September 07, (THEWILL) – The Federal Inland Revenue Service (FIRS) has issued a warning on the payment of the Value Added Tax (VAT), whose collection last week’s court ruling in Rivers said was the constitutional responsibility of the states and not the central government.
Despite the court rejecting on Monday a subsequent FIRS application to stay execution “until the Court of Appeal, or even the Supreme Court, determines the matter,” the agency has directed taxpayers “to continue to comply with their Value Added Tax (VAT) obligations within the status quo framework.”
Failing this, according to FIRS, taxpayers would be running on a “collision course with the law.”
The FIRS made the threat in a Monday, September 6, 2021 statement by the Special Assistant to the Chairman of the FIRS on Media and Communications, Johannes Wojuola.
The presiding Judge, Justice Stephen Dalyop Pam, in his judgement said granting the FIRS’ prayer would negate the principle of equity, and noted that in as much as the Rivers State Government and Legislature had perfected a law in respect of VAT collection, courts were bound to obey laws.
According to the ruling, the law, Rivers State Value Added Tax No. 4, 2021, remained valid until set aside by a court of competent jurisdiction.
Other states, like Lagos, in line with the court ruling, have begun to put legislative frameworks in place for the novelty of the second-tier of government collecting VATs.
In Lagos, the House hastily gave the state’s Value Added Tax (VAT) Bill, the first and second reading on Monday, and mandated the Committee on Finance to work on it and return it back on Thursday.
The Speaker urged the Executive to ensure it pursued the subsisting case up to the Supreme Court as part of the long sought quest for Fiscal Federalism.
The FIRS’ full statement said: “The FIRS having lodged, in the Court of Appeal, both an appeal against the decision of the Federal High Court sitting in Rivers State in Suit No. FHC/PH/CS/149/2020, Attorney General of Rivers State Vs Federal Inland Revenue Service, and an injunction pending appeal of the said judgement, assures taxpayers that there is no cause for alarm.
“The Federal High Court ruling should not breed any confusion as to the obligations of taxpayers. Taxpayers must continue to comply with the Value Added Tax Act pending the final determination of appeal.
“Taxpayers must continue to honour their tax obligations under the VAT Act. Failure to do this would put them on a collision course with the law”, the statement said.
“For the avoidance of doubt, records of appeal have been transmitted to the appellate court. The Service is confident that, given the extant laws, the arguments and case put forward, it will earn a favoured judgment at the appellate court.”
However, some commentators have vilified the statement as preposterous.
One LadiIshola on the blogging platform, Nairaland, noted: “Whoever gave out this press release should be job hunting by tomorrow morning.
“You have not applied for a stay of execution yet, and even if applied, it hasn’t been granted. Why ask people to maintain the status quo? As far as I’m concerned, the status quo in this matter is the decision of the Federal High Court. Anything besides that is null and void until the Appeal Court decides otherwise.”
Citing the Constitution, perambulator commented: “They can’t win. Federal VAT is unconstitutional. .. It is very clear: The only taxes the Federal government can impose are: 58. Stamp duties, 59. Taxation of incomes, profits and capital gains, except as otherwise prescribed by this Constitution. VAT is not a stamp duty, income, profit or capital gain tax. It is a consumption tax!!!!”
Another commentator by the moniker “smallsmall” wrote: “There is a subsisting Court Ruling saying that Rivers can collect VAT, so what is the nonsense that the FIRS is saying? Until there is another Court Ruling which invalidates that Ruling and Supersedes it, everyone in Port Harcourt and other states (by extension) should pay their VAT to their respective State. The citizens are not the Judge, their only duty is to pay tax to whoever is APPROVED by the LAW COURT.
“Imagine, VAT on beer Collected in Rivers will be given to Sokoto State or Zamfara who practice SHARIA and keep destroying the same Beer!”
