Polaris Bank has raised a strong defense in a criminal case filed against its Managing Director, Omokayode Lawal, by the Niger State Internal Revenue Service (NIRS). The case involves allegations that the bank failed to provide tax clearance information for customers who applied for foreign exchange between 2022 and 2023. In a move to challenge the charge, the bank has approached the Niger State High Court with a preliminary objection, claiming the case is an abuse of court process.
The legal battle took a significant turn when the bank’s legal team argued that the matter was already being contested at the Federal High Court in Abuja. In a case involving 21 banks, including Polaris Bank, and 16 states of the Federation, the dispute centers on whether state governments have the authority to request certain information from banks. Polaris Bank contends that proceeding with the case in Minna could render the ongoing Federal High Court suit meaningless.
The Niger State Internal Revenue Service had filed a charge against the bank and its Managing Director, alleging that between January 2022 and December 2023, the bank failed to request tax clearance certificates from foreign exchange applicants as required by law. The charges are in violation of Section 85 of the Personal Income Tax Act, which governs tax-related matters in Nigeria.
In response to the charge, Polaris Bank’s lawyer, Usman Sule SAN, filed an application to have the case dismissed. He contended that the subject matter of the case was already the subject of litigation at the Federal High Court. He argued that if the case in Minna proceeded, it would interfere with the outcome of the Abuja case, in which the powers of state governments to demand tax information from banks are being challenged.
Justice Maimuna Abubakar, who is presiding over the case in Minna, had initially issued a bench warrant for the arrest of the Polaris Bank branch manager. However, the court later vacated the warrant for the branch manager, keeping the one for the Managing Director in place. This decision was made in relation to the bank’s failure to provide the requested tax information.
While the case continues to unfold, the crux of the dispute is about the authority of state governments, through agencies like the Niger State Internal Revenue Service, to compel banks to hand over customer information related to foreign exchange transactions. Polaris Bank maintains that the request falls outside the jurisdiction of the Niger State Government, as the Central Bank of Nigeria (CBN) oversees such matters at the national level.
The legal team for Polaris Bank also pointed out that the case involves a broader question of the powers of state governments in regulating tax clearance for foreign exchange transactions. The ongoing litigation at the Federal High Court, which includes several banks and various states, is seen as crucial in determining whether state agencies can legally demand such information.
“It is an abuse of judicial process,” said Usman Sule SAN, representing Polaris Bank. He emphasized that the case in Minna should not proceed until the Federal High Court resolves the matter of state powers over such requests. The lawyer added that continuing the case would waste the court’s time and could interfere with the broader national legal framework being established.
The case before the Federal High Court in Abuja, identified as Suit No. FHC/ABJ/CS/120/2023, is a landmark suit involving Access Bank and 20 other banks, challenging the authority of state governments to demand tax information from financial institutions. Polaris Bank is also a party to the case, with Niger State’s Attorney General representing the state in the ongoing legal proceedings.
As the case in Minna continues, Polaris Bank’s defense strategy focuses on the potential overlap with the Abuja suit. The bank argues that the matter should not be heard at the state level until the Federal High Court makes its ruling on the broader issue of jurisdiction and the powers of state governments over tax-related matters.
“The matter being raised here is already under review at the Federal High Court, and we believe that pursuing it in Minna at this point would be legally improper,” said Usman Sule SAN.
The charge in question stems from the bank’s alleged failure to demand tax clearance certificates from foreign exchange applicants, as required under the Personal Income Tax Act. This act mandates that individuals or entities seeking to exchange foreign currency must provide proof of tax clearance to ensure compliance with Nigeria’s tax laws. Polaris Bank, in its defense, has maintained that this requirement falls under the purview of the Central Bank of Nigeria, not state agencies.
Justice Maimuna Abubakar, the presiding judge in the Niger State High Court, has adjourned the case to a later date. The new date for the hearing will be communicated to all parties involved. Meanwhile, the legal team for Polaris Bank is pressing for a quick resolution to their objection, which could have far-reaching implications for the ongoing litigation at the Federal High Court.
Polaris Bank’s legal challenge brings to light the complexities of Nigeria’s tax laws and the authority of state governments in regulating financial transactions. The outcome of this case could set a significant precedent for future conflicts between state and federal powers, particularly in matters concerning the banking sector and taxation.
