On 26 November 2018, the Court of Appeal (COA or the Court) held that the Ekiti State Board of Internal Revenue (“ESBIR”) cannot make an ex-parte application to distrain a taxpayer’s property or issue a warrant of distress in the absence of a final and conclusive tax assessment. This decision was reached in the case between Guaranty Trust Bank PLC (“GTB” or “the Bank”) vs Ekiti State Board of Internal Revenue.

The Court arrived at this decision because Section 104 of the Personal Income Tax Act (PITA) only empowers a tax authority to distrain taxpayers, subject to the fulfilment of certain conditions. These conditions include the service of a demand notice on the taxpayer; the tax assessed becoming final and conclusive; and a default in the payment of the tax assessed by the taxpayer.


ESBIR is a statutory body charged with the collection of taxes from chargeable persons in Ekiti State, Nigeria, while GTB is a licensed bank with branches all over Nigeria, including Ekiti State. In 2015, ESBIR wrote letters to GTB requesting certain documents including ledgers and customer account details, to enable it to audit and investigate the Bank’s remittance of withholding tax on interests paid to its customers from 1999.

Following GTB’s failure to respond to its letters, ESBIR filed an ex-parte application at the Ekiti State High Court (the High Court) seeking, amongst other things, an Order to distrain the Bank’s premises and property for failure to submit the requested documents. The High Court ruled in favour of ESBIR granting the Order sought. Aggrieved by the ruling of the High Court, GTB appealed to the COA.

The crux of the issues before the COA was whether ESBIR had followed the proper procedure contained in the PITA in applying for the Order to distrain the Bank’s premises and property. The COA ruled in favour of GTB setting aside the High Court’s Order on the grounds that ESBIR had not followed the proper procedure in seeking the said Order.

According to the Court, an ex-parte application for an Order to distrain can only be issued against a taxpayer where such taxpayer has failed to comply (within the specified time) with a final and conclusive assessment communicated to the taxpayer via a demand notice, based on the combined interpretation of Sections 55, 58 and 104 of the PITA.  ESBIR failed to issue a demand notice to GTB.  Thus, it erred by applying for the Order to distrain GTB.

Furthermore, the Court held that where a taxpayer neglects or refuses to provide the tax authority with documents to enable it to assess the taxpayer’s liability, the proper step to take is to apply to the court for an order compelling the taxpayer to surrender the relevant facts, records and documents. In addition, the Court held that making an ex-parte application to distrain in the absence of a final and conclusive assessment duly communicated to the taxpayer would amount to denying the taxpayer of the constitutional right to fair hearing.


Based on this Judgment, the powers of a state tax authority to apply for distrain of taxpayers can only be invoked where the taxpayer has failed to comply with a final and conclusive tax assessment. Thus, any distraining order made pursuant to Section 104 of PITA, in the absence of a final and conclusive assessment issued to the taxpayer is invalid and may be set aside on appeal.

It is pertinent to note that where a taxpayer has objected to an assessment in line with Section 58 of PITA, such assessment cannot be said to be final and conclusive. Thus, this Judgment may be a persuasive basis to challenge the actions of the tax authorities in cases of distrain of properties and freezing of bank accounts where an assessment is still in dispute. This Judgment is in line with established legal principle that where a law confers powers on an administrative body, such body must comply with any procedure prescribed under the law for the exercise of such powers, otherwise the exercise of such powers would be rendered invalid.

Based on the foregoing, taxpayers who have suffered distrain on their property based on alleged non-payment of taxes are advised to seek professional advice on the appropriateness or otherwise of such distrain.