Battle For VAT Collection Shifts To Supreme Court

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  • Rivers seeks to upturn status quo order
  • Bill passes second reading in Ogun

The battle on which authority has the right to collect Value Added Tax (VAT) is now in the Supreme Court.

Rivers State Governor Nyesom Wike has taken the battle to claim the VAT collected in his state to the Supreme Court.

The government has asked the apex court to set aside the “maintain status quo” order given last week by the Court of Appeal to enable him implement the state law which empowers it to collect the VAT.

The Court of Appeal gave the order pending the determination of the prayer by the Federal Inland Revenue Service (FIRS), which sought to upturn the judgment of the Federal High Court sitting in Rivers endorsing the collection of the tax by the state government.

On Tuiesday, the Ogun State government, one of the states with the highest VAT collections, joined the fray.

The bill to empower the state government to commence collection of VAT in its domain passed the second reading of the House of Assembly. It will go into public hearing before its passage.

The VAT has been collected by the FIRS on behalf of the Federal Government since 2004.

It is shared at 50 per cent among states and 38 per cent among the 774 local governments. The Federal Government takes 18 per cent.

The VAT is 7.5% tax on consumption and as well as goods and services.

About N8.8 trillion naira was generated in 2020.

The Federal Government got the support of Ebonyi State Governor Dave Umahi, who said he would prefer that it continued with the collection.

The Rivers State Government asked the Supreme Court to reverse the September 10 order by the Court of Appeal directing parties in the dispute over the administration of VAT to maintain status quo ante bellum.

Rivers, in a notice of appeal filed in the name of its attorney general, also wants the Supreme Court to order the Court of Appeal to assemble a separate panel to hear the appeal, marked: CA/PH/282/2021 filed against the earlier judgment of the Federal High Court, Port-Harcourt, by the FIRS.

In the notice of appeal filed for Rivers by a legal team, led by Emmanuel Ukala (SAN), the appellant raised 10 grounds in support of its prayers.

Rivers said it was dissatisfied with the decision of the Appeal Court, said “directing parties to maintain status quo, that is, to restore parties to the status quo that existed before the judgment of the Federal High Court, Port Harcourt division in suit: FHC/PH/CS/149/2020.”

According to the State, the Appeal Court Justices, who gave the September 10 order, erred in law when they relied on Section 6(6) of the Constitution and the court’s inherent jurisdiction to order parties to maintain status quo, “which they identified as restoring the parties to the position they were before the judgment of the Federal High Court .”

The state said the Justices applied the principle governing the exercise of inherent jurisdiction laid down by the Supreme Court in Shugaba vs Union Bank (1999) 11 NWLR (pt. 627) 459 to the effect that no court had an inherent jurisdiction (except in extreme circumstance) to set aside the exercise of discretion of another court with regard to order made in respect of application for a stay of execution.

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It contended, in ground two, that the Justices of the Court of Appeal erred in law when they wrongly assumed jurisdiction to entertain the oral application for maintenance made by lawyer to the FIRS “in spite of the fact that a condition precedent to the invocation of the jurisdiction of the Court of Appeal was not fulfilled by the first respondent (FIRS).

The appellant added that the Court of Appeal failed to appreciate that failure to comply with the condition precedent robbed the court of the requisite jurisdiction to entertain or grant the reliefs sought.

It contended in ground three that the Justices of the Court of Appeal erred in law and breached its (the appellant’s) right of fair hearing when they entertained a vague oral application for maintenance of status quo and went ahead to make orders aimed at maintaining the status quo ante bellum.

Rivers is contending,in ground four that the “Justices of the Court of Appeal erred in law when, in spite of a behemoth of binding precedents on what status quo ante bellum is, they went ahead and made orders for maintenance of status quo ante bellum, without due regard to the undeniable fact that judgment had already been entered in favour of the appellant and which had the practical effect of upturning a valid judgment of a court of competent jurisdiction and its order refusing to grant an injunction pending appeal, at a time when the Court of Appeal was yet to hear the appeal.”

It is contending, in ground five, that the justices erred in law in granting an order for the maintenance of status quo ante bellum, which amounted “effectively to an order for stay of execution and injunction against the declaratory orders of the Federal High Court, on an oral application by the appellant, pending the hearing of the various applications before it, and thus occasioned a miscarriage of justice, to the prejudice of the first respondent -now appellant – (Rivers State).

Ogun State House of Assembly unanimously agreed that when operational, the bill would accord the state its rightful position as a viable federating unit.

The bill “H.B No. 73/OG/2021- A bill for a law to impose and charge value added tax on certain Goods and services, provides for the administration of the tax and for related purposes.”

The motion for the second reading was moved by Majority leader Yusuf Sheriff.

In their contributions, Olakunle Sobukanla, Ganiyu Oyedeji, Adegoke Adeyanju and Abdul Bashir Oladunjoye – underscored the need for the enactment of the proposed law as a federating unit to further improve revenue accruable to the State.

The lawmakers reckoned that a VAT law would ensure a seamless funding of more projects,. They lamented that the state often got less of what it contributed in VAT.

In their submissions, Kemi Oduwole, Oludaisi Elemide, Solomon Osho and Olusola Adams explained that the bill would improve the state’s financial status through tax revenue generation.

Speaker Oluomo lauded his colleagues for their contributions to the debate and committed it to the Committee on Finance and Appropriation for further legislative actions. He fixed the public hearing on the bill for September 23.

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