The word 'distrain' is a peculiar one; it is not

commonly used in general language. It is used in

law to mean seizing (someone's property) in order
to obtain payment of rent or other money owed.
This paper seeks to examine the fairness of the
relevant section of P.I.T.A., both to the tax
authorities and to the citizens on whom such
powers to distrain may be enforced.

THE STRAIN
OF
DISTRAIN
A Review of the Statutory
Power to Distrain

AYUWO, JONES ROMIJARAN

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THE STRAIN OF DISTRAIN

A Review of the Statutory Power to Distrain

Jones Ayuwo

ABSTRACT
The word 'distrain' is a peculiar one; it is not commonly used in general language. Its usage in
law is interpreted as; Forcing a person, usually a tenant, by the seizure and detention of personal
property to perform an obligation (such as paying overdue rent).1
In taxation, where a taxable person has failed to pay his tax within a stipulated time after proper
assessment has been served upon his person and that assessment has become final and conclusive
and a demand notice has also been served, the tax authorities have been granted statutory
backing by virtue of the provisions of SECTION 104 of the PERSONAL INCOME TAX ACT
to seize the property (chattel or other goods and/or real property) and recover the amount of tax
due.
This paper seeks to examine the justness or fairness of this section of the PITA, both to the tax
authorities and to the citizens on whom such powers to distrain may be enforced.

DISTRAIN
Distrain and most other principles and necessary concepts associated or attached to impositions
or compulsory levies such as taxation, are not popular among the common folk or the layman. In
respect of taxation and taxing principles it is not received with relish. An understanding of the
core tenets of taxation is pertinent before the necessity of distrain can be embraced or at least
acknowledged.
A tax is a compulsory exaction of money by a government for public purposes (the tax payers do
not benefit directly from the payment of such exactions). Akanle defined tax as A compulsory
levy imposed on a subject or upon his property by the government having authority over him.
1

Blacks Law Dictionary

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The money retrieved from taxation is employed by the government to create a better standard of
living for its citizens.
The importance of taxes to the government and the state in general cannot be over emphasized.
In Lagos, for instance, only about 10 billion naira is received from the Federal coffers for the
running of the state, and of that amount, about 6 billion goes into salaries alone and the rest of
the state's need are to be addressed with the remaining 4 billion naira. Lagos state is however
able to make 23 billion naira from internally generated revenue 1 and that is how the state
generates revenue to keep ends together and at least be in a better condition in terms of amenities
and standard of living than in sister states in Nigeria.
However, this money is scarcely sufficient and the needs of the state spread the revenue
generated very thin. In the fiscal year of 2013-2014 the New York Assembly passed a budget of
135 billion dollars, which when converted to the naira at the rate of N180 to the dollar as existent
at the time, amounts to about 24trillion naira. Meanwhile the Lagos financial budget of
expenditure for the same fiscal year was N489.690 billion. The enormous difference between
fiscal plans of New York and Lagos State reechoes the need for more dependence on taxes which
would lead to more thorough examination of our tax systems which would engender
improvements in our tax laws, policies and principles which would enable better tax
administration and consequently a much more improved and developed state via a much higher
I.G.R. But for now, before such improvements knock at the door step of our revenue generation,
the state must face her fiscal realities. The reality is that the funds generated are scarcely enough
to create an acceptable standard of life within the state for its citizens and residents. Therefore
gravity of the effect of tax evasion or defaulting on remission of taxes to the appropriate tax
authorities becomes glaring and unpalatable. Bearing this in mind, effective measures must be
put in place to mitigate the inimical effect of defaulters on the internal revenue generation
scheme of the government.
_________________________________
1

Prior to the report on April 16, 2015 the I.G.R. of Lagos state used to be 20billion naira. From January to
June of 2014 Lagos State made 120billion naira from taxes alone.

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In light of this, the provision of the law enabling tax authorities to seize the property of defaulters
does not seem so draconian anymore, but only a logical and viable option to ensure strict
adherence to the constitutional obligation to pay tax.
The law provides due process that must be followed before a tax authority can distrain a taxable
person or distrain upon his property. Firstly, after the tax payer fails to pay an assessment that has
become final and conclusive, the legal department of the LIRS writes to the defaulting tax payer
to pay within 7 days. Where the tax payer fails to pay within 7 days after the receipt of the
intention to levy, warrant of distrain is served. The board will obtain an ex parte order to exercise
the power to distrain, the Board of the LIRS will then execute warrant of distrain for failure to
pay tax liability due to Lagos State Government. Therefore it is clear that time and due process
are inter-married to give the tax payer leeway to meet up with his obligation to pay.

THE STRAIN ON THE TAX AUTHORITY

Before the amendment of the P.I.T.A., it was at the discretion of the tax authority to distrain a tax
payer who defaults on his taxes after assessment which has become final and conclusive has
been served upon him. However, with the amendment of P.I.T.A., section 104 (5) provides that
an ex parte order must be sought from a judge of competent jurisdiction before distrain can be
carried out on a defaulter. This poses a couple of problems for the tax authority;
Firstly, the statute clearly states that the order from the judge be ex parte. However, the initial
responses of judges to ex parte applications for a warrant of distrain revealed a reluctance, an
aversion even, to grant ex parte orders. The judges desired an application which would involve
summoning the defaulting tax payer to explain his course and why he had failed to pay or
defending himself against an order to distrain, viewing ex parte as being against the
constitutional right of fair hearing couched succinctly in the latin maxim audi alterem partem.
However, the legal representatives of the tax authorities were able to painstakingly point out to
the judges the distinct wordings of the law ex parte. Nevertheless, the tax authorities are still
faced with the reluctance of judges to put pen to paper granting a warrant of distrain.
Secondly, the tax authorities feel that it is an unnecessary and cumbersome impediment to the
swift execution of their statutory powers for them to apply for a warrant from a judge. A lot can
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and has been said in support of this view. It is indeed a constitutional obligation of every citizen
to pay tax and with the heavy dependence on taxation which is beginning to spread across the
federation pioneered by the Lagos Internal Revenue Service, it is necessary to have some
effective means of enforcing the tax principles and policies as well as sufficient sanctions to
serve as deterrents to prospective defaulters otherwise the efforts of the tax authorities would be
one in futility or one beleaguered by incessant resistance and unwillingness to comply. Thus, the
seemingly unnecessary constriction of having to apply to court (which in Nigeria is synonymous
to delays for disconcerting lengths of time due to the abundance of applications filed in court
every day) would not be accepted with relish by the tax authorities.
However, much like search warrants for the police, there is a need for such administrative
powers to be checked by judicial supervision. It is embedded in the principle of checks and
balances which is key to federalism and corollary to separation of powers as propounded by
Baron De Montesque in his book ESPIRIT DE LOIS. Adumbrating further on this issue,
jurists have opined that it would be foolhardy to invest in one man such powers. Therefore, for
the sake of avoiding abuse or arbitrary use of such powers, there is a need for such a relatively
drastic measure to be used sparingly, filtered by the juristic hesitance of a competent judge. This
position may not augur well with the Tax Authorities, but it is the most legally expedient means
as it reduces the likelihood of the process being abused and used to maybe carry out personal
vendetta against an individual and it is the position of the law.

THE STRAIN ON THE TAXABLE PERSON

The 1999 Constitution of the Federal Republic of Nigeria makes it an obligation, an
entrenched duty of every citizen of the republic to pay his tax and to do so promptly by virtue of
the provision of section 24(f); It shall be the duty of every citizen to declare his income
honestly to appropriate and lawful agencies and pay his tax promptly. This provision which
calls for the prompt payment of taxes is at the root of the statute granting the tax authority the
power to distrain upon any taxable person who defaults in the payment of his taxes.
The first question this poses in practice is the question of burden of distrain, especially for
employees. In a system like Nigerias where the Pay As You Earn (PAYE) scheme is employed,
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the question would be, since the employees are not directly involved in the payment of their
personal income taxes, whenever there is a failure to comply do they then bear the burden of
distrain for the failure of their employers to remit the required taxes? According to Dr Abiola
Sanni, in practice the solution applied is that upon failure to comply, distrain is carried out on the
goods, chattel and other property real or personal of the employers.
In Nigeria, there are numerous reasons why self-employed tax payers fail to pay their taxes but
most of the time it is due to the meager incomes and profits and the very high cost of living,
especially in the big cities. This means that some taxable persons, especially those in the private
sector, barely earn enough to keep roof over their heads, clothes on their backs and food on the
table, or send their children to school not to mention paying some compulsory levy imposed by
the government. According to Mr. Tunde Fowler, Chairman of Lagos Internal Revenue Service,
in Lagos State tax compliance has gone up to 4.5million from the 3.8million of previous years.
Evidently, tax compliance within the state is on the rise, however, for a lot of the people who do
not pay, it usually is due to their inability to afford such sums.
In lieu of this, the provision of section 104 (5) which provides that the distrained goods may be
kept for fourteen days after confiscation at the cost of the owner and at the end of which time, if
the amount due in respect of tax and the cost and charges incidental to the distress are not paid,
the goods may be sold, seems a rather unfair. It is a different matter where it is obvious from the
tax assessments that a person who earns a rather handsome figure and can afford to pay taxes
fails to do so, but not so when an assessment is made on the pepper seller in the market, for
instance, who can barely afford it and so defaults on payment and upon being served a demand
notice still fails to pay because she is still not able to afford it, her goods are then confiscated and
sold. Of course upon seizure of the goods, she would only receive them back if she can pay the
taxes she could not afford to pay all year and the extra cost of the distress or of keeping the
goods. This law, while seemingly deserving on the well to do who default, would cause
unnecessary hardship for the poor. One of the major principles of taxation as expounded by
Adam Smith in WEALTH OF NATIONS (1776) is fairness, the conscionable nature of equity,
which demands that taxes should not impose a burden that is unjust and could encourage
rebellion. It appears that since taxes are used to make life better for citizens, it would be
unreasonable to make citizens suffer unbearable losses in order to make life better. Therefore, the
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notion of selling the distrained goods of low income earning defaulters in order to raise taxes
with which to make life better for the masses is pitifully paradoxical. Even among those who are
able to raise the money to pay the amount due in taxes, the time line of fourteen days to pay a tax
they could not pay in the first instance is cutting it too close. However, if the section is then
amended to extend the time within which the property can be retrieved to one month, for
instance, will the defaulter still have to pay for the cost incidental to the distress of keeping the
good for one month?
On the part of the tax authority, the rewards of executing this subsection of the Act on the
smaller fishes are much less than the running cost of administering this law, therefore it would
be better if this section is reconstructed to target such defaulters as would make a marked
difference on the gross internal revenue generated or the timeline before the sale of such property
be extended to give the taxpayer more time to garner such funds.

CONCLUSION

Taxes are an essential and critical aspect of the growth and progress and even survival of any
state and it is imperative that taxes are collected one way or the other. In the words of Babatunde
Raji Fashola, governor of Lagos State, A life without tax is a lie. However, despite the strain
on the activities of the tax authorities in carrying out their functions, the law must not be
boycotted and it is indeed good law to demand that before distrain can be carried upon a person
or his property anywhere in Nigeria in order to avoid capricious, arbitrary or whimsical exercise
of what should not be taken lightly. On the part of the taxable person, though it is his duty and
obligation to pay his tax promptly, the punitive measures put in place to curb evasion and to
ensure that the taxes are paid must also put on an equitable face and must take into consideration
the reasons for failure to make payment as corollary to the principle in section 36 of the
constitution or at least provide considerable time or the tax payer to pay up and retrieve his
property, as the law in section 104 does not strike as punitive but as consequential.

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REFERENCES

LIRS Lirs.gov.ng

THIS DAY LIFE Thisdaylife.com

PUNCH NIGERIA www.punchng.com

REUTERS.COM

COMMERCIAL LAW IN NIGERIA Edited by E. O. Akanki

LASG.EBSRCM.COM

LAGOS STATE lagosstate.gov.ng

CIL401 NOTES

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