Taxpayers Can’t Disregard Rivers VAT Law, SANs Tell FIRS

*Ozekhome (SAN) Says Rivers VAT Law Is Constitutional
*Kazeem (SAN) Advises FIRS To Obey The Order Of The Porthacourt
Federal High Court Till Set Aside
*Ogala (SAN) Says Items Outside Exclusive And Concurrent Lists Are
For Local Govts, Not State Govt

Senior Advocates of Nigeria (SANs) have reacted to the
directives of the Federal Inland Revenue Service that taxpayers
should continue to pay their Value Added Tax (VAT) to it in order
to avoid paying penalties for failure to do so.

The Federal High Court sitting in Port Harcourt had on August
10, 2021 declared in Suit No. FHC/PH/CS/149/2020 that it is the
Rivers State Government (RSG) and not the Federal Inland Revenue
Services (FIRS) that should collect Valued Added Tax (VAT) and
Personal Income Tax (PIT) in the state.

Emboldened by the judgement, the Governor of Rivers State,
Nyesom Wike, on signed into law a bill which authorises the Rivers
State Government to henceforth collect Value Added Tax (VAT) in the
state.

In an interview with the THISDAY Newspaper, Chief Mike Ozekhome,
a Senior Advocate of Nigeria, hailed the decision of the Government
of Rivers State to enact the VAT Law, which according to him, was
strictly in compliance with the judgment of the federal high court.
He said the Constitution of the Federal Republic of Nigeria 1999
(as Amended), “does not in any way specifically give any tier of
government the exclusive power to legislate on VAT.”

Ozekhome, on this ground, argued that the Rivers State VAT Law,
2021 “does not in any way contravene the provisions of the
Constitution. The actions of the Government of Rivers State to
enact its own VAT Law, 2021 were strictly in compliance with the
judgment of the federal high court.

“In any event, the FIRS has already filed an appeal against the
said judgment. It must obey the judgment of the Federal High Court,
Port Harcourt for now until reversed,” the human rights lawyer
argued.

Ozekhome also noted that any state desiring “to enforce the
judgment of the federal high court in the instant case must first
repeal its existing consumption tax law(s), if any.”

He said, “While parties are still on appeal over the court’s
decision in this matter, parties must maintain the status quo by
allowing Rivers State taxpayers to continue to pay money to the
state Inland Revenue Service, rather than remit such VAT charges to
FIRS.

“In my humble opinion, this is a more civilised way to deal with
this vexed issue, rather than resorting to brute force. This is to
prevent chaos and anarchy.”

A former Lagos State Attorney General and Commissioner of
Justice, Mr. Adeniji Kazeem (SAN), on his part opined that by
Section 7(1) of VAT Act, the FIRS was designated “to administer and
manage the tax payable under the federal legislation.” He argued
that Rivers State “must have a law that will empower its tax
authority to manage and administer the VAT,” a position that
justified the Rivers State VAT Law, 2021 duly enacted after the
judgment of the federal high court.

He argued that since VAT “is an indirect tax based on
consumption which is not expressly mentioned in the Exclusive or
Concurrent Legislative Lists, it is constitutional and just as the
Supreme Court upheld the legislative competence of Lagos State to
enact the Hotel Occupancy and Restaurant Consumption Tax Law.”

The senior advocate explained that the directive by the FIRS
asking taxpayers “to disregard a law validly made by the Government
of River State Government appears to be a confirmation of the
attitude of the federal government to the clamour for fiscal
federalism.

“The FIRS cannot constitute itself into a court that will
determine whether taxpayers should comply with a law or not and the
position of the law is that a judgment of Court even if it is a
nullity must be obeyed until set aside,” he warned the federal tax
enforcement authority.

Having appealed against the judgment, Kazeem urged the FIRS to
wait for the appellate court “to determine its appeal one way or
the other and not by calling taxpayers to disobey the judgment of
court and disregard a valid law made by the state government.”

However, a former National Legal Adviser of All Progressives
Congress (APC) and member of Lagos State House of Assembly, Mr.
Babatunde Ogala (SAN) faulted the position of the Federal High
Court that the National Assembly is not supposed to be a party in
the suit.

“If it is an Act of the National Assembly, the necessary parties
may not have been present in that suit contrary to what the court
seems to have suggested that the National Assembly ought not to
have been a party in the suit.” he said

Ogala argued that the matter should ordinarily be “a dispute
between the Rivers State Government and FIRS and not a dispute
between Rivers State and Federal Government of Nigeria for which
the Supreme Court ought to have original jurisdiction.”

Justifying his position, he said, “This is because the FIRS is
an agency of the federal government. If the federal government is
constitutionally empowered to collect this tax, in my humble
opinion, it can as well delegate that power to any of its agencies.
And in this case, it is the FIRS.”

He advised that the decision of the Court of Appeal should be
waited. However, according to him whatever is not listed in the
Exclusive and Concurrent Legislative Lists goes directly into the
Residual Legislative List. That is vested in the Local Government
and not the State.

He said, “I know that the judgment has been subjected to further
scrutiny before an appellate court. I understand that there is a
motion for stay of execution. I am also aware of the hurriedly
passed Rivers State VAT Law, 2021.

“In my own opinion, it is for us to wait for the outcome of the
appeal currently before a court of appeal. But whatever is not
listed in the Exclusive and Concurrent Legislative Lists goes
directly into the Residual Legislative List. That is vested in the
Local Government and not the State.”

*Ozekhome (SAN) Says Rivers VAT Law Is Constitutional
*Kazeem (SAN) Advises FIRS To Obey The Order Of The Porthacourt
Federal High Court Till Set Aside
*Ogala (SAN) Says Items Outside Exclusive And Concurrent Lists Are
For Local Govts, Not State Govt

Senior Advocates of Nigeria (SANs) have reacted to the
directives of the Federal Inland Revenue Service that taxpayers
should continue to pay their Value Added Tax (VAT) to it in order
to avoid paying penalties for failure to do so.

The Federal High Court sitting in Port Harcourt had on August
10, 2021 declared in Suit No. FHC/PH/CS/149/2020 that it is the
Rivers State Government (RSG) and not the Federal Inland Revenue
Services (FIRS) that should collect Valued Added Tax (VAT) and
Personal Income Tax (PIT) in the state.

Emboldened by the judgement, the Governor of Rivers State,
Nyesom Wike, on signed into law a bill which authorises the Rivers
State Government to henceforth collect Value Added Tax (VAT) in the
state.

In an interview with the THISDAY Newspaper, Chief Mike Ozekhome,
a Senior Advocate of Nigeria, hailed the decision of the Government
of Rivers State to enact the VAT Law, which according to him, was
strictly in compliance with the judgment of the federal high court.
He said the Constitution of the Federal Republic of Nigeria 1999
(as Amended), “does not in any way specifically give any tier of
government the exclusive power to legislate on VAT.”

Ozekhome, on this ground, argued that the Rivers State VAT Law,
2021 “does not in any way contravene the provisions of the
Constitution. The actions of the Government of Rivers State to
enact its own VAT Law, 2021 were strictly in compliance with the
judgment of the federal high court.

“In any event, the FIRS has already filed an appeal against the
said judgment. It must obey the judgment of the Federal High Court,
Port Harcourt for now until reversed,” the human rights lawyer
argued.

Ozekhome also noted that any state desiring “to enforce the
judgment of the federal high court in the instant case must first
repeal its existing consumption tax law(s), if any.”

He said, “While parties are still on appeal over the court’s
decision in this matter, parties must maintain the status quo by
allowing Rivers State taxpayers to continue to pay money to the
state Inland Revenue Service, rather than remit such VAT charges to
FIRS.

“In my humble opinion, this is a more civilised way to deal with
this vexed issue, rather than resorting to brute force. This is to
prevent chaos and anarchy.”

A former Lagos State Attorney General and Commissioner of
Justice, Mr. Adeniji Kazeem (SAN), on his part opined that by
Section 7(1) of VAT Act, the FIRS was designated “to administer and
manage the tax payable under the federal legislation.” He argued
that Rivers State “must have a law that will empower its tax
authority to manage and administer the VAT,” a position that
justified the Rivers State VAT Law, 2021 duly enacted after the
judgment of the federal high court.

He argued that since VAT “is an indirect tax based on
consumption which is not expressly mentioned in the Exclusive or
Concurrent Legislative Lists, it is constitutional and just as the
Supreme Court upheld the legislative competence of Lagos State to
enact the Hotel Occupancy and Restaurant Consumption Tax Law.”

The senior advocate explained that the directive by the FIRS
asking taxpayers “to disregard a law validly made by the Government
of River State Government appears to be a confirmation of the
attitude of the federal government to the clamour for fiscal
federalism.

“The FIRS cannot constitute itself into a court that will
determine whether taxpayers should comply with a law or not and the
position of the law is that a judgment of Court even if it is a
nullity must be obeyed until set aside,” he warned the federal tax
enforcement authority.

Having appealed against the judgment, Kazeem urged the FIRS to
wait for the appellate court “to determine its appeal one way or
the other and not by calling taxpayers to disobey the judgment of
court and disregard a valid law made by the state government.”

However, a former National Legal Adviser of All Progressives
Congress (APC) and member of Lagos State House of Assembly, Mr.
Babatunde Ogala (SAN) faulted the position of the Federal High
Court that the National Assembly is not supposed to be a party in
the suit.

“If it is an Act of the National Assembly, the necessary parties
may not have been present in that suit contrary to what the court
seems to have suggested that the National Assembly ought not to
have been a party in the suit.” he said

Ogala argued that the matter should ordinarily be “a dispute
between the Rivers State Government and FIRS and not a dispute
between Rivers State and Federal Government of Nigeria for which
the Supreme Court ought to have original jurisdiction.”

Justifying his position, he said, “This is because the FIRS is
an agency of the federal government. If the federal government is
constitutionally empowered to collect this tax, in my humble
opinion, it can as well delegate that power to any of its agencies.
And in this case, it is the FIRS.”

He advised that the decision of the Court of Appeal should be
waited. However, according to him whatever is not listed in the
Exclusive and Concurrent Legislative Lists goes directly into the
Residual Legislative List. That is vested in the Local Government
and not the State.

He said, “I know that the judgment has been subjected to further
scrutiny before an appellate court. I understand that there is a
motion for stay of execution. I am also aware of the hurriedly
passed Rivers State VAT Law, 2021.

“In my own opinion, it is for us to wait for the outcome of the
appeal currently before a court of appeal. But whatever is not
listed in the Exclusive and Concurrent Legislative Lists goes
directly into the Residual Legislative List. That is vested in the
Local Government and not the State.”