Taxpayers can’t disregard Rivers VAT law, SANs tell FIRS
By Joseph Ayinde
Senior Advocates of Nigeria (SANs) have reacted to the directives of the Federal Inland Revenue Service that taxpayers should continue to pay their Value Added Tax (VAT) to it in order to avoid paying penalties for failure to do so.
The Federal High Court sitting in Port Harcourt had on August 10, 2021, declared in Suit No. FHC/PH/CS/149/2020 that it is the Rivers State Government (RSG) and not the Federal Inland Revenue Services (FIRS) that should collect Valued Added Tax (VAT) and Personal Income Tax (PIT) in the state.
Emboldened by the judgement, the Governor of Rivers State, Nyesom Wike, signed into law a bill which authorises the Rivers State Government to henceforth collect Value Added Tax (VAT) in the state.
In an interview with the THISDAY Newspaper, Chief Mike Ozekhome, a Senior Advocate of Nigeria, hailed the decision of the Government of Rivers State to enact the VAT Law, which according to him, was strictly in compliance with the judgment of the federal high court. He said the Constitution of the Federal Republic of Nigeria 1999 (as Amended), “does not in any way specifically give any tier of government the exclusive power to legislate on VAT.”
Ozekhome, on this ground, argued that the Rivers State VAT Law, 2021 “does not in any way contravene the provisions of the Constitution. The actions of the Government of Rivers State to enact its own VAT Law, 2021 were strictly in compliance with the judgment of the federal high court.
“In any event, the FIRS has already filed an appeal against the said judgment. It must obey the judgment of the Federal High Court, Port Harcourt for now until reversed,” the human rights lawyer argued.
Ozekhome also noted that any state desiring “to enforce the judgment of the federal high court in the instant case must first repeal its existing consumption tax law(s), if any.”
He said, “While parties are still on appeal over the court’s decision in this matter, parties must maintain the status quo by allowing Rivers State taxpayers to continue to pay money to the state Inland Revenue Service, rather than remit such VAT charges to FIRS.
“In my humble opinion, this is a more civilised way to deal with this vexed issue, rather than resorting to brute force. This is to prevent chaos and anarchy.”
A former Lagos State Attorney General and Commissioner of Justice, Mr. Adeniji Kazeem (SAN), on his part opined that by Section 7(1) of VAT Act, the FIRS was designated “to administer and manage the tax payable under the federal legislation.” He argued that Rivers State “must have a law that will empower its tax authority to manage and administer the VAT,” a position that justified the Rivers State VAT Law, 2021 duly enacted after the judgment of the federal high court.
He argued that since VAT “is an indirect tax based on consumption which is not expressly mentioned in the Exclusive or Concurrent Legislative Lists, it is constitutional and just as the Supreme Court upheld the legislative competence of Lagos State to enact the Hotel Occupancy and Restaurant Consumption Tax Law.”
The senior advocate explained that the directive by the FIRS asking taxpayers “to disregard a law validly made by the Government of River State Government appears to be a confirmation of the attitude of the federal government to the clamour for fiscal federalism.
“The FIRS cannot constitute itself into a court that will determine whether taxpayers should comply with a law or not and the position of the law is that a judgment of Court even if it is a nullity must be obeyed until set aside,” he warned the federal tax enforcement authority.
Having appealed against the judgment, Kazeem urged the FIRS to wait for the appellate court “to determine its appeal one way or the other and not by calling taxpayers to disobey the judgment of the court and disregard a valid law made by the state government.”
However, a former National Legal Adviser of All Progressives Congress (APC) and member of Lagos State House of Assembly, Mr. Babatunde Ogala (SAN) faulted the position of the Federal High Court that the National Assembly is not supposed to be a party in the suit.
“If it is an Act of the National Assembly, the necessary parties may not have been present in that suit contrary to what the court seems to have suggested that the National Assembly ought not to have been a party in the suit,” he said
Ogala argued that the matter should ordinarily be “a dispute between the Rivers State Government and FIRS and not a dispute between Rivers State and Federal Government of Nigeria for which the Supreme Court ought to have original jurisdiction.”
Justifying his position, he said, “This is because the FIRS is an agency of the federal government. If the federal government is constitutionally empowered to collect this tax, in my humble opinion, it can as well delegate that power to any of its agencies. And in this case, it is the FIRS.”
He advised that the decision of the Court of Appeal should wait. However, according to him whatever is not listed in the Exclusive and Concurrent Legislative Lists goes directly into the Residual Legislative List. That is vested in the Local Government and not the State.
He said, “I know that the judgment has been subjected to further scrutiny before an appellate court. I understand that there is a motion for a stay of execution. I am also aware of the hurriedly passed Rivers State VAT Law, 2021.
“In my own opinion, it is for us to wait for the outcome of the appeal currently before a court of appeal. But whatever is not listed in the Exclusive and Concurrent Legislative Lists goes directly into the Residual Legislative List. That is vested in the Local Government and not the State.”
