By Adedapo Adesanya
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.
In a statement released on Sunday, the tax body, through its Director, Communications and Liaison Department, Mr Abdullahi Ismaila Ahmad, said the judicial action was taken to upturn the decision of the lower court.
Business Post understands that last Monday (August 9, 2021), the Federal High Court in Port Harcourt decided that the Rivers State Government, instead of the FIRS, has the authority to collect VAT in the state.
This is based on the idea that only the state has the constitutional authority to levy consumption or sales taxes in the country.
The trial judge, Justice Stephen Pam, also restrained FIRS and the Attorney-General of the Federation (AGF), both 1st and 2nd defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, both VAT and Personal Income Tax (PIT).
Justice Pam in his judgment in the suit by the Attorney-General for Rivers State against FIRS and AGF granted all the 11 reliefs sought by the state government.
The court held that there was no constitutional basis for the FIRS to demand and collect VAT, withholding tax, education tax and technology levy in Rivers or any other state of the federation, being that the constitutional powers and competence of the federal government was limited to taxation of incomes, profits and capital gains, which does not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the Constitution.
Appealing the decision, the FIRS said, “This is to inform the general public that the Federal Inland Revenue Service has lodged an appeal 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 in view of the pending applications for 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 in order to avoid accruing the consequent penalties and interest for non-compliance.”
Dipo Olowookere