The Appellants herein who are officials of the Akwa ibom State Government were the Respondents in the Court below. Following a tax audit of the records of the Respondents on record, undertaken presumably by officials or agents of' the Appellants, letters dated 12th August1996 Signed by the 1st appellant and titled "demand notice on liability for outstanding PAYE taxes " were served individually on the Respondents. According to the demand notice, the Respondents were notified of their liability to various sums of money ranging from N2,274.56 to N 1 48,01 2.50 representing under payments of personal income tax for the years 1989 to 1994. They were asked to effect payment to the Akwa Ibom State Government within 3 months of the demand notices. In the alternative. their employers were directed to deduct the underpayments from the emoluments of the employees within the stipulated time.

In their reaction, the Respondents decided to challenge the Demand notices in Court. To this end, after obtaining leave of court to do so in a representative capacity, they, pursuant to section 26(2) of the Finance Law of' Cross River State applicable to Akwa Ibom State, on 28th November, 1996 filed a notice of appeal in the court below "against the assessment made upon them by the 1st Respondent (1st appellant)or the directive given by 1st Respondent (1st Appellant) to Mobil Producing (Nigeria) Unlimited to deduct from the incomes/emoluments of the Appellants (Respondents) by way of additional assessment retrospectively from the year 1989 to 1994."

The "appeal" was heard and in a reserved judgment the High Court allowed the respondents' "appeal" and set aside the additional tax assessment for the years 1989-1994.

Aggrieved by that decision, the appellants appealed to the Court of Appeal.