Lagos Govt drags Keystone bank to court for tax evasion

Consequent upon the failure of Keystone Bank Limited to pay 2011 outstanding tax of N104, 003,593.49,

Lagos State Board of Internal Revenue (LBIR) has instituted a suit against Keystone Bank as a result of the bank's failure to pay 2011 outstanding tax liabilities of N104,003,593.49.

The suit was filed before Justice Morenike Obadina (Mrs) of Lagos High Court,  Lagos Judicial Division.

LBIR (claimant), in order  to enforce the provisions of Personal Income Tax Act 2004, has  filed motion ex-parte seeking an order of the court for a warrant in favour of its officers authorising them to distrain the bank's goods, chattels, bonds and other securities for the purpose of enforcing payment of taxes in the sum of N104, 003,593.49 being the bank's tax liability for 2011 assessment year.

The claimant is also seeking a warrant by the court in favour of its officers to distrain upon any land, premises or places of which Keystone Bank Limited (defendant) is the owner for the purpose of enforcing payment of aforementioned sum being the bank's tax liability for 2011 year of assessment.

In its statement of claim,  the State board of internal revenue prayed for a declaration that by virtue of the provisions of the Personal Income Tax Act 2004, Keystone Bank is liable to the claimant for the amount of tax deducted or to have been deducted from the emoluments paid to its employees under pay-as-you-earn (PAYE) and for withholding tax (WHT) which should have been deducted from payments made to individuals on contracts and other transactions under withholding tax scheme.

Claimant further prayed for a declaration that the total amount of N104,003,593.49 for 2011 tax audit year is conclusive, unpaid and due as debt to the government of Lagos State from the defendant for the stated period of 2011.

In addition, LBIR is seeking interest on the aforementioned amount at the prevailing commercial bank rate until judgement and further interest at the rate of 6 per cent per annum from the date of judgement until the whole sum is liquidated.

The claimant avers that by provision of Personal Income Tax Act 2004, Cap P8 laws of the federation of Nigeria , defendant bank is obliged to deduct personal income tax from the monthly salary and emoluments of its employees resident in Lagos state and remit same to the claimant.

Defendant is also obliged to deduct from payments made to individuals on contracts and other transactions under WHT scheme, deduct state development levy from emoluments of its staff, business premises levy and pay all monies to the claimant annually.

The State BIR submitted that after examining and reviewing the tax records of Keystone Bank in respect of 2011 tax year, the bank was found liable for under-deduction and under-remittance of tax under PAYE and WHT for the period of 2011 tax year. It was liable also for non-deduction of state development levy and non-payment of business premises levy for the stated period of 2011 tax year.

It was averred that following the demand notice sent to the bank on its outstanding tax liability, it responded by demanding for soft copy of its computation on PAYE, WHT to enable it review its position on the liability. After the review, the bank sent an objection letter to the claimant raising issues which were wrongly addressed while refusing to pay the said liability as prescribed by Personal Income Tax Act Cap P8, 2004.

The claimant stated that due to the defendant's persistent failure to pay the said liability, a letter of intention to levy warrant of distrains was served on the defendant.

In a meeting held with the claimant at the instance of the bank for tax reconciliation, it was discovered by the claimant from the documents tendered by the bank that the PAYE remittances and withholding taxes were underpaid, the consolidated tax relief allowances were not applied fully as one per cent of gross emolument was not taken into consideration.

Furthermore, it was discovered that the national housing fund was not taken into consideration by defendant for the months of January to June 20111. It was averred that at the meeting defendant became aware of its outstanding liability of N104,003,593.49 for 2011 which has remained unpaid, contending that the bank had no defence to the claim against it.

It should be noted that at time of filing this report, the bank was yet to file its defence or counter affidavit, as trial judge adjourned the matter till June 14 for further direction after last adjourned date.