Legal Nigeria

VAT row gets messier, AppealCourt orders stay of execution

By Gbenga Salau , Ann Godwin , Ameh Ochojila and Joseph Wantu

Sanwo-Olu. Photo/facebook/jidesanwooluofficial
• Appeal Court Orders Stay Of Execution
• Sanwo-Olu Signs VAT Bill, Applies To Be Joined In Suit
• Wike Inaugurates Rivers Tax Appeal Commission
• Ortom Backs Lagos, Rivers

The ongoing row between the Federal Inland Revenue Service (FIRS) and the Rivers State governments over the collection of Value Added Tax (VAT) in the country deepened yesterday with the Court of Appeal, Abuja Division, ordering the Rivers Government, FIRS and the Attorney-General of the Federation to maintain status quo, pending the hearing and determination of applications before it in respect of VAT.

This is even as Lagos State Governor, Babajide Sanwo-Olu, yesterday, signed the state VAT Bill into law less than 24 hours after it was passed by the state House of Assembly.

The state government also filed an application at the Appeal Court to be joined in the appeal filed by FIRS challenging the judgment of the Federal High Court, Port Harcourt, which declared that the Rivers State government and not the FIRS should collect VAT and Personal Income Tax in the state.nullnull

Meanwhile in Rivers State, Governor Nyesom Wike has inaugurated a four-man Tax Appeal Commission with a charge to enshrine a new culture in which taxable persons and entities comply with the relevant tax laws in the state without hesitation.

A Federal High Court, Port Harcourt, had on August 9, this year, declared that it was the Rivers State government, and not FIRS, that should collect VAT and Personal Income Tax in the state, a judgment the FIRS appealed against.

The three-man panel of Appeal Court justices hearing the case led by Justice Hassan Tsammani ordered all parties to maintain status quo and refrain from taking any action that would give effect to the judgment of the Federal High Court, Port Harcourt.

Justice Tsammani held that since all parties in the matter had submitted themselves before the court, it was proper and the law for the court to preserve the res (subject matter) from being rendered nugatory.

Consequently, the court held that parties should refrain from giving effect to the judgment of the trial court in Port Harcourt pending the hearing and determination of the application of the FIRS to stay execution of the trial court’s judgment.

Parties were also asked to maintain status quo pending the hearing of an application by the Attorney-General of Lagos State to be joined as a party in the matter.

Counsel to the appellant/applicant, Mr. Mahmud Magaji (SAN), made an oral application for an order that status quo be maintained pending the hearing and determination of the motion for injunction and stay.

However, Mr. Emmanuel Ukala (SAN), counsel to Rivers government and Mr. Oyosore Onigbanjo (SAN), counsel to Lagos State Government, both opposed the application for status quo.

Mr Tijani Ghazali (SAN), who represented the attorney general, on his part, supported the application for status quo to be maintained.

The applicants were given two days to file their written addresses in respect of the pending applications just as the respondents have also been given two days to file, and the applicant has one day to reply on points of law.
 
Earlier, Onigbanjo had informed the court of their application for the Lagos State Government to be joined as a party in the appeal.
He argued that the application for joinder be taken first before FIRS’ application for stay of execution.

However, Counsel for the FIRS, Magaji argued that their application for stay of execution should take precedence over the application for joinder. Majagi, relying on the case of Pam V. Mohammed, argued that the court could restrict itself to the business of the day.
  
But after listening to submissions from all the parties, the court stood down the matter for the ruling on the application for joinder.

The VAT Bill passed by the state House of Assembly last Thursday was immediately transmitted to the governor, who signed it into about 11:00am yesterday.

The state Commissioner for Information and Strategy, Gbenga Omotoso, in a statement, said the governor signed the “bill for a law to impose and charge VAT on certain goods and services at about 11:45am yesterday, after returning from an official trip to Abuja.”

Governor Wike, while inaugurating the four-man Tax Appeal Commission, urged them to focus on dealing with complaints arising from those who do not want to pay their taxes, while also prevailing on those who believe that the tax body is doing what it is not supposed to do.

According to Governor Wike, taxes are important sources of revenues for any government to shore up its funds to implement its development agenda.

“It is a very serious assignment at this period as regards what is going on. So, I believe that you have to take this assignment as a call of duty from your state.

“No country can survive without taxes. And so, you will do all you can to support the government and the citizens to do what they’re supposed to do.

“I have confidence in you, the chairman, that you will be able to lead the members of the commission to do the right thing.”In his response, Chairman of the Rivers State Body of Tax Appeal Commissioners, Justice Bennett Eke Ugbari (rtd), noted that the state like other federating states, needed to generate sufficient internal revenues to augment the statutory allocations it receives from the Federal Government.

This, he said, will enable the government to fulfil its obligations and promises to Rivers people in terms of infrastructure and other developments. 

“It is therefore the intendment of the commission to partner with other relevant tax authorities in Rivers State to generate adequate internal revenue for the State. 

“In carrying out our assignment, the commission shall be guided by the principle of fair hearing, justice and equity. We shall ensure that there is proper assessment of taxes and that every tax payers in Rivers State pays adequate tax as required by the relevant tax laws.”

Justice Ugbari (rtd) gave the assurance that the commission would discharge their responsibilities diligently and conscientiously with the fear of God. According to him, they will also work in accordance with the objectives, purpose of the enabling law and other tax laws of Rivers State.

Commissioners sworn-in by the governor included Justice Bennett Eke Ugbari (rtd), who will serve as the chairman, Edwin Krukrubo, Owhonda Ihekwoaba Nobel and Mrs. Gift Sovins as commissioners.

In a related development, Benue State Governor, Samuel Ortom, has thrown his weight behind his colleagues from Rivers and Lagos states stance on the VAT matter, saying he would toe the same path if it conforms to the constitution.

Ortom, who spoke in Makurdi while fielding questions from newsmen, yesterday, commended his colleagues for the giant step they have taken by domesticating the VAT law. He said he has already directed the Attorney General and Commissioner for Justice to study the law and tell him its implications.

His words: “I have asked my Attorney General and Commissioner for Justice to study the law and let me know the implication.

“I don’t think there is anything wrong embracing the law as long as it conforms with the constitution, whether it affects me positively or negatively.

“I support the Governor of Lagos State and that of Rivers State for what they are doing. Anything that follows the rule of law I will accept, but if anyone thinks otherwise the best thing to do is go to court. I heard they are in court and if the case is decided otherwise we will accept it.”

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