VAT: Appeal Court restores status quo on all parties

The Court of Appeal, sitting in Abuja, Federal Capital Territory (FCT) on Friday restored status quo on the Value Added Tax (VAT) conflict between the Federal Inland Revenue Service (FIRS) and the Rivers State government. The appeal court, accordingly, ordered all parties in the conflict to maintain the status quo and refrain from taking further action that would be prejudicial to the judgement of a Federal High Court sitting in Port Harcourt, Rivers State, which upheld the legislation of the Rivers State government to collect Value Added Tax (VAT), pending the hearing and determination of the instant suit.

Justice Haruna Tsammani, leading a three-man panel of the appeal court in a preliminary judgement on an appeal by the Federal Internal Revenue Service (FIRS) on Friday, issued the order restraining all parties from further actions on the matter.

The Rivers State government has recently enacted a law to collect VAT directly from firms operating in the state, a revenue generation duty performed by the FIRS over the years.

Governor Nyesom Wike had on August 19 assented to the Valued Added Tax Law, 2021 enacted by the Rivers State House of Assembly.

Justice Stephen Pam of the Federal High Court in Port Harcourt, Rivers State, had in a judgement, declared that states should collect VAT, not the Federal Government.

The FIRS, thereafter, challenged the judgement, filing a motion on notice to apply for a stay of execution on the judgement delivered by Justice Pam.

The Federal High Court, Port Harcourt, had declined the application, noting that the FIRS failed to file an application to set aside the tax law recently enacted by the Rivers State House of Assembly. Justice Pam maintained that the state law on VAT was valid and subsisting.

FIRS, therefore, proceeded to  the Court of Appeal sitting in Abuja, filing a civil motion seeking a stay of the execution of the judgement delivered by the Federal High Court in Port Harcourt, Rivers State, pending the determination of the substantive case.