AG. Rivers v. FIRS: CITN Will Take an Informed Position After Studying the Court Judgement


Wednesday, August 11, 2021 / 06:47 PM / CITN / Header Image Credit: Key Visa



In a judgment delivered by Justice Stephen Pam of the Federal High Court, Port Harcourt Division, Rivers State, which has gone viral in the social media, it was held, reportedly, that the Rivers State Government, and not the Federal Government, is empowered to collect Value Added Tax (VAT) and Personal Income Tax (PIT) in the State.


It was reported that the court held that there was no constitutional provision backing the collection of VAT, Withholding Tax, Education Tax and Technology Levy in Rivers State or any other state of the Federation by the FIRS owing to the fact that the Federal Government is restricted by the Constitution of the Federal Republic of Nigeria, 1999 to taxation of incomes, profits and capital gains and these do not in any way include VAT or any other levy other than those specifically mentioned in Items 58 and 59 of the Exclusive Legislative List of the Constitution. For the purpose of this Press Release, the Institute is restricting itself to the vexed issue of the constitutionality of the Value Added Tax.


Previous Decisions Nullifying The VAT Act or Parts Thereof

In October 2019, the Federal High Court, Lagos Division, in the Registered Trustees of Hotel Owners and Managers Association of Lagos v. A. G. Federation & Others while considering the validity of the Hotel Occupancy and Restaurants Consumption Law of Lagos State upheld the powers of the Lagos State Government to charge and collect Consumption Tax from hotels, restaurants and event centres within the State. The Court held that based on the Constitution and the Taxes and Levies (Approved List for Collection) Act, the power to impose consumption tax was a residual power within the exclusive competence of States. It restrained the FIRS from imposing VAT on goods and services consumed in hotels, restaurants and event centres as this was already covered by the Lagos State Law.


The court proceeded to declare section"s" 1,2,4,5 and 12 of the VAT Act as being inconsistent with section 4(2),(4) (a) & (b), (7)(a) & (b) of the Constitution and consequently unconstitutional and invalid. The court granted perpetual injunction against FIRS from collecting VAT from hotels, restaurants and event centres in Lagos.


In Emmanuel Chukwuka Ukala v. FIRS & A.G. FEDERATION in Suit No. FHC/PH/CS/30/2020, Hon.  Justice I. O. Oshomah sitting at the Portharcourt Division of the Federal High Court, on 11th December, 2020, expressly held that the National Assembly had no power to enact the VAT Act. The plaintiff had asked the court to declare that there was no constitutional basis for the imposition, demand and collection of VAT by FIRS from him since the constitutional powers and competence of the National Assembly were limited to those specifically listed in Item 59, which did not include VAT or any other species of sales tax. The court, therefore, declared the VAT Act a nullity.


Summary of these Decisions

In the Registered Trustees of Hotel Owners and Managers Association of Lagos v. A. G. Federation, the court invalidated some of the provisions of the VAT Act. In Ukala v. FIRS, the court nullified the VAT Act. In A.G. Rivers v. F.I.R.S., it has been reported that the court has nullified the VAT Act and empowered the States to impose, demand and collect VAT within their States.


Our Conclusion

While the Institute is in possession of the first and second cases mentioned, we are making efforts to get a certified true copy of the third and current case.

From the foregoing decisions, it is evident that this is not the first time that the VAT Act has been declared unconstitutional.


As an Institute, we were waiting for the appellate courts to take a definite position on the matter before making our comments. In view of the length of time that it takes for an appeal to be determined in our country, we think it will be in the public interest not to wait any longer, hence this press release.


As soon as we receive the certified true copy of the judgement, our legal advisers will study it and advise us accordingly. When that is done in the next few weeks, the Institute will take an informed position and the public will be duly communicated. We are mindful of our statutory mandate as a tax regulatory professional Institute and we will not shirk our responsibility to the public in all matters relating to taxation in Nigeria.

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 Proshare Nigeria Pvt. Ltd.

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