Doctrine of Covering the Field

“The doctrine of covering the field, is essentially that
where the main, principal or superior law has covered a given field
or area, any other subsidiary law made in that area or field,
cannot operate side by side with the main, principal or superior
law. If the inferior law is inconsistent with the principal law, it
has to be declared void to the extent of its
inconsistency”

In the Supreme Court of Nigeria
Holden at Abuja
On Friday the 8th Day of December, 2017

Before Their
Lordships

Musa Dattijo Muhammad
Kudirat Motonmori Olatokunbo Kekere-Ekun
John Inyang Okoro
Amiru Sanusi
Ejembi Eko
Justices, Supreme Court
SC.321/2007

Between

Attorney-General, Lagos State
………Appellant

And

1. Eko Hotels Limited
2. Federal Board of Inland Revenue ……Respondents

(Lead Judgement delivered by
Hon. Kudirat MotonmoriOlatokunbo Kekere-Ekun, JSC)

Facts
The 1st Respondent filed an Originating Summons before the Federal
High Court, Lagos, seeking a determination of the question whether
remittance of money collected as tax by it from its consumers,
should be paid to the Federal Board of Inland Revenue (FBIR) or to
the Lagos State Government, having regard to the provisions of
Sections 1, 2, 10, 11, 12, 13, 14, 15 and 16 of the Value Added Tax
(VAT) Decree No 102 and Sections 1, 2, 3, 4, 5 and 6 of the Sales
Tax Law. Both the Appellant and the 2nd Respondent, filed
Counter-affidavits in opposition to the Originating Summons. The
Judge held that the 1st Respondent could only be a ‘taxable person’
or remitting agent in respect of the amount due as tax on its sales
to its consumers to a single agent, which is the FBIR. The
Appellant, who was dissatisfied, unsuccessfully appealed to the
Court of Appeal; it has further appealed to the Supreme Court.

Issues for Determination:
The issues as formulated by the Appellant which were adopted by the
Respondents are:
1. Whether the Court below was right when it held that the cases of
ATTORNEY-GENERAL OF OGUN STATE v ABERUAGBA (1985) 1 NWLR
(Pt. 3) 395 and NIGERIAN SOFT DRINKS LTD v ATTORNEY-GENERAL OF
LAGOS STATE (1987)
2 NWLR (Pt. 57) 444 cited to the trial Court as stare decisis, is a
non-issue, and that none of those decisions was authority to say
that the 1st Respondent is obliged to remit proceeds of Sales Tax
to Lagos State Government.
2. Whether the Court of Appeal was right, when it held that the
Value Added Tax has covered the field of Sales Tax, and its
provisions prevail over the Sales Tax Law of Lagos State.
3. Whether the Court below was right, when it held that imposition
of both Value Added Tax and Sales Tax, will create double
taxation.

Arguments:
On the first issue, Counsel for the Appellant contended that the
cases of ATTORNEY-GENERAL OF OGUN STATE v ABERUAGBA (1985)
1 NWLR (Pt. 3) 395 and NIGERIAN SOFT DRINKS LTD v ATTORNEY-GENERAL
OF LAGOS STATE (1987)
2 NWLR (Pt. 57) 444 have conclusively determined the sales taxing
power of Lagos State, and were decisions of the Supreme Court and
Court of Appeal respectively and that by the doctrine of stare
decisis, both the Federal High Court and the Court of Appeal should
have held themselves bound by the decisions. He relied on
NAB LTD v BARRI ENGINEERING NIGERIA LTD. (1995) 8 NWLR (Pt.
413) 275 at 289.

He argued that, the Federal Government derived its power to
enact VAT Act from Item 61 in the Exclusive Legislative list, and
that the provision was considered and interpreted by the Supreme
Court in Aberuagba’s case, wherein the taxing power of the Federal
Government was limited to international and interstate trade and
commerce.

On their part, Counsel for the 1st Respondent submitted that
Aberuagba’s case was distinguishable from the present case. The
present action was for a determination as to who should receive
remittance of tax already collected by the 1st Respondent, as
against the validity of the Sales Tax Law of Lagos State, which was
the decision in Aberuagba’s case. Counsel for the 2nd Respondent
submitted that, even though a State has power to enact a Sales Tax
Law, that law must not be inconsistent with any validly made Act,
especially where the Act has covered the field.

On issue 2, Counsel for the Appellant argued that, it is not in
all cases where a statute enacted by a State is in conflict with an
Act on the same subject, that the former would be declared invalid
and inoperative. He submitted that, for the doctrine of “covering
the field” to apply, the Federal Government must first have the
legislative competence to enact the law. He conceded that the
Federal Government has incidental sales taxing power in respect of
trade and commerce, but that the power is incidental only to the
exclusive power of the National Assembly over international and
interstate trade and commerce. He submitted that, the National
Assembly does not have power to make laws on intrastate trade and
commerce and therefore, cannot impose tax on such trade as the VAT
appears to do. He relied on FAWEHINMI v BABANGIDA (2003) 3
NWLR (Pt. 808) 604.

He concluded that the issue of covering the field, is not
applicable so as to make the VAT prevail over the Sales Tax Law.
For the 1st Respondent, Counsel argued that the constitutionality
of the VAT Act, was not in issue at the lower Court. He submitted
that VAT and Sales Tax are the same, as the incidence of both taxes
is on the consumer.

He submitted further that, the lower Court was right to have
held that the VAT Act had covered the field. Counsel for the 2nd
Respondent submitted that VAT is a tax payable on goods and
services all over Nigeria, and that all tiers of government,
including Lagos State, are beneficiaries. He concluded that since
VAT is a valid law of the National Assembly, the Sales Tax Law is
void to the extent of its inconsistency.

On issue 3, Counsel for the Appellant submitted that, double
taxation might arise in two situations: (i) the imposition of two
taxes on the same property, tax payer or profit or goods, during
the same period by one taxing authority; and (ii) the imposition of
comparable taxes in two or more States on the same tax payer for
the same subject. He relied on Black’s Law Dictionary, 8th Edition.
He submitted that, neither situation is applicable in this
case.

Counsel for the 1st Respondent countered the submission of
Counsel for the Appellant, and posited instead that in so far as
the objectives of the VAT Act and the Sales Tax Law are the same
and the incidence of the taxes is on the consumer, then the
imposition of both taxes would create double taxation. Counsel for
the 2nd Respondent, agreed with the Counsel for the 1st Respondent
on this point.

Court’s Judgement and Rationale

On issue 1, the Supreme Court relying on Black’s Law Dictionary,
8th edition defined ‘Stare decisis’ as follows “’to stand by
things decided’, the doctrine of precedent under which it is
necessary for a court to follow earlier judicial decisions when the
same points arise again in litigation”. Based on this
definition, the Apex Court held that the issue in ABERUAGBA’S case
was the validity of the exercise of the legislative powers by the
Ogun State House of Assembly in enacting the Sales Tax Law of 1982,
which imposed tax on the purchase of specified goods and services.
The Court held further that, in this case, the 1st Respondent did
not challenge the validity of the Sales Tax Law of Lagos State;
therefore, the cases of ABERUAGBA and the NIGERIAN SOFT
DRINKS LTD cannot constitute stare decisis for the trial
Court.

On issue 2, the Learned Justices held that the Value
Added Tax Decree No. 102 of 1993 was promulgated by the Federal
Military Government and it remained in effect until the coming to
effect of the 1999 Constitution. At the time the cause of action
arose, the VAT Act was deemed to be an Act of the National Assembly
and until there is a decision of a competent Court invalidating it,
it remains valid. The Court held further that Section
2 of the VAT Act, provides that the tax to be charged and payable
on goods and services is as set out in column A of schedules 1 and
2 of the Act. Section 1 of the Sales Tax Law of Lagos State makes
similar provision. The Supreme Court, agreeing with the
two lower Courts, held that the goods and services covered by the
VAT Act and the Sales Tax Law, are the same. It follows that the
VAT Act has effectively covered the field in that regard. The
provisions of the VAT Act, having covered the field on the issue of
Sales Tax, its provisions prevail over the provisions of the Sales
Tax Law of Lagos State.

Deciding issue 3, the Supreme Court held that, not only do both
the VAT Act and the Lagos Sales Tax law cover the same goods and
services, they are also targeted at the same consumer.
The court is unequivocal that it would amount to double
taxation for the same tax to be levied on the same goods and
services, payable by the same consumers, under two different
legislations.

Having resolved all the issues against the Appellant, the
Supreme Court dismissed the appeal. Appeal Dismissed.

Representation:

S.A. Quadri Esq. (DCL) with E.R. Agu (Mrs.) (CSC) Ministry
of Justice, Lagos State for the Appellant.

M.N.O. Olapade Esq. with Ibiye Tyroll Thompson for the 1st
Respondent. B.H. Oniyangi (Mrs) with Ibrahim Abdullah for the 2nd
Respondent.

Reported by Optimum Law Publishers
Limited

(Publishers of the Nigerian Monthly Law
Reports (NMLR))

“The doctrine of covering the field, is essentially that
where the main, principal or superior law has covered a given field
or area, any other subsidiary law made in that area or field,
cannot operate side by side with the main, principal or superior
law. If the inferior law is inconsistent with the principal law, it
has to be declared void to the extent of its
inconsistency”

In the Supreme Court of Nigeria
Holden at Abuja
On Friday the 8th Day of December, 2017

Before Their
Lordships

Musa Dattijo Muhammad
Kudirat Motonmori Olatokunbo Kekere-Ekun
John Inyang Okoro
Amiru Sanusi
Ejembi Eko
Justices, Supreme Court
SC.321/2007

Between

Attorney-General, Lagos State
………Appellant

And

1. Eko Hotels Limited
2. Federal Board of Inland Revenue ……Respondents

(Lead Judgement delivered by
Hon. Kudirat MotonmoriOlatokunbo Kekere-Ekun, JSC)

Facts
The 1st Respondent filed an Originating Summons before the Federal
High Court, Lagos, seeking a determination of the question whether
remittance of money collected as tax by it from its consumers,
should be paid to the Federal Board of Inland Revenue (FBIR) or to
the Lagos State Government, having regard to the provisions of
Sections 1, 2, 10, 11, 12, 13, 14, 15 and 16 of the Value Added Tax
(VAT) Decree No 102 and Sections 1, 2, 3, 4, 5 and 6 of the Sales
Tax Law. Both the Appellant and the 2nd Respondent, filed
Counter-affidavits in opposition to the Originating Summons. The
Judge held that the 1st Respondent could only be a ‘taxable person’
or remitting agent in respect of the amount due as tax on its sales
to its consumers to a single agent, which is the FBIR. The
Appellant, who was dissatisfied, unsuccessfully appealed to the
Court of Appeal; it has further appealed to the Supreme Court.

Issues for Determination:
The issues as formulated by the Appellant which were adopted by the
Respondents are:
1. Whether the Court below was right when it held that the cases of
ATTORNEY-GENERAL OF OGUN STATE v ABERUAGBA (1985) 1 NWLR
(Pt. 3) 395 and NIGERIAN SOFT DRINKS LTD v ATTORNEY-GENERAL OF
LAGOS STATE (1987)
2 NWLR (Pt. 57) 444 cited to the trial Court as stare decisis, is a
non-issue, and that none of those decisions was authority to say
that the 1st Respondent is obliged to remit proceeds of Sales Tax
to Lagos State Government.
2. Whether the Court of Appeal was right, when it held that the
Value Added Tax has covered the field of Sales Tax, and its
provisions prevail over the Sales Tax Law of Lagos State.
3. Whether the Court below was right, when it held that imposition
of both Value Added Tax and Sales Tax, will create double
taxation.

Arguments:
On the first issue, Counsel for the Appellant contended that the
cases of ATTORNEY-GENERAL OF OGUN STATE v ABERUAGBA (1985)
1 NWLR (Pt. 3) 395 and NIGERIAN SOFT DRINKS LTD v ATTORNEY-GENERAL
OF LAGOS STATE (1987)
2 NWLR (Pt. 57) 444 have conclusively determined the sales taxing
power of Lagos State, and were decisions of the Supreme Court and
Court of Appeal respectively and that by the doctrine of stare
decisis, both the Federal High Court and the Court of Appeal should
have held themselves bound by the decisions. He relied on
NAB LTD v BARRI ENGINEERING NIGERIA LTD. (1995) 8 NWLR (Pt.
413) 275 at 289.

He argued that, the Federal Government derived its power to
enact VAT Act from Item 61 in the Exclusive Legislative list, and
that the provision was considered and interpreted by the Supreme
Court in Aberuagba’s case, wherein the taxing power of the Federal
Government was limited to international and interstate trade and
commerce.

On their part, Counsel for the 1st Respondent submitted that
Aberuagba’s case was distinguishable from the present case. The
present action was for a determination as to who should receive
remittance of tax already collected by the 1st Respondent, as
against the validity of the Sales Tax Law of Lagos State, which was
the decision in Aberuagba’s case. Counsel for the 2nd Respondent
submitted that, even though a State has power to enact a Sales Tax
Law, that law must not be inconsistent with any validly made Act,
especially where the Act has covered the field.

On issue 2, Counsel for the Appellant argued that, it is not in
all cases where a statute enacted by a State is in conflict with an
Act on the same subject, that the former would be declared invalid
and inoperative. He submitted that, for the doctrine of “covering
the field” to apply, the Federal Government must first have the
legislative competence to enact the law. He conceded that the
Federal Government has incidental sales taxing power in respect of
trade and commerce, but that the power is incidental only to the
exclusive power of the National Assembly over international and
interstate trade and commerce. He submitted that, the National
Assembly does not have power to make laws on intrastate trade and
commerce and therefore, cannot impose tax on such trade as the VAT
appears to do. He relied on FAWEHINMI v BABANGIDA (2003) 3
NWLR (Pt. 808) 604.

He concluded that the issue of covering the field, is not
applicable so as to make the VAT prevail over the Sales Tax Law.
For the 1st Respondent, Counsel argued that the constitutionality
of the VAT Act, was not in issue at the lower Court. He submitted
that VAT and Sales Tax are the same, as the incidence of both taxes
is on the consumer.

He submitted further that, the lower Court was right to have
held that the VAT Act had covered the field. Counsel for the 2nd
Respondent submitted that VAT is a tax payable on goods and
services all over Nigeria, and that all tiers of government,
including Lagos State, are beneficiaries. He concluded that since
VAT is a valid law of the National Assembly, the Sales Tax Law is
void to the extent of its inconsistency.

On issue 3, Counsel for the Appellant submitted that, double
taxation might arise in two situations: (i) the imposition of two
taxes on the same property, tax payer or profit or goods, during
the same period by one taxing authority; and (ii) the imposition of
comparable taxes in two or more States on the same tax payer for
the same subject. He relied on Black’s Law Dictionary, 8th Edition.
He submitted that, neither situation is applicable in this
case.

Counsel for the 1st Respondent countered the submission of
Counsel for the Appellant, and posited instead that in so far as
the objectives of the VAT Act and the Sales Tax Law are the same
and the incidence of the taxes is on the consumer, then the
imposition of both taxes would create double taxation. Counsel for
the 2nd Respondent, agreed with the Counsel for the 1st Respondent
on this point.

Court’s Judgement and Rationale

On issue 1, the Supreme Court relying on Black’s Law Dictionary,
8th edition defined ‘Stare decisis’ as follows “’to stand by
things decided’, the doctrine of precedent under which it is
necessary for a court to follow earlier judicial decisions when the
same points arise again in litigation”. Based on this
definition, the Apex Court held that the issue in ABERUAGBA’S case
was the validity of the exercise of the legislative powers by the
Ogun State House of Assembly in enacting the Sales Tax Law of 1982,
which imposed tax on the purchase of specified goods and services.
The Court held further that, in this case, the 1st Respondent did
not challenge the validity of the Sales Tax Law of Lagos State;
therefore, the cases of ABERUAGBA and the NIGERIAN SOFT
DRINKS LTD cannot constitute stare decisis for the trial
Court.

On issue 2, the Learned Justices held that the Value
Added Tax Decree No. 102 of 1993 was promulgated by the Federal
Military Government and it remained in effect until the coming to
effect of the 1999 Constitution. At the time the cause of action
arose, the VAT Act was deemed to be an Act of the National Assembly
and until there is a decision of a competent Court invalidating it,
it remains valid. The Court held further that Section
2 of the VAT Act, provides that the tax to be charged and payable
on goods and services is as set out in column A of schedules 1 and
2 of the Act. Section 1 of the Sales Tax Law of Lagos State makes
similar provision. The Supreme Court, agreeing with the
two lower Courts, held that the goods and services covered by the
VAT Act and the Sales Tax Law, are the same. It follows that the
VAT Act has effectively covered the field in that regard. The
provisions of the VAT Act, having covered the field on the issue of
Sales Tax, its provisions prevail over the provisions of the Sales
Tax Law of Lagos State.

Deciding issue 3, the Supreme Court held that, not only do both
the VAT Act and the Lagos Sales Tax law cover the same goods and
services, they are also targeted at the same consumer.
The court is unequivocal that it would amount to double
taxation for the same tax to be levied on the same goods and
services, payable by the same consumers, under two different
legislations.

Having resolved all the issues against the Appellant, the
Supreme Court dismissed the appeal. Appeal Dismissed.

Representation:

S.A. Quadri Esq. (DCL) with E.R. Agu (Mrs.) (CSC) Ministry
of Justice, Lagos State for the Appellant.

M.N.O. Olapade Esq. with Ibiye Tyroll Thompson for the 1st
Respondent. B.H. Oniyangi (Mrs) with Ibrahim Abdullah for the 2nd
Respondent.

Reported by Optimum Law Publishers
Limited

(Publishers of the Nigerian Monthly Law
Reports (NMLR))