VAT: Appeal court halts Rivers from collecting tax

The Court of Appeal, Abuja Division, on Friday ordered the Rivers Government, the Federal Inland Revenue Service, FIRS, and the Attorney-General of the Federation to maintain status quo, pending the hearing and determination of applications before it in respect of the Valued Added Tax, VAT.

The Federal High Court, Port Harcourt, had on August 9 declared that it was the Rivers Government, and not FIRS that should collect VAT and Personal Income Tax in that state.

The three-man panel of Appeal Court justices led by Justice Hassan Tsammani ordered all parties to maintain status quo and refrain from taking any action that would give effect to the judgment of the Federal High Court, Port Harcourt.

The order of the appellate court is the latest development in the series of legal tussles over whose responsibility it is to collect VAT.

Although the FIRS has taken up the responsibility over the years, the Rivers State government tested the legality recently, and it was worth the move.

On August 19, Governor Nyesom Wike assented to the Valued Added Tax Law, 2021 along with four others following their passage by the Rivers State House of Assembly.

His action was sequel to the judgement delivered by Justice Stephen Pam of the Federal High Court in the state capital who held that states should collect VAT, and not the Federal Government.

Displeased with the decision of the court, the FIRS filed a motion on notice to apply for a stay of execution on the earlier judgement delivered by Justice Pam.

But the court said refused the application, saying the federal agency failed to file an application to set aside the tax law recently enacted by the Rivers State House of Assembly.

Justice Pam, therefore, stated that the state law on VAT was valid and subsisting.

The FIRS later approached the Court of Appeal in Abuja with a civil motion seeking a stay of the execution of the judgement earlier granted by the court in Rivers pending the determination of the case.

Consequently, the court held that parties should refrain from giving effect to the judgment of the trial court in Port Harcourt pending the hearing and determination of the application of the FIRS to stay execution of the trial court’s judgment.

Parties are also to maintain status quo pending the hearing of an application by the Attorney-General of Lagos State to be joined as a party in the matter.

Counsel to the appellant/applicant, Mahmud Magaji, made an oral application for an order that status quo be maintained pending the hearing and determination of the motion for injunction and stay.

However, counsel to Rivers government, Emmanuel Ukala, and counsel to Lagos State Government, Oyosore Onigbanjo, both opposed the application for status quo.

Tijani Ghazali, who represented the attorney-general for his part, supported the application for status quo to be maintained.

The applicants have been given two days to file their written addresses in respect to the pending applications just as the respondents have also been given two days to file, and the applicant has one day to reply on points of law.

The matter has been adjourned until September 16.