Renowned lawyer, Chief Mike Ozekhome, SAN says that the ruling of the Court of Appeal sitting in Abuja on Friday means that the Rivers State Government has the power to collect Value Added Tax until the court decides otherwise.
The lawyer stated this in a statement on Saturday titled ‘FIRS & Rivers State Government: Who Should Now Collect VAT?’
VAT is a consumption tax paid when goods are purchased and services are rendered. It is charged at a rate of 7.5 per cent.
The Federal High Court sitting in Port Harcourt last month in a judgment in suit number FHC/PH/CS/149/2020, held that the Rivers State Government had the powers to collect VAT within its territory.
Rivers State Governor, Nyesom Wike, who lamented the injustice in the country, had said Rivers State generated N15bn VAT revenue in June this year, but got N4.7bn in return, while Kano generated N2.8bn in the same month and got the same N2.8bn back.
He had said that N46.4bn was collected from Lagos State in the same month but the Federal Government gave Lagos N9.3bn. “Sometimes, you don’t want to believe these things exist,” he added.
Wike had also assented to the Rivers State Value Added Tax Law 2021 in August after it was passed by the state House of Assembly.
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Some states have since followed. Lagos State Governor, Babajide Sanwo-Olu on Friday signed the State VAT Bill into law a day after it was passed by the Lagos State House of Assembly.
On Friday, Lagos also asked to be joined as a respondent alongside Rivers State in the appeal filed by the Federal Inland Revenue Service challenging the judgment of the Federal High Court, Port Harcourt regarding the issue of VAT collection.
Justice Haruna Tsammani of the Appeal Court had adjourned to September 16 to hear the application by Lagos and asked all parties to “maintain status quo”.
But in his interpretation of “maintain status quo” as reportedly said by Justice Tsammani, Ozekhome said, “Clearly, the status quo ante bellum was before the breakout of the hostilities.
“The hostilities broke out when the FIRS dragged the Rivers State Government to court, arguing that it cannot collect VAT based on its law. The said law was already duly passed and made operational by Rivers State House of Assembly that it has the constitutional competency under section 4 of the Constitution to do so.
“The FHC, Port Harcourt, Rivers State, had earlier held that it was the Rivers State Government that was competent to collect VAT, not the FIRS.
“The law was already therefore in operation before the FIRS challenged the validity of an FHC judgement, PH, that had given the Rivers State Government the power to collect the VAT.
“So, the status quo is that it is the Rivers State Government that has the power to collect VAT, until perhaps, the Court of Appeal rules otherwise and set aside the FHC judgment.”
The senior advocate, however, urged the parties to “avoid unnecessary bickerings and needless head-on collision” in the matter that is “already subjudice” and “cease hostilities” by “maintaining the status quo until the Court of Appeal finally pronounces on the matter.”