TAX CRISIS: Lagos tells court they are legally entitled to collect VAT.


As the battle over who collects VAT rages on, the court of appeal in Abuja has reserved ruling in an application filed by the Lagos state government to join in an appeal filed by the Federal Inland Revenue Service (FIRS) against the Rivers state government.

It would be recalled that a federal high court in Port Harcourt had on August 9 issued an order restraining the FIRS from collecting VAT and personal income tax (PIT) in Rivers state.

Although the federal tax authority had appealed for a stay of execution, the court dismissed it on the basis that it would “negate the principle of equity”.

Consequently, FIRS went to the court of appeal.

However, on September 10, Moyosore Onigbanjo, attorney-general of Lagos, informed the court of an application for the state government to join as a party in the appeal, following the VAT bill into law and it has been assented to by governor Babajide Sanwolu.

Arguing the application on Thursday, Onigbanjo said the state is constitutionally empowered to collect VAT.

“My lord, it is not in dispute that Lagos, one of the federating states in Nigeria is entitled to collect VAT and that’s our interest,” he said.

“Even the appellant recognised that the Lagos state government has an interest in the matter in their affidavits in support of stay of execution where copious reference was made to the Lagos state government.

“That been the case, it cannot now lie in the mouth of the appellant to say that Lagos state has no interest in this matter.

“It was in recognition of the interest of Lagos state that this court made an order for status quo to be maintained by all parties before it.”

Onigbanjo added that if the state is not joined, there is bound to be another cause of action since the state would enforce the VAT act which has been enacted.

“In view of the inconsistencies contained in the counter affidavit of the appellant, I pray the court to grant our application in favour of Lagos state,” the attorney-general said.

Ifedayo Adedipe, Rivers state counsel, also prayed the court to grant the Lagos state application.

But Tijani Gazali, who appeared for the attorney-general of the federation (2nd respondent), said they have served their written address on Lagos.

However, it was filed out of time and consequently withdrawn, hence struck out.

Meanwhile, the three-member panel of the court led by Haruna Tsanammi refused to hear an oral application by both Rivers and Lagos state for a receiver or manager to be appointed in the interim to collect VAT from their territories, pending the conclusion of the case.

Adedipe, in his oral application, pleaded with the appellate court to exercise its power under Order 4 Rule 6 of the Court of Appeal to appoint a receiver or manager to take custody of VAT in the interest of justice to parties in the matter.

Onigbanjo said the court’s order to maintain status quo is also binding on the FIRS. He submitted that should the case go in favour of the states, it would be difficult to get back the VAT that has been collected by the FIRS and disbursed to all 36 states.

He prayed the court to restrain the FIRS from further collecting VAT.

But the appellate court asked the two states to make their request by a formal written application.

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