VAT Collection Tussle: Court Of Appeal Orders States To Halt Enforcement

A Court of Appeal sitting in Abuja has stopped the State Governments of Rivers and Lagos from collecting Value Added Taxes (VAT), pending the determination of an appeal filed by the Federal Inland Revenue Service (FIRS).

A three-man panel of the appellate court ordered that the enforcement of the judgment of the Federal High Court, Port Harcourt, latched on to by the state governments be put on hold, Premium Times reports.

According to the report, Haruna Tsanami, the judge who delivered the lead ruling of the panel, also suspended the operation of the law passed by the Rivers State House of Assembly and assented to by Governor Nyesom Wike, for the collection of VAT by the State government.

The appellate court which said the order was to preserve the ‘Res’ (subject matter) of the appeal before it, gave the order on Friday, September 10.

This came after Attorney-General of Lagos state, Moyosore Onigbanjo informed the court of an application for the Lagos state government to be joined as a co-respondent in the appeal filed by FIRS.

The court held that since parties had submitted themselves to the jurisdiction of the court for adjudication on the issue, they must not do anything that will destroy the subject matter of the appeal.

Specifically, according to Premium Times report, Mr Tsanami granted “status quo ante bellum” in favour of the Federal Inland Revenue Service (FIRS) and against the respondents.

As such, the suit was then fixed for September 16, 2021, for hearing of an application by the Lagos State government to join the suit.

Furthermore, according to the report, Lagos State needed to apply to be joined in the case because it was not part of the case at the trial court.

Asking the appellate court to stay the execution of Rivers’ judgment, the FIRS in an appeal marked CA/PH/282/2021, is praying the court to set aside the judgment of the Federal High Court, in Port Harcourt, the Rivers State capital, which granted power to the state government to collect VAT

Recall recently, the Federal High Court in Port Harcourt in a verdict held that it was unconstitutional for the FIRS to collect VAT and personal income tax in Rivers State, and had ruled that Rivers State Government, and not the agent of the Federal Government – the FIRS – was authorised by the Nigerian Constitution to collect personal income tax in the state.