A-G OGUN STATE V ABERUAGBA

A-G OGUN STATE V ABERUAGBA


IN THE SUPREME COURT OF NIGERIA

12TH APRIL, 1985


APPEAL NO: SC.20/1984

CITATION:
Alternative Citation: (1985) 1 NWLR (PT. 3) 395

Before Their Lordships

GEORGE SODEINDE SOWEMIMO CJN (PRESIDED)

AYO GABRIEL IRIKEFE, JSC

MOHAMMED BELLO JSC (DELIVERED THE LEADING JUDGMENT)

KAYODE ESO, JSC

AUGUSTINE NNAMANI , JSC

MUHAMMADU LAWAL UWAIS, JSC

ADOLPHUS GODWIN KARIBI-WHYTE, JSC.


BETWEEN

ATTORNEY-GENERAL, OGUN STATE

(APPELLANTS)

AND

ALHAJI AYINKE ABERUAGBA

RESPONDENTS


CONSTITUTIONAL LAW – “Excise” used in item 15 of the Exclusive Legislative List of the 1979 Constitution – meaning of – meaning of “excise” in other common law countries – whether applicable in Nigeria.

CONSTITUTIONAL LAW – Interpretation of the Constitution – general principles governing same.

CONSTITUTIONAL LAW – Legislative powers – “in particular” used in item 61 of the Exclusive Legislative List of the 1979 Constitution – meaning of – whether 1979 Constitution conferred on the Federation exclusive power over trade and commerce.

CONSTITUTIONAL LAW – Legislative powers – Concurrent Legislative List – extent of the competence of the National Assembly and the House of Assembly of a State to legislate thereunder.

CONSTITUTIONAL LAW – Legislative powers – exclusive legislative competence of the National Assembly to legislate on items on the Exclusive Legislative List under the 1979 Constitution.

CONSTITUTIONAL LAW – Legislative powers – residual legislative powers – what constitutes same – competence of states to legislate on same.

CONSTITUTIONAL LAW – Ogun State Sales Tax Law, 1982 imposing sales tax on products the prices of which has been controlled by the Federal Government under the Price Control Act, 1977 pursuant to its exclusive competence to control prices of goods and commodities under item 61(e) of the Exclusive Legislative List of the 1979 Constitution – whether constitutional.

CONSTITUTIONAL LAW – Sales Tax Law – competence of Federal and State Governments to make sales tax laws – extent of the competence of State Governments to make such laws under the 1979 Constitution.

CONSTITUTIONAL LAW – Section 3(1) of Ogun State Sales Tax Law 1982 – imposing sales tax on products brought into Ogun State – matter falling under inter – state trade and commerce within exclusive competence of the Federation under the 1979 Constitution – whether constitutional.

CONSTITUTIONAL LAW – Taxing powers – competence and extent of the legislative powers of a state to impose tax on all items on the Concurrent Legislative List and residual matters under the 1979 Constitution.

INTERPRETATION OF STATUTES – Interpretation of the Constitution – general principles governing same.

TAXATION – “Excise” used in item 15 of the Exclusive Legislative List of the 1979 Constitution – meaning of – meaning of “excise” in other common law countries – whether applicable in Nigeria.

TAXATION – Ogun State Sales Tax Law, 1982 imposing sales tax on products the prices of which has been controlled by the Federal Government under the Price Control Act, 1977

pursuant to its exclusive competence to control prices of goods and commodities under item 61(e) of the Exclusive Legislative List of the 1979 Constitution – whether constitutional.

TAXATION – Sales tax imposed by section 3(1) and 3(4)(i) of Ogun State Sales Tax Law – whether amounts to an excise duty.

TAXATION – Sales Tax Law – competence of Federal and State Governments to make sales tax laws – extent of the competence of State Governments to make such laws under the 1979 Constitution.

TAXATION – Section 3(1) of Ogun State Sales Tax Law 1982 – imposing sales tax on products brought into Ogun State – matter falling under inter – state trade and commerce within exclusive competence of the Federation under the 1979 Constitution – whether constitutional.

TAXATION – Taxing power – competence and extent of the legislative powers of a state to impose tax on all items on the Concurrent Legislative List and residual matters under the 1979 Constitution.


LEAD JUDGEMENT DELIVERED BY BELLO, J.S.C.


The principle of the division of legislative powers of Government enshrined in “the Constitution” of the Federal Republic of Nigeria 1979, (hereinafter referred to as “the Constitution”), is the base of the dispute in this case on appeal. So it is pertinent to state the principle from the onset. It may also be observed that case was decided before the Constitution was amended and modified by Constitution (Suspension and Modification) Decree 1984 No. I with retrospective effect from 31st December 1983 and for this reason the appeal must be determined in accordance with the relevant provision of the Constitution as they were before the promulgation of the Decree 1984. No. 1

The legislative powers of Nigeria were shared between the Federation and the component states by section 4 of the Constitution in these terms:

“4. (1) The legislative powers of the Federal Republic of Nigeria shall be vested in a National Assembly for the Federation which shall consist of a Senate and a House of Representatives.

(2) The National Assembly shall have power to make laws for the peace, order and good government of the Federation or any part thereof with respect to any matter included in the Exclusive Legislative List set out in Part I of the Second Schedule to this Constitution.

(3) The power of the National Assembly to make laws for the Federation with respect to any matter included in the Exclusive Legislative List shall, save as otherwise provided in the Constitution be to the exclusion of the Houses of Assembly of States.

(4) In addition and without prejudice to the powers conferred by subsection (2) of this section, the National Assembly

shall have power to make laws with respect to the following matters, that is to say:

(a) any matter in the Concurrent Legislative List set out in the first column of part II of the Second Schedule to this Constitution to the extent prescribed in the second column opposite thereto; and

(b) any other matter with respect to which it is empowered to make laws with respect to the following matters, that is to say:

(a) any matter in the Concurrent Legislative List set out in the first column of part II of the Second Schedule to this Constitution to the extent prescribed in the second column opposite thereto; and

(b) any other matter with respect to which it is empowered to make laws in accordance with the provisions of this Constitution.

(5) If any law enacted by the House of Assembly of a State is inconsistent with any law validly made by the National Assembly, the law made by the National Assembly shall prevail, and that other law shall to the extent of its inconsistency be void.

(6) The legislative powers of a State of the Federation shall be vested in the House of Assembly of the State.

(7) The House of Assembly of a State shall have power to make laws for the peace, order and good government of the State or any part thereof with respect to the following matters, that is to say:-

(a) any matter not included in the Exclusive Legislative List set out in Part I of the Second Schedule to this Constitution;

(b) any matter, included in the Concurrent Legislative list set out in the first column of Part 11 of the Second Schedule to this Constitution to the extent prescribed in the second column opposite thereto; and

(c) any other matter with respect to which it is empowered to make laws in accordance with the provisions of this Constitution.”

The provisions of section 4, which have been suspended by the Decree No. 1, 1984 were clear. The National Assembly was vested with exclusive legislative powers in respect of all the matters specified in the Exclusive Legislative List and, save as expressly provided in the Constitution, the House of Assembly of a State had no legislative power in respect of any of the matters in the said list. The National Assembly and the House of Assembly of a State had concurrent powers to make laws in respect of the matters in the Concurrent Legislative List but legislations made by the National Assembly on matters within the Concurrent List had supremacy over State’s legislations on the same matters. In this respect, a Law enacted by a State might be void either on the ground of inconsistency as per section 4(5) above or on the ground of covering the field where identical legislations, without any inconsistency on the same subject matter which were validly made by the State and the Federation. In such a situation, the State’s Law must give way to the Federal legislation: Attorney -General of Ogun State v. Attorney-General of the Federation (1992) 3 N.C.L.R. 166 at 179.

A careful perusal and proper construction of section 4 would reveal that the residual legislative powers of Government were vested in the States. By ‘residual legislative powers’ within the context of section 4. is meant what was left after the matters in the Exclusive and Concurrent Legislative Lists and those matters which the Constitution expressly empowered the Federation and the States to legislate upon had been subtracted from the totality of the inherent and unlimited powers of a sovereign legislature. The Federation had no power to make laws on residual matters.

Now, the defunct House of Assembly of Ogun State enacted the Sales Tax Law 1982 which imposed a tax upon the purchase of specified goods and services and made provisions for the collection of the same. Section 3 of the Law reads:

3. (1) A tax to be known as Sales Tax, shall be charged in accordance with the provision of this Law on all taxable products brought into the State and on the supply of goods and services in any inn not exempted from the requirement of registration under this Law at the rate specified opposite each class of goods or services in the first schedule to this Law.

(2) The tax shall be under the care and management of the Board.

(3) All money and securities for money collected or received for on account of the tax shall form part of the revenue of the State.

(4) The tax shall be due

(i) in the case of the supply of goods and services in an inn from the purchaser of goods and services at the time of the supply of such goods and services

and shall be collected and accounted for and remitted to the Board by the innkeeper within such time line and in such manner as are herein prescribed;

(ii) in the case of any other taxable product by the purchaser at the time of entry into contract of purchase of the taxable product with the wholesaler and shall be collected, accounted for and remitted to the Board by the wholesaler in the State, within such time and in such manner as are herein prescribed.

(5) The tax shall be a debt due to the Board and recoverable as such by the Board from the inn keeper or wholesaler whose duty it is to collect, account, for and remit the tax to the Board.

(6) The daily records of the tax shall be kept and shall be remitted monthly by the innkeeper or wholesaler to the Board on or before the 10th day of the month next following the month for which the tax is due.

(7) The Executive Council may from time to time by order amend the list or products and services liable to sales tax and may also by order alter the rate of tax payable on any taxable service.”

Under section 2 of the Law

– “the Board ” means the State Tax Board established under the Income Tax Law;

– “Wholesaler” means any person in the State whether he is the manufacturer or not of the goods who sells a taxable product to a person who carries on a business of selling goods of that class again;

– “taxable product” means any product specified in Part I, II or III of the First Schedule hereto.

In the First Schedule to the Law, it was provided as follows:

“FIRST SCHEDULE”

Products PART I (Sections 2 and 3)

Rate of tax

Petrol 1 kobo per litre

Diesel Oil. 1 kobo per litre

Petroleum products other than

petrol and diesel oil……….. 1 kobo per litre

PART II

Products Rate of Tax

Drinks (Beer and Alcoholic spirits) ……… 10% of Retail Price

Tobacco …………………… 10% of Retail Price

PART III

Products Rate of Tax

Paints…………… 5% of Retail Price

PART IV

Products Rate of Tax

Sales and Services provided

in Inns to lodgers and others ..….. 10% of Retail Price

Customers…………………. Charges of theInn”

In order to facilitate effective and efficient management in the administration of the law and particularly to ensure that the tax collected reach the Board, the Law requires the innkeepers and wholesalers who are appointed as the tax collectors to register with the Board, to keep and maintain proper books and accounts of all transactions by them on taxable products or service and to render monthly account of their collections together with the tax collected to the Board. It is an offence for any person who is not registered to collect sales tax.

With the foregoing preamble, the facts and circumstances of the case on appeal may now be stated. By an originating summons, the Appellants as Plaintiffs, who are wholesale purchasers of beer in Ogun State instituted the suit in the High Court of Ogun State for themselves and on behalf of wholesale purchasers of beer in the State claiming against the defendant now respondent, as follows:

(i) A declaration that section 3(1),3(4)(11),3(7),4, 5, 8 and 21 of the Sales Tax Law 1982 are inconsistent with the provision of the Constitution of the Federal Republic of Nigeria and accordingly void.

(ii) An injunction restraining all officers, servants and agents of the Government of Ogun State from executing any of the provisions of the said enactment or from requiring the Plaintiffs or any of them to implement or otherwise carry out the said provision.

(iii) Such further or other reliefs as the court may deem just

The matter was fully argued before Craig C.J. In the course of hearing, learned counsel for the Plaintiff requested the High Court to refer the question as to the constitutional validity of the Law to the Court of Appeal for determination pursuant to the provisions of -section 259(2) of the Constitution. After hearing submissions of counsel on all the issues, the learned Chief Judge delivered a well considered ruling in which he expressed his opinion that substantial questions of law of urgent public importance were involved in the suit. Accordingly, in pursuance of section 259(2) of the Constitution he referred to the Court of Appeal the following questions:

(1) Whether the omission to include item 38 of the 1960 and 1963 Exclusive List in the 1979 Constitutions shows and intention to regard the Sales Tax Law as a residual subject or whether the power to legislate on all fiscal subjects have (sic) been vested in the Federal Government

(2) Whether the tax imposed under the Sales Tax Law is an excise duty within the meaning of that term in item 15 of the Exclusive Legislative List,

(3) Whether the enactment of the Sales Tax Law is an exercise of power with respect to trade and commerce in item 61 of the Exclusive List.

(4) Is the Sales Tax Law valid and constitutional in so far as it imposes tax on purchasers of taxable goods ?

(5) If the answer to question 4 is in the affirmative, are sections 4,5 and 8 valid and constitutional as being incidental to the execution of the Sales Tax Law?

In his lead judgement. (with which Nasir P., Phil-Ebosie, Kazeem and Ete J.C.A concurred) Omo J. C. A., after he had extensively considered the submissions of learned counsel and reviewed the Australian and Canadian cases cited by counsel in support of their submissions, answered the questions on reference as follows:

“In view of my findings above, I will answer the questions referred to this court, and set out by the learned trial judge in the court below seriatim as follows:

QUESTION 2

Answer- YES, it is; except as to the tax on the supply on goods and services in an Inn.

QUESTION 3 Answer: Yes

QUESTION 4

Answer: No, but it imposes tax on products not on purchasers (of goods).

QUESTION 5

Answer: The answer to question 4 above is negative. The second part of this question therefore does not arise.”

The Appellants were not satisfied with the decision of the Court of Appeal and so they had appealed to this Court on the two grounds of appeal, which read:

(1) The Federal Court of Appeal erred in law in holding that the Ogun State Sales Tax Law 1982 by imposing sales tax on taxable products brought into the State imposes excise tax within the meaning of item 15 of the Exclusive Legislative List of the 1979 Constitution.

PARTICULARS OF ERROR

(a) The Sales Tax Law 1982 is not a tax on production of goods but upon the consumer who is the ultimate payer of the tax.

(b) Excise tax is an indirect tax while sales tax is a direct tax on the consumer.

(c) Excise tax is paid by the manufacturer who cannot be reimbursed while sales tax if paid by the manufacturer is reimbursed by the consumer who is the ultimate payer.

(2) The Federal Court of Appeal erred in law when it held that sales tax comes within “Trade and Commerce” in item 61 of the Exclusive Legislative List to the 1979 Constitution.

PARTICULARS OF ERROR

(a) Trade and commerce as provided within item 61 of the Exclusive Legislative List relate only to the matters clearly enumerated in paragraph (a) – (f) of item 61 and these relate to international and inter-states trade and commerce:

(b) Sales tax being intra-state trade and commerce is not within Federal legislative competence.

(c) Sales tax having been omitted from the legislative, lists is residual to the States who have sole legislative competence”

The relief sought in this Court is: “To set aside the said judgment of the Federal Court of Appeal and substitute an order answering the questions Federal Court of Appeal as follows:

QUESTION I: The power to legislate on all fiscal subjects has not been vested in the Federal Government. The omission of items 38 of the 1960 and 1963 Exclusive Legislative List in the 1979 Constitution shows an intention to regard sales tax as a residual subject.

Question 2. No.

Question 3: No.

Question 4: Yes.

Question 5. Yes.

As the appeal raised very important constitutional issues concerning the Federal and State taxing powers, we invited all the Attorneys General in the Federation as amici curiae to file briefs of argument on the issues and to appear for oral argument at the hearing. The Attorney-General of the Federation and the Attorney-General of ten States responded to the invitation. In the line-up for the legal battle, nine Attorneys-General or their representatives namely of Benue, Cross River Gongola, Kaduna, Lagos, Ondo, Kwara, Plateau and Rivers States, joined issue on the side of the appellant.The Attorney-General of the Federation and the Attorney-General of Oyo State pitched their tents on the side of the respondents. In parenthesis I should like to express my appreciation for the assistance given to the court by learned counsel for the parties and learned amici curiae. From the divergent and varied views expressed in their submission , it is manifest that they had put a lot of industry and learning into the presentation of their respective cases. The totality of their effort is highly commendable.

I think it is pertinent to start with the 1st question on reference to the Court of Appeal which for convenience sake may be repeated. The question is:

“(1) Whether the omission to include item 38 of the 1960 and 1963 Exclusive Legislative List in the 1979 Constitution shows an intention to regard the Sales Tax Law as a residual subject or whether the power to legislate on all fiscal subjects have (sic) been vested in the Federal Government.”

One may observe that the question has two limbs. The first limb is specific, i.e. Whether sale tax is a residuary matter. The second limb, as to whether the power to legislate on all fiscal subjects have been vested in the Federal Government, is too wide and it smells as an academic question which a court would refrain from answering on reference. The word “fiscal” is defined by the Oxford Universal Dictionary as “of or pertaining to the Treasury of a State; of or pertaining to financial matters.” The second limb of the question should therefore be limited to the context of the facts and circumstances of the case on appeal.

In his lead judgment, Omo J.C.A. stated his reasons for his answers to both limbs of the question in these words:

“It has been submitted by the defendant that the effect of the omission of item 38 on the Exclusive List of the 1960 and 1963 Constitutions from the 1979 Constitution, is to make the subject-matter of sales tax therein given to the States, a residual matter on which they can legislate. The arguments in support of this submission had been set out in detail earlier I must reject this submission and prefer that of the learned Federal Attorney-General that the power to legislate on same remains with the Federal Government. This must be so because in my view the subject-matter of sales tax does in fact fit into that contemplated in item 15 (as I have just found), possible (sic) item 58, and most certainly item 61 of the Exclusive Legislative list. There is therefore no vacuum which will make the subject-matter residual. Rather it has been provided for elsewhere in the Constitution.”

In my view the plain effect of the phrase ‘in particular’ as set out in item 61 is one of emphasis and not limitation. It unequivocally means that the ‘trade and commerce’ without any limitation is the exclusive legislative province of the Federal Government. Again, Professor Nwabueze puts it as follows:

“But the context of the trade and commerce provision in the Nigerian Constitution really puts it beyond question that the Federal power over the matter extends to trade and commerce (as defined) within each State…..The particularisation of international and interstate trade and commerce shows that the power is not limited to it but extends also to trade and commerce within each State.”

The conclusion that this must be the intention of item 61 is also buttressed by the effect of the provisions of sections 4, 16, 40(3) and paragraph (f) of the Third Schedule as submitted earlier by the Federal Attorney-General, to wit, that the economic control of the Federal Government is fairly comprehensive. I also accept his submission that with the control of trade and commerce goes the inherent right of taxation on that item.

Since the sale of products within the State (intra-state) or into the State (interstate) is ‘trade and commerce’ the imposition of tax on such trade is therefore within the exclusive purview of the Federal Government. The Ogun State Sales Tax Law which imposes tax on such trade is therefore ultra vires, null and void”

Chief Adaramaja, learned counsel for the appellant, submitted that the Court of Appeal was wrong in its interpretation of the provisions of item 61 in holding that all aspects of trade and commerce are exclusive to the Federation and a State has no power whatever over trade and commerce. He said the Constitution does not intend the Federal Government to concern itself with petty matter, such as control of street trading. regulation and collection of market fees, licensing of beer parlours, control of advertising, etc. which are the responsibilities of a State or a Local Government. For this reason, counsel contended, item 61 should be construed as to limit the exclusive powers of the Federation therein to the matters specifically listed in paragraphs (a) to (f) inclusive. The words “in particular” are words of imitation and not of particularisation. Since the Constitution makes no specific provision for sales taxing power, it was intended to be a residuary matter which is within the competence of a State.

However, learned counsel conceded that because of the Price Control Act, 1977 (which is an existing law by virtue of section 274 of the Constitution as amended by Price Control Commodities Orders, L.N. 21 and 22 of 1979. The Law in question is void in so far as it imposes sales tax on petroleum products because of the exclusive Federal power to control prices under item 61(c). He said the schedule to the Law was amended to exclude Petroleum products but he did not produce the amendment Law.

I have earlier indicated that Attorney-General of nine states associated themselves with the submission of Chief Adaramaja. In order to avoid repetition, I would only refer to the submissions of those Attorney-General who amplified Chief Adaramaja’s contention. The Attorney-General of Benue contended that the only matters that are within the exclusive taxing powers of the Federation are matters of customs and excise (item 15), export duties (item 22) stamp duties (item 57), trade and commerce (item 61), taxation of incomes, profits and capital gains (item D of the Concurrent List). From the purview of the whole Constitution, he said, States are perfectly entitled to regulate the carrying on of any business or trade-such as the sale and consumption of alcohol. He stated that if the converse were true, then all the existing States Ministries of Trade and Commerce would be illegal. He concluded that sales tax is a residual matter within the legislative competence of the States. He relied on Uwaifo v. Attorney-General of Bendel State (1982) 7 SC. 124 at 184 Rabiu v. State (1980) 8-11 SC. 130 at 195 and Awolowo v. Shagari (1979) 6-9 S.C. 51 at pages 66 – 68.

While endorsing the view that by the omission of sales tax in the Exclusive and Concurrent Lists sales tax was intended to be a residuary matter and that items 61 should be given a restrictive meaning, the Attorney-General of the Cross Rivers State pointed out other areas of trade and commerce which were specifically conferred on the Federal Government. He mentioned banks and banking (item 6) commercial and industrial monopolies (item 11), incorporation of companies (item 31), insurance (item 32) and many others. It appears, according to his contention, that the makers of the Constitution specifically set out those matters on which they intended the Federal Government to have legislative rights, and left the rest open to the States; and sales tax is one of the matters left out.

In this submission, the Attorney-General of the Rivers State raised the very important question as to whether the States have any power at all to enact sales tax on matters which are not exclusively reserved to the Federation. He submitted that if sales tax on whatever matter is an excise duty as has been held by the Court of Appeal, then it would be wrong to say that sales tax falls under items 58 and 61 when excise duty is expressly confined to item 15. He further submitted that if the words “trade and commerce” in item 61 were intended to cover all aspects and ramifications of trade and commerce to be within the Exclusive List then it would not have been necessary to make any of the other provisions in the Exclusive List which are connected with trade and commerce.

Chief Williams prefaced his response by stating that since the matters under reference depended on the scope of certain items in the Exclusive Legislative List, the court should read the List as a whole with section 4(2) of the Constitution. He pin-pointed the words ‘respect to’ in the subsection which he said refer to the width and generality of the items in the list. He referred to the State of New South Wales v. The Commonwealth (1909) CLR 179 at 186; Navindra v. Commissioner of Income Tax (1955) AIR (S.Ct) 58 at 61; Since v. The State of Utta Pardesh (1962) AIR 1563 at 1568 and Dass v. Wealth Tax Officer (1965) AIR 1387 at 1389 wherein the significance of the phrase “with respect to” was severally considered. Learned counsel urged us to interpret broadly the scope of the Federal powers in the Exclusive List in accordance with the principle stated in Rabiu v. The State (1982) 2 NCLR 293 at 326.

Referring to item 61, Chief Williams submitted that “trade and commerce” are not restricted to sub-items (a) to (f) therein which arc not exhaustive. He urged us to hold, as the Court of Appeal had done, that the words “in particular” are words of emphasis and not of limitation. He said item 61 covers all aspects of trade and commerce and, consequently, a state has no power to regulate trade or make sales tax law. With regard to the 1960 and 1963 Constitutions which conferred general legislative power on the Regions to make sales tax law, learned counsel contended that power has been taken away from the States by the present Constitution and the provisions of the former Constitution cannot be imported into the present Constitution.

While relying on Clapham v. National Insurance Board (1961) 2. QB. 602, Maxwell on Interpretation of Statutes 12th Edition p.64 and in Re Aviation Engineering Limited (1963) Ch. 24 at 37 in support of the view that the present Constitution must be interpreted independently of the previous Constitutions and that upon the correct interpretation of the present Constitution a State has no power whatever over “trade and commerce” or to make sale tax law, the learned Attorney-General of the Federation advanced a very powerful alternative submission. He contended that even if the Federal “trade and commerce” power under item 61 is limited to the matters set out in sub-items (a) to (f) therein, the Sales Tax Law of Ogun State is unconstitutional and void because it infringes the provision of “trade and commerce between the States” in item 61 (a). He submitted that the Federal Government having been given the power to regulate inter-state trade and commerce by item 61 (a), any State law having the possibility of interfering with trade and commerce between the States is null and void. The Constitution does not allow a State to impair the freedom of inter-State trade and commerce by means of its taxing power. Reliance was placed on Fox v. Robbins (1909) 8 C.L.R. 115, Associated Steam-Ships Pty. Ltd v. Western Australia (1969) 120 C.L.R. 92; Western Live Stock v. Bureau of Revenue (1939) 303 U.S. 250 at 255 and Joseph v. Carter (1947) 330 U.S. 422 at 429.

Now, from a simplistic approach to the solution of the issue, it is very tempting to accept the view that since the 1960 and 1963 Constitutions specifically shared the power to make sale tax law between the Federation and the Regions and since that power is omitted in the Exclusive and Concurrent Lists of the present Constitution, then there is a presumption that sales tax is left as residuary matter to the States. It is also equally appealing to agree with the contrary view that since trade and commerce under item 61 are exclusively reserved for the Federation and that since by its very nature sales tax is an incident of trade and commerce, then it follows that sales tax is an incidental matter within the exclusive power of the Federation under item 67. As attractive as both views appear to be, ‘neither can withstand the test of the principle for the construction of the Constitution stated in Adesanya v. President of Nigeria (1981) 5 S.C. 112, to wit, that all its provisions relating to an issue must be read together and not disjointly.

It follows from the foregoing that for the correct determination of the issue, all provisions of the Constitution which have bearing on the taxing power and trade and commerce power of the Federation should be read together with those provisions relating to the taxing power and trade and commerce power (if any) of the States.

By virtue of section 4, section 150 and item D of Part II of the Second Schedule to the Constitution, the Federation has the power to impose tax on any of the matters in the Exclusive and Concurrent Lists. Similarly, pursuant to section 4 and item D9 of Part II of the Second Schedule, which provides:

“9. A House of Assembly may, subject to such condition as it may prescribe make provisions for the collection of any tax, fee or rate………”.

A State has the power to impose tax on all matter in the Concurrent List and residuary matters. However, it must be noted that the taxing power of a State over the concurrent matters is subject to the rule of inconsistency under section 4(5) and the doctrine of covering the field, which I have stated at the beginning of this judgment.

It is axiomatic and in the absence of any constitutional provision, express or implied, to the contrary the respective taxing power of the Federation and of a State include sales taxing power. Accordingly, the Federation is entitled to levy sales tax on any saleable matters within its competence. It must, however, be emphasized that it is not within the competence of a State:

1. to make sales tax law affecting any of the matters in the Exclusive Legislative List; or

2. to make any sales tax law on any matter in the Concurrent Legislative List which is inconsistent with any law validly made by the Federation; or

3. to make any sales tax law on any matter in the Concurrent List where any law validly made by the Federation has covered the field.

It is in pursuance of the above stated constitutional law that several States in the Federation enacted Sales Tax Laws. Although the validity of the Ogun State Sales Tax Law is the only question in issue on this appeal, the validity of all the Sales Tax Laws of the other States are indirectly involved because of the proposition that sales tax is a matter within item 61. This brings me to the examination of item 61, which reads:

“61. Trade and commerce, and in particular-

a. trade and commerce between Nigeria and other countries including import of commodities into and export of commodities from Nigeria, and trade and commerce between the States;

b. establishment of a purchasing authority with power to acquire for export or sale in world markets such agricultural produce as may he designated by the National Assembly;

c. inspection of produce to be exported from Nigeria and the enforcement of grades and standards of quality in respect of produce so inspected;

d. establishment of a body to prescribe and enforce standards of goods and commodities offered for sales;

e. control of the prices of goods and commodities designated by the National Assembly as essential goods or commodities; and

f. registration of business names.”

It is common ground that the scope of item 61 depends on the meaning of the words “in particular” within the context therein. It is also conceded by all counsel that the words are capable of two meanings. They may be words of emphasis or of limitation. The dispute revolves on which meaning should be preferred.

I think, for the correct resolution of the dispute, I consider it pertinent to reiterate the general principles for the interpretation of our Constitution which I stated in Ifezue v. Mbadugha (1984) 5 SC. 79 at 101 in these terms:

“The fundamental principle is that such interpretation as would serve the interest of the Constitution and would best carry out its object and purpose should be preferred. To achieve this goal, its relevant provisions must be read together and not disjointly; where the words of any section are clear and unambiguous, they must be given their ordinary meaning unless this would lead to absurdity or be in conflict with the provisions of the Constitution and effect must be given to those provisions without any recourse to any other consideration; and where the Constitution has used an expression in the wider or in the narrower sense the court should always lean where the justice of the case so demands to the broader interpretation unless there is something in the context or rest of the Constitution to indicate that the narrower interpretation will best carry out its object and purpose. In other words, where the provisions of the Constitution are capable of two meanings the court must choose the meaning that would give force and effect to the Constitution and promote its purpose.”

In deciding that the words “in particular” are words of emphasis, the Court of Appeal heavily relied on the Fundamental Objectives and Directive Principles of State Policy under section 16 of the Constitution which directs the Federation to control the national economy in such manner as to ensure maximum welfare, freedom and happiness of every citizen. But the Court of Appeal did not advert its mind to item H 18 of Part II of the Second Schedule, which reads:

“18. Subject to the provision of this Constitution a House of Assembly may make laws for that State with respect to industrial, commercial or agricultural development of the State.” (Italics supplied)

Furthermore, the Court of Appeal did not consider at all the provision of section 7(3) of the Constitution, which says:

“(3) It shall be the duty of a Local Government Council within the State to participate in economic planning and development of the area referred to in subsection (2) of this section and to this end an economic planning board shall be established by a Law enacted by the House of Assembly of the State.” (Italics supplied)

It is clear from the foregoing that the control of the economy is not within the exclusive power of the Federation. Each Government (Federal, State and Local) has a share in the control. While the Constitution requires the Federation to control the national economy, it also empowers a State to participate in the development of the national economy, it also empowers a State to participate in the development of the economy within the State and a Local Government in the development of the economy within its area of jurisdiction. It is therefore wrong for the Court of Appeal to conclude that because section 16 obliges the Federal Government to control the national economy and since trade and commerce is an integral part of the national economy, the words “in particular” are words of emphasis and accordingly as it held, a State has no power to regulate any aspect of trade and commerce. With all due respect, this conclusion is inconsistent with the provisions of item H 18 of Part II of the Second Schedule and section 7(3) of the Constitution.

Again, the Court of Appeal did not advert to section 7(1) which provides:

“7(1) The system of Local Government by democratically elected Local Government Councils is under this Constitution guaranteed, accordingly, the Government of every State shall ensure their existence under a Law which provides for the establishment structure, composition, finance and functions of such Councils.” (Italic mine)

Section 7(5) states that the functions to be conferred shall include those set out in the Fourth Schedule to the Constitution. The functions set out therein include control and regulation of out-door advertising and hoarding, control and regulation of shops, kiosks, restaurants and other places for sale of food to the public, laundries and the development of agriculture and natural resources. These functions, in my view, are invariably matters relating to trade and commerce. That being the case, the Constitution having specifically empowered a State to confer trade commerce power on its Local Governments, it must be inferred that the Constitution reserves some trade and commerce power to a State. Otherwise, it would be ridiculous for the Constitution to oblige a State to give what it does not possess.

For the above reason, having regard to all the relevant provisions of the Constitution, I am of the firm view, that the Constitution does not confer on the Federation exclusive power over trade and commerce in item 61. I hold that all the Governments (Federal, State and Local) have been accorded their respective shares to control trade and commerce. Accordingly, I would construe the words “in particular” in item 61 to be words of limitation and that the trade and commerce power of the Federation is limited to the sub-items (a) to (f) therein. For the avoidance of any doubt, I may emphasise that the Federal Government had power to make law on the items specified in sub-items (a) to (f). In this respect international trade and commerce and inter-state trade and commerce are specifically reserved for the Federation. While trade and commerce within a State is left as a residuary matter to the States.

Accordingly, I would not invalidate the Sales Tax Law of Ogun State by reason of the proposition that, having regard to the generality of item 61, a State has no power at all over trade and commerce. I reject the proposition because it has no constitutional basis.

I shall now deal with the narrow question as to whether the Law is contrary to section 4(3) of the Constitution in that it purports to impose sales tax on inter-state commerce. The provisions of subsection (3) are clear that, save as otherwise provided by the Constitution, a State has no power over inter-state commerce. However, because of the saving clause of the subsection, the whole of item H of Part H to the Second Schedule is pertinent and is hereby set out.

“17. The National Assembly may make laws for the Federation or any part thereof with respect to-

(a) the health, safety and welfare of persons employed to work in factories, offices or other premises or in inter-state transportation and commerce including the training, supervision and qualification of such persons:

(b) the regulation of ownership and control of business enterprises throughout the Federation for the purpose of promoting, encouraging or facilitating such ownership and control by citizens of Nigeria;

(c) the establishment of research centres for agricultural studies and

(d) the establishment of institutions and bodies for the promotion or financing of industrial, commercial or agricultural projects.

18. Subject to the provision of this Constitution a House of Assembly may make Laws for that State with respect to industrial, commercial or agricultural development of the State (Italics supplied)

19. Nothing in the foregoing paragraphs of this item shall be constituted as precluding a House of Assembly from making laws with respect to any of the matters referred to in the foregoing paragraphs.”

I have already considered the scope of item H18 as enabling a State to regulate trade and commerce within its borders. I do not think the law making power conferred on a State by item H 19 in respect of the matters specified in item H 17(a) to (d), which includes inter-state commerce, can reasonably be construed so as to include the power to tax products of inter-state commerce as such.

In the interpretation of the inter-state commerce clause of the Constitution of the United States, the Supreme Court has consistently held the taxing of goods coming from other States as such to be unconstitutional because such tax is a regulation of inter-state commerce and to leave the State free to tax inter-state commerce would result in intolerable discriminations and unneigbhourly regulations: Nippert v. City of Richmond 327 U.S. 416; Carter v. Clark 67 S.Ct. 815. In Brown v Houston 11 U.S. 611 at 630 the Court had this to say:

“No State has power to make any law or regulation which will affect the free and unrestrained intercourse and trade between the States, or which will impose any discriminating burden or tax upon the citizens or products of other States coming or brought within it jurisdiction.”

However, the court upheld the validity of the State tax law in that case because the particular product of inter-state commerce that had been brought into the state had intermingled with local products and the tax was imposed on both the inter-state product and the local products. It was not a discriminating tax.

The High Court of Australia took similar stand in the interpretation of section 92 of their Constitution which guaranteed freedom of inter-state trade and commerce. Thus, in Fox v. Robbins (1909) 8 CLR 115, the Court declared unconstitutional a State licensing law which imposed higher fee for the sale of wine brought into the state than the fee for the sale of local wine.

Unlike our Constitution, the Constitution of the United States did not specifically prohibit a State from making laws which would interfere with the freedom of inter-state commerce. The guarantee was secured by judicial interpretation. Our Constitution is specific. In clear terms section 4(3) prohibited the states from making laws with respect to any matter in the Exclusive List, which includes inter-state trade and commerce.

Now, section 3(1) of the law imposes sales tax on products brought into Ogun State. The products are petrol, diesel oil, petroleum products, beer and alcoholic spirits, tobacco and paints. Since the sales tax is only chargeable on the products brought into the state and because the products can only be brought into Ogun State from another state or from outside Nigeria, it follows that the tax is a discriminating tax directed against inter-state or international trade and commerce which are within the exclusive regulatory power of the federation under item 61(a). Accordingly, I hold that in so far as the law purports to impose sales tax on taxable products brought into the state, it offends the provision of inter-state or international trade and commerce and contravenes section 4(3) of the Constitution. I declare the law unconstitutional to that extent.

Furthermore, item 61(e) empowers the Federation to control the prices of goods and commodities. Under the Price Control Act, 1977 and the Price Control (Controlled Commodities) Order 22 of 1979, the Federal Government has controlled the price of petrol, diesel oil and petroleum products. I have earlier shown that the Act and the Order are existing laws. Since the sales tax is intended to be paid by the consumer, it is tantamount to an increase – in my view – in the prices of the taxable products, namely petrol, diesel oil and petroleum products the price of which have been controlled by the Federal Government. That being the case, I hold the sales tax to be inconsistent with the Price Control Act and the Order made thereunder. Consequently, the sales tax on petrol, diesel oil and other petroleum products is unconstitutional, null and void. I do not treat beer as a controlled commodity because under Order No. L.N. 21 of 1979 it has been approved as a commodity subject to the resale price maintenance agreement between the manufacturer and the seller. There is no evidence of such agreement in the record of appeal. So it is with tobacco.

Having regard to the foregoing, I may summarise that the Federation has implied exclusive power to make sales tax law in all matters within the Exclusive and Concurrent Lists while the States have implied or residuary power to enact sales tax law on all matters outside the said Lists. The answer to the first limb of question 1 is therefore partly No. and partly Yes.

I have already shown that the second limb of question 1 is too wide and it misconceived. The answer to it is an obvious emphatic No. If all the powers to legislate on all fiscal subjects, as the question suggests, have been vested in the Federal Government then non of our States would survive for one day because none would have a budget and Appropriation Law having regard to the dictionary meaning of the word “fiscal” I have earlier on indicated.

In my consideration of question 1, I have also covered all the issues relating to question 3. I, accordingly, answer question 3 as follows:

In so far as the Sales Tax Law purports to impose sales tax on the taxable products, it is an exercise of power with respect to inter-state or international trade and commerce in item 61(a) of the Exclusive List. The answer to the question is therefore Yes to this extent.

Now, question 2 on reference (which is whether the sales tax is an excise duty) together with its subsidiary question 4 may now be considered.

While dealing with question 2, after he had extensively considered the decisions in the Australian and Canadian cases cited by counsel in support of their submission, Omo J.C.A. answered question 2 as follows:-

“I am persuaded by the submission that the definition of ‘excise’ as shown by the authorities considered above are (sic) applicable to the definition of the same word in item 15 on the Exclusive Legislative list of our 1979 Constitution. Applying the authorities set out above to the Ogun State Tax Law, there is no doubt that it is a tax on the sale and distribution of goods by a ‘whole-saler’ (sic) “Wholesaler” is defined in section 2 of the Act as meaning:- any person in the State whether he is a manufacturer or not of the goods who sells a taxable product to a person who carries on a business of selling goods of that class again. (italics mine).

By this definition, a mere retailer appears to be exempted. It is without doubt a tax on the product itself, not merely on the consumption thereof. It provides for the registration of the business premises of the wholesaler and prescribed a penalty for failure to comply with the various provisions of the Act (sic) as to registration, payment of tax, keeping of records, etc. In my view the part of the Act (Law), which provides for the taxation of all taxable products brought into the State, is an imposition of excise tax within the meaning of Item 15 of the Exclusive Legislative List of the 1979 Constitution. It is therefore to that extent ultra vires the Ogun State House of Assembly, and must accordingly be adjudged null and void.”

In challenging the decision of the Court of Appeal that the sales tax is an excise duty as being an error in law, Chief Adaramaja contended that in the Nigerian context “excise duty” is a tax imposed on production of goods at the place of production and the tax is paid by the producer before the entry of the goods into the market and that excise duty is not imposed on distribution. On the other hand, according to learned counsel, a sales tax is a tax imposed on a consumer at the time of the sale of the goods and the fact that a wholesaler is appointed as a collecting agent would not affect the character of the sale tax. He relied on Atlantic Smoke Shop Ltd. v.Conlon (1943) A.C. 550 at 561 and Dickenson’s Arcade Pty Ltd. v. The State of Tasmania AND Anor. (1974) 130 C.L.R. 177 to buttress his contention. He said the Oxford English Dictionary meaning of “excise” and the one ascribed to it by the Canadian cases are too wide for our purpose. He urged us to hold that the tax in question is not an excise duty.

In his contribution, the Legal Draftsman for Kaduna State referred to Governor-General v. Madras (1045) A.L.R. (P.C) 98 and contended that, in deciding whether a tax is an excise duty or a sale tax, two tests should be applied i.e.

1. when is the tax due and

2. who is liable to pay the tax.

Applying the tests, he concluded that an excise duty is due for payment at the place of manufacturing and is paid by the manufacturer who must pay whether he sold the goods or not; that sales tax is due for payment at the point of sales and the consumer pays. Since the Law of Ogun State clearly shows that the sales tax is payable by the consumer, it is not an excise duty.

Referring to the definition of “excise” in Mozley and Whiteleys Law Dictionary 8th Edition, Jowitt’s Dictionary of English Law 2nd Edition and Stroud’s Judicial Dictionary, the Attorney-General of Lagos State submitted that the dictionary meanings of the word are conflicting and do not meet the Nigerian context. She also stated that the Australian decisions, on which the Court of Appeal relied, were based on the interpretation of section 90 and the transitional provision of section 93 of the Australian Constitution which reflected the history of customs and excise duty in that country. She submitted that no decision of an Australian court can do justice to the word in the context of the Nigerian situation. The learned Attorney then proceeded to evolve her own definition within the Nigerian context as follows: Excise “is a duty or tax payable on an article or commodity produced locally within the country.” Applying her definition of “excise” and the definition of “sales tax” in Chambers Twentieth Century Dictionary to the Law of Ogun State, she asked us to hold that the Law is intra-vires the House of Assembly of Ogun State.

While responding, Chief Williams urged the Court to adopt the Oxford English Dictionary meaning of “excise” as “a duty charged on home goods either in the process of their manufacture or before their sale to home consumers.” He indicated that for practical reasons, it is obviously easiest and most effective to collect the duty immediately on their production and before distribution to wholesalers, distributors, retailers or ultimate consumers. It was the convenience of the collection of excise duty at the point of production, according to learned counsel, that led to the erroneous impression that “excise duty” is limited only to duty imposed on goods at the point of their production in the factory. Referring to Tobacco and Cigarettes Excise Duties Ordinance No. 23 of 1933, the Excise Ordinance Cap. 65 Laws of the Federation 1948, the Customs Tariff Act 1965, the General Excise Regulations No. 55 of 1958, Excise (Control and Distillation) Act 1964 and the Customs and Excise Management (Amendment) Act, 1960 learned counsel submitted that the excise laws in Nigeria demonstrate that “excise duty” is simply and purely a tax on manufactured goods and its collection at the point of manufacture is purely a matter arising from practical considerations of effective collection.

Chief Williams further contended that because of our common law heritage, the interpretation given to the word “excise” in the Australian and American Constitutions will be of persuasive authority in the interpretation of our Constitution. For this reason, he relied on the interpretation given to the word “excise” in Australian decision such as Mathews v. Chicory Marketing Board 60 C.L.R. 263 (especially where Dixon J, at P.293 gave a history of the expression in English Law), Parton v. Milk Board 80 C.L.R. 229 per Dixon at 259-60; Western Australian v. Chamberlain Industries Property Ltd. 121 C.L.R. I at 12.13 and 15-17 and Dickenson’s Arcade Pty Ltd v. Tasmania (supra). Citing Black’s Law Dictionary, learned counsel said the meaning of “excise” is much wider in America.

Finally, he urged us to confirm the answers given to the questions by the Court of Appeal.

On his journey to discover the meaning of —customs and excise” in item 15 the Attorney-General of the Federation referred to several dictionaries and judicial decisions in A.G for British Columbia v. Kingcome Navigation Co. (1934) A C. 45 at 50, A-G British Columbia v. Macdonald etc. Co. (1930) A.C. 357, Mathews v. Chicory Marketing Board (1938) 60 C.L.R. 263, Parton v. Milk Board (1949) 80 C.L.R. 229 and Brown v. Maryland 12 Wheat 419 and submitted that by going through all the meanings of “customs and excise” so far preferred it will be found that “customs” or “excise” are taxes imposed either on imported goods or goods manufactured locally. He further contended that as the Sales Tax Law of Ogun State imposes tax on goods either imported into Nigeria or manufactured in Nigeria and brought into Ogun State, the Law comes within “customs and excise in item 15 and it is ultra vires the House of Assembly of Ogun State. He concluded that the argument that sales tax is paid when the goods are sold while customs duties are paid when the goods are imported or exported or the excise duty is paid when the goods are manufactured is only a distinction without a difference. It does not matter at what stage the tax is paid because once it is a tax on goods, it qualified either as customs or excise.

I am in full agreement with the unanimous submission of counsel that the word excise” within the context of item 15 is not defined in the Constitution nor in the Interpretation Act 1964 which, by virtue of section 277(4) of the Constitution, applied for the purposes of interpreting its provisions. Consequently, it falls on the court to determine the constitutional meaning of the word. For guidance, the Court may refer to dictionaries and judicial decisions in other jurisdictions to see the meaning of the word. In this respect, the dictum of Lord Coleridge in R v. Peters (1886) 16 Q.B.D. 636 at 64 1, cited by the Attorney-General of the Federation, is apt. He said:

“While the Chambers Twentieth Century Dictionary defines it as “A tax on certain home commodities and on licences for certain trades”, the Oxford Advanced Learner’s Dictionary of Current English defines it as “Government tax on certain goods manufactured sold or used within a country.” “I am quite aware that dictionaries are not be taken as authoritative exponents of the meaning of words used in Acts of Parliament, but it is a well-known rule of courts of law that words should be taken to be used in their ordinary sense, and we are therefore sent for instruction to those books.”

Now, let us see the dictionary meanings of “excise”. Oxford English Dictionary defines it as:

“A duty charged on home goods, either in the process of their manufacture or before their sale to home consumers” while the Chambers Twentieth Century Dictionary defines it as “A tax on certain home commodities and on licences for certain trades”, the Oxford Advanced Learner’s Dictionary of Current English defines it as “Government tax on certain goods manufactured, sold or used within country.”

Yet, Jowitt’s Dictionary of English Law defines it as “a duty on certain commodities charged in most cases on the manufacturer.” In the Stroud’s Judicial Dictionary it is defined as “duties charged on articles or commodities produced or manufactured in the United Kingdom.”

The definition in Mozley and Whiteleys Law Dictionary is wider. It defines excise as:

“a name formerly confined to the imposition upon beer, ale, cider and other commodities manufactured within the realm being charged sometimes upon the consumption of the commodity but more frequently upon the sale of it, under recent Acts of Parliament, however, many other impositions have been classed under excise, such is the case with regard to the licence which must be taken out by every one who keeps a dog, uses a gun or deals in game.”

Again, in America, Black’s Law Dictionary defines it thus: “Tax paid on manufacture, sale or consumption of commodities or upon licence to pursue certain occupations or upon corporate privilege. In current usage the term has been extended to include various licence fees and practically every internal revenue tax except the income tax”

I shall now consider summarily the judicial interpretation of some of the common law countries.

In Commonwealth AND Anor v. South Australia (1926) 38 C.L.R. 408, the High Court, sitting as a full court of seven, Duffy J. dissenting invalidated the State Law which imposed a tax of three pence per gallon on the first sale of petrol refined in the State. The court was of the view that because the tax was calculated by reference to the quality of petrol refined and tax was payable by the first seller, who was the producer, the tax was an excise. I think the dictum of Issac J. in that case on the question whether “excise duties” within the meaning of section 90 of the Australian Constitution should be construed as widely as the law regards it in England is very material to the case in hand. He said:

“The question as to this limb is whether the tax is an ‘excise duty’ within the meaning of section 90 of the Constitution. The court was asked by the plaintiffs to say that the view expressed as to the meaning of the phrase in Peterswald v. Barley (4) was too narrow, and that the expression ‘excise duties’ should be construed as widely as the law regards it in England. If that were acceded to, the term ‘excise duties’ would embrace such things as a dog tax, a vehicle tax, a hawkers’ licence tax, a tax for publicans’ licences or wine licences or pawn brokers’ licences. All these come within the recognised range of excise duties as defined by English Legislation, although some are licences merely. The concatenation of the three branches of finances, customs, excise and bounties (not mining), in the Australian Constitution, their evident interdepence and mutual action and reaction, would lead me to the clear conclusion, even if it were res nova, that the words ‘excise duties’ are not used in the Constitution in the extended sense suggested. I arrive at that conclusion notwithstanding that the expression was in Australia before Federation, as in Victoria, sometimes used in a sense large enough to include brewers’ and wine licences. Licences to sell liquor or other articles may well come within an excise duty law, if they are so connected with the production of the articles sold or are otherwise so imposed as in effect to be a method of taxing the production of the article. But if in fact unconnected with production and imposed merely with respect to the sale of the goods as existing articles of trade and commerce, independently of the fact of their local production, a licence or tax on the sale appears to me to fall into a classification of governmental power outside the true content of the words ‘excise duties’ as used in the Constitution. Such taxing regulations are, in my opinion, not ‘withdrawn’ from the States, however they might stand in presence of relevant Commonwealth legislation respecting foreign or inter-state trade. I agree with the reasoning in Peterswald v. Barl (1). Therefore, if the taxation by the State Act under section 4 were simply on motor spirit as an existing substance in South Australia and not subject to any foreign or inter-state-operation of trade or commerce, it would not be open to the challenge here made. That, however, is not the nature of the legislation.”

Again, in Mathews v. Chicory Marketing Board (sic) (1938) 60 C.L.R. 26 where the State of Victoria imposed a tax of 1.64 for every half acre of chicory planted, it was held by a majority of three to two that the tax was an excise. In that case at page 303, Dixon J. stated the primary meaning of the word “excise” a follows:

“The basic conception of an excise in the primary sense which the framer of the Constitution are regarded as having adopted is a tax directly affecting commodities.”

Thereafter, he proceeded to advance a wider definition at page 304 in these terms:

“To be an excise the tax must be levied ‘upon goods’ but those apparently simple word permit of much flexibility in application. The tax must bear a close relation to the production or manufacture, the sale or the consumption of goods and must be of such a nature as to affect them as the subjects of manufacture or production or as articles of commerce.”

The decision in Parton v. Milk Board (1949) 80 C.L.R. 229 was concerned with a levy of 1/8 penny per gallon imposed by a law of the State of Victoria on distributors of milk. The levy was not imposed on the producers nor on the owners of milk shops who sold to the consumers. The High Court by a majority of three to two held the levy to be an excise within the meaning of section 90 of their Constitution by reason of the fact that the levy was imposed by reference to the quantity of the production, i.e. the milk, distributed.

However, in Anderson’s Ply. Ltd. v. Victoria (1964) 111 C.L.R. 353, the High Court unanimously held valid the Victorian legislation which imposed a stamp duty on certain agreements, such as hire purchase agreements, where in the amount of the stamp duty was calculated by reference to the amount of the price to be paid by instalmental payments. The court held that the stamp duty was not an excise duty. The dictum of Kitto J. at page 373 in that case is germane to the issue before us. He said:

“It is now established as the court said in Bolton v. Madsen (1963) 110 C.L.R. 271, that for constitutional purposes duties of excise are taxes directly related to goods (i.e. goods originating in Australia), imposed at some step in their production or distribution before they reach the hands of consumers. This does not exclude a tax imposed, as is the duty now in question upon the final step in distribution, by which goods reach the hands of consumers. The crucial question in the case of such a tax is whether it is ‘directly related to goods’, in the sense in which that and similar expressions, such as ‘upon’ goods are used in the lengthening line of judgments which have been delivered in this court upon the subject. What is referred to may, I think, be described as a relation consisting in this, that some conduct is selected by the production, manufacture or distribution of goods and in that character is made of the essence of tax. A tax must necessarily be made payable by a person; but it is not a duty of excise unless the criterion of the person’s liability is the fact that some act of his possesses the quality of a contribution either to the physical character of goods as subjects of commerce or to the sequence of events which results in their being available, as in the hands of a consumer, to be put to their ultimate purpose. The reason is that a duty of excise is, at bottom, burden upon home production or manufacture. Obviously, it is such a burden if it is payable upon a step in production or manufacture in its character of such a step. Not so obviously but just as certainly, it is such a burden if it is payable upon a step in distribution in its character of such a step; for in that case from the time the goods come into existence the law makes it inherent in their nature, as goods requiring distribution in order to become available to fulfill their purpose, that the tax shall be paid. This is the point that Rich and Williams made by saying in Parton v. Milk Board (Viet.) (1) that to be an excise duty a tax must imposed ‘so as to be a method of taxing the production or manufacture of goods’. At whatever point before consumption a duty of excise becomes payable it must burden on production or manufacture.”

The two conflicting decisions of the High Court in Dickenson’s Arcade Pty, Ltd. v. Tasmania (1973-1974) 130 C.L.R 177 were based on a very strict application of legalistic nicety. The Tasmania Tobacco Act imposed tobacco consumption tax and provided two ways for paying the tax. Under the first scheme, the consumer would buy the tobacco, collect it and pay his own tax after consumption. ‘The court upheld the validity of the Act in this respect, McTiernan J. alone dissented, as being a tax on consumption and not an excise duty. However, under the alternative scheme for payment, the consumer would pay the tax to the retailer at the time of purchase. By a majority of 4 to 2 the court nullified the Act as being an excise duty in so far as it permitted collection of the tax by the retailer.

In parenthesis, I may observe that payment of the tax by consumer after consumption might work in Australia but it would certainly be unrealistic in Nigeria to expect a person, who purchased a bottle of beer in Ogun State, to go to the tax office to pay the sales tax after he had consumed the beer.

Now, the constitutional meaning of “excise” in Australia may be summarised: it is any tax imposed at any stage “in a process of bringing goods into existence or to a consumable state, passing them down the line which reaches from the earlier stage in production to the point of receipt by the consumer” per Kitto J. in Dennis Hotels ft. v. Victoria (1961) 104 C.L.R. 529 at 559 or if the tax is directly related to goods, imposed at some step in their production before they reach the hands of the consumers”: Bolton v. Madsen (1963) 110 C.D 264 at 271. Since sales tax is generally payable at the time of sale, it falls within the two definitions of the word excise and the States in Australia have no power to enact sales tax law as such. However, within its constitutional power, a State has the right to impose its tax even if the tax is in some way associated with goods provided the tax is imposed on the use, consumption or ownership of goods in the hands of the final purchaser. In their attempt to settle the incessant controversy over consumption, which is the line of demarcation between the Federal and the States’ taxing powers. Australian judges have expressed conflicting and divergent views. I have painstakingly considered these Australian cases because the Court of Appeal, wrongly for reasons which I shall state later in the judgment relied heavily on them in declaring the sales tax under the Ogun State Law to be an “excise” within the purview of item 15.

In Canada, the dispute has always been on the question whether a particular tax, is direct taxation” which a Province has power to levy under section 92 of the British North American Act or “excise duty” which is within the competence of the Federal Government under section 122 of the Act.

In A-G for British Columbia v. Murphy Lumber Co. Ltd (193 0) A. C. 3 5 7 a provincial tax upon all timber cut in the Province was held to be an “excise” but in A-G for British Columbia v. Kingcome Navigation (1934) A.C 45 and Atlantic Smoke Ltd. v. Conlon (1943) A.C. 550, the Privy Council upheld the validity as “direct tax” of Provincial Acts which imposed a tax upon every consumer of fuel oil according to the quantity which he had consumed and a sales tax imposed on the purchase of tobacco

payable to a retailer by a purchaser at the time of the sale because it was a tax which was to be paid by the last purchaser of the article, and since there was no question of further re-sale, the tax could not be passed on to any other person by subsequent dealing. So it was “direct taxation”. In the latter case at page 564 the Privy Council had this to say about the meaning of the word “excise”:

“’Excise’ is a word of vague and somewhat ambiguous meaning. Dr. Johnson’s famous definition in his dictionary is distinguished by acerbity father than precision. The word is usually (though by no mean always) employed to indicate a duty imposed on home-manufactured articles in the course of manufacture before they reach the consumer. So regarded, an excise duty is plainly indirect. A further difficulty in the way of the precise application of the word is that many miscellaneous taxes, at any rate in this country, are classed as ‘excise’ merely because they are for convenience collected through the machinery of the Board of Excise – the tax on owning a dog, for example.”

It remains to consider “excise” within the conception of Nigeria statutes. I must emphasize, however, that a statutory provision is not an aid in the construction of the Constitution but may be a guide in discovering the intention of its framers. The first excise law in Nigeria was the Tobacco and Cigarette Excise Duties Ordinance 1933 which imposed duties of excise on tobacco and cigarettes. The Ordinance did not define “excise duty” but section 6 provided that:

” Such duties as are required to be paid under this ordinance shall be paid in the manner and at the time prescribed.”

The Ordinance was repealed and replaced by the Excise Ordinance, Cap 65 Laws of Nigeria 1948. Section 2 defined “excise duty” as “includes any duty other than an export duty of customs imposed on any goods manufactured in Nigeria.” (italics supplied). With respect to the place of payment of the duty and the person liable to pay it, sections 29, 15 and 24(1) provided:

“29. Subject to the provisions of the excise laws, it shall be lawful for the Comptroller to permit any manufacturer to remove excisable goods from his factory to a warehouse and no duty shall be payable on any such goods while in any such warehouse, save in such cases where a contrary provision shall be made by law.”

“15. All goods made or deposited in any factory or warehouse without payment or duty shall upon being delivered there from for consumption in Nigeria or upon being used in such factory or warehouse be subject to the rate of duty in force at the time when the same are delivered or used as afore said save in any case where special provision shall otherwise be made by law.”

“24(l). The excise duty on any goods shall become due and payable to the Comptroller by the manufacturer of such goods before the same are delivered from the factory of the manufacturer or from a warehouse, if the same are goods permitted by the Comptroller to be warehoused without payment of duties there on, or before any such goods are used by the manufacturer in his factory or in his factory or in a warehouse for any purpose, or otherwise as specially provided by law: Provided that the Comptroller may upon the manufacturer giving such security by bond or otherwise as he may require defer the payment of duty upon such terms as he may allow.”

The Customs and Excise Management Act, 1958, as amended by several Acts, repealed the former Ordinance and is an existing law within section 274 ‘of the Constitution. The Act does not define “excise duty” but it defines duty” as “includes any royalty or fees leviable by the Board by virtue of any enactment.” In Part IV, the Act makes comprehensive provisions for the storage of goods in warehouses and, subject to the exceptions stated therein, prohibited the removal of any goods from warehouses without payment of duty: section 82(4) to 95. Except as otherwise, permitted by the Board of Customs and Excise, the excise duty chargeable on manufactured tobacco shall become due and payable by the tobacco manufacturer on delivery of such tobacco from the factory; section 107. Distress may be levied on the goods of a manufacturer for the payment of an excise duty: section 119.

In order to ensure that manufacturers render full account of their production for the payment of the excise duty, the Act requires them to keep books and accounts.

By the combined effect of section 85, 116(l) and 119A of the Act any goods unlawfully removed from a factory or a warehouse without payment of an excise duty or lawfully removed but subject to any condition imposed by the Board and the condition is thereafter contravened, then in either case the goods shall be forfeited. It appears that before the enactment of the Customs and Excise Management (Amendment) Act 1972, the Board had discretion to charge the person in whose possession the goods had been found to pay the unpaid excise duty instead of forfeiting the goods. Under section 14 of the Amendment Act, forfeiture is now mandatory.

It follows from the foregoing that under the provisions of our statutes, “excise duty” has always been levied on goods manufactured within the country and the tax is payable by the manufacturers before the goods are removed from the factories or warehouses. It was only on the happening of the two events, which I have shown in the foregoing paragraph, that excise duty was formerly imposed on goods that had left the factories or warehouses and had entered into the process of distribution. Such goods are now automatically forfeited. Liability for the payment of excise duty has never been imposed on distributors or retailers of manufactured goods.

What then is the constitutional meaning of “excise” in item 15? I think, the meanings given to the word by other common law countries would hardly assist in finding the answer to the question because each meaning was decided within the context of the Constitution of the country concerned. Hence there is no universal meaning of the word. Each case must be viewed through the spectacles of constitutional perspectives.

The Parliament of England is a sovereign legislature with unlimited power to make any law imposing tax on any matter whatsoever and call it an “excise”. This has resulted in the very wide meaning of the word given to it in Mozley’s Dictionary. Such wide meaning was held to be inappropriate for the Australian situation; Commonwealth AND Anor. v. South Australia (supra) and also for the Canadian one: Atlantic Smoke Shop Ltd. v. Conlon (supra). In my view, it would not meet the demand of our Constitution to put to the word “excise” the wide meaning given to it in England. Neither the Federation nor a State is sovereign in respect of the taxing power in Nigeria. As I have earlier shown, the Constitution has shared taxing between the Federation and the States and neither should trespass over the right of the other. Accordingly, a narrow interpretation should be placed on the word “excise” in accordance with the principle stated in Rabiu v. The State (supra). For this reason the meanings of the word in Mozley’s and Black’s Dictionaries are inapplicable to item 15.

As we have seen, a tax paid by the consumer after consumption is a sales tax in Australia but if it is paid to a retailer as a collector by the consumer then it is excise: Dickenson’s Arcade v. Tasmania (supra). It is a sales tax in Canada if it is paid by the purchaser to a retailer but apparently it is an excise if it is paid to a distributor by a retailer who would pass it on to a consumer: Atlantic Shop Ltd. v. Conlon (supra). These fine distinctions were necessitated by the construction of their Constitutions. In Australia a State has no power at all to make sales tax law while in Canada a Province has such power but the tax imposed therein must be “direct taxation.” So it is wrong, as the Court of Appeal has done, to rely on Australian and Canadian decisions in the interpretation of our Constitution.

Our Constitution should be interpreted in such a manner as to satisfy the susceptibilities of the Nigerian societies for whom it was made and to meet the needs of the Nigerian Institutions: Senator Adesanya v. The President (supra). It would be, in my respectful view, an exhibition of the highest degree of absurdity, folly and ridicule by a State to follow the example of Australia and make a sales tax law which would require a person, who purchases a stick of cigarette from a hawker, to go to the State tax office for the purpose of paying the sales tax after he has smoked the cigarette. The State of Tasmania resorted to this device in order to evade the prohibition against the States from making sales tax law.

The Canadian precedent would also be, in my opinion, an exercise in futility in Nigeria. In developed countries where retail trade is carried on in departmental stores, supermarkets, drug-stores and shops where all sales are accounted for and the business addresses registered, it is convenient and safe for any government to appoint retailers as its agents for the collection of sales tax. Every penny collected will ordinarily reach the government. The position is entirely different in Nigeria. It is a notorious fact that except in few departmental stores, shops and drug-stores where accounts of sales are kept, the bulk of retail trade is carried on by a swarm of amorphous traders in the market places and in their homes, on our streets and highways, under our bridges and trees. They do not keep record or account of their business dealings and they cannot be reached by any government. It would be a bonanza to those retail traders to appoint them as agents for the collection of any sales tax. Except in the case of the few retailers I have mentioned, not a kobo would reach the Government. Consequently, for any meaningful sales tax to reach the Government, it must be collected by agents, such as distributors, whose accountability to the Government for the tax collected is assured such as that enacted by Ogun State Law.

In my considered view, to hold that a sales tax is an excise simply because distributors are appointed as the agents for its collection would be tantamount to importing the Canadian element of “direct taxation’ ‘into our Constitution and by such import to deny the States their constitutional right, which I already shown in this judgement they have, to make law imposing sales tax. Mere collection of a tax by distributors ought not to be the dividing line between sales tax and excise under the provisions of our Constitution.

After having taken into account all the aforesaid considerations, I would respectfully define “excise” within the purview of item 15 to be a duty tax charged on goods manufactured or produced in Nigeria whether in the process of their manufacture or production or their storage or distribution before their sale to the consumers in Nigeria but does not include a tax imposed on the sale of goods to a distributor, retailer or consumer. For emphasis ‘excise” is a tax on the goods while sales tax is a tax on their sale.

Now, the question whether the sales tax under the Ogun State Law is an excise duty may now be determined. It has been contended that because section 3 (4) (ii) of the law does not impose the tax on consumers but it imposes it on wholesale purchasers who purchase from wholesalers and the latter are appointed as agents for the collection of the tax and that since section 2 of the law defines ” wholesalers” to include the manufacturer of the goods on whom excise duty is ordinarily levied, the tax is an excise duty.

I think the words in section 3(l) of the law which provides:

“A tax to be known as Sales Tax, shall be charged in accordance with the provisions of this law on all taxable products brought into the State ………”

may appear to be an excise duty within the meaning of “excise” I have stated. It is apparent that the tax is chargeable on goods. But the provisions of section 3(4)(ii) rebut that appearance and show that the tax is levied on the sale of the taxable goods by a wholesaler to a wholesale buyer. Unlike excise duty, the sales tax is not due for payment if there is no sale.

With regard to the submission that the sales tax is excise because manufacturer have been appointed as its collecting agents, I think from the fact that goods have been brought into Ogun State it follows that the goods had passed the manufacturing process and if their manufacturer deals with them in Ogun State he can only be regarded as a wholesaler or distributor or retailer. A multi national company, like the United Africa Co. Ltd., may be a manufacturer of a taxable product in another State. It may then, as wholesaler or distributor, bring the product into Ogun State and it may sell the product as a retailer in its Kingsway Stores in Ogun State. Under the circumstances, I do not think that the mere appointment of wholesalers which include manufacturers, as the tax collectors is sufficient to change the character of the sales tax to excise. I have already shown in my definition of “excise” that wholesalers, distributors and retailers can be appointed as sales tax collectors.

For the above reasons, I hold that the sales tax imposed under sections 3(1) and 3(4)(ii) of Ogun State Sales Tax is not an excise duty.

However, the sales tax under the said two sub-sections is unconstitutional null and void because the Law imposes the tax on taxable products brought into the State which is a matter of inter-state trade and commerce which is within the exclusive legislative power of the Federation. Accordingly, my answer to question 2 is No. My Answer to question 4 is also No but in so far as the Law imposes the tax on the taxable goods brought into the State.

For clarity and ease of reference, I think it is pertinent to repeat the questions on reference and to restate my answers:

Question 1: Whether the omission to include item 38 of the 1960 and 1963 Exclusive Legislative List in the 1979 Constitution shows an intention to regard the Sales Tax Law as a residual subject or whether the power to legislate on all fiscal subjects have been vested in the Federal Government.

Answer:

(1) To the 1st Limb of the question: The Federation has implied exclusive power to make sales tax law in all matters within the Exclusive and Concurrent Legislative Lists while the States have implied or residuary power to do the same on matters outside the said Lists. The answer to the first limb of the question is partly No. and partly Yes. (2) To the 2nd Limb of the question: No

Question 2: Whether the tax imposed under the Sales Tax Law is an excise duty within the meaning of that term in term 15 of the Exclusive Legislative Lists.

Answer:- No.

Question 3. Whether the enactment of the Sales Tax Law is an exercise of power with respect to trade and commerce in item 61 of the Exclusive List.

Answer: -Yes to the extent that the law imposes sales tax on inter-state trade and commerce.

Question 4: Is the Sales Tax Law valid and constitutional in so far as it imposes tax on purchasers of taxable goods?

Answer: No to the extent that the law imposes the sales tax on inter-state trade and commerce and also in respect of taxable goods the prices of which have been controlled by the Federal Government.

For the avoidance of doubt, it may be pointed out that the sales tax on the supply of goods and services under sections 3(l) and 3(4)(1), which the Court of Appeal upheld, is not on appeal before us. The decision of the Court of Appeal in this regard stands. The sales tax under these subsections is severable from the tax under section 3(1) and 3(4)(ii). Accordingly, the Law remains valid in respect of the tax on the supply of goods and services.

The appeal partly succeeds and partly fails. There will be no order as to costs.

SOWEMIMO, CJN.:I have read. in draft, the lead judgement of my learned brother Bello. J.S.C., and the dissenting judgment of my learned brother, Karibi-Whyte, J.S.C.

In the interpretation or the construction of the constitution, including Constitutional provisions the conditions leading to the set-up of this country as a Federation should, in my opinion, be the determining factor in considering whether the interpretation of the laws of any particular foreign federation is applicable or not, either in a persuasive manner or authoritative.

In the United States of America, the States forming Federation have exclusive powers of legislation, and it is only in very few cases that the Federal Government has residuary legislative power. In other to bring this matter into proper focus, direct and indirect legislative powers were introduced for raising revenue.

In Canada, which again seems to have a federal set-up like the United States of America, legislative powers are similarly divided, with the centre being weak.

In Australia, the development of that country into a Federation determined the eventual legislative powers which control that Commonwealth. There are in Australia, for example, certain powers conferred by legislation in States and the residual in the Commonwealth Government.

It is in the set-up of every federal institution that interpretation of its control on revenue laws has to be construed. There are laws principally for a State and others controlling inter-state relationship.

My learned brother, Karibi-Whyte, J.S.C., has drawn attention to legislations made before 1967 when twelve States were created. It is of common usage and acceptance in this country, because of its constitutional and economic development, that excise duty is limited to goods manufactured in Nigeria. Trade and commerce is controlled by the Federal Government because, in the main, the whole concept of trade and commerce is based on exports and imports.

Nigeria, as a Federation, started with very strong Regional Governments. Powers were exclusively granted to those strong Regions with regard to revenue collection. The Centre or the Federal Government, as the case may be, only had such powers as surrendered to it by the Regions. The basics, therefore, of eventualy development in our body politics depends on this understanding. When, therefore, legislative competence was conferred on the Regions, the Centre or the Federal Government was weak, and the Regions strong. In further development and in the increase of States, the balance of legislative powers shifted. The centre or the Federal Government has exclusive powers and sometimes concurrent, and the States concurrent and residual. Such residual powers, in our own local Nigerian context, demand that certain things which are exclusively States-oriented, should be controlled by the States, e.g. local markets, local food-stuffs, local palm wine, internal trade and commerce, and other local products in the markets. It is, therefore, unarguable that a State has powers to legislate for matters which are exclusively State-oriented.

I hold that excise duty means, as it has always meant, duty imposed on locally manufactured goods, and customs duties on imported goods. Trade and commerce means, and will continue to mean, imported and exported goods. Every State in Nigeria in exercise of its legislative powers under the Concurrent Legislative List, can legislate for sales tax within its own State, save that it does not restrict interstate trade. Once it does that, it exceeds its powers and, therefore, such State’s sales tax is liable to be declared invalid.

It is in the context of the above that I accept and adopt the reasoning contained in the lead judgment of my learned brothers, Bello J.S.C would, therefore, in the circumstances, also adopt all the orders made by him consequently.

In order to make the judgment more explanatory, the decision of the Court of Appeal will be set aside in the sense that the answers given to the questions put to it by the High Court of Ogun State, Abeokuta, should have been in the negative. Any State Government in the Federation of Nigeria has the legislative power to impose sales tax. So long as that sales tax does not discriminate against other products respect of this particular sales tax, it discriminates against other products within the States constituting the Federal Republic of Nigeria. To that extent, it will be regarded as invalid.

IRIKEFE, JSC.:I had the advantage of a preview of the preview of the lead judgement just read by my learned brother, Bello, J. S.C. and I am in entire agreement with his views on all the issues raised in this appeal. Like him, I would also hold that the appeal should succeed in part and fail in part; in which case, there should be no order as to costs.

The main issue with which this appeal is concerned is whether the sales tax imposed by the Ogun State Government under section 3(l) and 3(4) (ii) of Ogun State Sales Tax Law can be equated with excise duty which belongs to the exclusively fiscal domain of the Federal Government. The sales tax cannot be so equated. Sales tax is tax on consumption and until the goods have arrived at the point of consumption, it is not due and payable. This is distinct from excise duty which is levied at the point of manufacture.

I also hold that, to the extent that portions of the Ogun State Sales Tax Law more particularly referred to in the lead judgment, discriminate against goods brought into Ogun State, in favour of goods in that State, such provisions would be null and void, as being in conflict with the express provision of the Federal Constitution (Suspension and Modification) Decree No. I of 1984, which sanction such free-flow.

ESO, JSC.:The issue raised in this reference by the first question in the reference that is the constitutionality of the Ogun State Sales Tax Law, has touched on one of our most difficult constitutional provisions. Perhaps, as my learned brother, Bello J.S.C, has said in his judgment, which he has just

read, it is simplistic to treat sale tax as unconstitutional by reference to item 61 of the Exclusive Legislative List contained in Part I of the Second Schedule to the Constitution, of the Federal Republic of Nigeria, 1979, especially when one tries to define the general nature of the phrase “trade and commerce.”

The Supreme Court of the United States, faced with the issue of commerce under the U.S. Constitution (the U. S. Constitution, unlike the Nigerian Constitution, is limited to commerce and not “trade and commerce”), had for a long time rejected the narrow compass which is the etymology of the word commerce and which in fact is derived from its latin origin “cum merce” (with merchandise).

I would like however to go into this aspect of the reference in some considerable detail as I find it difficult to accept the forceful reasoning of my learned brother thereupon and, as such, is therefore necessary for one to lay the background to the reference before us if only for the purpose of cohesion although my learned brother has in his own judgment done this.

The plaintiffs had brought an originating summons against the defendants who in this court are now the appellants. They sought in the summons:-

“(1). A declaration that section 3(l), 3(4), 3(7), 4, 5, 8 and 21 of the Sales Tax Law 1982 are inconsistent with the provisions of the Constitution of the Federal Republic of Nigeria and accordingly void;

(ii) An injunction restraining all officers, servants and agents of the Government of Ogun State from executing any of the provisions of the said enactment or from requiring the plaintiffs or any of them to implement or otherwise carry out the said provision;

(iii) Further or other reliefs as the court may deem just”

When the matter came up for hearing before the Ogun State High Court, Craig C.J. who was seized of it, referred the question of the constitutionality of the Ogun State Sales Tax Law 1982 to the Court of Appeal for determination. The learned Chief Judge, under section 259(2) of the Constitution of the Federal Republic of Nigeria which will here in after referred to as the “1979 Constitution” or as “the Constitution” simplicita, in giving his ruling, after an exhaustive argument before him, said-

“Furthermore, I note that the Sales Tax Law affects other wholesalers of tobacco, paints and alcoholic spirits. It may very well be that these other classes of businessmen are contemplating taking action against the State Government, and in those circumstances, it becomes a matter of urgent public importance, not only to all the State Houses of Assembly which have adopted this Law, but to the Nigerian business concern in

general, that a proper adjudication be made on whether or not the Sales Tax Law is valid and Constitutional.

Accordingly, for the above reasons, it is ordered that the following substantial questions of law shall be referred to the Federal Court of Appeal under section 259(2) of the Constitution of the Federal Republic of Nigeria. 1979.

1. Whether the tax imposed under the Sales Tax Law is an excise duty within the meaning of that term in item 15 of the Exclusive Legislative List.

2. Whether the enactment of the Sales Tax Law is an exercise of power with respect to trade and commerce in item 61 of the Exclusive List.

3. Is the Sales Tax Law valid and constitutional in so far as it imposes tax on purchasers of taxable goods?

4. If the answer to question 3 is in the affirmative, are section 4, 5 and 8 valid and constitutional as being incidental to the execution of the Sales Tax Law?

The judgment of this court will give answer to these four questions from the Federal Court of Appeal.”

Then under Order 2 rule 1 of the Court of Appeal Rules, the Chief Judge stated the facts established before him as follows:

i. That the Sales Tax Law is not a new legislation in Nigeria: See Produce Sales Tax Law, Cap. 99 Laws of Western Nigeria, 1959.

ii. That the law contained identical provisions as the present Sales Tax Law, 1982.

iii. That when the Nigerian Constitution 1960 was passed, it made provisions for the collection of sales tax: See item 38 of the Exclusive Legislative List.

iv. That in 1963 when the Republican Constitution was promulgated, it retained item 38 on its Exclusive List – thus preserving the incidence of sales tax collection.

v. That in 1966, during the military regime, the legislative powers of Parliament were abrogated and the legislative lists suspended.

vi. That the Constitution of the Federal Republic of Nigeria, 1979 came into operation on 1/10/79 and omitted item 38 on the Exclusive List. Furthermore, it made no reference of any kind to the Sales Tax Law. See further points on the attached RULING of the court dated 15/12/82.”and put down the constitutional question arising therefore as:

1. Whether the omission to include item 38 of the 1960 and 1963 Exclusive Legislative List in the 1979 Constitution shows an intention to regard the Sales Tax Law as a residual subject or whether the power to legislate on all fiscal subjects have (sic) been vested in the Federal Government.

2. Whether the tax imposed under the Sales Tax Law is an excise duty within the meaning of that term in item 15 of the Exclusive Legislative List.

3. Whether the enactment or the Sales Tax Law is an exercise of power with respect to trade and commerce in item 61 of the Exclusive List.

4. Is the Sales Tax Law valid and constitutional in so far as it imposes tax on purchasers of taxable goods?

If the answer to question 4 is in the affirmative, are sections 4, 5 and 8 valid and constitutional as being incidental to the execution of the Sales Tax Law?”

These then were the questions before the Court of Appeal consisting of Nasir P., Phil-Ebosie, Kazeem, Ette and Uche Omo J.C.A. The court considered the various submission of learned counsel and answered the question as follows:-

“QUESTION 1

Answer: The power to legislate on trade and commerce is vested in the Federal Government. The omission of item 38 as set out does not show any intention to regard the Sales Tax Law as a residual subject. Power conferred on the States by item 38 is covered by Item 15 and/or 61 of the Exclusive Legislative List in the 1979 Constitution.

QUESTION 2

Answer : YES, it is; except as to the tax on the supply of goods and services in an inn.

QUESTION 3

Answer: Yes.

QUESTION 4

Answer: NO, but it imposes tax on products not on purchases (of goods).

QUESTION 5

Answer: The answer to question 4 above is negative. The second part of this question therefore does not arise.”

The Court of Appeal determined the issues by giving answers to the questions raised by the reference, and it is from the decision of the Court of Appeal that the appellant who is dissatisfied with it, has appealed to this Court, relying on two grounds of appeal. As these grounds of appeal have been so well spelt out in the judgment of my learned brother Bello J.S.C. I do not intend to repeat them here.

Again, as my brother Bello has stated, we had the advantage of learned briefs and submission from the amici curiae which the court had invited they were the Attorney-General of the Federation and ten State Attorneys-General. I will like to pay compliment to the learned amici curiae for their invaluable assistance in this tricky subject but more especially to Chief Williams S.A.N. for the respondent and Mr. Adaramaja of counsel for the appellant,

The only point I would like to deal with in this part of the judgment is the scope of the provision of item 61 of the Exclusive Legislative List, that is, meaning to be ascribed to “trade and commerce” in the item, whether or not the legislative powers of the Federal Government extend only to the items specified after the words “and in particular” in item 61, in which case the words would be limiting trade and commerce to what follows them and the State will be left with residual powers to legislate in regard to intra state trade and commerce or whether the words “and in particular” adjunctive thus legislative to the Federal Government to legislate on intra State trade and commerce.

My brother Bello took the former view on the powerful argument that item H 18 of Part II of the Second Schedule to the Constitution which provides:

“18 Subject to the provisions of this Constitution a House of Assembly may make laws for that State with respect to industrial, commercial or agricultural development of the State.”

and section 7(3) of the 1979 Constitution-itself which provides:

“It shall be the duty of a Local Government Council within the State to participate in economic planning and development of the area referred to in subsection (2) of this section and to this end an economic planning board shall be established by a law enacted by the House of Assembly of the State.”

gives power to the States and Local Government Councils to legislate on commerce.

My brother Bello then concluded that having regard to all these, the control of the economy is not within the exclusive domain of the Federation.

While I do agree that the control of the economy of the country is not within the exclusive domain of the Federal Government, I would with utmost difference not subscribe to the view that the words “and in particular” in item 61 of the Exclusive Legislative List are words of limitation and not of emphasis. Nor that “economy” is synonymous with commerce or commerce exhaustive of economy. What item 61 aforesaid provides for is “trade and commerce” and I will like to start with a definition of this phrase – trade and commerce. In this regard, I will make reference to other jurisdictions, particularly the United States, Australia and Canada where the words have featured in their various Constitutions. I am not oblivious to the fact that in interpreting the Nigerian Constitution what should be borne in mind are, essentially, the Nigerian conditions for, though the wordings of the Constitutions of other countries may be similar to ours, it does not necessarily follow ipso facto, that the judicial approach to the interpretation must be the same.

Principally, in the interpretation of the Constitution as in interpretation of statutes, one of the first rules is that words must be given their ordinary plain natural meaning see Nnamani J.S.C in Ifezue v. Mbadugba (1994) (1) S. C. N. L.R 427 as at 478. This principle will be patent when I deal with the phrase “and particular.” However, what I intend to deal with is the expression “Trade and commerce”. I start with the American Constitution first. Clause 3 of that Constitution provides –

.”The Congress shall have power…. to regulate commerce with foreign nations and among the several states, and with the Indian Tribe.”

The word “commerce” therein came for interpretation in the famous case of Gibbons v. Ogden 9 Wheat (22U.S.l) (l824) Marshall C.J. refused to limit the interpretation of the word to traffic, to buying and selling, or to inter-change of commodities as submitted by the appellant’s counsel. Marshall C.J. said-

“The subject to the regulated is commerce. The counsel for the appellant would limit it to traffic, to buying and selling, or the interchange of commodities, and do not admit that it comprehends navigation. This would restrict a general term, applicable to many objects, to one of its significations. Commerce, undoubtedly, is traffic, but it is something more – it is intercourse.”

The Chief Justice thus made the word to include navigation in that case. “Intercourse”, according to Marshall C.J., must be commercial intercourse thus covering every species of movement of persons and things, whether for profit or not across State lines; every species of communication, every species of transmission of intelligence and every species of commercial negotiations which will involve an act of transportation of persons or things or the flow of services or power across State lines.

Now, though the American Constitution specifically limited commercial intercourse to one of foreign nations and inter-state, Marshall C.J. equated intrastate commerce which affects other states or with which it is necessary to interfere in order to effectuate congressional power with those actions which are purely interstate.

I have made reference to this American Supreme Court decision in Gibbons v. Ogden (supra) to show that in industrial countries, there is only so much thin thread between inter-state and intra-state commerce, even where the legislative powers of the Federal Government are limited to inter state commerce.

The American Constitution, as I have earlier pointed out, deals only with commerce while our Constitution talks about “trade and commerce.” How much difference does the addition of the word “trade” make? Apart from the Nigerian Constitution, there are the Australian and Canadian Constitutions which add the word “trade” to “commerce”.

Trade, simpliciter, is a line of work or form of occupation pursued as a business or calling, but as Latham C.J. said in Bank of New South Wales v. Commonwealth (1948) 76 C.L.R. I the word “trade” is used in several senses. The learned Chief Justice in trying to unravel whether banking is trade or commerce said-

“A carpenter is ‘a carpenter by trade’. But no one would say that the craft of carpentry – as distinct from the sale and purchase of its products – is a trade or commerce.”

It was the issue of the construction of s. 92 of the Australian Constitution that arose in that case. The section has provided that-

“trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.”

It is in regard to the word “trade” in this provision that the learned Chic Justice has said-

“The trade and commerce to which s. 92 relate is trade and commerce among, the States, whether by means of internal carriage or ocean navigation.”

This is relating “trade and commerce” together to commercial intercourse as the American Supreme Court had done in Gibbons v. Ogden (supra).

By the same token I form the view that the words “trade and commerce;’ in item 61 of the Exclusive Legislative List are to be taken together, and they both must mean commercial intercourse. In other words I am of the firm view that the Federal Government has exclusive jurisdiction to legislate on commercial intercourse (trade and commerce) as distinct from “trade” specifically used in common parlance of a tradesman or carpenter, a road mechanic or a garri manufacturer. It means therefore that the commercial intercourse involves movement of commerce as defined, whether to or from foreign countries, whether they move inter-state or intra-state. But it must be commercial intercourse. And they must move!

The words “and in particular” in the item 61 aforesaid to my mind can only be words of emphasis and not limitation. There is no ambiguity about them which would lead to a canon of interpretation other than the plain and literal meaning. I agree with Justice Black of the United States Supreme Court who in United States v. South-Eastern Underwriters Association 322 U.S. 533 said-

“Ordinarily, courts do not construe words used in the Constitution so as to give them a meaning more narrow than one of the times in which the Constitution was written.” (See p. 539 Ibid).

When the 1979 Constitution was written, the Constitution Drafting Committee had limited the Federal powers to

“Trade and commerce between Nigeria and other countries and commerce among the States” – See item 62 of the Exclusive Legislative List appended to the Draft.

“Commerce among the States” could only mean inter-state commerce, Gibbo v. Ogden (supra) where Marshall C.J. observed that the phrase “among the several States” was “not one which would probably have been selected to indicate the completely interior traffic of a State.”

“The genius and character of the whole government’ ‘said Marshall C.J. “seem to be, that its action is to be applied to all the external commerce of the nation, and to their internal concerns, which affect the States generally; but not to those which are completely within a particular State, and with which it is not necessary to interfere, for the purpose of executing some of the general powers- of the Government.” ibid p. 195 (Italics supplied).

It was the ultimate draftsman of the 1979 Constitution, the Constitution maker who in his wisdom jettisoned the idea of not excluding intra-state commerce but making the situation one applying, among others, to intra-state commerce. There is nothing preposterous about this once the phrase trade and commerce is limited to commercial intercourse as in the other countries which deal in commerce. This does not mean that the economy as the economy, is totally vested in the Federal Government. Ordinary trade is still residual, or ordinary commerce that is, no commercial intercourse, is also still in the State.

Certainly in the present day business world or rather in the modern economic system, I would agree with Bernard Schwartz who in his American Constitutional Law declared that under contemporary conditions, the economic system is so interconnected in its parts that there are few, if any even purely local business activities which may not have at least some repercussions upon commerce which extends beyond State lines. In America, in the case of the United States v. Darby 312 U.S. 100, the Supreme Court declared –

“The power of Congress over interstate commerce, is not confined to the regulation of commerce, among the States. It extends to those activities intre-state which so affect inter-state commerce or the exercise of the power of Congress over it as to make regulation of them appropriate means to the attainment of the exercise of the granted power of Congress to regulate inter state commerce.”

That court established in the case that the cumulative effect of many minor transactions, with no separate effect on inter-state commerce, when they are viewed as a class, may be sufficient to merit congressional regulation.

The economic system in this country is so connected, that in my opinion, the American situation, as stated in the Darby case, must also be applicable to Nigeria. I do not think it is by an accident or mistake, that the Constitution maker, who no doubt is aware of the provisions of section 7 of the Constitution which guarantees the system of local government and assigns that Council with duty to participate in economic planning and development of the area and, as also pointed out in the judgment of my learned brother Bello J.S.C., regulate out-door advertising and hoarding, control and regulation of shops, kiosks, restaurants, and other places for sale of food to the public, laundries and the development of agriculture and natural resources – should use the words “Trade and commerce, and in particular” when drafting item 61 of the Exclusive Legislative List.

I also do not subscribe to a strained construction of the words “and in particular”. I think the expression “and in particular” means therein, in

addition to “trade and commerce”. And therein plain “and” and which is conjunctive and emphatic and not strained “and” which is merely delimiting. If the Constitution maker had wanted to limit trade and commerce to purely the matters particularised under item 61, he would not have had to strain himself that much. He had an excellent draft to copy or adopt in that Draft Constitution prepared by the Constitution Drafting Committee.

“63(l) Trade and Commerce between Nigeria and ther countries and commerce among the States ………………………………………………”

Nothing could be clearer, no draft could be simpler. But then he chose the present draft in item 61 of Exclusive Legislature List which to my mind is clearly not the same thing as contained in item 63 of the Draft Constitution prepared by the Constitution Drafting Committee.

But once it is realised that the expression “trade and commerce” means commercial intercourse and viewed with the background of contemporary commerce, the Fourth Schedule to the 1979 Constitution stating the functions of Local Government which I have earlier referred to, is not in conflict with those items. that is –

“control and regulation of – out-door advertising and hoardings, movement and keeping of pets of all descriptions; shop and kiosks; restaurants and other places for sale of food to the public and laundries.”

are, with profound respect, in no way equivalent to commercial intercourse.

Indeed, I have to reiterate my earlier opinion which I expressed in Ogun State v. The Federation (1982) 3 N.C.L.R. 202 that the bedrock of federalism lies in each tier of government being a master in its own domain. If this is a federation where the Local Government Council could not control or regulate simple occupations as the kiosk or “buka” for the sale of game or melon, the trade of shoe making or bicycle repairing, brick making or roadside mechanic, that is no federation. There is a lot of difference between these and wholesale delivery and vehicular movement of beer, rice or tyres which will amount to commercial intercourse. Further, for each unit to be master in its own domain is not one of compartmentisation.

The Nigerian federation itself never started like the American federation of strong small units coming under an umbrella as if the original purpose was confederation graduating to federation and with each strong small unit yielding some means of its power structure to the federation. The Nigerian federation started the other way round, first as one whole (unitary government) then with provinces and finally regions. But then, very powerful regions each almost independent of the other. It is the federation of powerful regions that has yielded some of it powers to the state. units created therefrom.

In The Bank of New South Wales v. The Commonwealth (1947-1948) 7 C. L. R. I. Lathan C. J. made a subtle but pertinent distinction between what could be a trade or what could be commerce. The learned chief Justice said-

“A loan transaction is a business transaction, but it is not therefore itself trade or commerce – unless all business transactions, from building a house to pulling out a tooth, are to be described as trade or commerce, simply because they are business transactions. ……………………”

The word ‘trade’ is used in several senses. – p.236 ibid.

To my mind one should look at the whole of item 61 from a real commercial angle. There must be movement by land or by sea or water either into or out of the country (export and import) or commercial movement inter state or intra state. It must be real. Not just moving of some gallons of paint from one shop to the next door by hand or truck -the usual “Omolanke” -to help the adjacent shop with a sale. That looks a bit artificial if one is to classify it as commercial intercourse. One should view this as opposed to movement of say -Volkswagen vehicle from its headquarters in Lagos to motor distributors in Lagos State, Golden Guinea Beer from Umuahia to distributors in Anambra State etc. This is commercial intercourse. But each case will depend on its peculiar facts for a determination of commercial intercourse.

If one still has any doubt about the pervasive powers of the National Assembly in regard to trade and commerce, that is, as defined, meaning commercial intercourse, a close look at the economic objectives under s. 16 of Chapter 11 of the Constitution, that is Fundamental Objectives and Directives Principle, should remove such doubt.

There is section 16(l) which provides for the State, that is the Federation to –

(a) control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity;

(b) without prejudice to the right of any person to participate in areas of the economy within the major sector of the economy, protect the right of every citizen to engage in any economic activities outside the major sections of the economy.”

while “economic activities” has been defined under section 16(4)(b) as including – activities directly concerned with the production, distribution and exchange of wealth or of goods and services.

For all these reasons, the Ogun State Sales Tax has transgressed into the province established for the National Assembly under item 61 of the Exclusive legislative List and it is for this purpose void. I will therefore answer the first question as follows-

The omission to include in the 1979 Constitution item 38 of the Exclusive Lists in the 1960 and the 1963 Constitutions, does not show an intention to regard the Ogun State Tax law as a residual subject. The power is in the National Assembly. All fiscal subjects to the extent of my discussion in this judgment are vested in the Federal Government.

As regards the issue whether or not the Ogun State Sales Tax Law is contrary to s.4(3) of the 1979 Constitution that is, being a legislation which deals with inter-state commerce, I do not intend to repeat what my brother Bello J.S.C. has said in the lead judgment in regard thereto, as I am in complete agreement. Item H of Part II of the Second Schedule to the Constitution, that is, the Concurrent Legislative List, which would permit a State to legislate in regard to subjects in the Concurrent List is subject to the doctrine of non-conflict with the legislation of the Federal Government or also that of covering the field by the National Assembly.

To start with, a legislation for tax, payable on goods moved from one State to another is legislation in respect of interstate commerce which is patently contrary to the provision of item 61 of the Exclusive Legislative List. Item H 17 of Part 11 of the Second Schedule (the Concurrent List) does not cover tax in respect of interstate commerce, for laws made for the Federation or any part thereof with respect to paragraphs (a), (b) and (d) thereof, (these are the paragraphs relevant to this case) that is,

(a) the health, safety and welfare of persons employed to work in factories, offices or other premises or in interstate transportation and commerce .

(b) Regulation of ownership and control of business enterprises throughout the Federation for the purpose of promoting encouraging or facilitating such ownership and control by citizens of Nigeria;

(c) the establishment of institutions and bodies for the promoting or financing of industrial, commercial or agricultural projects could not amount to laws made in regard to commercial intercourse. Again item 18 (which is also relevant) provides-

“18. Subject to the provisions of this Constitution a House of Assembly may make Laws for that State with respect to industrial, commercial or agricultural development of that State”.

but then as I have earlier said in this judgment, item 61 which speaks of trade an commerce is commercial intercourse, which is subject to the power of the National Assembly to legislate exclusively and not commercial development. The power of the State exists, concurrently with that of the National Assembly (and subject to the doctrine of non-conflict and non-covering the field) to legislate on industrial, commercial or agricultural development of that State. The emphasis therefore in item H 18 should be on development as opposed to intercourse the latter being of transportation by sea, air or land.

All these would take care of question 3 and my answer to that question therefore is an unqualified “Yes”. The Ogun State Sales Tax law is invalid for being a legislation which deals with interstate commerce.

Now, question 2 is very important. It raises the question as to the meaning to be ascribed to “excise duty”. Item 15 of the Exclusive Legislative List vests the legislative power in regard to “customs and excise duties” in the National Assembly The question then is, Does the Ogun State Sales Tax law impose an excise duty? If it does, of course, it is invalid for being unconstitutional.

In the forceful argument before this court a good number of the learned counsel have brought to our notice the dictionary meaning of “excise”. There is nothing wrong with this especially as there is no definition of the word in the Constitution itself (as it would be expected) nor in any relevant existing law. Except recourse may be had to a repealed law.

In the interpretation of statutes, the ordinary literal meaning must first be examined. If the words are clear and unambiguous then the ordinary literal meaning must be given to them, for then, the intention of the lawmaker has not been obscured. It is only where there is doubt or ambiguity, that recourse is made to other canons of interpretation (see Awolowo v. Shagari (1979) 6-9 SC. 51).

In item 15 of the Exclusive Legislative List the words used are merely “customs and excise duties” that is, customs duty as an entity and then 11 excise duty as another entity. There’s no problem about “Customs duty” and though it is not strictly relevant to the determination of this appeal the Customs and Excise Management Act No. 55 of 1958 s.35 has taken care of that expression, But what is excise duty? The only legislation I could lay hand upon which defined excise duty is the repealed Excise Ordinance 1948, section 2 of which defines excise duty as including –

“any duty other than export duty of customs imposed on any goods manufactured in Nigeria.”

One thing is clear; while customs duty is chargeable on goods manufactured outside Nigeria and coming into Nigeria or goods exported from Nigeria, excise duty is chargeable on goods manufactured or made in Nigeria and circulating in Nigeria.

The real contention of the learned counsel in this case in so I far as excise duty is concerned seems on the surface to be semantic. Chief Adaramaja (and he had the support of most of the Attorney-General contended that the tax imposed by the Ogun State Sales Tax Law is not on the wholesaler. It is on the ordinary purchaser in the State in which latter case, the State Legislature will have competence in imposing the tax. Chief Williams on the contrary has submitted that the tax is, in the ultimate, paid by the consumer and the wholesaler is a mere collector of this tax. That being the case contended learned counsel, the tax is excise duty. It is necessary to examine the relevant portions of the legislation itself at this stage.

“3. (1) A tax to be known as Sales Tax, shall be charged in accordance with the provisions of this Law on all taxable products brought into the State and on the supply of goods and services in any inn not exempted from the requirement of registration under this law at the rate specified opposite each class of goods or service in the First Schedule to this law.

2. The tax shall be under the care and management of the Board.

3. All money and securities for money collected or received for or on account of the tax shall form part of the revenue of the State.

4. The tax shall be due:

(i) in the case of the supply of goods and services in an inn from the purchases of goods and services at the time of the supply of such goods and services and shall be collected and accounted for and remitted to the Board by the innkeeper within such time and in such manner as are herein prescribed;

(ii) in the case of any other taxable product by the purchaser at the time of entry into the contract of purchase of the taxable product with the wholesaler and shall be collected, accounted for and remitted to the Board by the wholesaler in the State, within such time and in such manner as are herein prescribed.

(iii) The tax shall be a debt due to the Board and recoverable as such by the Board from the innkeeper or wholesaler whose duty it is to collect, account for and remit the tax to the Board.”

Taxable products referred to by section 3 of the Law are such products in the First Schedule, an examination of which shows they are all brought to Ogun State from outside the State. The legal contention as I could see of Chief Adaramaja is that the law provides for sales tax and not excise tax whereas Chief Williams’ very strong submission is that it is excise duty that is being charged though indirectly. A lot of authorities have been cited to us from Australia, Canada and the United States. I have after very anxious consideration of all these authorities from other jurisdictions come to the conclusion that I will rather approach this aspect of the case from a simple angle. The question I ask myself are these:

What is excise duty in Nigeria?

What is sales tax?

Who pays excise duty?

Who pays sales tax?

Then as a final question –

In the context of the Nigerian economy, can a State charge a sales tax or is every sales tax excise duty?

I have made reference to the only definition of excise duty in any Nigerian statute I could find. And that is the repealed 1948 Excise Ordinance. The Interpretation Act, 1964 has not been of any assistance either. I will however define excise duty as duty charged on goods manufactured and circulating in Nigeria. This will exclude duty charged on exports, duty which will qualify as customs duty. It also excludes duty charged on goods imported into the country. That is also customs duty. Sales tax is tax chargeable to the purchaser or rather, the ultimate consumer of goods, made in Nigeria and circulating in Nigeria. Such ultimate consumer will exclude the manufacturer or the wholesaler or indeed the retailer who is a middle man between the wholesaler and the consumer. Matches are mad in Nigeria (not just assembled in Nigeria). The ordinary cigarette smoker who buys from a hawker is a consumer and if he is asked to pay tax on the matches, he is paying a sales tax not excise duty. And this goes for cigarettes or any of those articles made in Nigeria as opposed to those imported into Nigeria.

From the constitutional point of view there should be nothing to stop a State from legislating and enacting a Sales Tax Law whereby the State could charge and collect tax on certain items or goods made in that State, from the consumers of such goods, if only as an avenue of revenue for that State. The subject is neither on the Exclusive nor on the Concurrent List. It is certainly residual.

Apart from what I have stated I will adopt the reasoning of my learned brother Bello J. S.C. in this aspect of the case and will not avoid the Sales Tax law for the reason only of its being a sales tax. If it is otherwise, a State will starve and would not be able to meet its financial obligations which would arise from duties imposed on the States under Constitution. It will be a way of having a neo-unitary government as the States will have to rely almost entirely upon the financial mercy of the Federal Government. Surely that could not be the federation contemplated by the Constitution makers. A federation where a State cannot raise any finances is of course no federation. It would be a status of a Father Christmas Federal Government and its beggar States.

Of course, the facts of this case leaves no one in no doubt of the unconstitutionality of the Sales Tax Law as the goods are brought into the State from outside the State a case within the exclusiveness of the Federal Government by virtue of item 61 of the Exclusive List. Sales tax could be charged by the Ogun State on beer made in that State, and circulating in that state and the tax collected from consumers of such beer in Ogun State. That is purely intra-state transaction. But when it comes to beer made in another state that Ogun State charges “taxes on”, that is no more intra state sales tax but inter state commerce in respect of which Ogun State has passed a discriminatory legislation.

This, then, is my concurring judgement.

NNAMANI, JSC.:The present appeal arose from the Appellant’s dissatisfaction with the answers given by the Court of Appeal, Ibadan Judicial Division, on a reference by the High Court of Ogun State. The background facts have been fully set down in the lead judgment of my learned brother, Bello, J. S.C. which I had the advantage of seeing in draft and it is unnecessary to repeat them. My learned brother in the said judgment just delivered has exhaustively and most ably dealt with all the issues raised before us. I agree substantially with his reasoning and conclusions.

In effect the issue is the constitutional validity of the Sales Tax Law of Ogun State – A law to impose a tax upon the purchase of specified goods and services and to make provision for the collection and recovery thereof and for purposes connected therewith – enacted by the Ogun State House of Assembly, the date of commencement being 25th February, 1982. Its validity has been questioned in relation to Items 15 and 61 of the Exclusive Legislative List in Part I of the 2nd Schedule to the Constitution of the Federal Republic of Nigeria, 1979 hereinafter referred to as “the Constitution”. This suit arose before the modification and suspension of some of its provisions by Decree No. I of 1984. The relevant sections of the Ogun State Law are as follows;

“3 (1) A tax to be known as Sales Tax shall be charged in accordance with the provisions of this Law on all taxable products brought into the State and on the supply of goods and services in any inn not exempted from the requirements of registration under this Law at the rate specified opposite each class of goods or services in the First Schedule to this Law.

(2) The tax shall be under the care and management of the Board

…………………………………………

(4) The tax shall be due

i. in the case of the supply of goods and services in an inn from the purchaser of goods and services at the time of the supply of such goods and services and shall be collected and accounted for and remitted to the Board by the innkeeper within such time and in such manner as are herein prescribed;

ii. in the case of any other taxable product by the purchaser at the time of entry into the contract of purchase of the taxable product with the wholesaler and shall be collected, accounted for and remitted to the Board by the wholesaler in the State, within time and in such manner as are herein prescribed”

In the definition section of the Law, “wholesaler” means:

“any person in the State whether he is the manufacturer or not of the goods who sells a taxable product to a person who carries on a business of selling goods of that class again”

The goods as listed in Parts I, II, III of the First Schedule to the Law are petrol, diesel oil, other petroleum products, drinks (beer and alcoholic spirits), tobacco, paints. Items 15 and 61 of the Exclusive Legislative List in the Constitution are in these terms:

15 “Customs and excise duty”

61 “Trade and Commerce, and in particular

(a) trade and commerce between Nigeria and other countries including import of commodities into and export of commodities from Nigeria, and trade and commerce between the States;

(b) establishment of a purchasing authority with power to acquire for export or sale in world markets such agricultural produce as may be designated by the National Assembly;

(c) inspection of product to be exported from Nigeria and the enforcement of grades and standards of quality in respect of produce so inspected;

(d) establishment of a body to prescribe and enforce standards of goods and commodities offered for sale;

(e) Control of the prices of goods and commodities designated by the National Assembly as essential goods or commodities; and

(f) registration of business names.”

The Constitution does not define the terms customs and excise which are terms of commerce and finance. Customs was not in issue in this suit and is generally accepted to be the duty or tax imposed on goods imported into this country.

It was in relation to the meaning of excise that so much argument arose. The court was inundated with several dictionary meanings of the term as well as several decisions of the Courts in Australia and Canada. As regards the dictionaries, Lord Coleridge in R. v. Peters (18 86) 16 Q B. D. 636 at p. 641 said –

“I am quite aware that dictionaries are not to be taken as authoritative exponents of the meanings of words used in Acts of Parliament, but it is a well-known rule of courts of law that words should be taken to be used in their ordinary sense, and we are therefore sent for instruction to these books.”

As regards the decisions of the courts in Australia and Canada which merely’ have persuasive authority, one has to be cautious for they arc decisions in relation to Constitutions of other countries dealing with the definition of a term in an, economic atmosphere totally alien to ours. While however one may not accept the very wide definition that those courts have given to the term excise, it is my view that it would not accord with the economic realities of our country to give it an unduly restrictive definition.

Ordinarily, excise is the duty imposed on goods manufactured at home. The definition given by the Encyclopedia Britannica 11th edition Vol. 10 and adopted by the Oxford English Dictionary is-

“a term now well known in public finance, signifying a duty charged on home goods, either in the process of their manufacture or before their sale to the home customers.”

This is the definition which was urged on this Court by Chief Williams, S.A.N. learned counsel to the Respondents. This is clearly wider than the definition previously accepted in Peterswald v. Bartley (1904) 1 C.L.R. 509 (See Mathews and The Chicory Marketing Board (Victoria ) (1938) 60 C.L.R.263, 293 284; Parton and Anor. v. Milk board (Victoria) and Anor. (1949-50) 80 C.L.R: 229, 259).

In my view the tax will only cease to have the character of excise at the point when the good are sold to the ultimate consumer, that is the man who does not sell the commodity again.

In the instant case, the tax is payable by the purchaser at the time of contract of purchase between him and the wholesaler. In the ordinary course of commercial practice in Nigeria, a contract of purchase of commodity is hardly ever entered into between a wholesaler and a consumer but usually between a wholesaler and someone who will resell to the ultimate consumer. When therefore the Law defined wholesaler as a person who sells a taxable product to a person who carries on a business of selling goods of that class again, it was clear that the purchaser who is to pay the tax is clearly not the consumer. Again the definition of wholesaler as including manufacturer moved the tax payable away from consumption. I agree that as contended in the lead judgment there may be cases in which the manufacturer is the wholesaler and indeed the retailer, e.g. the U.A.C. and Kingsway Stores as indicated in that judgment. Admittedly in such cases the contract of purchases would be with the consumer, but such cases are indeed very few. That the Ogun State House of Assembly had power to legislate to impose sales tax on consumption of goods is beyond question, but I think that the tax as framed under section 3(4)(ii) of the Law is excise duty and is beyond the legislative competence of that Assembly. It is unconstitutional as being in breach of section 4(3) of the Constitution, excise being within Item 15 of the Exclusive Legislative List.

The second problem with the Law arises from the use of the words “taxable products brought into the State” in section 3(l) of the Sales Tax Law. These goods will necessarily fall into two classes. First, are goods imported into this country and then brought into Ogun State. Such goods not being manufactured in Nigeria are subject to customs duty which is contained in item 15 of the Exclusive Legislative List in the Constitution. The Ogun State House of Assembly lacks competence to impose such a tax and to that extent section 3(l) must be unconstitutional as being in breach of section 4(3) of the Constitution. Section 3(l) of the Law is equally bad as being discriminatory since as framed no equivalent tax is imposed on goods manufactured or produced in Ogun State. The tax is only imposed on goods brought into Ogun State from other States of the Federation which ultimately will bear higher prices by the time they get to the ultimate consumer.

Before considering the Sales Tax Law in relation to item 61 of the Exclusive Legislative List, I would like to consider, albeit briefly, the scope of that item on which so much argument was addressed to us. As has been repeatedly decided by this Court, the meaning of the provisions of our Constitution must be found within that Constitution, and to discover the true meaning of the provisions in question, the Constitution must be read as a whole (See Bronik Motors Ltd. and Anor. v. Wema Bank Ltd. (1983) 6 S.C. 158, 313). Looking at the words used in Item 61 of the Exclusive Legislative List, it would appear that it was the intention of the framers of the Constitution to give very wide powers over trade and commerce to the Federal Government. That item merely reads “Trade and commerce, and in particular…..” and it then states sub-sections (a) – (f). If this item was read in isolation there would be no doubt that the words and in particular would be words of emphasis and not limitation of the legislative competence of the National Assembly. But Item 61 of the Exclusive Legislative List must not only be closely scrutinised but must be read together with section 7(3) of the Constitution and Item H18 of the Concurrent Legislative List in Part 11 of the 2nd Schedule to the Constitution. To start with, item 61 (a) of the Exclusive legislative List, it is significant that trade and commerce was therein limited to trade and commerce between the States. Then item H18 of the Concurrent Legislative List provides as follows;-

“Subject to the provisions of this Constitution, a House of Assembly may make laws for that State with respect to industrial, commercial and agricultural development of the State”.

Commercial development of a State must necessarily involve legislation pertaining to trade and commerce within the State. Admittedly this power being within the Concurrent Legislative List was within the legislative competence of the National Assembly and if it legislated it would automatically cover the field. There is however as yet no Federal legislation on such matters as markets, super-markets, and industrial layouts within States.

Then section 7(3) of the Constitution vests in Local Governments establish, under section 7(l) of the Constitution, the power within the State

“to participate in economic planning and development of the area referred to in subsection 2 of this section and to this end an economic planning board shall be established by a law enacted by the House of Assembly of the State.”

Economic planning and development will necessarily involve aspects of trade and commerce. It is unarguable that the National Assembly is excluded from the power so conferred by this section of the Constitution. I do not see how Houses of Assembly of States could enact legislation in relation to the establishment and control of markets and industrial layouts nor how local governments can carry out functions assigned to them in the fourth Schedule to the Constitution if trade fade and commerce in Item 61 of the Exclusive Legislative List are given so pervasive a meaning. I therefore agree that the words and in particular in Item 61 of the Exclusive Legislative list are words of limitation. Having disposed of that issue, it now remains to relate the Ogun State Tax Law to Item 61 of the I”, Exclusive Legislative List. Section 3(l) and 3(4) (ii) of the Law having regard to the words “taxable goods brought into the State” are unconstitutional as being an interference with Item 61 (a) of the Exclusive Legislative List i.e. trade and commerce between the States. This matter falls within the exclusive legislative competence of the National Assembly.

Item 61 (e) deals with control of prices of goods and commodities designated by the National Assembly. By the Price Control Act No. I of 1977 prices were fixed in respect of controlled commodities as contained in Schedule to the said Act. In Legal Notice No. 22 of 1979 and the Price Control (Controlled commodities) Order 1979 the schedule 1 to the Act of 1977 was replaced with another schedule containing 9 items in respect of which the Board will still exercise control, These items include petroleum products which appear in Schedule to the Ogun State Tax Law. Then under section 8 of Act No. I of 1977, the Commissioner may on the recommendation of the Board and in relation to any commodity controlled under the Act , by order approve any resale price maintenance agreement or arrangement entered into by the manufacturer, importer, or distributor of that commodity on the one hand and the seller (whether a wholesaler or retailer on the other. By the Price Control (Resale Price Maintenance) Arrangement Order 1979 (L.N. 21 of 1979) a new list of 13 commodities were specified as being subject to resale price maintenance agreements or arrangement. These goods include beer and stout, building materials, cigarettes and tobacco. These also appear in Schedule I to the Ogun State Tax Law. Legislation by the Ogun State House off Assembly in respect of these goods is an interference with the legislative power of the National Assembly as conferred exclusively by Item 61(e) of the Constitution. To that extent sections 2 and 3 of the Ogun State Sales Tax Law are unconstitutional. In the final analysis I am also of the view that sections 2 and 3 of that Law are unconstitutional as being in various ways in breach of items 15 and 61 (a) and (e) of the Exclusive Legislative List in the Constitution in respect of which legislative competence lies with only the

National Assembly. I would answer the questions as my learned brother Bello J. S.C. has done except for questions 2 and 4 in respect of which I would answer Yes (except as to section 3(4)(i) which was not appeal against) and No, because though it imposes tax on purchasers of goods those purchase are neither the ultimate consumers nor sufficiently close to them. The appeal succeeds only as to the scope of Item 61 of the Exclusive abide by the order for costs in the lead judgment

UWAIS, JSC.:I have had the privilege of reading in draft the judgement read by my learned brother, Bello, J.S.C. I entirely agree with the answers he has given to the constitutional questions referred to the Court of Appeal and his conclusion that this appeal should be allowed in part only

By section 4 of the Constitution of the Federal Republic of Nigeria 1979 now suspended by virtue of the provisions of section I subsection (1) of the Constitution (Suspension and Modification) Decree 1984 the legislative power of the defunct National Assembly fell into three categories. These are first the power to legislate on the subjects listed under the Exclusive Legislative List in Part 1 of the Second Schedule to the 1979 Constitution. Secondly, some subjects of the Concurrent Legislative List as prescribed in part 11 of the Second Schedule to the Constitution. Thirdly other matters which were not contained in either the Exclusive Legislative List or the Concurrent Legislative List but were expressly stated by the Constitution that the National Assembly had power to legislative upon.

The power of a State House of Assembly to legislate was also spelt out by the same section of the 1979 Constitution. Sub-section (7) thereof provided that the House of Assembly may legislate with respect to any matter not included in the Exclusive Legislative List. It could legislate also on some of the subjects under the Concurrent Legislative List as prescribed in part 11 of the Second Schedule to the 1979 Constitution. Lastly, the House of Assembly was empowered to legislate on any subject or matter which the Constitution expressly provided.

By inference, since a State House of Assembly could legislate on any subject not included in the Exclusive Legislative List and the National Assembly lacked such power, it follows that the power to legislate on residual matters under the constitution was vested in a State House of Assembly.

By section 4 sub-section (5) of the 1979 Constitution, if a State House of Assembly enacted a Law which was inconsistent with any enactment made by the National Assembly, the latter law will prevail and the Law enacted by the House ‘Assembly would be void to the extent of the inconsistency.

Now the power of the Federation to legislate on trade and commerce is expressly provided under item 61 of the Exclusive Legislative List. The Item reads:

“61. Trade and commerce, and in particular –

(a) trade and commerce between Nigerian and other countries including import of commodities into and export of commodities from Nigeria, and trade and commerce between the States;

(b) establishment of purchasing authority with power to acquire for export or sale in world markets such agricultural produce as may be designed by the National Assembly;

(c) inspection of produce to be exported from Nigeria and the enforcement of grades and standards of quality in respect of produce so inspected;

(d) establishment of a body to prescribe and enforce standard of goods and commodities offered for sale;

(e) control of prices of goods and commodities designated by the National Assembly as essential goods or commodities, and

(f) registration of business names.”

Therefore, for a State to validly legislate on trade and commerce the provisions of such legislation must steer clear of the provisions of Item 61 and any legislation that the Federation might have enacted thereunder. The Sales Tax Law, 1982 which was enacted by Ogun State sought, in section 3 subsection(1) thereof, to interfere with inter-state trade by imposing tax on goods brought into the State from other States. The subsection provides”

“3.(1) A tax to be known as Sales Tax shall be charged in accordance with the provisions of this Law on all taxable products brought into the State and on the supply of goods and services in any inn not exempted from the requirement of registration under this Law at the rate specified opposite each class of goods or services in the First Schedule to this Law.”

Although it might not have been the intention of the State, it seems to me that the effect of the foregoing provisions is to discriminate against goods coming into Ogun State from other States of the Federation. In addition, the provisions, as underlined above, in the first part of the subsection do not seem to apply to similar goods manufactured in Ogun State. In my opinion, therefore, the provisions of the Sales Tax Law in that respect are inconsistent with the provisions of Items 6 1 (a) of the Exclusive Legislative List read together with section 4 sub-section (3) of the, Constitution which reads:

“(3) The power of the National Assembly to make laws for the peace, order and good government of the Federation with respect to any matter included in the Exclusive Legislative List shall, save as otherwise provided in this Constitution, be to the exclusion of the Houses of Assembly of States.”

Accordingly, the said provisions of the law are by virtue of section subsection (3) of the Constitution void to the extent of the inconsistency

It has emerged from the arguments advanced by the learned counsel that appeared in this case that the words “in particular” in the first line of Item 61 of the Exclusive Legislative List are capable of two meanings. On one hand it was canvassed that the words have the effect of limiting the power of the Federation to legislate on only the subjects referred to under paragraphs (a) to (f) inclusive of the Item. On the other hand the contention is that the words only put emphasis on paragraphs (a) to (f) of the Item but are by no means exhaustive of the power of the Federation to legislate on trade and commerce. Both arguments could, I dare say, be right but the guiding. principle as laid down by this Court in a number of constitutional cases is that the construction which will best serve the purpose of the Constitution should be placed on the words. For the reasons clearly stated by my learned brother Bello J. S.C. in his judgment, I will interprete the words as limiting the power of the Federation over trade and commerce as expressed under paragraphs (a) to (f) of Item 6 1. 1 hold so in view of the provisions of paragraph 18 of I Item 11 H of the concurrent Legislative List and section 7 sub-section (5) of the 1979 Constitution (now suspended).

Another consequence of charging tax on goods declared taxable under the First Schedule to the Sales Tax Law, is the resultant increase in the prices to be paid by a consumer on such goods. By virtue of the provisions of paragraph (e) of Item 61, the power to control prices of goods and commodities is vested in the National Assembly. This the Federation had exercised by promulgating the Price Control Act, 1977 (No. 1). The first Schedule to the Act contains a list of the commodities whose prices were controlled. The Schedule was later in 1979 substituted by the Price Control (Controlled Commodities) Order, 1979 (L.N.22 of 1979). Petroleum products which appear under the First Schedule to the Sales Tax Law are also listed under Schedule I to the Price Control Act, 1977 as amended by L.N. 22 of 1979. Consequently the provisions of the Sales Tax Law which pertain to petroleum products are inconsistent with the provisions of the Price Control, Act. 1977. To that extent the provisions of the Sales Tax are void. Furthermore the doctrine of covering the field will render the said provisions of the Sales Tax Law inoperative; see A-G of Ogun State v. A.-G. of the Federation, (1982) 3 N.C.L.R. 166 at p. 179.

The next question is whether the tax imposed by the Sales Tax Law is an “excise duty” within the meaning of Item 15 of the Exclusive Legislative List. The question arose in view of the fact that a wholesaler of taxable goods under the law is made liable to collect from a purchaser of the goods the prescribed tax and pay it over to the Ogun State Tax Board. Section 2 of the Law defines a “wholesaler” to mean inter alia a manufacturer. “Excise duty” has not been defined in the Constitution or the Interpretation Act, 1964. The only definition of the words in our laws is to be found in section 2 of the Excise Ordinance, Cap. 65 of the Laws of Nigeria 1948 which had since been repealed by the Customs and Excise Management Act, 1958 (No. 55 of 1958). The various dictionary meanings of the word “excise” as quoted by learned counsel are either too wide or to some extent not very helpful. So also the decision of the Courts of the United States, Canada and Australia. Willy nilly we are, therefore, left to find out what has been the practice in this country for the collection of excise duty. Here again there is no available evidence before us; but an examination of our statutes as done by my learned brother Bello, J. S.C. will show that the duty is payable by a manufacturer before the goods-manufactured leave the factory or warehouse as the case may be. It is also a matter of common knowledge that customs officials are posted to factories for the purpose of verifying the quantity of goods manufactured.

In view of the foregoing, although I will not venture a definition of what excise duty is, I will say that a sale tax as imposed by the Sales Tax Law is different from excise duty since it is to be collected by a manufacturer or a distributor of goods from a purchaser of the goods before the manufacturer or distributor becomes liable to pay it over to Ogun State Tax Board. To that extent, I hold that it is not an excise duty.

In conclusion, for these and the reasons copiously given by my learned brother Bello, J. S.C I will answer the questions posed to the Court of Appeal in the same manner as done by him in the judgment which he read. Therefore the appeal succeeds in part. There will be no order as to costs. Each party is to bear its costs.

KARIBI-WHYTE JSC.:On the 23rd June 1982, plaintiff, who are now the respondents, issued an originating summons against the defendants, who are now the appellants, seeking the following-

(i) A declaration that section 3(l), 3(4)(ii), 3(7), 4, 5, 8, and 21 of the Sales Tax Law, 1982 are inconsistent with the provisions of the Constitution of the Federal Republic of Nigeria and accordingly void.

(ii) An injunction restraining all officers, servants and agents of the Government of Ogun State from executing any of the provisions of the said enactment or from requiring the Plaintiffs or any of them to implement or otherwise carry out the said provisions;

(iii) Such further order or other reliefs as to the court may deem just.”

In the High Court at Abeokuta, capital of Ogun State, the parties agreed to refer the questions of interpretation of the Ogun State Sales Tax Law, 1982 provisions of which involve important construction of the Constitution to the Court of Appeal in accordance with section 259(2) of the Constitution 1979. The questions to be referred were as follows:

1. Whether the tax imposed under the Sales Tax Law is an excise duty within the meaning of that term in item 15 of the Exclusive Legislative List.

2. Whether the enactment of the Sales Tax Law is an exercise of the legislative power with respect to trade and commerce in item 61 of the Exclusive Legislative List.

3. Is the Sales Tax Law valid and constitutional in so far it imposes tax on purchasers of taxable commodity.”

After argument whether the issues deserve a reference to the Court of Appeal for the purpose of the construction contended, the learned Chief Judge of the court formulated the following substantial questions of law to be referred to Federal, Court of Appeal, as it then was, but now the Court of Appeal –

1. Whether the tax imposed under the Sales Tax Law is an excise duty within the meaning of that term in item 15 of the Exclusive Legislative List.

2. Whether the enactment of the Sales Tax law is an exercise of power with respect to trade and commerce in item 61 of the Exclusive List.

3. Is the Sales Tax Law valid and constitutional in so far as it imposes tax on purchasers of taxable goods?

4. If the answer to question 3 is in the affirmative, are section 4, 5 and 8 valid and constitutional as being incidental to the execution of the Sales Tax Law?

The Court of Appeal answered the first three questions in the affirmative. The fourth question was answered in the negative. Dissatisfied with this construction of the provisions of the Sales Tax Law in issue, the defendant, the -Attorney-General of Ogun State, has now appealed to this court. There are only two grounds of appeal which are as follows:

“(1) The Federal Court of Appeal erred in law in holding that the Ogun State Sales Tax Law 1982 by imposing sales tax on taxable products brought into the State imposes excise tax within the meaning of item 15 of the Exclusive Legislative List of the 1979 Constitution.

Particulars of Error

(a) The Sales Tax Law, 1982 is not a tax on production of goods but upon the consumer who is the ultimate payer of the tax.

(b) Excise tax is an indirect tax while Sales tax is a direct tax on the consumer.

(c) Excise tax is paid by the manufacturer who cannot be reimbursed while sales tax if paid by the manufacturer is reimbursed by the consumer who is the ultimate payer.”

“(2) The Federal Court of Appeal erred in law when it held that sales tax comes within “Trade and commerce” in item 61 of the Exclusive List to the 1979 Constitution.

Particulars of Error

(a) Trade and Commerce as provided within item 61 of the Exclusive Legislative List relate only to the matters clearly enumerated in paragraphs (a)- (f) of item 61 and those relate to international and inter-states trade and commerce.

(b) Sales tax being intra states trade and commerce is not within Federal Legislative competence.

(c) Sales tax having been omitted from the Legislative lists is residual to the States who have sole legislative competence.”

Counsel for the appellant and for the respondents filed briefs of argument, and elaborated on their briefs in oral argument before us. The Attorney-General of the Federation, and the Attorneys General of Benue, Cross River, Gongola, Lagos, Ogun, Ondo, Oyo, Plateau and Rivers States, filed briefs and appeared either in person or by representative as amici curiae. The Hon. Attorney-General for Kaduna State, did not file a brief but was represented by Mr. Yahaya who made oral submissions before us. The trend of the submission was that the submission of the respondents was supported entirely by the Hon. Attorney-General for the Federation, and the Attorney-General of Oyo State. The submission of the appellants was supported by the rest of the amici curiae.

The contention in the two grounds of appeal filed and argued related to whether the provisions of sections 3 (1), 4(ii) of the Ogun State

Sales Tax Law 1982, was in view of section 4(7) and item 15 of the Exclusive Legislative Lists constitutional and valid; and secondly, whether the enactment of the law was an infringement on item 61 of the Exclusive Legislative List, of the power of the National Assembly to regulate trade and commerce. Appellants’ contention was that the tax imposed by section 3(l) of the Law is on the purchaser of goods and therefore a tax on sales and therefore not an excise tax, and consequently did not infringe item 15 of the Exclusive Legislative List.

On the second ground, it was contended that the subject matter of sales tax, having not been expressly or impliedly enumerated in either of the two lists, namely, exclusive and concurrent, belongs to the residual list which is exclusive to the States.

The respondents contended that the tax imposed was in the nature of an excise having been imposed before it reached the consumer. Counsel adopted a broader definition of the word excise as against the orthodox narrow meaning. It was submitted on the modern definition of the word ‘excise’ sections 3(i), 4(ii) of the Law in question by its provisions had infringed the provisions of section 4(7) and item 15 of the Exclusive Legislative List. It was further submitted that the commodities indicated in the schedule to the Law and which are subject to the payment of tax are goods already subject to price control measures, a subject matter within the exclusive competence of the National Assembly.

On the second ground respondents submitted that the regulation of inter state, and commerce is item 61 of the Exclusive Legislative List of the Constitution. The Ogun State Sales Tax Law is therefore an infringement of the provision of the Constitution.

I have merely summarised the contentions of counsel. I shall deal with them in greater detail when considering the provisions of the Law and the judicial authorities cited in support of the contentions. It is however of immense assistance to discuss the provisions of the law challenged even in outline to give a bird’s eye view of the purport of the sections contended as invalid.

The Sales Tax Law No.2 of 1982 has twenty-one sections and four schedules. Section I is the short title and section 2 is the interpretation section. Section 3 is the operative section and together with section 2 (the definition section) contains the most important provisions for the purpose of the appeal. Sections 5,6,7,8 and 9,11.13 may be regarded as the service provisions included to support sections 3 and 4. Sections 14 and 15, 19, 20 are the penalty provisions. Section 21 empowers a non-existent Executive Council to make regulations for the effectual operations of the law. Section 2 defines the words “wholesaler” “purchase” “person” “taxable product” “tax” as follows-

“Section 3(l) A tax to be known as Sales Tax, shall be charged in accordance with the provisions of this law on all taxable products brought into the State and on the supply of goods and services in any inn not exempted from the requirement of registration under this law at the rate specified opposite each class of -goods or service in the first schedule to this law.

(4) Tax shall be due;

(ii) in the case of any other taxable product by the purchaser at the time of entry into the contract of purchase of the taxable product with the wholesaler and shall be collected, accounted for and remitted to the Board by the wholesaler in the State, within such time and in such manner as are herein prescribed.

(5) The tax shall be a debt due to the Board and recoverable as such by the Board from the innkeeper or wholesaler whose duty it is to collect, account for and remit the tax to the Board. It is clear from the provision here reproduced that the tax is imposed on all taxable products brought into the State which in the schedule includes beer, with respect to which the respondents are interested. Again the tax is due at the time of entry into the contract with the wholesaler and shall be collected, accounted for and remitted to the Board by the wholesaler in the State within such time and in such manner as are prescribed in s.3(6).

Respondents are wholesalers. Although section 3(l) has indicated that the tax is due at the time of entry into the contract of purchase by the purchaser, and shall be collected etc by the wholesaler, it did not say from whom the tax is due. it is, however a fair inference that it is due from the purchaser who enters into contract with the wholesaler. Thus the purchasers are expected to pay to the wholesaler at the time of purchase the tax due, and the wholesaler will remit the tax so collected to the Board. On this interpretation of the operative sections which are challenged as unconstitutional, as an imposition of excise tax, appellants have submitted on their definition of the word excise that this is a sales tax.

Surely, it is not what the appellant calls its legislation that matters. It is the substance and effect of such legislation that counts. Whether the provisions challenged or infringed the Constitution or not depends upon its true substance. In this case the Ogun State Sales Tax Law has imposed tax on all taxable products brought into the State, and on all transactions for the purchase of such taxable, products from wholesaler. The question to be answered now is whether in view of items 15 and 61 of the Exclusive Legislative List of the Constitution 1979, the State Legislature was competent to enact such Law, and if it is not whether the law is not therefore unconstitutional and invalid?

Chief Adaramaja, for the appellants, has submitted that the word “excise” in item 15 of the Exclusive Legislative List should be given its original and traditional meaning. He pointed out that the definition of the word in the Oxford English Dictionary is too wide. Counsel referred to several Canadian cases on the meaning of the word and submitted that they conote “tax upon a commodity at any point in the course of distribution before it reaches the consumer” as also too wide. It was submitted citing the cases of Atlantic Smoke Shop Ltd. v. Conlon (1943) AC. 550 at p. 5 6 1, and the Australian case of Dickenson’s Arcade Pty, Ltd. v. The State of Tasmania AND Anor. (1974) 13 0 C. L.R. 177, in support of the proposition that excise duty is not imposed on distribution. It is imposed on production or manufacture. It was also submitted that the cases show that where a tax is imposed on the consumer .or in respect of consumption of goods that would not be an excise tax even if paid by the distributor since the distributor passes the tax onto the consumer. Counsel pointed out that although the Canadian cases dealt with direct and indirect taxes, they showed clearly that when the consumer is the target of the tax it is not excise, but it is indirect tax and as such sales tax and not excise tax. This he contended was the clear intent of the words in s.3 (4) (ii) of the Sales Tax Law.

Chief F.R.A. Williams, SAN in his very helpful brief, traced the history of the word “excise” in Nigeria Legislation from 1933 in the Tobacco and Cigarettes Excise Ordinances of that year which was repealed and replaced by the Excise Duties Ordinance, Cap.65. He referred to the current excise laws, namely (a) Customs and Excise Management Act 1958, No. 55 (b) Custom Tariff Act 1965 No.3(c) The General Excise Regulations (No.55) of 1958 (d) Excise (Control and Distrillation) Act, 1964, (e) The Customs and Excise Management (Amendment) Act No. 18 of 1960 and (f) The General Excise Regulations L.N.50 of 1965.

Counsel cited and relied on the construction of the word “excise” in the Australian decisions of Matthews v. Chicory Marketing Board 60 CLR. 263 at pp. 293, Parton v. Milk Board 80 CLR. 299 259-260, 264-265 Western Australia v. Chamberlain Industries Property Ltd. 121 C.L.R. I at pp. 12 – 13, 15 – 17, 25, 26 and Dickenson’s Arcade Pty. Ltd. v. Tasmania AND Anor. 130 CLR. 177, 184-187, 213-222, 223-228. Counsel was content in his reliance on American authorities to cite the definition in Black’s Law Dictionary, because reference to the word “excise” in Volume 15A of Words and Phrases, published by West Publishing Co. discloses numerous decided cases.

Counsel contended that the word ‘excise’ should not be read as limiting it to what is payable before the goods are delivered from the factory or warehouse etc. It should only be read as prescribing the point along the distribution line at which the tax is due and payable. Thus, relying on the Australian and American authorities, counsel submitted that the word “excise” should be given its ordinary dictionary meaning, which did not restrict the imposition of tax to the point of production or manufacture but extends to distribution before consumption.

It was further submitted that some of the items subject to tax, such as beer, were already subject to price control measures, and that the tax imposed on such commodity is a tax on the profit of the vendor. The effect of the imposition of the tax is to limit the profit of the vendor thereby rendering the tax payable by him made out of his profits. This, it was submitted, is also an infringement of the constitutional powers of the National Assembly in items 5 8, 61 relating to taxation of incomes, profits and capital gains and relating to regulation of trade and commerce.

The crux of the matter here therefore is the precise meaning and scope of the expression “customs and excise duty” in item 15 of the Exclusive Legislative List of the Constitution, 1979.

Construction of the Expression “Customs and Excise duties”

The expression “customs and excise duties” is in item 15 of the Exclusive Legislative List of the Constitution 1979. Section 4(3) of the Constitution vests in the National Assembly the power to make laws in respect of the matters. Save as otherwise provided in the Constitution, the Houses of the Assembly of the State.; have no legislative competence in respect of such matters. “The elliptical manner in which the enumeration of the subjects in item 15 is indicated raises no ambiguity as to the plenitude of the scope. It seems to me that the meaning of the expression if and when ascertained encompasses all the functions of government which can be brought within its scope.

It has been very forcefully submitted before us that the ordinary diction meaning of the word “excise” should be adopted and applied in determining the meaning of the word in item 15. There is no doubt that in the construction of a word in an enactment resort to the dictionary meaning is of immense assistance where there is no other guide. Otherwise, where the words of the enactment are clear and unambiguous, the words themselves clearly disclose the intention of the law maker. In this case there is no doubt that the intention of the constitutional provision is to vest exclusive legislative powers in respect of ” customs and excise duties” in the National Assembly. Unfortunately what these duties are collectively or separately are not defined in the Constitution. The Constitution is a code embodying the pre-existing statutory provisions and also the common law rules relating to the matter. Therefore, where the scope of the meaning of any expression is in doubt, I think the better approach is first to look into the Constitution for the meaning . The Constitution in its wisdom has preserved all existing laws merely modifying them as is necessary to bring them into conformity with the provisions of this Constitution; and they are deemed to be Acts of the National Assembly or House of Assembly of the State as the case may be. Section. 274 (3) (4) (b) defines existing law to mean.

“any law and includes any rule of law or any enactment or instrument whatsoever which is in force immediately before the date when this section comes into force or which having been passed or made before that date comes into force after that date; ……..

The Customs and Excise Management Act, 1958 The Brewing Regulations 1959, Customs AND Excise (Control and Distillation) Act 1965, Customs AND Excise Management (Amendment) Act No. 18 of 1960, General Excise Regulations L.N. No. 50 of 1965, are all existing laws within the meaning of section 274 (4) (b) of the Constitution. Lord Herschell has formulated a useful guide in the construction of a codifying statute. In the Bank of England v. Vagliano Brothers (1891) A.C 1 07. He said,

“I think the proper course is in the first instance to examine the language of the statute and to ask what is its natural meaning, uninfluenced by any considerations, law, and not to start with inquiring how the law previously stood …….”

Lord Herschell was quick at p. 145 to correct the view that recourse may never be had to the previous State of the law in aid of construction of provisions of the code. He pointed out that in provisions of doubtful import, it is perfectly legitimate to resort to the previous state of the law. The situation here is entirely different. The existing laws referred to in section 274 are not previous laws, but existing provisions which are of assistance in the construction of the imprecise word of the Constitution. It is therefore perfectly legitimate to resort to them. There is no definition of the expression “customs and excise” or each word independently. The word customs is employed to qualify the word “airport”, “area”, “port”, “station”. In section 2 of the Customs AND Excise Management Act 1958 the words “duty” “excise trader” are also defined.

“Duty” is defined to include”…. any royalty or fees leviable by the Board by virtue of any enactment”. “Excise trader” means any person carrying on a trade or business subject to any provision of the excise law, whether or not that trade or business is a trade or business for the carrying on of which an excise licence is required.” “Customs duty” is the tax levied on the importation and exportation of goods into or out of the country (see sections 35, 54 Customs AND Excise Management Act No. 55 of 1958), Apart from the definition in section 2 of the repealed Excise Ordinance, 1948, there seems to be no legislative definition of the word “Excise” Section 2 of the 1948 Ordinance states-

“excise duty” includes any duty other than an export duty of customs imposed on any goods manufactured in Nigeria.”

It is clear from the provisions of the repealed law that liability to pay excise duty is not necessarily on the manufacturer of the excisable goods – see section 24; 25. The Excise Tariff Ordinance 1958, which came into force on the 1st April 1959 (see L.N No. 87 of 1959) in section 2 whilst not defining the word “excise” merely states that there shall be charged in respect of goods manufactured in Nigeria …..duties of excise at the rates specified in the Schedule. No person can undertake the manufacture of any products unless he holds an excise licence for that purpose. (See s.101 CEME 1958). It is clear from the statutory provisions that an excise licence is a licence to manufacture the product indicated in the licence and at the premises stated (see section 101 as amended by No. 18 of 1960, sections 107A; 108B; 108.)

The provisions of regulation 12(l) (6) (7) of the Brewing Regulations 1959 clearly showed that the responsibility for the payment of excise duty is of holder of the excise licence who is the manufacturer of the product which attracts excise duty. The regulation provides as follows-

“12 (1) The excise duty in respect of beer brewed shall be charged and paid in accordance with the following provisions of this regulation.

(6) subject to paragraph (7), the amount payable in respect of duty shall become due immediately the works are collected in a storage vessel.

(7) The Board may cause the charge to be made up at the close of each month in respect of all the brewing during that month and , in that case, the aggregate of the qualities of the words deemed to have been brewed in one brewing and the Board may, if it be deferred upon such terms as it sees fit, allow payment shall not be later than the 21st day of the month next following that in which the duty was charged.”

Paragraph 7 of Regulation 12 clearly fixes the point of time for the payment of excise duty. The date of payment shall not be later than the 21st day of the month next following that in which the duty was charged.

This has been the legal position and has been stated and consolidated in subsequent legislations. Section 6 of the Excise Tariff (Consolidation) Act 1973 which is to be read together with the Customs AND Excise Management Act, 1958 provides for the situation where a seller or purchaser of goods manufactured in Nigeria could recover amount paid due to increase or reduction of revocation in the duty of excise imposed in respect of such goods in the absence of agreement to the contrary.

Section 6 identical with section 7 of the Excise Tariff Ordinance 1958, No. 58 of 1958 provides as follows-

“2. Goods manufactured in Nigeria for the time being specified in Schedule 2 shall, subject to the conditions set out therein, be exempted from duties of excise

3. (1) The Federal Executive Council or the Head of the Federal Military Government may, by order

(a) impose, vary or remove any duty;

(b) Add to or vary any of the schedules;

(c) delete the whole or any part of any of the schedules

(d) substitute a new schedule or schedules for any of the schedule or schedules.

(2) An order made under subsection (1) above shall have effect from the date of its publication in the Gazette.

4. (1) Where any order made under sections 3 above has the effect of reducing or revoking the duty of excise on any goods any person by whom such goods are manufactured shall, or where the Commissioner so direct

(a) in the case of a reduced duty, pay the reduced duty there on and in addition there to shall

(i) pay to the Board an amount equal to the difference between the duty payable immediately before the coming into effect of the order and reduced duty payable under the order; or

(ii) give security to the Board by bond or otherwise for such amount ;

(b) in the case of a revoked duty –

(i) pay to the Board an amount equal to the duty immediately before the coming into effect of the order ; or

(ii) give security to the Board by bond or otherwise for such amount.

(2) All payments made under subsection (1) above which, without prejudice to the provisions of the said sub-section, together with any duty payable after the expiry of the order, shall be realised and brought to account as duties of excise.

(3) So much of the amount for which a bond or other security was given under subsection (1) above as together with any duty paid after the expiration of the order shall be realized and brought to account as duties of excise,

5. (1) If the amount paid as duty on any goods under any order made under section 3 together with any additional amount paid under section 4(l) above exceeds the duty on such goods immediately after the expiration of the order the balance shall on application be repaid by the Board to the person who paid such amount.

(2) Subject to the provisions of section 4(3) above any bond or other security given by any person under section 4(l) above shall, on the expiration of the order, be cancelled.

6. (1) Where by or under this or any other enactment.

(a) a new duty of excise is imposed or any duty of excise is increased, and

(b) any goods in respect of which the duty is payable are, in pursuance of a contract made before the day on which the new or increased duty takes effect, delivered on or after the day, then and in every such case, the seller of the goods may, in the absence of agreement to the contrary, recover, as an addition to the contract price, a sum equal to any amount paid by him, in respect of the goods on account of the new duty or the increase of duty as the case may be.

(2) Where by or under this or any other enactment

(a) any duty of excise is reduced or revoked. And

(b) any goods affected by the duty are, in pursuance of contract made before the day on which the reduction in the duty takes effect or the duty ceases, delivered on or after that day, then and in every such case, the purchaser of the goods, in the absence of agreement to the contrary, may, if the seller of goods has had in respect of those goods the benefit of the reduction or revocation of the duty, deduct from the contract price a sum equal to the amount of the duty, as the case may be.

(3) Where the contract price has been or is to be adjusted in accordance with this section and any repayment is made to the seller under section 5, the seller shall allow the benefit of such repayment to the buyer.

7. (1) If any goods can reasonably be classified under two or more names, classes or descriptions with the result that liability to duty or rate of duty chargeable depends on which name, class or description the goods are classified under, such goods shall be classified under the name, class or description which results in such goods being liable to duty or being chargeable at the higher rate of duty.

(2) Where by virtue of this section or any other provision of the excise laws, goods are chargeable at whichever or two or more rates is the higher or highest, there shall be taken into account for the purpose of determining which is the higher or highest rate or duty any additional duty or surtax for the time being chargeable at the higher rate of duty.

8. (1) Where a duty of excise is chargeable on any goods by reference to their value, their value shall be taken to be that laid in schedule 3, and duty shall be paid on that value.

(2) The Board may require any manufacturer or other person concerned with the production of excisable goods to furnish to the Board, in such form as it may require, such information as is in the opinion of the Board necessary for a proper valuation thereof, and to produce any books of account or other document of whatever nature relating to the manufacture or sale of the goods by that person.

9. Notwithstanding the provisions of section 7, wherever any goods chargeable with duty or exempt from duty as the case may be are comprised of two or more separate parts, the Board may, in its absolute discretion and subject to any provision in the excise laws to the contrary, direct that any part, though manufactured by itself or themselves, shall be chargeable with the same rate of duty or be free from duty, as the case may be, as the complete article”

Under section 3 there is power to impose or vary duties, either by imposing same where there is none, or reducing the rate. Section 4 enables a manufacturer to pay the reduced duty or pay the new rate and requires the manufacturer to pay to the Board of Customs and Excise the difference or give security. Section 5 enable refund of excess excise duty to be repaid.

Section 6(3) clearly shows that the intention of the Decree is to make the manufacturer bear the burden of the payment of excise duty. Section 6(3) is as follows:

“(3) Where the contract price has been or is to be adjusted in accordance with this section and any repayment is made to the seller under s.5, the seller shall allow the benefit of such repayment to the buyer.”

It is a legitimate inference from the words of sections 2,4,5,6 and 8 of this Decree that the seller is the manufacturer and on who the excise duty is imposed. There is no other provision indicating that excise duty is to be paid by any other person. The Excise trader who holds by virtue of section 117A a trading licence and defined as “any person carrying on a trade or business subject to any provision of the excise laws, whether or not that trade or business is a trade or business for the carrying on of which any excise licence is required”, is no where in the legislation required to pay excise duty. The position is the same with the Excise Agent (see s. 198 Customs AND Excise Management Act 1958, as amended by Decree No. 46 of 1968, section 7). Thus it is still the position that excise duty is in accordance with our laws only payable by the manufacturer of the goods before they reach the buyer.

In both ordinary legal usage and in economic terms excise duties are analogous to customs duties. Whereas excise duties relate to taxes imposed upon goods, produced or manufactured within the country, customs duty is concerned with the imposition of taxes on goods not produced and not manufactured but imported into the country. They are both taxes imposed on goods circulating in the country. The economic realities and the commercial development of the country to a large extent dictate the nature and scope of the tax to be imposed, on who to impose the burden, at what point of time it should be imposed. Customs and excise duties as taxes are an integral and indispensable part of modem commercial legislation. However, the approach to the imposition of the taxes, in respect of what products and on whom and at what time, depends to a large extent on legislation founded on decisions based on economic and political considerations.

Chief Adaramaja has submitted, and is supported by the Attorneys-General for Lagos, Ondo, Benue, Cross River, Rivers, Plateau, Gongola, and Kaduna States, that the provisions of the Sales Tax Law in issue did not impose any tax on the wholesaler. That the wholesaler was only for convenience made the agent for the collection of the tax payable by the purchaser. On the view the tax is imposed on the purchaser and therefore was within the competence of the State legislature. The contention of Chief Williams, SAN, is quite simple. It is that any tax imposed on the sale of products manufactured or produced in the country before they reach the consumer and intended ultimately to be paid by the consumer is an excise tax. Australian, Canadian and United States of America decisions have been relied upon.

It is clear from the express words of sections 3(l) and 3(4)(iii) that the law did not contemplate imposing taxes on any goods manufactured in the State. This is because section 3(l) is with respect to taxable products brought into the State. Taxable products have been defined as any of the products specified in part 1, II, or III of the First Schedule to the Law. Thus taxable products manufactured in the State, which are not brought into the State, are not caught by section 3(l).

For the purpose of determining whether the State legislature was competent to impose any tax, it is essential to determine whether a tax was imposed at all, on. who, and at what point of time. It is clear that section 3(l) has purported to impose a tax and section 3(4)(i),(ii) prescribed on who and when tax is due. The tax is due from the purchaser of the taxable product and at the time of entry into the contract of purchase. It is pertinent to observe that for the purpose of the law a manufacturer may also be a wholesaler where he sells a taxable product to another who carries on the business of selling goods of that class. Thus after paying excise duties on the goods manufactured, in his capacity as a wholesaler, he will then be the agent for the State Tax Board with respect to the sale of such goods. Excise tax is essentially a tax on production, whereas sales tax is on sale. The definition of the word “wholesaler” to mean “whether he is the manufacturer or not of the goods who sells a taxable product to a person who carries on a business of selling goods of that class again,” suggests that the purchaser in this case to whom the taxable product is sold is not the ultimate consumer of the goods. Accordingly, the tax he pays on the entering into the contract of purchase is one likely to be passed on to the ultimate consumer of the products on their purchase. Thus the tax paid by the consumer is an indirect tax. This is because the tax imposed here is a tax after the product has left the manufacturer and before it reaches the consumer. There is no doubt that the excise tax imposed on the manufacturer is indirectly borne by the consumer by way of increase in prices. However the determination of taxability on the principle of direct and indirect taxes employed in Canada and United States of America, or the principle subsequently adopted by Australia enjoys no legislative support in this country.

Although, the well accepted definition of direct and indirect taxation formulated by John Stuart Mill is recognised, our cases have to be decided either on the ordinary meaning of the word or legislative limitations on that definition. It is accepted that excise duties are a classical example of indirect taxes.

In Canada, the provisions of the taxing power of the Dominion and Provincial Governments as stated in section 92 of the British North America Act, 1867 which have been construed in numerous cases relate to the taxes being direct or indirect. It is admitted that excise duties fall within the category of indirect taxes and are outside the competence of the provincial legislatures, and having regard to section 91 head 3 and section 91 head 2 of the British North America Act 1867 ultra vires. The proposition from the Canadian cases is that where it appears from the terms of an enactment by the provincial Legislature in respect of a commodity, that there is the expectation and intention that the person required to pay the tax imposed will indemnify upon a resale of the commodity taxed, the tax is indirect and ultra vires the legislature. – See Lower Mainland Dairy Products Sales Adjustment Committee v. Crystal Dairy (1933) A. C. 168, AG. for Br. Columbia v. Canadian Pacific Rly (1927) AC. 934, AG. for Manitoba v AG for Canada AND ors (1925) AC. 5 6 Atlantic Smoke Shops Ltd. v. Conlon (1943) AC. 550.

The Australian cases have moved from the position they took in the early case of Peterswald v. Bard (1904) 1 C.L.R. 497. where the word excise was restrictively defined, like our legislations. to mean taxes imposed on goods purchased or manufactured within the country to the current position in Western Australia v. Chamberlain Industries Pty. Ltd. (1970) 121 CLR. at pp. 12 -14 where it has been extended to include taxes imposed at some step in their production distribution before they reach the hands of the consumer. In Peterswald v. Bard (supra) Griffith C.J. said, “the fundamental conception of the term is that of a tax on articles produced or manufactured in the country” and that the word “excise”, in section 90 “is intended to mean a duty analogous to a custom duty imposed upon goods either in relation to quantity or value when produced or manufactured and not in the sense of a direct-tax or personal tax.” The reasons suggested for this attitude were first, that a tax imposed before the manufactured goods reached the consumer had the same effect on the price of the goods as a tax imposed on the manufacturer. In each case the incidence of the tax is on the ultimate consumer who does not resell. The second reason was the dominant intention of the Australian Constitution to invest the Commonwealth Parliament with all taxing powers. The third reason is the effect of common usage on the expression which suggests that the word excise is not by the definitions limited to taxes imposed on the manufacturer and on goods manufactured within the country, but that it is extended to many indirect taxes paid on manufactured goods, before they reach the consumer.

The Australian cases have rejected the distinction between direct and indirect taxes in the determination of taxation in section 90 of the Constitution of Australia as irrelevant, and have held in Bolton v. Madsen (1963) 110 C.L.R, at p. 271:

“It is now established that for constitutional purposes duties of excise are taxes directly related to goods imposed at some step in their production or distribution before they reach the hands of the consumers.”

The view adopted is that the tax will only be an excise tax if the person taxed is under the legislation rendered liable because he has taken a step in the production or distribution of the goods. It is not such a tax merely because the tax is liable to be passed on to the ultimate consumer, although there seems to be no difference in practice in the two situations. -See Western Australia v. Chamberlians Industries Pty Ltd. (1970) 121 C.L.R. 1, 1, 20, 35 Parton AND anor. v. Milk Board (Victoria) (1949) 80 C.L.R. 229. This is the prevailing view of the meaning of excise in section 90 of the Constitution of Australia. A tax imposed on consumption and payable by the consumer at the time of purchase is not, within the meaning of the provision, an excise tax. -See Dickenson’s Arcade Pty Ltd. v. The State of Tasmania (1973-74) 130 C.L.R. 177.

The view adopted by the United States’ Supreme Court on the meaning of the word “excise” has been most liberal and wide. There, the validity of taxes imposed by Congress on the manufacture, importation and sale of goods is unquestioned. As in the Australian cases the tax imposed on articles manufactured in the country and before they reach the consumer are regarded as excise taxes. Here also there has been a shift from the position which Marshall C.J. took in Gibbins v. Ogden. 9 wheat 1, 6 L.Ed. 23 (1824) Loan Association v. Topeka U.S.20 Wall. 655 where the States had exclusive jurisdiction to impose taxes on their production and manufactured goods to the modern situation where the Congress controls the imposition of tax which affects inter state commerce. See also Wickard v. Filburn. 3 17 U.S. I 11, 125 (1942). Thus, wherever inter state activities will affect interstate commercial transactions Congress can interfere -See United States v. Kahriger 345 U.S. 22 (1953). A Magnano Co. v. Hamilten, 292 U.S. 20. The distinction here is that between direct and indirect taxes, and those even though direct and inter-State commerce. -See Flint v. Stone. 220 U.S. 107; Eisner v. Macomber 252 U.S. 189; Dean Milk Co. v. City of Madison 340 U.S. 349.

It would seem from Justice Brewer in Patton v. Brady 46 L. Ed. 713 that the Supreme Court in construing Article 1, section 8 of the Constitution which vests power in Congress to impose uniform duties, import and excises, throughout the United States, adopted the definition of Blackstone, in his Commentaries on the Laws of England, vol.1, p.318, where excise was defined to include “An inland imposition sometimes upon the consumption of the commodity or frequently upon the retail sale, which is the last stage before the consumption.” Patton v. Brady was a case of a tax imposed on manufactured tobacco at a period intermediate to the commencement of manufacture and the final consumption. The view adopted here, as in Australia and Canada is that excise tax is a tax imposed on goods produced or manufactured in the country either on the manufacture or any other person whether the distributor before the article reaches the consumer. This view agrees with John Stuart Mill’s definition of direct and indirect taxes, and with the Dictionary meaning of the word excise.

I have already pointed out that there is no definition of the word “excise” in the Interpretation Act, 1964, in the various Customs and Excise Managements Acts and Excise Tariffs Acts or the Constitution. Furthermore analysis of the Customs and Excise Acts 1958 and the various excise Tariffs Legislations have limited the imposition of excise duties to the manufacturer of the products. No legislation has gone beyond this point in imposing taxes on goods produced or manufactured in this country. However, it is clear from the provisions of the Constitution 1979, that the only taxing power allowed to the Houses of Assembly of the States, is that in Part 11 items 7, 8, 9, 10, section D of the Concurrent Legislative List. This relates to the imposition of any tax or duty on capital gains, incomes or profits of persons other than companies, and stamp duties on documents or transactions. On the other hand the Exclusive legislative List of the Constitution vests exclusively in the National Assembly the power to legislative on items 15, 22,31, 35, 37, 42,45, 57, 58, 62,65. Item 15 deals with customs and excise duties. Section 4(2) (3) empowers the National Assembly, subject to express exclusion, to make laws in respect of any of these matters and matters incidental to them for the whole of the Federation or any part thereof. The matters so expressly excluded shall be within the legislative competence of the House of Assembly. It has been contended by the appellant that sales tax having not been mentioned in either Lists, but was in the Exclusive List in the 1960 and 1963 Constitutions, should now be deemed to be in the Residual List. If so accepted, the Sales Tax Law is a subject in respect of which the House of Assembly is competent to legislate. A perusal of the items enumerated above as contained in the exclusive list shows unequivocally the intention of the Constitution makers to vest in the National Assembly not only dominant, but also pervasive jurisdiction in taxation in respect of the items enumerated. This was preceded by the Commodities Board Decree No. 29 of 1977 which dissolved the Marketing Boards which hitherto operated the produce sales tax legislations and in their place established Commodity Boards with Federal control. Mention should also be made of the Price Control Decree, 1977. Both legislation are by virtue of section 274 (b) of the Constitution existing law. This shows that the power to legislate in respect of item 38 of the former Constitutions now vests in the Federal Government. In addition, the accepted Dictionary definition of the word “excise” have gone further to explain the scope of the expression in our Constitution. Words are like crystals. The meanings attributable to any word depend upon the age of its use, the clime and place of its operation and the governing considerations of its application. For the accurate meaning of a word, these factors decide. It is an established canon of the construction of the provisions of our Constitution that “where the question is whether the Constitution has used an expression in the wider or in the narrower since…. this court should whenever possible, and in response to the demands of justice, lean to the broader interpretation, unless there is something in the text or in the rest of the Constitution to indicate that the narrower interpretation will best carry out the object and purpose of the Constitution.” per Sir Udo Udoma JSC in Nafiu Rabiu v. Kano State (1980) 8-11 S.C. at p. 149. There is no doubt the intention of the Constitution coupled with the meaning of word “excise” compels one to lean towards a broader interpretation, so as to bring out the full implications of the word. There is nothing in the Constitution to suggest otherwise. To adopt a narrow interpretation would result in a legislative Alsatia, where neither the National Assembly by virtue of its enumerated subjects and the House of Assembly, there being no express or implied vesting, will have no powers.

In my opinion, the time has arrived when commercial usage dictates that the court should construe the word “excise”, broadly, consistently with its practical meaning. It cannot or ought not now be limited to taxes imposed on the producers or manufacturer of goods simpliciter. It should be extended to include all the innominate taxes imposed even after the goods have left the producer or manufacturer but before they are in the hands of the consumer. Thus, any tax imposed and paid by any person other than the consumer at the time of purchase is properly regarded as excise and within the exclusive legislative competence of the National Assembly.

The contention before us is that the sales tax here imposed is paid by the purchaser at the time of the contract, and therefore is a tax on the consumer. In determining the real nature of the law, it is not relevant to consider the characterisation by the law maker. The important factor is the substance and effect of the legislation – Richfield Oil Corporation v. State Board of Equalization 329 U. S.69. Section 3(4) (ii) purports to make the purchaser pay the tax imposed to the wholesaler at the time of the contract or purchaser, and renders the wholesaler accountable to the Board for tax. It is clearly not disputed that the purchaser, who is not defined here is not necessarily the ultimate consumer of the taxable product. This renders the tax so paid liable to be passed on to the ultimate consumer. A purchaser means any person who, through a sale at retail, acquires the ownership of tangible personal property for valuable consideration. The consideration in determining taxability, if at all, is the purpose for which the property is bought and the disposition of the goods made by the buyer. Thus where the tax is imposed on a buyer who does not resell but uses the goods for himself, then the tax imposed on such a buyer is not an excise tax because it is not liable to be passed on to another who buys it from him. Where a sales tax, as in this case, is directed by the enabling statute to be collected by the retailer from the consumer, it was in De Ary v. Akers, 308 U.S. 581, held to be an excise tax on the retailer and not on the consumer. The case in hand is even more direct. It is a tax to be collected by the wholesaler, on behalf of the Board, but in respect of goods bought by a retailer who intends to resell to the ultimate consumer. This is an indirect tax and an excise tax within the accepted definition of the word, and is item 15 of the Exclusive Legislative List of the Constitution 1979. The Ogun State House of Assembly has no legislative competence in respect thereto being ultra vires the House of Assembly.

Similarly section 3(l) of the Sales Tax Law, 1982 which imposes taxes on all taxable products brought into the State, imposes a tax analogous to customs duty, or excise which is within the exclusive competence of the National Assembly, in item 15, of the Exclusive Legislative List. Section 2 of the Customs AND Excise Management Act 1958 defines “duty” to include any royalty or fees leviable by the Board by virtue of any enactment”. Customs duties are taxes imposed on goods imported into the country. It is ultra vires the State to impose any taxes on such goods.

Chief Adaramaja conceded in his argument before us that the provision was an oversight. It contains the equally objectionable implication of discriminating between goods manufactured within the State and those brought into the State. This is clearly repugnant to the powers of the National Assembly in section 4(l) (2) and item 15 and is therefore ultra vires and void.

The first ground of appeal, therefore, fails and is accordingly dismissed.

Ground 2 is a challenge of the view of the Court of Appeal that the subject-matter of sales tax falls within item 61 of the Exclusive Legislative List, 1979. Chief Adaramaja, supported by the briefs filled by Lagos, Bendel, Benue, Ondo, Plateau, Cross River and River States as amici curiae, referred to the Constitution of 1960 and 1963 where sales tax appeared as item 38 of the Exclusive List, and the omission of the item in any of the lists in the 1979 Constitution and submitted that the inference is that it was intended to be regarded as in the residual list. It was further submitted that item 61 of the Exclusive Legislative List was not intended to interfere with intra-state commercial activities. The sales tax it was submitted concerned regulation of intra state commercial activity and was therefore intra vires. Chief Williams, SAN’s contention was that the words “in particular” in item 61 are words of emphasis and not of limitation to exclude the exercise by the States of any legislative jurisdiction in any of the matters enumerated in item 6 1. It was therefore submitted that in so far as section 3(l) affected inter state commerce or trade, it is ultra vires. Counsel also submitted that the item legislated upon was already a matter under the Price Control Decree, in respect of which the National Assembly has exercised legislative authority.

Item 61 of the Exclusive Legislative List provides as follows:-

(a) trade and commerce between Nigeria and other countries including import of commodities into and export of commodities from Nigeria, and trade and commerce between the States;

(b) establishment of a purchasing authority with power to acquire for export or sale in world markets such agricultural produce as may be designated by the National Assembly;

(c) inspection of produce to be exported from Nigeria and the enforcement of grades and standard of quality in respect of produce so inspected-,

(d) establishment of a body to prescribe and enforce standards of

goods and commodities offered or commodities, and

(e) control of the prices of goods and commodities designated by

the National Assembly as essential goods or commodities, and

(f) registration of business names.”

Like customs and excise in item 15, “Trade and commerce” in item 61 is also elliptical. The phrase “in particular” is in my opinion, not a delimitation of the scope of the subject matter, but is emphasis as to scope. A comparison of the items enumerated in (a) – (f) discloses that they are elaborations of items 11, 22 and complimentary to item 31, of the same list. The subject matter of regulation is trade and commerce. One of the definitions of the word “trade” in Webster’s News 20th Century Dictionary p.1934 is “what act or business of exchanging commodities for other commodities or money; the business of buying and selling; commerce, barter.” “Commerce- is also defined as “an interchange of goods, wares, products or property of any kind, between nations or individuals, either by barter or by purchase and sale; trade; traffic.” (See webster’s Dictionary (supra) at p. 364.) There is very little, if any, distinction in the meaning of the two words. Thus, where the enumeration of specific items is merely for emphasis, then all those items not particularly enumerated are within the general scope of the powers conferred. See Citizens Insurance Co. of Canada v. Parsons (18 81) 7 App. Case 96, 112. It appears conclusive that he particular enumeration relates both to the external, and inter-state activities with respect to trade and commerce. Accordingly the general powers, of regulating trade and commerce which affect the States even though internally within a particular State, have been vested in the National Assembly. A shift in emphasis in the enumeration of the powers from the 1963 Constitution, where there was no provision akin to item 61 in the present Constitution, the provision relating to economic objectives in section 16(l) and especially section 16(3) section (4), section 140, and Third Schedule F, the National Economic Council, reveal the intention of the Constitution to vest the control of the economy in the National Assembly. Apart from this, the concept of Nigeria federalism operating only one constitution has shifted from the pre – 1966 position of composite states with co-equal units with separate Constitutions to one of one Constitution with a dominant Federal Government with subsidiary component governments. Thus, with respect to the enumerated activities and matters incidental thereto, it is difficult to imagine anything left for the States. It is not disputed that they can impose any taxes within the limitations of the power vested in them in the Concurrent Legislative List; it is, however, only within such powers that they can act, – See McCulloch v. Maryland 4 Wheat 316 (1819).

It is hardly arguable that under contemporary economic conditions, there are very few, if any, commercial or trading activity in our circumstances, which does not extend beyond State boundaries. Particularly affected are those in item (d) (e) (f). The powers of the National Assembly with respect to trade and commerce would seem to be plenary. And the amplitude of these powers is consolidated by the incidental powers. This is because no trade or commerce power is retained to the States by inclusion in the Concurrent Legislative List.

Trade, in its ordinary meaning is the buying and selling of goods. “Commerce”, as was said by Marshall C.J. in Gibbons v. Ogden 22 U. S. 1(1824) “is traffic, it is intercourse.’ What then is the power of the National Assembly spelt out by item 61? It is in my opinion the power to regulate, by enactment, the rule by which commerce is to be governed. The power to regulate commerce includes the powers to impose taxes on commodities, prescribe prices for which the goods are to be sold, determine the quality of the goods, and the manner of their production. The power seems to be now all pervasive. It will appear that there is no longer an exclusive area of State Authority over commerce with which the National Assembly cannot legislate.

The situation is comparable to the development in the United States of America in the construction of Article 1, section 8 of the Constitution. In the Child Labor Tax Case, Bail v. Drexel Furniture Co. 259 U.S. 20 (1922), the Supreme Court recognised and preserved the dichotomy of the State and Federal power in taxation. Each had exclusive authority within its jurisdiction without interference by the other. But in United States v. Darby 312 U.S. 100 (1941) the Supreme Court refused to follow that view, and declared that its prior decision rested upon a conception of Federal State power which was now outmoded and said,

“The reasoning and conclusion of the Court’s opinion there cannot be reconciled with the conclusion which we have reached, that the power of Congress under the commerce clause is plenary to exclude any article from interstate commerce subject only to the specific prohibitions of he Constitution,”

The court went further to state that,

“………….the power of Congress over interstate commerce is not confined to the regulation of commerce among the States. It extends to those activities intra state which so affect inter state commerce or the exercise of the power of congress over it as to make regulation of them appropriate means to the attainment of a legitimate end, the exercise of the granted power to Congress to regulate interstate commerce.”

In United States v. Wrightwood Dairy Co. 315 S 10(1942), the power of Congress to regulate intra state trade which are interrelated or affect interstate commerce was held to be valid. See also U.S. v. Kahriger 345 U.S. 22 Sunshine Anthracitite Coal Co. v. Adkins 310 U.S. 381, 396 (1940); Wickard v. Kilburn 317 U.S. I 11. This is the exercise of the Federal power to regulate commerce under the Constitution. Our Constitutions appear to me to have passed through a similar experience. There is therefore the need to construe the provisions of the Constitution in the light of current realities as expressed in the Constitution. The power of the National Assembly to regulate Trade and Commerce under the Constitution is the power to regulate the prices at which the commodities are deal dealt with and practices affecting such prices. The provisions of section 3 (1) of the Sales Tax Law, and S. 3 (4) (ii) undoubtedly is an attempt to impose taxes on goods brought into the State. This has effect of increasing the prices of goods brought into the State as against goods produced or manufactured in the State The obvious result is to increase the prices of such goods to the disadvantage of goods produced or manufactured in the State and affects interstate trade.

In United States v. Wri Dairy Co. 315 U.S. 116 (1942) it was held that the power of Congress to regulate intrastate trade which are interrelated with interstate commerce is valid. It was said,

“……the marketing of a local product in competition with that of a like commodity moving interstate may so interfere with interstate commerce or its regulations as to afford a basis for Congressional regulation of the intrastate activity. It is the effect upon the interstate commerce or its regulation, regardless of the particular form which the competition may take, which is the test of Federal power.”

Since the National Assembly is by section 4 of the Constitution and item 61 empowered to regulate trade and commerce, as between States and between the country and foreign countries, the power extends to the regulation of intra state legislation which so affect interstate commerce as to render interstate commerce ineffectual for the purpose for which it is desired. The Sale Tax Law 1982 of Ogun State, is designed to provide a more favourable commercial climate for intrastate commodities as against inter state commodities. This is clearly in competition with inter state trade and in conflict with the power of the National Assembly as provided by the Constitution and is therefore ultra vires and void.

This ground of appeal also fails and is dismissed. I shall answer the questions referred as follows

Question – I

The power to legislate on trade and commerce is by virtue of section 4 of the Constitution exclusively vested in the National Assembly. The omission of item 38 of the Exclusive Legislative Lists of the 1960 and 1963 Constitutions in the 1979 Constitution did not suggest the subject matter to have been moved into the residual list. Item 61 with its incidental powers is all pervasive and total as to leave nothing for the State except in so far as is expressly stated in the Constitution.

Question 2 Yes

Question 3 No.

Question 4 Not relevant

I think the Court of Appeal has answered the questions referred to it correctly. Both grounds of Appeal having failed, the appeal is dismissed.

There is no order as to costs.

Counsel:

Chief Akin Adaramaja (with him Mrs. Onanuga Osinuga) for the plaintiffs/appellants.

Chief F.R.A. Williams, S.A.N. (with him B.O. Babalakin and F.R.A. Williams (Jnr.)) for the defendants/respondents.

AMICI CURIAE

Chief Chike Ofodile, S.A.N., Attorney-General for the Federation (with him Mrs. R. Ikeje and M.N. Duru)

Mr. Ade Alabi, Asst. Director, Civil Ligitation for Attorney-General of Lagos State.

Mr. G.I. Uloko, A-G for Plateau State (with him Peter Choji, Senior State Counsel).