Appeal Court stops Rivers from collecting VAT as Sanwo-Olu signs law

The Court of Appeal in Abuja has stopped the governments of Rivers and Lagos from collecting Value Added Taxes (VAT).

In a ruling yesterday, Justice Haruna Simon Tsanami directed that the law passed by the Rivers State House of Assembly and assented to by Governor Nyesom Ezenwo Wike be put on hold.

The judge gave the order hours before Governor Babajide SanwoOlu signed the law on VAT.

Sanwo-Olu signed the law moments after he arrived the state from Abuja.

The appellate court’s decision followed an application by the Federal Inland Revenue Service (FIRS) seeking a stay of execution of the order of a Rivers State High Court in the matter.

A Federal High Court in Port Harcourt had in August upheld the powers of the state to collect VAT and Personal Income Tax.

It declared that the FIRS had no power to collect VAT and Personal Income Tax in Rivers State.

The court also issued an order of perpetual injunction restraining the FIRS and the Attorney-General of the Federation from collecting, demanding, threatening and intimidating residents of Rivers State to pay to the FIRS, personnel income tax and VAT.

The Court of Appeal also fixed September 16 for hearing in the application by the Lagos State Government to be joined as a co-respondent in the appeal filed by the FIRS, challenging the judgement of the Federal High Court in Port Harcourt.

Counsel to the Lagos State Government, Moyosore Onigbanjo, a Senior Advocate of Nigeria (SAN), who is also the attorney-general and commissioner for justice, had asked the appellate court to hear the application for joinder ahead of the application for stay of execution brought by the FIRS..

But the counsel to the FIRS, Mahmoud Magaji (SAN), argued that the application for stay of execution should be taken before the application for a joinder.

Both Rivers and Lagos State governments have already enacted legislations to give effect to the judgment in respect of VAT.

An earlier application by the FIRS for stay of execution of the judgement was on Monday refused by Justice Stephen Dalyop Pam on the ground that the application would negate the principle of equity as the state legislature had already enacted law on the VAT collection.