Court Dismisses Prayer of Nigeria’s Tax Agency (FIRS) for Stay of Execution on VAT

The suit filed by the Federal Inland Revenue Service (FIRS) seeking to stop the Rivers State Government from commencing collection of Value Added Tax (VAT) has been dismissed Federal High Court sitting in Port Harcourt, Rivers State.

Last month, a Federal High Court had declared the collection of VAT by federal government in states, unconstitutional. The tax agency had approached the court praying a Stay of Execution on the judgment.

According to Vanguard, Justice Stephen Dalyop Pam, in his ruling, said granting the application would negate the principle of equity. He noted that in as much as the state government and the state legislature has enacted a law in respect of the VAT that courts were bound to obey laws.

He noted that the Rivers State Government and the State Assembly, have duly enacted Rivers State Value Added Tax No. 4, 2021, which makes it a legitimate right of the state to collect VAT.

The judge said law remained valid until it has been set aside by a court of competent jurisdiction, adding that the law enacted by the Rivers State legislature remained valid

Pam, also said granting the prayers of FIRS would amount to committing murder, adding that the prayers cannot stand and dismissed same.

Earlier, Justice Pam had read a letter that FIRS lawyers had served the court seeking for stay of any ruling on their application.

But, in the absence of any requisite document that ought to have been attached to the letter, the Judge dismissed the letter.

Meanwhile, the Counsel for Rivers State Government, Mark Agu, commended the court for standing for justice, noting that the state assembly had already made a standing law on VAT.

Agu disclosed that FIRS had approached the court with two prayers but that they withdrew the first prayer seeking for injunction and wanted the court to stay the execution of that judgment.

According to him, “the first Defendant, FIRS, sent their appeal against the judgment of the Honourable court delivered wherein the court allowed the Rivers State Government to collect their VAT.

“Subsequently after the judgment Rivers State has its own law on that, the Rivers State Law on VAT No. 4, 2021. Having appealed, they were asking for an injunction and secondly asking for stay on the judgment.

“Today, the court has delivered its ruling dismissing the said application for stay, though, without cost.

“The court’s reasoning is that if it should grant stay it is more or less like overruling itself and the court is empowered to recognize all laws enacted by the national assembly or the state house of assembly, therefore the law stands as substantive.

“Therefore the issues of collection of VAT as it stands today Rivers State is still entitled to still collect.”

But, counsel for FIRS, Reuben Wanogho, expressed displeasure with the stand of the court, noting that FIRS would not hesitate to appeal the ruling.

Wanogho said: “The court has delivered its ruling on the bases of how it saw the facts of the case. We do not agree with the ruling and we will take all necessary steps to challenge it. That is why the appellate System is there.

“The appellate System is there to enable us ventilate out grievances if for any reasons the court makes a pronouncement me we do not agree with it.

“For sure we feel that the ruling should have gone in our favour but, the court has taken a position against us, so we will do the needful by taking it up immediately before the court of appeal.

“We will challenge it. And we are hopeful that at the court of appeal we should be able to find our way. The appeal system is there to correct errors.

“The natural consequences of the ruling is that the Rivers State Government will be collecting the VAT, but we will take steps to ensure that we amelioration situation as quickly as possible,” he said.

Upholding the judgment means other states now have the freedom to follow the step of Rivers State. Already, the Lagos State government said last week, it has commenced collection of VAT, following last month’s judgment. The original judgement was hailed as a bold step forward in the push for fiscal federalism, the states’ lawmakers only need to enact laws to give it a legal backing.

State Broadcast

Governor Wike, in a state wide broadcast asserted that with Monday’s judgement, the state can enforce  the Rivers State Value Added Tax Law 2021, until otherwise set aside by a superior Courts.

“Consequently, I hereby direct the Rivers State Internal Revenue Service (RIRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities and individuals with immediate effect.

“All corporate bodies, business entities and individuals are advised to willingly, truthfully and promptly comply with their tax obligations under this law to avoid the full weight of the stipulated sanctions, including having their business premises sealed-up. “I wish to further assure every resident that we shall as usual make effective use of the expected proceeds from this tax to accelerate the development of our State and improve the wellbeing of everyone.”