Hon. Justice Dalyop Pam issued an order of perpetual injunction restraining FIRS and AGF from collecting and demanding personal income tax and VAT. The suit was filed by the Attorney General of Rivers State. The court granted all the reliefs sought by attorney general citing Item 58 and 59 of the exclusive legislative list of the constitution as the only authority limiting the tax collection of federal government to taxation of incomes, profits and capital gains and this does not include VAT or any other sales or levies.
This judgement is exciting to some Southerners who see the region as the biggest source of VAT and implying the North as “parasite”. So the judgement fits the deepening regional division unfortunately. It is more unfortunate because the judgement will attract ethnic biases instead of dispassionate legal analysis. It is needful to disappoint those that will use the judgement as a tool of ethnic or regional manipulation to note that out of 36 states in Nigeria and FCT, only about five states can boast of contributing meaningful VAT collection. According to 2020 report of BudgIT, Lagos, Ogun, FCT, and Rivers are the highest contributors of VAT. This is a slap in the face of other states; whether in the south or north that are being sustained largely by the contributions of just four or five states.
However, the legal perspective in respect of this judgement is a very interesting one. There is a Supreme Court judicial precedent on VAT involving AG Lagos State VS AG of the federation. It was held by the Supreme Court that only Federal High Court has original jurisdiction to entertain suits relating to Federal revenues and not Supreme Court. Upon preliminary objection, the suit on VAT was only struck out and not resolved on merits. This means the substantive suit brought by Lagos State government on whether federal government should control and collect VAT was not resolved, but matter regarding jurisdiction was resolved. This confirms the judgement and jurisdiction of the Federal High Court sitting in Rivers State.
Interestingly, it is too early for anyone to jubilate because statutory interpretations can be tricky. This is my prediction before further appeal by the FGN.
Mujib Dada-Qadri Esq, dadamujeeb1@gmail.com
