Taxes & Tariffs | |
Taxes & Tariffs | |
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Wednesday, March 20,
2019/02:54PM /Deliotte
Federal Capital
Territory High Court (“the Court”) on Monday, 14 January 2019 ruled that Local
Government Area Councils (LGCs) in the Federal Capital Territory (FCT) lack
authority to impose taxes and levies that are outside the purview of the
Constitution of the Federal Republic Of Nigeria, 1999 as amended (the
Constitution) and Taxes and Levies (Approved List for Collection) Act (TALC).
This was delivered in the case between Abuja Electricity Distribution Company
(AEDC) v. Kuje Area Council (KAC).
AEDC, an
electricity distribution company with operations in areas within KAC, was
issued demand notices by the latter, requesting it to pay a total of N540,000 for outdoor
advertisements, corporate parking, sanitation and operational permit levies for
2015 and 2016. AEDC, dissatisfied with the demand notices, approached the Court
for a declaration that KAC has no legal basis for the taxes underpinning the
demand notices.
Agreeing with AEDC
in part, the Court held that some of the taxes imposed by KAC were outside the
ambit of the Fourth Schedule to the Constitution and Part III of the TALC, thus
beyond KAC’s scope. The Court further held that the Constitution confers FCT’s
legislative powers on the National Assembly. Hence, LGCs in FCT do not have the
powers to create new heads of taxes (outside of the Constitution and TALC) in
the absence of any enabling legislation by the National Assembly. This
judgement suggests that LGCs are only able to impose applicable taxes and
levies provided in the Fourth Schedule to the Constitution and Part III of the
TALC – any imposition beyond this is null & void. It further reinforces the
conclusion reached by the Court in 2018 in the case between AEDC and Abuja
Municipal Area Council.
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