FIRS Opposes Inclusion of Lagos in VAT Collection Suit

  • As A’Court reserves ruling

By Alex Enumah

The Federal Inland Revenue Service (FIRS) on Thursday opposed the request by Lagos State to be joined as an interested party in its appeal challenging the judgment of a Federal High Court which faulted its collection of Value Added Tax (VAT) in Rivers State.

A three member panel of the Court of Appeal in Abuja, last week adjourned to Thursday to take the Lagos application for joinder after it held that Lagos may be affected adversely if the State was not heard before decisions were made in the matter.

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, Personal Income Tax 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.

As a result of the court’s decision the Lagos State government commenced move to stop the collection of VAT by the FIRS in Lagos State.

However, having failed to stay the judgment of the Federal High Court, FIRS had approached the appellate court to challenge the judgment.

The service also applied for two orders; the first seeking to stay the execution of Justice Pam’s Judgment and the second, an interlocutory injunction restraining Rivers from collecting VAT in the state.

But because of the request of Lagos, the two applications could not be taken as the court said priority should be given to the Lagos application for joinder.

When the matter came up on Thursday, counsel, to the appellant, Mr Mahmoud Magaji, SAN vehemently opposed the Lagos request claiming that the state has not shown how its interest would be jeopardized if not allowed in the matter.

Magaji further faulted the application on the grounds that it breached section 243 (1),(a), (b) of the 1999 Constitution, which forbids the a respondent from challenging the judgment.

He subsequently urged the panel to dismiss the application for lacking in merit.

However, the processes filed on behalf of the Attorney General of the Federation (AGF), through his counsel, Tijani Gazali SAN, also in opposition to the Lagos application, were struck out on the ground of being incompetent having been filed out of time.

Earlier, while moving the Lagos application, Attorney General (AG) of Lagos State, Mr Moyosore Onigbanjo, SAN submitted that Lagos has vested interest in the VAT collection, adding that the decision of the Court would affect It when delivered.

Onigbanjo noted that FIRS in its appeal against the judgment of Justice Pam, made some allegations against It and that it would be in the interest of justice for it to be allowed to join in the appeal to ventilate its defense.

“From the contents of the appellants affidavit, Lagos has been made a necessary party in the appeal by some references to It and for it to be bound by the final decision, It is in the interest that It should be allowed to make defense to allegations against It”, he said.

Similarly, counsel to Rivers State, Mr Ifedayo Adedipe, SAN, in adopting his processes, aligned himself with the submission of Onigbanjo and urged the court to join Lagos as a party in the appeal.

After parties concluded their arguments for and against the joinder application, Magaji urged the court to reiterate its order on status quo ante bellum made last week, restraining Rivers and Lagos from collecting VAT in their respective states.

Reacting, Rivers and Lagos States urged the appellate court to rather appoint a Receiver or Manager for the purpose of collecting and keeping VAT collected in the interim.

The two states in addition urged that the order of status quo ante belum be put on hold in view of the appeal filed against it at the Supreme Court.

Adedipe, arguing orally urged the court to exercise its power under Order 4 Rule 6 of the Court of Appeal to appoint a Receiver or Manager to take custody of the VAT in the interest of justice to parties in the matter.

Onigbanjo in addition, urged the appellate court to restrain FIRS from further collectting the tax and replace it with a Receiver or Manager that will act for parties that are locked in the legal battle.

According to him, FIRS apart from collectting the tax has been sharing It among the 36 states and the Federal Capital Territory FCT despite the pendency of the legal tussle, adding that recovery of the shared fund would be difficult if the court upheld the judgment of the trial court.

Responding, the Presiding Justice, Haruna Tsammani asked the two states to make their request formal by putting it in writing.

Justice Tsammani further announced that judgment of the panel on the joinder application has been reserved to a date that would be communicated to parties.

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