Court upturns powers of Edo State govt to collect taxes on behalf of LG, nullifies sections of Land Use Charge 2012

An Edo State High Court in Benin City has nullified certain provisions of the Edo State Land Use Charge (LUC), Law, 2012 that empower the Edo State government to collect taxes on behalf of the local government, citing a written agreement between the local and state governments. The court, accordingly, pronounced such provisions unconstitutional, null and void.

The court in its judgement on a suit: Chief Ferdinand SAN v. Edo State Geographic Information Service (EIGS) & Ors. Suit no: B/99/2021, declared ruled that no local government is empowered by law to delegate its constitutional powers and functions to a State government.

The plaintiff had contested that the defendants, the state government, had issued his chambers at Christiana Orbih Drive, by 84, Boundary Road, behind G.R.A., Benin City, a Land Use Charge Demand Notice, directing him  to pay the sum of N3,373,719.95  to the state government as land use charge for the period of 2016-2021 for a property at No. 66 84, Boundary Road, behind G.R.A., Benin City, which doesn’t belong to the claimant.

The defendants had argued that the property was formerly No. 66 but was renamed No. 84, but the claimant disagreed, contesting that the property had been No. 66A and not No. 66 as claimed by the defendants.

Chief Ferdinand SAN, in the suit through an originating motion, sought the Court to determine whether in light of Section 7(1) and (5) of the Constitution as well as Par. 1 of the 4th Schedule of the Constitution,  the LUC Law, 2012 of Edo State is not unconstitutional, invalid, null and void and whether in light of the above listed sections of the Constitution,  the defendants are not bereft of power to impose land use charge on the claimant’s privately owned property at Christiana Obrih Drive, 84  Boundary Road, behind G.R.A., Benin City.

Counsel to the claimant, K.O. Obamogie, had argued that by the Provisions of the Constitution, there were 3 tiers of government: Federal, State and Local Governments, and that by virtue of constitutional provisions and judicial precedents meant to protect the Federal State nature of Nigeria, no arm of government is allowed to usurp the powers of any other arm of government. He argued further that par. 1 of the 4th Schedule of the Constitution provided for the functions of the Local government, one of which was the collection of levies and rates on privately owned houses and as such the Edo State LUC law, 2012 which allowed the state government to collect such levies and rate was a violation of the Constitution and therefore null and void.

The Claimant’s counsel also argued that the Local government cannot delegate its powers to the state, noting that such would undermine the constitution.

He argued, therefore, the in view of this, the defendants lack the powers to issue a land use charge, demand notice to the claimant’s privately owned property.

Counsel to the defendants, Mrs. V. U. Adeleye (Director), countered the arguments, declaring that the Edo State LUC, Law, 2012 was not in violation of the relevant provisions of the constitution, noting that it is not just a law for the collection of tenement rate but a consolidation of all land based rates and charges on landed or real properties in Edo State as deduced from its preamble.

Adeleye had argued that the Edo State government was only collecting the rates on behalf of the local governments and would be remitting same to the account opened for the local government. The counsel noted that that the aim is to support the collaboration between the state government and the 18 local governments; arguing that, therefore,  the defendants have powers to issue a LUC demand notice to the claimant.

The presiding Judge of the High Court, Justice P. A. Akhihiero, in his judgment citing  Par. 1 of the 4th schedule of the Constitution, declared that it is the power of the local government to collect levies and tenement rates in a state, saying, thus, it would be an ouster of the powers and functions of the state government to seek to perform the functions of the local government councils, which was what the Edo State Government had done by virtue of section 12 of the LUC Law, 2012, Edo State which made the Edo State IRS the collection agent. The Court cited the case of Knight, Frank & Rutley v. A. G Kano.

The Court also emphasized that by virtue of s. 7 of the Constitution and relevant judicial precedents, the local government was an established tier of government and on the question whether it can delegate its powers, the Court relied in the case of Bamidele v. Commissioner of Local Govt. and ruled thus: “it is evident that the local government councils in Edo State are by the constitution empowered to levy, assess and collect tenement rates on residential premises within area of jurisdiction pursuant to the law made by the House of Assembly. Such constitutional power or duty cannot be derogated by agreement or by any other statutory provision.”

The Court, therefore, declared the Edo State LUC, Law, 2012 which seeks to delegate the local govt powers null and void to the extent of its nconsistencies.

The Court in applying the blue pencil rule, reasoned that the purpose for applying the rule was to determine if after striking the inconsistencies provisions of the law, the law had become redundant, thus determining if the entirety of the law would be declared null and void or just only the inconsistencies. The court went on to hold thus:

“I find the following sections that must be struck down for reasons stated by them namely: Section 3(2) – Delegation of functions by each local government council – (it amounts to usurpation and thus completely null and void); section 5 – property assessment after delegation (it amounts to usurpation and thus completely null and void); section 18 – land use collection fund (it amounts to usurpation and thus completely null and void); section 24 – application of other laws (it amounts to usurpation and thus completely null and void); section 27 – interpretation: the following two items “Collection Authority” & “Net Land Use Charge” (they are in furtherance of the delegation and usurpation).”

The court also stated that having declared the relevant provisions of the law inconsistent, the defendants lack  the powers to issue a LUC demand notice on the private property of the claimant on Christiana Obrih Drive 84, Boundary Road, behind G.R.A., Benin City.

The court awarded the sum of N200,000 as cost in favor of the claimant.