Do Shop Owners’ Unions Have the Right to Collect Market Taxes?

CASE TITLE: AKOR & ANOR v. OTUKPO L.G. COUNCIL (2025)
LPELR80253(CA)
JUDGMENT DATE: 22nd Jan, 2025
JUSTICES: BIOBELE ABRAHAM GEORGEWILL
BATURE ISAH GAFAI
NEHIZENA IDEMUDIA AFOLABI
DIVISION: MAKURDI

PRACTICE AREA: GOVERNMENT

FACTS:

This appeal borders on the extent of powers of the Local Government.

This appeal is against the decision of the High Court of Benue State, Otukpo Division, in Suit No. OHC/51/2021, delivered on 25/3/2022.

The gist of the case of the Respondent inter alia was that the Respondent established the Otukpo Main Market and has the power to maintain and regulate the activities in the market. It is also entitled by law to collect taxes, rates and levies from shop owners in the market for the purpose of securing the maintenance or regulation of security and sanitation. the Otukpo Main Market. The Appellants are not disputing the powers of the Respondent to make control, regulate and maintain the Otukpo Main Market. However, the Appellants are, without any iota of power, contending the powers and functions of the Respondent does not extend to collection of levies and rates from shop owners. The Respondent had therefore, approached the lower Court for the interpretation of certain provisions of the Constitution and the Benue State Local Government Law 2007 as it affect the extent of the powers of the Respondent in the control, regulation of security and sanitation, and maintenance of the Otukpo Main Market.

The case of the Appellants was that 1st Appellant and members of the 2nd Appellant are traders who own, operate or occupy Shops, Shades and Kiosks in the Otukpo Main Market, and have been paying all the statutorily prescribed taxes, rates and levies payable in the said market. However, the Respondent had in the past failed to provide adequate security and environmental sanitation in the said market, which failure had adversely affected their business. The Appellants decided to come together and formed an Association, known as Otukpo Traders Company, in order to collectively pursue their common interest. Subsequently, the members voluntarily decided to levy themselves with N300.00 for security and N100. 00 for environmental sanitation in order to provide for security and environmental sanitation in the market. Sometimes in 2019, following leadership crisis, the Appellants entrusted the Respondent with the running of their affairs pending the resolution of the crisis. The Respondent then made the payment of security levy compulsory and increased same by N200. 00. In early 2021, the leadership crisis was resolved and Association metamorphosed into the new Otukpo Main Market Traders Union Ltd, which was duly registered under the Co – Operative Societies Act with the 1st Appellant as its President. The Respondent was informed of this new development and politely demanded the return to the Association the right to manage its affairs by their new leadership, especially the collection of the voluntary levy for security and environmental sanitation, which demand attracted adverse reaction from the Respondent, leading to the arbitrary arrest and detention of the 1st Appellant and ultimately the institution of this suit by the Respondent on receipt of a Pre-action Notice from the Appellants.

At the conclusion of the hearing of the Respondent’s suit against the Appellants, the lower Court in its judgment delivered on 25/3/2022, granted the claims of the Respondent as Claimant against the Appellants as Defendants, hence this appeal.

ISSUES FOR DETERMINATION:

The Appellants formulated the following issues for the determination of the appeal thus:

1. Whether the Respondent can, under the guise of maintaining and regulating the Otukpo Main Market as provided for by the provisions of Paragraphs 1(b), (e) and (k) (iii) to the Fourth Schedule to the Constitution of the Federal Republic of Nigeria 1999 as amended and Section 46(e) of the Local Government Law 2007, enact or purport to enact a Bye-Law, (the Otukpo Local Government Environmental Sanitation and other Related Matters Bye-Law 2020) to determine, impose, fix, demand and collect taxes and/or levies from members of 2nd Appellant differently or contrary to those provided by the constitution and other statutory provisions enacted by Superior Legislatures?

2. Whether the Constitutional right of the Appellants to fair hearing was/is not breached or denied by the late introduction into the case and the use by the Respondent and the Learned trial Judge of Exhibit EO6 (The Otukpo Local Government Environmental Sanitation and other Related Matters Bye-Law 2020) without the Appellants having an opportunity to be heard on it?

3. Whether the collection of the voluntary levy for security and environmental sanitation by the Appellants from their members operating in the Otukpo Main Market is unconstitutional, unlawful and illegal and amounts to usurping the statutory functions of the Respondent of maintaining and regulating the Otukpo Main Market?

4. Whether the provision of welfare services such as the establishment of markets and the provision of security and environmental sanitation by a tier of Government such as the Respondent, is taxable?

5. Whether it was not a misdirection for the learned trial judge to hold that the Respondent’s lone issue was the same as Appellants’ issue I and that the Respondent’s lone issue is/was enough to dispose of the case?

The Respondent formulated a sole issue, thus:

“Whether or Not the lower Court was right when it granted the reliefs sought by the Respondent, having regards to the evidence and the documents placed before it?”

COUNSEL SUBMISSIONS:

On issue one, learned counsel for the Appellants had submitted inter alia that it is not within the legislative competence of the Respondent to enact a Bye – Law that will enable it to determine, fix, impose and collect taxes/levies from the traders in the Otukpo Main Market outside those statutorily prescribed by the Constitution and other laws simply because the power vested in it to establish, maintain and regulate the Otukpo Main Market, and contended that in order to avoid arbitrariness in imposition and collection of taxes and levies, tax matters nationwide are regulated by Acts of the National Assembly, with no powers vested in the Local Government to collect security and sanitation levy contrary the perverse findings of the lower Court, and urged the Court to hold that, though Section 49(1) of the Benue State Local Government Law 2007 empowers the legislative arm of the Local Government in Benue State to make Bye – Laws, such Bye – Laws cannot purport to add to or be inconsistent with the express provisions of an Act of the National Assembly or a Law of the Benue State House of Assembly, such as the Benue State Environmental Sanitation Authority Law 2005, which has taken care of all environmental sanitation in Benue State, having covered the field and leaving no room for a Local Government Bye-Law in the matter, the Otukpo Local Government Environmental Sanitation and Other Related Matters Bye – Law 2020 made by the Respondent is invalid and inoperative for the reasons of duplication or inconsistency, and to allow the Appeal, set aside the perverse judgment of the lower Court and dismiss the claims of the Respondent for lacking in merit. Learned counsel referred to Section 90 and 91 (1) of the Personal Income Tax Act Cap P8, Taxes and Levies (Approved List for Collection) ACT Cap T2 1998, Section 49(1) of the Benue State Local Government Law 2007, Benue State Internal Revenue Administration Law 2015 and Sections 5(1) (a) – (p) and 30(1) of the Benue State Environmental Sanitation Law 2005, Section 28(4) of the Otukpo Local Government Environmental Sanitation and Other Related Matters Bye – Law 2020, and relied on Ogun State V. The Federation (1982) 3 NCLR 166, Attorney-General Abia State & Ors V. Attorney General, Federation (2002) FWLR (Pt. 101) 1419 @ pp. 1510 – 1512, Attorney – General Ogun State V. Aberuagba (1985) 1 NWLR (Pt. 3) 395 @ p. 413. It was also submitted that the power of establishing, maintaining and regulating markets vested in the Respondent by the Constitution and other relevant laws does not translate to arbitrary imposition and collection of taxes and levies from the traders in the markets within the Otukpo Local Government other than those specified in the Constitution and the other relevant laws, and contended that the levy or tax for security and sanitation is not among the levies and taxes the Respondent is by law empowered to collect, and urged the Court to hold that, since the Respondent is not empowered to legislate on tax matters, and levy or tax for security and sanitation, which are not included in its vested powers of maintenance and regulation of markets, the Respondent has no right to the claims against the Appellants contrary to the perverse findings of the lower Court, and to allow the appeal, set aside the perverse judgment of the lower Court and dismiss the claims of the Respondent for lacking I merit. Learned counsel referred to Chambers Dictionary 10th Edition 2007 @ pp. 902 & 1288; Oxford Advanced Learner’s Dictionary 8th Edition 2010 @ pp. 897 & 1239, and relied on Eti – Osa Local Government V. Jegede & Anor (2007) 10 NWLR (Pt. 1043) 537 @ p. 558.

The respondent on the other hand, submitted that on the evidence before the lower Court it was right to find as fact that the Otukpo Main Market belonged to the Respondent to the exclusion of the Appellants and that the maintenance and making regulations for its security and sanitation is by law within the powers of the Respondent, findings which were not even appealed against by the Appellants and with which they are bound, and contended that the Appellants who are persons merely operating shades, kiosks and shops in the Respondent’s market are without any colour of right of ownership to contest with and or usurp the functions and powers of the Respondent over the security and sanitation in its own market, and urged the Court to hold that, the Appellants having not shown any law enabling them to establish, maintain or make regulations for the Respondent’s Otukpo Main Market, the lower Court was right granting the claims of the Respondent against the usurper Appellants, and to dismiss the appeal and affirm the sound judgment of the lower Court. Learned counsel referred to Paragraph 1 (b)(e), k (ii) of the Fourth Schedule to the Constitution of Nigeria 1999 (as amended), Section 46 (e) of the Benue State Local Government Law 2007, and relied on Dabup V. Kolo (1993) 9 NWLR (Pt. 313) 254 @ p. 269, UBA Plc V. Mabogunje (2022) 14 NWLR (Pt. 1849) 99, FBN V. Nwadialu (2016) 18 NWLR (Pt. 1546) 1 @ p. 58.

DECISION/HELD:

In the final analysis, the Court of Appeal held that the appeal lacked merit and was dismissed in its entirety.

RATIO:

GOVERNMENT – LOCAL GOVERNMENT: Power of local government council to levy rates and collect taxes from shop owners in a market; whether shop owners through their registered Trade Union can arrogate such powers to themselves without delegation of such authority

“I am aware of the right to Freedom of Association as protected under Section 40 of the Constitution of Nigeria 1999 (as amended). It is one of the basic fundamental human rights of the citizen and therefore, cannot be easily derogated from except in accordance with the due process of law. However, it is not the case of the Respondent that the Appellants should not associate or should not be registered, which they as had already done without any let or hindrance from the Respondent. The right of Freedom of Association, as found by the lower Court, and quite right too in my finding, does not extend to the right to levy rates and collect taxes from the Respondent’s Shop Owners for the purpose of security and sanitation. The above is clearly so because the right and or power to do so and or delegate it to the Appellants was squarely that of the Respondent, without which the Appellants cannot exercise such powers as they had purported and arrogated to themselves. The Appellants were under a duty, being mere tenants in the Otukpo Main Market established not by them but by the Respondent, which exclusively established and owns it, to obey the rules and regulations put in place by the Respondent, as the Owner of the Otukpo Main Market rather than challenging the rights, powers and functions of the Respondent. See Mbanefo V. Molokwu & Ors (2008) LPELR – 3696 (CA) @ pp. 29. My lords, let us now hear for ourselves how the lower Court puts its conclusion on the matter before it when it held inter alia as follows: “It is not in doubt that the Otukpo Main Market belongs to the Plaintiff to be exclusion of the Defendants. It is established and beyond any argument that the maintenance and making of regulations for the security and sanitation is within the power of the plaintiff as provided by the law. It is also an established fact that the Defendants are operating Shades, Kiosks and Shops in the Plaintiff’s market. And finally, it is not in doubt that the Defence has not pointed out any provisions of law that allows the Defendants to establish, maintain or make regulations for the Plaintiff’s Market. The Defendants cannot by any stretch of imagination arising from the provisions of the law highlighted above or any other provisions, be placed in the position to maintain or make regulations for the good of the Plaintiff’s market…The law does not empower them with the status of a Local Government for the purpose of establishing, maintenance and making of regulations for the markets. Since the Defendants have not been declared by the Constitution or any other law to be a Local Government, they cannot exercise or arrogate the functions ascribed to the Plaintiff by the constitution to themselves. The Defendants by their letters in Exhibits EO2 and E04 have almost usurped the powers of the Plaintiff. It is a constitutional arrogance and aberration for the Defendants and their members to take over the functions of the Plaintiff…” ? The above findings and conclusions of the lower Court are both correct and unimpeachable and must therefore be allowed to stand as it cannot be interfered with or disturbed by this Court! On the whole therefore, all the functions for which the Respondent sought the protection of the lower Court against the interferences by the Appellants were strictly within the plenitude and amplitude of the powers vested in and exercisable by the Respondent to the exclusion of the Appellants. Thus, the Appellants lack even the modicum of any right either to challenge, interfere and or carry out any of these functions except as may be delegated to them by the Respondent, and there being no such delegation, either alleged or proved, the Respondent carries the sole responsibility for the performance and or carrying out of these functions without the need for any concurrence, permission, consultation and or participation of the Appellant. See Edo State House of Assembly & Ors V. Igbinedion & Ors (2021) LPELR – 55990 (CA) @ p. 60. Accordingly, issues one, three and four are hereby resolved against the Appellants in favour of the Respondent.” Per GEORGEWILL, J.C.A.

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