EXCLUSIVE: CBN challenges ‘N579 billion Stamp Duty’ judgment for Kasmal International, lists 17 reasons  

The Central Bank of Nigeria (CBN) and the Attorney General of the Federation (AGF) have cited 17 grounds why the Court of Appeal in Abuja should quash the judgment of the Federal High Court, Abuja which ordered the CBN to pay Kasmal International Services N579,130,698,440 with 10% interest per annum from January 1, 2015, to January 31, 2020, for its role in stamp duty collection.

This is detailed in their notice of appeal against the judgment of Justice Inyang Ekwo, which was exclusively seen by Nairametrics.

The High Court judgment, delivered on Friday, October 11, 2024, favored Kasmal in a case instituted against the CBN and the AGF.

What Transpired at the Trial Court 

Kasmal’s lawyer, Dr. Alex Izinyon SAN, submitted that his client was appointed by the Nigerian Postal Service (NIPOST) to collect N50 on all receipts issued by any bank or financial institution in acknowledgment of services rendered concerning electronic transfers and teller deposits of N1,000 and above, in compliance with the Stamp Duties Act and the Nigeria Financial Regulations 2009.

  • He added that the terms of the agreement between NIPOST and Kasmal included remuneration of N7.50 from every N50 deduction.
  • The senior lawyer stated that the plaintiff’s 15%, amounting to N579,130,698,440, is part of the N3.8 trillion in the Stamp Duty Collection Account.
  • He asked the High Court to direct the CBN to pay this amount for the stipulated period.
  • However, counsel for the CBN and the AGF, Chief Adeniyi Akintola SAN, argued that the purported appointment of Kasmal by NIPOST was void from the outset because stamp duty charges on bank transfers and deposits are a tax that is exclusively administered by the Federal Government through the Federal Inland Revenue Service (FIRS).

He contended in the suit marked FHC/ABJ/CS/335/2024 that NIPOST is not the revenue collection agency for stamp duties and therefore has no authority to appoint Kasmal as a collection agent for the Federal Government.

The senior lawyer maintained that revenue belongs to the entire Federation, with collection and remittance going to the Federation Account, while distribution is among the Federal, State, and Local Government Councils.

In passing his verdict, Justice Ekwo stated that the submissions of the CBN and AGF—that NIPOST lacks the statutory power to collect stamp duties and that the agency agreement entered into with Kasmal “does not hold water.”

He observed that the CBN had paid Kasmal N10.3 billion, representing 15% of remitted stamp duties by all Deposit Money Banks (DMBs) between January 1, 2015, and January 31, 2020, from the CBN NIPOST Stamp Duty Collection Account No. 3000047517.

The judge noted that the CBN and AGF had not effectively contradicted Kasmal’s case and granted its requests.

CBN and AGF’s Grounds of Appeal 

In the CBN and AGF’s 17 reasons listed in their notice of appeal against Kasmal and School of Banking Honours, dated October 24, 2024, Chief Akintola expressed dissatisfaction with the ruling and judgment of the Federal High Court, Abuja.

He maintained that Justice Ekwo “erred in law,” necessitating the Appeal Court to set it aside.

Here are the reasons listed by the CBN and AGF:

  • CBN Responded Within the Scope of Kasmal’s Questions

Akintola stressed that the decision of the learned trial judge to the effect that the appellants formulated different questions for determination and took over the case of Kasmal “is perverse and occasioned a miscarriage of justice” against the appellants.

  • Kasmal ‘Failed’ to Produce Documents Associated with the Stamp Duty Contract

The appellants argued that Kasmal allegedly failed to provide evidence of the existence of the purported agency contract with NIPOST, stating there is no “contractual relationship between the appellants and Kasmal.”

  • FG is the Only Competent Authority to Collect Stamp Duties

Akintola argued that the federal government is the sole authority to charge, impose, and collect stamp duties.

He noted that while the National Assembly established the FIRS as the agency with this power, NIPOST is limited to prescribing postage stamps and their sale.

  • Public Funds Cannot Go to Kasmal International

The appellants further submitted that “the alleged funds Kasmal International seeks to recover are public monies, which are part of the Federation Account governed by the provisions of Section 162 of the 1999 Constitution (as amended).”

Akintola stated that regardless of any previous mismanagement, stamp duties must be paid into the Federation Account and shared only among the three tiers of government.

  • Kasmal Did Not Prove CBN’s Failure to Fully Disclose Stamp Duties Collected

The appellants argued that at the Federal High Court, Kasmal alleged that the CBN did not fully disclose the stamp duties collected but never provided evidence to support this claim.

“The trial court’s finding that the appellants should have disclosed full remittances is grossly misconceived, “ it stated.

  • Federal High Court Relied on Speculation

“The law is that courts do not rely on speculation to arrive at their decisions but on solid facts supported by credible evidence,” the appellants’ appeal states.

  • Kasmal Accepted N10.3 Billion as Final Settlement

The appellants informed the appeal court that Kasmal had previously appealed to the Supreme Court on this matter but withdrew upon accepting N10.367 billion as a full and final settlement for its role.

“Ignoring the appellate court’s judgment amounts to judicial impertinence,” Akintola stated.

  • Non-Joinder of NIPOST in Kasmal’s Case Was an Error

The legal team for the CBN and AGF contended that the trial judge erred in law by holding that the non-joinder of NIPOST, a crucial party, was not fatal to the suit.

  • NIPOST Lacks Powers to Collect Stamp Duty or Delegate in That Regard

The CBN emphasized that NIPOST lacks the authority to collect stamp duty and cannot delegate this responsibility.

  • Kasmal is Not a Tier of Government

The appellants maintained that since Kasmal International is not a tier of government, it is not entitled to any payment from the Federation Account. “At best, it can claim from the accounts or funds of its counterparty, NIPOST,” they stated.

  • Judge Erred Regarding Commencement of Kasmal’s Suit

CBN and AGF stated that “The learned trial judge erred in law when his lordship held that the mode of commencement of the suit through originating summons was valid because documentary evidence tendered by the parties through their respective affidavits is capable of being used to resolve the issues in the suit. ”

  • Kasmal’s Legal Action Was Filed Out of Time

Akintola argued that any legal action brought outside the three-month period stipulated by the Public Officers (Protection) Act is statute-barred, as was the case with Kasmal.

  • The Trial Judge Failed to Appreciate CBN’s Reasoning

The appellants contended that the trial court failed to recognize their reasoning for challenging the jurisdiction to entertain the suit, noting that NIPOST was a necessary party not before the court, making the suit an abuse of the court process.

  • High Court Judgment Outside Scope of Kasmal’s Claims

Akintola argued that the facts and circumstances of Kasmal’s case related to a breach of terms of the alleged agency agreement with NIPOST, not the enforcement of a judgment as maintained by Ekwo.

  • Kasmal Was Barred from Raising Stamp Duties Contract Issues After Four Years

The CBN maintained that evidence shows Kasmal received N10.36 billion from the CBN as full and final payment. The apex bank stressed that Kasmal was barred from raising this issue after waiting four years before rejecting the payment.

  • Appeal Court Had Stated NIPOST Can’t Collect Stamp Duties

“The learned trial judge erred in law by failing to abide by the decision of the Court of Appeal in Appeal No. CA/L/437A/2014, which clearly states that NIPOST does not have the power to enter into contracts with another organization to collect stamp duties on its behalf,” the CBN and AGF added.

  • Evidence is Against High Court’s Decision

Akintola concluded that the trial court’s decision was despite the weight of evidence presented by the CBN and AGF.

More Insights 

Stamp duty is an indirect tax imposed on several financial transactions. In 2023, a former CBN governor, Godwin Emefiele, revealed that the total revenue collected as stamp duty on behalf of the Federal Government from 2016 to 2022 was N370.686 billion.

The applicant approached the court to determine its percentage from the agreed terms with relevant agencies, particularly NIPOST.

It is now up to the Appeal Court panel to pass its verdict on the matter, with Kasmal expected to respond to the fresh appeals by the CBN.


Source: TheTimes.com.ng.