Review of Retail Supermarket Nig. Ltd v. Citibank Nig Ltd & CBN

Background

Following a decision of the Federal High
Court in Suit No: FHC/L/CS/1710/2013: Kasmal International Ltd v.
Central Bank Nigeria, the Central Bank of Nigeria (CBN) issued a circular
dated January 15, 2016 to all Deposit Money Banks to the effect that stamp
duties at the rate of N50 for every payment of N1000 and above would be
applicable to all receiving accounts in the country with immediate effect.

The drastic decline in the price of crude
in the international market has adversely affected Nigeria’s economy in the
last few years due to its dependence on revenue from sale of crude oil to fund
its budget. Revenue from non-oil sectors have not been significant enough to
mitigate this harsh effect of fall in crude prices as the Federal and State
Governments have not been able to successfully diversify the nation’s economy
after decades of dependence on oil.

One of the major sources of non-oil revenue
for the Country is taxes and levies by Government at all levels. Accordingly,
the directive of the CBN is clearly an attempt to shore up revenue for the
Federal Government.

In 2013, Kasmal International Services Ltd
sued the CBN in Suit No: FHC/L/CS/1710/2013: Kasmal International Ltd
v. Central Bank Nigeria and the Deposit Money Banks in Suit
No: FHC/L/CS/1462/2013. In both cases, judgement was awarded in favour of
Kasmal International Services Ltd to the effect that stamp duty of N50 was payable
on every deposit or fund transfer of N1000 and above; and the CBN and Deposit
Money Banks were obliged to implement the deduction.

Following the decision in
FHC/L/CS/1462/2013, Standard Chartered Bank Nigeria Ltd brought an appeal vide Suit
no: CA/L/437A/2017: Standard Chartered Bank Nigeria Limited v. Kasmal
International Services Ltd & 22 Others challenging the decision of
the lower court. The Court of Appeal upheld the Appeal of Standard Chartered
Bank and set aside the decision in Suit No: FHC/L/CS/1462/2013.

Despite these decisions, the policy of
deducting N50 for every bank transaction above N1000 has continued unabated. In
2016, Retail Supermarkets Nigeria Limited brought a fresh action against
Citibank and Central Bank of Nigeria vide Suit No: FHC/L/CS/126/2016:
Retail Supermarkets Nigeria Limited v. Citibank Nigeria Limited & Central
Bank of Nigeria wherein it challenged the collection of N50 surcharge
for every N1000 transaction. A summary of the case which is the subject of this
review follows.

Facts of the case

Retail Supermarkets Nigeria Ltd
(owners/operators of Shoprite retail outlets across Nigeria) instituted an
action against Citibank and Central Bank of Nigeria on the 8th of July, 2016
praying the Federal High Court for the following orders:

1.
A
declaration that the provisions of the 2nd Defendant’s (CBN) circular reference
GEN/CBN/DMB/02/006 of 15th January, 2016 are inconsistent with Schedule 1 of
the Stamp Duties Act, Cap S8 Laws of the Federation of Nigeria and are invalid,
null and void;

2.
An
order setting aside the provisions of the circular reference GEN/CBN/DMB/02/006
of 15th January, 2016;

3.
An
order of perpetual injunction restraining the first Defendant (Citibank) either
by itself, its agents, servants, privies, assigns or any person claiming
through or deriving authority from it from taking any step to implement or from
further implementing the 2nd Defendant’s circular reference GEN/CBN/DMB/02/006
of 15th January, 2016 in relation to the Plaintiff’s bank accounts.

The argument of the Plaintiff was that
implementation of the 2nd Defendants circular reference GEN/CBN/DMB/02/006 of
15th January, 2016 by the 1st Defendant i.e. deduction of the sum of N50 for
every deposit into its account from N1000 upwards would expose it to several
financial losses.

Decision

In arriving at its decision, the Federal
High Court (Coram: Obiozor J.) relied heavily on the Court of Appeal decision
in Suit no: CA/L/437A/2017: Standard Chartered Bank Nigeria Limited v.
Kasmal International Services Ltd & 22 Others based on the
settled principle of stare decisis i.e. that lower courts are
bound by decisions of Superior Courts. In its decision, the Court of Appeal
held inter alia as follows (paraphrased):

1.
A
court of law can only enforce and apply provisions of the law which are in
existence and in force in Nigeria;

2.
There
is no provision in the Stamp Duties Act nor the Amendment to the Act conferring
powers on licensed banks in Nigeria to collect the sum of N50 for teller deposit
or fund transfer of N1000 and above. Accordingly, in the absence of any
contrary provision, the provisions of the Schedule to the Stamp Duties Act
especially item 4 clearly show that documents which evidence receipts of
monetary deposits by a bank are exempted from Stamp Duties Act. Thus, there is
no obligation to deduct stamp duty from deposits or transfers at all.

In view of the above decision of the Court
of Appeal, the Federal High Court in the case under review decided as follows:

1.
A
declaration that the provisions of the 2nd Defendants circular reference
GEN/CBN/DMB/02/006 of 15th January, 2016 are inconsistent with the provisions
of the Stamp Duties Act Cap S8 Laws of the Federation of Nigeria, 2004 and are
invalid, null and void.

2.
An
order setting aside the provisions of the 2nd Defendant’s circular reference
GEN/CBN/DMB/02/006 of 15th January, 2016.

Comment

Nigerians have been moaning since the
commencement of the implementation of the CBN circular reference
GEN/CBN/DMB/02/006 of 15th January, 2016. Although the policy has been
perceived by many as bad, insensitive and illegal, there appears to have been
no public interest law suit challenging the implementation of the directive
which has now gone on for over one year. It is important to note that the case
in review is only for the benefit of Retail Supermarkets Nigeria Limited and so
no one else can benefit from the judgement as it was not a class action.
Invariably the deduction of illegal stamp duty charges will continue on all
other accounts in the Country. It is hoped that this decision will spur a more
definitive action on this issue to restrain all the banks from continuing with
the directive of CBN with regards to illegal stamp duties deduction from all
bank accounts. A class action by citizens will be more encompassing.