FIRS files appeal against court judgment on VAT

The Federal Inland Revenue Service (FIRS) says it has appealed a recent judgment of the Federal High Court in Port Harcourt, Rivers State banning it from further collection of Value Added Tax (VAT).

In a statement from its Director, Communications and Liaison Department, Abdullahi Ismaila Ahmad, on Sunday, FIRS added it has also asked for an injunction pending appeal and a Stay of Execution of the said judgment.

“As the decision is being appealed and in view of the pending applications for injunction and stay of execution which the FIRS has filed in court against the judgement, members of the public are advised to continue complying with the Value Added Tax obligations until the matter is resolved by the appellate courts in order to avoid accruing the consequent penalties and interest for non-compliance.”

Justice Dalyop Pam in his ruling had said the constitutional powers and competence of the Federal Government was limited to taxation of incomes, profits and capital gains, which did not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the Constitution.

The court agreed with the Rivers State government that it was the state and not FIRS that was constitutionally entitled to impose taxes enforceable or collectable in its territory of the nature of consumption or sales tax, VAT, education and other taxes or levies, other than the taxes and duties specifically reserved for the Federal Government by items 58 and 59 of Part 1 of the Second Schedule of the 1999 constitution as amended.

The court, also declared that the defendant, FIRS and the Minister of Finance were not constitutionally entitled to charge or impose levies, charges or rates (under any guise or by whatever name called) on the residents of Rivers and any state of the federation.

The Rivers State government, which was the plaintiff in the case had pleaded with the court to declare that, by virtue of the provisions of items 7 and 8 of Part II (Concurrent Legislative List) of the Second Schedule of the constitution, the power of the Federal Government to delegate the collection of taxes could only be exercised by the state government or other authority of the state and no other person.

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