A Federal High Court sitting in Port Harcourt yesterday dismissed an application by the Federal Inland Revenue Service (FIRS) in a bid to stop the Rivers State government from collecting Value Added Tax (VAT) in the state.
The FIRS in suit no FHC/PH/CS/149/2020 had applied for a stay of execution on the court’s earlier judgement delivered by Justice Stephen Dalyop Pam, stressing that it was the constitutional role of state governments to collect VAT and not FIRS.
Governor Nyesom Wike, who reacted swiftly in a state broadcast shortly after the judgement, directed the Rivers State Revenue Service (RSRS) to fully implement and enforce the state’s VAT Law, just as he urged other states to follow suit.
In yesterday’s ruling, the judge said that granting such application would negate the principle of equity, adding that Rivers government through the State Assembly, has duly enacted the Rivers State Value Added Tax No. 4, 2021, which makes it a legitimate right of the state to collect VAT.
The Judge dismissed FIRS application because all subsisting laws concerning the collection of VAT stand in favour of the Rivers State government.
He added that every court in the country is bound by the constitution to obey every legislation enacted by both the National and State Assembly respectively, explaining that Rivers law on VAT remains valid until it has been set aside by a court of competent jurisdiction.
Justice Pam stated that since FIRS acted in error from the beginning by collecting VAT in Rivers State, and has a huge burden of refund of those monies there was need not to allow it incur more liability.
Justice Pam, who had read a letter that FIRS lawyers had served the court seeking for stay of any ruling on their application, dismissed the letter due to the absence of any requisite document that should have been attached to the letter.
The counsel for the state, Mark Agwu, who spoke on the implication of the ruling, noted that the state government is still entitled to collect VAT within the State. “Today, the court has delivered its ruling dismissing the said application for stay of execution, though without cost.
In fact, the court’s reason is that if it should grant stay, it is more or less like overruling itself. “And then, since the court is empowered to recognize all laws enacted by the National Assembly or the State Houses of Assembly, therefore, that law (Rivers) stands, it is a substantive law.
“Therefore, the issue of collection of VAT as it stands today, Rivers State Government is still entitled to collect. That is where we are today.” Lead Counsel to the FIRS, Reuben Wanogho said the court has delivered its ruling on the basis of how it saw the facts of the case before it.
He, however, said that they do not agree with the ruling and already resolved to take all necessary steps to challenge it. Wike, in his broadcast said that his administration can enforce the Rivers State Value Added Tax Law 2021, until otherwise set aside by a superior court.