The answer to this question might seem obvious: doctors ease
pain, heal the sick and save lives, but not lawyers. Really? Are
those functions peculiar to only doctors, to the exclusion of other
professionals, including lawyers? The question is prompted by the
decision of the Court of Appeal in AL-MASEER LAW FIRM vs.
FIRS, CA/J/179/2018, in which the court upheld the
applicability of the Value Added Tax Act to legal practitioners on
the ground that legal services are not included in the list of
services which the Act exempts from collecting and remitting
VAT.
While the rationale for the judgement can hardly be faulted on
the basis of the ipssisima verba (or the exact terms) of
the law which the court was asked to interpret, the larger
question, in my view, is whether that law itself is valid, either
by reference to any other law or the Constitution. We shall shortly
undertake that exposé, but, first, an analysis of that
decision.
The appellant, a private legal practitioner, challenged a demand
by the Federal Inland Revenue Service to pay Value-Added Tax
purportedly due from the Appellant’s clients which she had failed
to remit to the Respondent. She requested the Federal High Court,
Bauchi to interpret relevant provisions of the VAT Act in her
favour, to wit: (i) that legal practice is not a business venture
under Section 8 of the VAT Act and as such is not
required to register with the FIRS as an agent for the purpose of
collecting VAT; (ii) that a (private) legal practitioner is not a
“taxable person” within the contemplation of
Section 46 of the VAT Act. The trial court agreed
with the Respondent that the Act was applicable to the Appellant,
and dismissed her originating summons.
Dissatisfied, the Appellant approached the Jos Division of the
Court of Appeal, which, in determining the appeal, considered the
provisions of Sections 1 – 3 of the VAT Act,
viz:
“There is hereby imposed and charged as a tax to be known as
the Value Added Tax which shall be administered in accordance with
the provisions of this Act”;
“Tax shall be chargeable and payable on the supply of all
goods and services (in this referred to as “taxable goods and
services”) other than goods and services listed in the First
Schedule to this Act”.
In affirming the decision of the lower court, the Court of
Appeal reiterated that, to the extent that “legal
practitioners” and “law firm” are not included in the
list of services specifically exempted from collecting/remitting
VAT in the First Schedule to the Act, “the rule of
interpretation is that when something is specifically mentioned in
a statute, the intendment is that it excludes whatever is not
mentioned”. Accordingly, the Court of Appeal dismissed the
appeal.
A subsequent, seemingly contrary, decision (AMA ETUWEWE
vs. FIRS, FHC/WR/CS/27/2019, Federal High Court, Warri,
delivered on 30th September, 2019) should, however, be
understood within its own peculiar facts and issues, which turned
on whether a solicitor to an oil company is bound to remit VAT
already paid by his client. This piece is concerned with the status
of legal practitioners and other professionals vis-à-vis
the distinction which the VAT Act makes in exempting only medical
practitioners (“medical services”) from collecting and
remitting VAT. I believe that it raises profound questions about .
. .
The Status of Professionals in Nigeria
Are they co-equal or, is one class or group of professionals
superior to the other or others in the eyes of the law? This poser
is significant, because the answer to it will determine the
validity or otherwise of the distinction between medical
professionals and others – including legal practitioners – for the
purposes of collection/payment of VAT.
As ever, the starting point is the fons et
origo of our law – the Constitution. By virtue of
Section 4(3) and Item 49 of the Exclusive
Legislative List of the 1999 Constitution, only the
National Assembly is competent to legislate in respect of
“professional occupations as may be designated by (it)”.
The National Assembly has exercised that power in relation to a
number of professions, including Architecture, Estate
Surveying/Valuation, Engineering, Pharmacy, Teaching (yes),
Computer Science, Nursing/Midwifery, Medicine/Dentistry and, of
course, Law. The relative statutes in this regard are all contained
in the relevant volumes of the current edition (2010) of the Laws
of the Federation.
The implication of the above provisions is that, as far as the
Constitution is concerned, all the professions which the National
Assembly has so designated are duly recognised (baptised?) by the
law. Such a recognition should not to be taken lightly, as it makes
all the difference between a genuine professional and a fake one;
in other words, whether there has been compliance, in any given
case, with laid down guidelines contained in (a) relevant Act(s) of
the National Assembly. I humbly submit that, to this extent, all
professions which have been designated by the National Assembly are
similarly circumstanced, or, in colloquial language, are “birds
of the same feather”.
Accordingly, just as the members of our avian analogy flock
together, no discrimination ought to be discernible between
professionals in the eyes of the law. This is otherwise known as
the right to equal protection of the law, and it is codified in
Article III(II) of the African Charter on Human and Peoples
Rights, an international treaty, domesticated vide an Act
of the National Assembly. As conceded at the beginning of this
piece, an obvious criticism of this analogy is that, suggesting
that lawyers and other professionals should enjoy the same
exemption from remitting VAT as medical doctors, would be somewhat
akin to comparing grapes with apples.
However, I believe that this is far from the case, because that
notion ignores hard statistics gathered in a census of private
health facilities conducted across six States of Nigeria by the
Strengthening Health Outcomes through the Private Sector
(SHOP) Project in 2014 (USAID-funded). That study
identified 5,086 private health facilities in the six target States
of Abia, Benue, Edo, Kaduna, Lagos and Nassarawa, compared to only
3,612 public health facilities (See page 66 of the report).
Extrapolating this across the 36 States of the Federation, the
import is clear: the overwhelming preponderance of health
facilities (read: medical services and, therefore, medical
professionals or doctors/dentists/ophthalmologists, optometrists,
etc.) in Nigeria are provided by the private sector.
Accordingly, I posit that to the extent that the VAT Act does
not distinguish between private medical services and public medical
services which it exempts from its coverage, it unwittingly
subsidises the income of the former to the detriment of their
counter-parts in other professions, including, of course, private
legal practitioners. Curiously, however, Section 2 of the
Act, provides that a “taxable person”, includes,
inter alia, “an agency of Government exploiting
tangible or intangible property for the purpose of obtaining income
therefrom by way of trade or business”. Be that as it may,
suffice it to say that it violates the right to equal protection of
the law for the Act to discriminate against legal services, when,
to all intents and purposes, they are similarly circumstanced with
medical services. Quite simply, it would be unfair and unjust.
For the avoidance of doubt, the right to equal protection of the
law “demands that laws will only be legitimate if they can be
described as just and equal. Equal protection guarantees that the
Government must treat a person or class of persons the same as it
treats other persons or class of persons like circumstances . . .
equal protection means a legislation that discriminates must have a
rational basis for doing so. And if the legislation affects a
fundamental right or involves a suspect classification, it is
unconstitutional unless it can withstand strict scrutiny” see
BLACK’S LAW DICTIONARY, 8th edition,
page 577.
I submit that the blanket exclusion of “medical
services” from paying VAT without discrimination as aforesaid,
fails the twin tests for the validity of any discriminatory
legislation – intelligible differentia and rationality –
laid down by the Court of Appeal in N.N.P.C vs.
FAWEHINMI (1998) 7 NWLR pt. 559 pg. 598 @ 616.
Conclusion
To the extent that, by virtue of Section 4(3)
and Item 49 of the Exclusive Legislative List of the
Constitution, all professionals are similarly
circumstanced, it is illegitimate and unacceptable to confer the
privilege of exemption from paying VAT on medical services (or
medical professionals) without distinguishing between private
health/medical services and public health/medical services.
This is because whilst the latter is justifiable and acceptable
(on the grounds of public policy), the former is not. Assuming the
rationale is that they both provide a supposedly “critical”
service, what about lawyers? We defend the rights – sometimes to
life – of the oppressed, downtrodden and, all-too-often,
economically-disadvantaged.
Accordingly, it is arguable that the decision in AL-MASEER’S
case was given per incuriam, as the foregoing argument was
never canvassed by the appellant, either at the trial court or
before the Court of Appeal.
Abubakar D. Sani,
Esq.Kano.
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