Story Highlights
- The Federal Inland Revenue Service(FIRS) claims the Akwa-Ibom state government defaulted in its tax obligation to the tune of N84 billion, between 2008 and 2015.
- The FIRS’ claim has been denied by the state in its lawsuit before a competent court.
- However, parties in the dispute are considering an out-of-court settlement.
The Federal Inland Revenue Service(FIRS) has accused the Akwa Ibom state government of refusing to pay the N84 billion tax allegedly owed between 2008 and 2015.
This is contained in FIRS’ amended counter-claim before the Federal High Court Abuja in suit number FHC/ABJ/CS/600/18, seen by Nairametrics on Wednesday.
The case was originally instituted by the Attorney General of Akwa Ibom State against the FIRS, Accountant General of the Federation, Minister of Finance, Minister of Works and Housing, Central Bank of Nigeria and the Attorney-General of the Federation (1st to six defendants).
Akwa Ibom’s Case
In the state’s writ of summons seen by Nairametrics, Tayo Oyetibo(SAN) contended that sometime in July 2016, the FIRS wrote a letter dated 19 July 2016 to the then Governor of Akwa Ibom State in which it alleged that the state was owing un-remitted Value Added Tax (VAT) of N24,568,290,909.59 and un-remitted Withholding Tax of N26,395,877,430.66 and that both taxes totalled N50,964,168,339.84 excluding interests and penalties.
He submitted that FIRS made a veiled threat that if the alleged debt was not settled it would authorize the Accountant General of the Federation to deduct the alleged debt from the statutory allocations due to the State from the Federation Account.
He denied the tax default allegation by the FIRS, adding that the agency did not take into consideration several remittances made by the State, over time.
However, the senior lawyer disclosed that in October 2012, the Akwa Ibom State Government had received approval from the Federal Government to take over and construct some federal roads in Akwa Ibom State subject to reimbursement of the cost of construction.
He stated that after the completion of the project by the state, the President of the Federal Republic of Nigeria had on 11th May 2015 approved the refund of N45,408 883,188.15 to Akwa Ibom state being the balance of funds expended on some federal government roads in Akwa Ibom State.
He contended that despite repeated demands, the money still remains unpaid, adding that the state needs the refund to be able to pay the balance of whatever may be adjudged to be owed to the FIRS on account of tax liabilities.
“On or about Friday 1st June 2018, the Akwa Ibom State Government discovered that the 1st, 2nd and 3rd Defendants have started the process of deducting the alleged indebtedness of the State to the 1st Defendant from monies payable to the State out of the Federation Account in purported pursuance of the provisions of section 24 of the Federal Inland Revenue Service (Establishment) Act and section 83 of the Companies Income Tax Act.
“The Plaintiff is desirous to set-off alleged sum of N10,740,273,197.62 (Теп Billion Seven Hundred and Forty Million, Two Hundred and Seventy Three Thousand, One Hundred and Ninety Seven Naira and Sixty Two Kobo) being claimed by the 1st defendant, out of the debts owed to it by the Federal Government of Nigeria against the 1st Defendant’s demands made on the Plaintiff,” the state’s lawyer submitted and urged the court to restrain FIRS, among other reliefs sought.
FIRS Counters Akwa Ibom Govt
In its counter-claim, the FIRS legal insisted that the state government is indebted to the agency in the sum of N84, 866,652,479.50 being unremitted Value Added and Withholding Taxes for the 2008-2015 year of assessment, excluding interest and penalties.
Professor Taiwo Osipitan(SAN), who filed the counter-claim on FIRS’ behalf stated that despite repeated demands to the state government, it “has failed/refused to remit outstanding Value Added Tax and Withholding Tax in the sum of N84, 866,652,479.50 to the 1 Defendant/Counter-Claimant.”
He accused the state government of employing diversionary and delay tactics by alleging that it is being owed by the Federal Government in the sum of N45, 408,883,188.15 (Forty-Five Billion) being the cost of constructing and repairing Federal Roads in Akwa-Ibom State.
He urged the court to hold that Akwa-Ibom State is truly and justly indebted to FIRS on account of collected but unremitted value-added and withholding taxes in the total sum of N84, 866,652,479.50.
Ministry of Works Objects
The Federal Ministry of Works, being the fourth defendant in the matter, also filed a preliminary objection seeking an order striking out its name from the suit.
The ministry’s lawyer, Chika Eze submitted that the Statement of Claim by the Akwa Ibom Govt AG discloses no cause of action against her client, adding that “the alleged sum indebted to the Plaintiff by the Ministry of Works and Housing has been fully paid vide promissory note issued in favour of the Plaintiff by the Federal Government.”
Out-of-court settlement moves
At the resumed hearing on Wednesday, the legal team of the Akwa Ibom state AG, said that out-of-court settlements by the parties are in “top gear”.
“We have not filed our terms of settlement but it is in top gear,” the legal team of the Akwa Ibom AG told Justice James Omotosho.
The judge subsequently adjourned the case to July 8, 2024, for report of settlement.
“If you don’t have your witness statement or terms of settlement on that date, I will strike out your matter,” Justice Omotosho warned the Akwa-Ibom AG’s legal team.
- The FIRS is a federal government agency that assesses, collects, accounts and enforces payment of taxes due to the Government or any of its agencies in Nigeria.
- The Federal High Court has jurisdiction over matters touching agencies of government and the state.
