MPC: Experts warn against further MPR hike
Godwin Emefiele, CBN governor


For those who thought the controversies surrounding the deduction of N50 as stamp duty on teller deposits or electronic transfer of funds by banks were over, a recent court ruling has said otherwise by declaring the practice illegal.
The Federal High Court in Asaba presided over by Justice Nnamdi Dimgba had given the verdict on December 9, in a case between a businessman, Rupert Irikefe, and the Central Bank of Nigeria, Zenith Bank, and the Attorney General of the Federation.
Details of the judgment showed that Mr. Irikefe, the plaintiff, sought eight declarations against the CBN and the other defendants – Zenith Bank and AGF.
He urged the court to declare, among others, that the conduct of the CBN in continuing to impose, direct the imposition, deduction or remittance to it by Zenith Bank and or receiving the sum of N50 as stamp duty on electronic transactions or transfer of monies from N1,000 (One Thousand Naira) upwards from his current account is unlawful and contemptuous of court judgments.
These deductions, he argued, the bank made despite the subsistence and or its awareness of the Judgments in Appeal No CA/L/437A/2014 and Suit No FHC/L/CS/126/ 2016.
Mr. Irikefe argued that by the decisions of courts on the subject, it was unlawful and disrespectful of the banks to continue to impose the charges on his account.
But in their defence, the CBN and others argued that the suit with preliminary objections which were all dismissed by the court as unmeritorious.
The CBN on its part claimed that it is protected from any liability whatsoever by Sections 52(1) and 53(1) of the CBN Act. Zenith Bank, on its part, argued that it cannot be liable because it was merely acting on the instruction of a disclosed principal.
The circular
The CBN had on 15th of January 2016 issued a circular titled: “Collection and Remittance of Statutory Charges on Receipts to Nigeria Postal Service under the Stamp Duties Act”, to all Deposit Money Banks (DMBs) and other Financial Institutions (FIs) in Nigeria.
The initiative was part of the federal government’s efforts to boost revenue collection in the non-oil sector following the oil price nose-dive and reduction in related oil sector receipts.
By that circular, all DMBs and FIs were instructed to charge N50 as stamp duty on all receipts issued in acknowledgment of services rendered in respect of electronic transfer and teller deposits from N1,000 in accordance with the provisions of the Stamp Duties Act, Cap S8, LFN 2004 (SDA) and the Federal Government Financial Regulations 2009 (FGFR).
This rate, payable by the receiving accounts, exempts self – to – self deposits/ transfers, whether inter or intra bank; and also any form of withdrawal/transfers from savings accounts.
The circular, however drew the ire of many Nigerians: Questions, whether the stamp duty charged was progressive from every N1000 per deposits above N1000 or will be a flat rate of N50 on deposits above N1000, ensued.
The circular stated (in paragraph 1) that: “It is in recognition of this fact that banks and other financial institutions are enjoined to support government’s revenue generation drive through compliance with the provisions of the Stamp Duties Act, LFN, 2004 as reinforced by the court judgment in Suit No FHC/L/CS/1710/2013.”
On 21 January, 2016 the CBN clarified that the eligible transactions to be charged pursuant to the circular include all receipts given by a DMB or FI in acknowledgment of services rendered in respect of teller deposits and electronic transfers for the value of N1,000 and above. However, this clarification did little to help the situation.
In its judgment, the Federal High Court in Asaba noted that the CBN’s argument was misconstrued and could not hold water. The court said before the banks can enjoy the privilege they argue about, the actions done or undone in good faith should be one done or undone in the process of the execution of any powers conferred upon the apex bank by the legislation.
It held that the said deductions made from the Mr. Irikefe’s account in the face of subsisting decisions of courts prohibiting, such actions does not qualify as one done in good faith.
Justice Dimgba recalled that the CBN participated in Suit No FHC/L/CS/126/2016 between Retail Supermarkets Nigeria Limited verses Citi Bank Limited and CBN which challenged its circular with reference CBN/GEN/DMB/02/006 where CBN instructed banks to deduct the said N50 as stamp duty.
He maintained that the court, in that case, held that it was unlawful for the apex bank and the commercial banks to continue to make those deductions.
The judge quipped: “The question is, having been aware of the above clear decisions of competent courts (of this Court and Court of Appeal), why then did the 1st Defendant and the 2nd Defendant continue to treat those decisions as if they were not existing, and to continue to implement the provisions of the circular which had already been nullified as being inconsistent with the law, namely the Stamp Duties Act?”
The court, thereafter, ruled that by the dictate of Section 287 of the 1999 Constitution, the banks are bound by the decisions of the court and are under obligation to enforce them. It then held that the argument of Mr. Irikefe was meritorious, awarding the sum of N2 million as damages.
“It is true that there is a provision for stamp duty in the Stamp Duty Act but that should be handled by the Nigeria Postal Agency (NIPOST) or the Federal Inland Revenue (FIRS)”, said Barr. Fred Nzeako..
Nzeako, a development economist, told Business Hallmark in a telephone chat that It is not supposed to be the duty of the banks to collect stamp duty, saying that even if the banks want to collect charges, it should be called something else and not stamp duty.
“A stamp duty should come as a charge for affixing a stamp or something of that nature on a document.
“A situation where a bank collects Stamp duty from customers for depositing money is wrong. So to that extent, the court is right in declaring it illegal.”
Ephraim Sunday, a Port Harcourt businessman described the court ruling as very much in order. For him, “It is a move to put an end to a major corporate stealing by banks.”
“Behaviours like this explain why they (the banks) will be declaring huge profits even in the face of economic woes”, Sunday added.


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