Court Orders FIRS to Stop Collection of Consumption Tax in Lagos Hotels, Restaurants

By Dipo Olowookere

The Federal Inland Revenue Service (FIRS) has been restrained from collecting tax from customers for goods and services consumed in hotels, restaurants and event centres in Lagos State.

This directive was given by Justice Rilwanu Aikawa of a Federal High Court sitting in Lagos on Thursday in a case with Suit No. FHC/L/CS/360/18.

The Registered Trustees of Hotel Owners and Managers Association had filed a suit against the Lagos State government challenging the legality of the Lagos State Hotel Occupancy and Restaurant Consumption Tax Law and Regulation in 2018.

The association argued that since the Value Added Tax (VAT) collected by the FIRS contains provisions relating to consumption, it had ‘covered the field’ and as such, no state law can impose any similar tax.

At the ruling on Thursday, the judge held that the Lagos State Hotel Occupancy and Restaurant Consumption Tax Law and Regulation was constitutional, valid and operative.

He further held that Lagos State remains the only constitutional and lawful body permitted to assess, impose and collect tax from customers for goods and services consumed in hotels, restaurants and event centres in the metropolis.

Justice Aikawa thereafter invalidated sections 1, 2, 4, 5 and 12 of the Value Added Tax Act for being inconsistent with the provisions of the Constitution of the Federal Republic of Nigeria 1999 as amended.

Following the judgement, all hotels, restaurants and events centre managers and operators have been enjoined by the Ministry of Justice to comply with the provisions of the Hotel Occupancy and Restaurant Consumption Tax Law and Regulations of Lagos State.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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