Rivers State Government has power to collect VAT now – Ozekhome

The judgement of the Court of Appeal, sitting in Abuja, the Federal Capital Territory (FCT) on the controversy over the collection of Value Added Tax (TAX) in Rivers State last Friday has been ambiguous on what constitutes the status quo on the matter brought before it by the Federal Inland Revenue Service (FIRS).

The appeal court had in a preliminary ruling on the appeal by the FIRS challenging the judgement of the Federal High Court, Port Harcourt, which held that it is the Rivers State government that should collect VAT in the state and not the FIRS, ordered that both parties – Rivers State government and the FIRS – should maintain the status quo.

A renowned legal practitioner, Mike Ozekhome, had stated that “clearly, the status quo ante bellum was before the breakout of the hostilities.”

According to Ozekhome the hostilities broke out when the FIRS dragged the Rivers State Government to court, arguing that the state government cannot collect VAT based on its law. He noted that the said law was already duly passed and made operational by the Rivers State House of Assembly, which had been assented by Governor Nyesom Wike, asserting that the state has the constitutional competency under section 4 of the Constitution to collect VAT even after the court of appeal status quo order.

The Federal High Court, Port Harcourt, Rivers State, had in a judgement held that it is the Rivers State Government that is competent to collect VAT, not the FIRS. Ozekhome declared that the law was, therefore, already in operation before the FIRS challenged the validity of a Federal High Court judgement, Port Harcourt, that had given the Rivers State Government the power to collect the VAT.

“So, the status quo is that it is the Rivers State Government that has the power to collect VAT, until perhaps, the Court of Appeal rules otherwise and set aside the judgment of the Federal High Court.

“However, the Court of Appeal ruled that all parties on the matter (including the FIRS, Attorney General of the Federation and the Lagos State Government that sought to be joined as co-respondent, should maintain the status quo, so as to preserve the res and prevent the Federal High Court judgment from being negatively affected.

“Consequently, to avoid unnecessary bickering and needless head-on collision between the Attorney General of the Federation, the Federal Government (which owns the FIRS) and the Rivers State Government in a matter that is already subjudice, I will advise that both the Rivers State Government and the FIRS should both cease hostilities for now and maintain the status quo until the Court of Appeal finally pronounces on the matter,” Ozekhome declared.