Lagos, Rivers urge Appeal Court to stop FIRS from sharing VAT proceeds

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The governments of Rivers and Lagos states, on Thursday, urged the Court of Appeal in Abuja to issue an order restraining the Federal Inland Revenue Service (FIRS) from further collecting and distributing Value Added Tax (VAT) proceeds pending the determination of an appeal by the tax administration agency.

The appeal by the FIRS is against August 9, 2021 judgment by Justice Steven Pam of the Federal High Court in Port-Harcourt, voiding the Value Added Tax (VAT) Act and holding that states could collect VAT.

Lawyer to Rivers State, Mr. Ifedayo Adedipu (SAN), applied orally to the court to exercise its powers under Order 4 Rules 6 of the court’s Rules to appoint either a receiver or manager to take custody of the res (subject of dispute) pending the determination of the appeal.

Lawyer to Lagos State and the Attorney General, Mr. Moyosore Onigbanjo (SAN), noted that it is necessary that the court balances the equity as it relates to its earlier order, directing parties to maintenance of status quo ante bellum.

“I think it is also necessary to restrain the FIRS, because they collect the VAT, distribute to all the states and keeps their own four per cent.

“If, at the end of the day, the court agrees with the judgment of the Federal High Court, how do we retrieve the funds that have been shared?”

Justice Haruna Simon Tsanami, who led a three-member panel, directed them to make the application formal by providing the necessary facts, including ascertaining the amount being collected as VAT.

Other members of the panel are Justices Bature Gafai and Peter Affen.

Meanwhile, the court has reserved ruling on an application by Lagos State to be joined as a respondent in the appeal filed by the Federal Inland Revenue Service (FIRS).

The court, after listening to arguments by lawyers to parties on Thursday, said they would be informed when the ruling is ready.

In arguing Lagos application, Onigbanjo (SAN) said his client is a necessary party as it would be affected by the outcome of the case.

He noted that, as a federating unit/state in Nigeria, Lagos is entitled to collect VAT by virtue of the judgment of the Federal High Court that annulled VAT Act.

Onignajo argued that even the appellant (the FIRS) recognised that Lagos State has an interest in the case, which he said, is evident in the affidavit it filed, wherein copious reference was made to the Lagos State Government.

He further argued that since FIRS, in an affidavit supporting its application for stay of the judgment, recognises the interest of the Lagos State Government in the case, “it cannot now turn around to say the Lagos State Government has no interest in this case and should not be joined. It cannot blow hot and cold or speak from both sides of its mouth.”

Onigganjo also contended that it is unfair for the FIRS to oppose the request by Lagos to be heard in the case after making allegations against it.

He added that even the court recognises the interest of Lagos State in the case when it extended its order on maintenance of status quo to Lagos State, which is not yet a party in the case.

Onignajo prayed the court to join his client as a respondent.

Adedipe adopted Onignajo’s argument, and urged the court to allow the application by Lagos State.

Following the observation by Onigbanjo that the written address filed by the Attorney General of the Federation (AGF) is incompetent, the lawyer representing the AGF, Tijani Gazali (SAN) withdrew the address, subsequent upon which the court struck it out.

Lawyer to FIRS, Mahmud Magaji (SAN) objected to the ‘joinder’ application filed by Lagos State, arguing that the State is not a necessary party.

Magaji faulted the competence of the application and urged the court to discountenance it.

On second thought, Magaji said if the court is willing to join Lagos, it should extend such gesture to the other states of the federation.

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