JURISDICTION TO TRY WITHHOLDING TAX MATTERS: Whether Federal High Court or the State High Court?

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JURISDICTION TO TRY WITHHOLDING TAX MATTERS: Whether Federal High Court or the State High Court? 

by Branham Chima. 

✓ ANSWER: 
The jurisdictional aspect of WHT is an important consideration. When it comes to enforcing the revenue drive and resolving matters related to withholding tax, the relevant State High Court assumes jurisdiction. The Federal High Court, on the other hand, has no jurisdiction to entertain matters pertaining to or connected with the revenue of a state. Its jurisdiction is invoked only when the issue concerns the revenue accruing to the federal government. In cases involving WHT, personal income tax, pay as you earn (PAYE), and similar tax issues, the State High Court is the eligible court to try the matter. This distinction is crucial in maintaining the balance between state and federal revenue administration. It is important to note that the collection of withholding tax does not fall within the purview of acts carried out in the course of administering and managing the Federal Government or its agencies, as affirmed by legal precedents. 

In ACCESS BANK PLC v. EDO STATE BOARD OF INTERNAL REVENUE (2018) JELR 39356 (CA), the Court ruled in respect thus: ‘This withholding tax interest is one of the means through which the states are generating revenue to meet the daily expenses of governance and one of the means of enforcing their revenue drive is by approaching the relevant State High Court and not the Federal High Court which statutorily and constitutionally have no jurisdiction to entertain any matter pertaining to or connected with the revenue of a State. The jurisdiction of the Federal High Court can only be invoked where the issue is connected with or pertaining to the revenue accruing to the federal government. In this regard, the case of Shittu v. Nigerian Agricultural and Co-operative Bank Ltd. supra, also relied on by the Respondent is very apt on this issue wherein it was held by this Court that: "I have considered and discussed in the judgment above, the ruling of the Federal High Court on appeal, I find no error in the decision and I affirm it in its entirety when I say yes to the principle issue in this appeal, that the issue of tax before the Court is on Personal Income Tax, pay as you earn (PAYE) and withholding Tax (WHT), the eligible Court to try the issue is the State High Court, Akwa Ibom State." I also agree with the submission of the learned counsel for the Respondent that the collection of withholding tax does not constitute acts done in the course of administration and management of the Federal Government or any of its agencies as contended by the Appellants counsel.’

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