Justice Tsammani: All parties should refrain from giving effect to the judgment of the Federal High Court, Port Harcourt which restrained the FIRS from collecting VAT in Rivers State
Alex Enumah in Abuja
Without hearing the application seeking to stay the judgment of a Federal High Court, Port Harcourt, Rivers State which restrained the Federal Inland Revenue Service (FIRS) from collecting Value Added Tax (VAT) in Rivers State, nor issuing a stay order, the Abuja Division of the Court of Appeal yesterday ordered the Rivers State Government to suspend collection of VAT.
A three-member panel of Justices of the appellate court presided by Justice Haruna Tsammani made the order shortly after the court granted the request of the Attorney General of Lagos State to bring the state’s application seeking to be heard as an interested party in the suit.
The Rivers State Government had last month secured a major court victory over the federal government in the collection of VAT in the state, and had gone ahead to enact necessary laws and agencies for the collection of the tax in the state.
Justice Stephen Pam of a Federal High Court in Port Harcourt had in a judgment delivered on August 9, held that the Rivers State Government and not the FIRS, has the right to collect VAT in the state.
Justice Pam, in the judgment subsequently restrained the Attorney General of the Federation and FIRS (1st and 2nd defendants) from collecting VAT in Rivers and directed the Rivers State Government to take charge of the duty.
But the Abuja Division of the Court of Appeal yesterday ordered all parties that have submitted themselves before the court to maintain status quo ante bellum pending the hearing of an application seeking to stay the judgment of a Federal High Court, Port Harcourt.
While invoking the powers of the court in line with section 6 of the Constitution, to preserve the “res”, i.e. main case from being dissipated, the court ordered that all those who had submitted themselves before the court should maintain status quo ante bellum.
According to the ruling, all parties should refrain from giving effect to the judgment of the Federal High Court, Port Harcourt delivered on August 9, which restrained the FIRS from collecting VAT in Rivers State.
As a result of the court’s decision in Port Harcourt, the Lagos State Government also commenced move to stop the collection of VAT by the FIRS in the state.
Miffed by the decision of the trial court and also the move by Lagos State, the FIRS approached the Court of Appeal for an order staying the judgment of Justice Pam and another order restraining the Rivers State Government from collecting VAT in the state.
However, the application for stay and interlocutory injunction could not be heard yesterday, because of the request of Lagos AG to be included as a party in the suit.
Although the appellant had opposed the joinder application but the court held that his right would be affected adversely if not heard.
Justice Tsammani consequently fixed September 16 for the hearing of the joinder application by Lagos AG.
Justice Tsammani, however, held that since the application for stay and interlocutory injunction could not be heard, it was only proper to preserve the ‘res’, i.e. the main case.
He subsequently adjourned to September 16 for the hearing of the application for joinder by the Lagos AG.
The FIRS was forced to approach the Appeal Court, after Justice Stephen Pam of the Federal High Court sitting in Port Harcourt had, last Monday, dismissed its application seeking to stop the Rivers State Government from collecting VAT in line with an earlier judgement in favour of the state by the same court.
Pam held that granting the application would negate the principle of equity. He stated further that in as much as the state government and the state legislature had enacted a law with respect to VAT, the courts were bound to obey such law.
He said the state government and the House of Assembly had duly enacted the Rivers State Value Added Tax No. 4, 2021, which makes it legitimate right of the state to collect VAT.
The judge maintained that the law remained valid until it had been set aside by a court of competent jurisdiction.
Pam said granting the prayers of the FIRS would amount to committing murder and noted that the prayers could not stand.
Sanwo-Olu signs Lagos VAT law
In a related development, Lagos State Governor Babajide Sanwo-Olu yesterday signed into law the State VAT Bill as passed by the House of Assembly.
According to a statement signed by Gbenga Omotoso, Commissioner for Information and Strategy, “the Governor signed the bill for a law to impose and charge VAT on certain goods and services at about 11. 45 am today, after returning from an official trip to Abuja. By this act, the Bill has now become a Law.”
