Tuesday, July 31,
By a recent Federal High Court (FHC) ruling, the consumption tax imposed by Kano State Government on goods and services consumed within the state has been nullified. This is in addition to a perpetual injunction granted against the State Government from implementing the tax.
This decision arose from an action filed by Nigeria Employers Consultative Association (NECA) and Retail Supermarkets Nigeria Limited (the Plaintiffs) against Kano State Inland Revenue Service, shortly after the introduction of the 5% consumption tax on goods and services by the Kano State Government in 2017.
The FHC ruled in favour of the Plaintiffs, on the following bases:
· imposition of consumption tax over the goods and services which are already subject to Value Added Tax (a Federal legislation on the same scope) amounts to double taxation; and
· the provision of the Kano State Law is inconsistent with the Second Schedule to the Constitution of the Federal Republic of Nigeria.
It is interesting to note that this decision came not too long after a ruling by the Supreme Court in respect to the imposition of Sales Tax by Lagos State Internal Revenue Service. While the FHC ruling on Kano State consumption tax appears consistent to the ruling issued by the Supreme court, it raises other issues worthy of consideration.
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