Lagos Business NVAT Collection: FIRS files appeal against court judgment

The Federal Inland Revenue Service (FIRS) has appealed a recent judgment of the Federal High Court in Port Harcourt Rivers State on the issue of Value Added Tax (VAT) collection.

The FIRS disclosed this in a statement by its Director, Communications and Liaison Department, Abdullahi Ismaila Ahmad.

The statement reads as follows: “This is to inform the general public that the Federal Inland Revenue Service has appealed against the judgment of the Federal High Court Port Harcourt Judicial Division delivered by Honourable Justice Stephen Pam, in SUIT NO. FHC/PH/CS/149/2020-ATTORNEY GENERAL OF RIVERS STATE v. FEDERAL INLAND REVENUE SERVICE & ANOTHER. We have also sought an injunction pending appeal and a Stay of Execution of the said judgment.

“As the decision is being appealed and given the pending applications for an injunction and stay of execution which the FIRS has filed in court against the judgement, members of the public are advised to continue complying with the Value Added Tax obligations until the matter is resolved by the appellate courts to avoid accruing the consequent penalties and interest for non-compliance.”

It was earlier reported that the federal high court in Port Harcourt has issued an order restraining the Federal Inland Revenue Service (FIRS) from collecting value-added tax (VAT) and personal income tax (PIT) in Rivers state.
In its ruling, the court directed the Rivers state government to take charge of the collection.

Rivers state government (plaintiff) had filed a case, with suit No. FHC/PH/CS/149/2020, against the FIRS (first defendant) and the attorney general of the federation (second defendant) over demands, threats and intimidation of the state residents to pay PIT and VAT by the tax agency.

Meanwhile, the Chartered Institute of Taxation of Nigeria (CITN) has restricted itself to the vexed issue of the constitutionality of the Value Added Tax (VAT), while it is still studying the court judgement that invalidated the collection of VAT and personal income tax (PIT) by the FIRS in Rivers state.

This was owing to the fact that a federal high court in Port Harcourt issued an order restraining the FIRS from collecting VAT and PIT in the state.

The registrar/chief executive of CITN, Mr Adefisayo Awogbade in a statement at the weekend said that the professional body would take its position on the matter after studying the certified true copy of the judgment.

The statement cited two court cases where courts had declared some provisions of the VAT Act unconstitutional.

In Emmanuel Chukwuka Ukala v. FIRS & A.G. Federation in Suit No. FHC/PH/CS/30/2020, Hon. Justice I. O. Oshomah sitting at the Portharcourt Division of the Federal High Court, on Dec. 11, 2020, expressly held that the National Assembly had no power to enact the VAT Act.

“Similarly, in October 2019, the Federal High Court, Lagos Division, in the Registered Trustees of Hotel Owners and Managers Association of Lagos v. A. G. Federation & Others while considering the validity of the Hotel Occupancy and Restaurants Consumption Law of Lagos State upheld the powers of the Lagos State Government to charge and collect Consumption Tax from hotels, restaurants and event centres within the State.

The Court held that based on the Constitution and the Taxes and Levies (Approved List for Collection) Act, the power to impose consumption tax was a residual power within the exclusive competence of States.

To this end, it restrained the FIRS from imposing VAT on goods and services consumed in hotels, restaurants and event centres as this were already covered by the Lagos State Law.