link must be direct, not inferential.’’