Lagos State Government has said no booby-trap will affect the implementation of the collection of Value Added Tax (VAT) by the state after receiving court judgement on the case.

This was a position of the State Attorney-General and Commissioner for Justice, Mr Moyosere Onigbanjo (SAN) during a public hearing at the State House of Assembly on “A Bill for the law to impose and charge Value Added Tax on certain goods and services provided for the administration of the tax and other related matters.”

Onigbanjo was responding to a representative of civil society organizations, Mr Adeola Samuel who cautioned the state government over the execution of the judgment in favour of Rivers State.

A Federal High Court in Rivers State presided over by Justice Stephen Dalyop Pam, had issued an order of perpetual injunction restraining the Federal Inland Revenue Service (FIRS) and the Attorney General of the federation, both first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, personnel income tax and Value Added Tax.

Justice Pam made the assertion while delivering judgement in Suit No. FHC/PH/CS/149/2020, filed by the Attorney General for Rivers State (plaintiff), against the Federal Inland Revenue Service (first defendant) and the Attorney General of the Federation (second defendant).

The Court, which granted all the eleven reliefs sought by the Rivers State Government, stated that there is no constitutional basis for the FIRS to demand and collect VAT, Withholding Tax, Education Tax and Technology levy in Rivers State or any other State of the Federation, being that the constitutional powers and competence of the Federal Government is limited to taxation of incomes, profits and capital gains which does not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the constitution.

The judge dismissed the preliminary objections filed by the defendants that the court lacks jurisdiction to hear the suit and that the case should be transferred to the Court of Appeal for interpretation.

Justice Pam, who also dismissed the objection raised by the defendants that the National Assembly ought to have been made a party in the suit, declared that the issues of taxes raised by the state government are issues of law that the court is constitutionally empowered to entertain.

He declared that after a diligent review of the issues raised by both the plaintiff and the defendants, the plaintiff has proven beyond doubt that it is entitled to all the eleven reliefs it sought in the suit.

The court agreed with the Rivers State Government that it is the state and not FIRS that is constitutionally entitled to impose taxes enforceable or collectable in its territory of the nature of consumption or sales tax, VAT, education and other taxes or levies, other than the taxes and duties specifically reserved for the Federal Government by items 58 and 59 of Part 1 of the Second Schedule of the 1999 constitution as amended.

Reacting, Samuel argued that the execution of the judgement by the Lagos State Goverment was a booby trap that would make it failed in its implementation.

According to him, “There is a booby trap except if Lagos wants to overlook it. The doctrine of covering the field will have to be applied. If the law is passed as it is, there will be a lot of litigations.”

He cited a judgement where it was declared that an individual or organization cannot benefit from a judgement that one is not part of.

In a swift reaction, Onigbanjo said, “That judgement on VAT law is not valid only in Rivers State. Any state in Nigeria stands to benefit. Your statement is not correct on the position of the law.

He reiterated that “the National Assembly does not have power on VAT, that is what brings us where we are today. The position as it is today the VAT law is no longer applicable in Nigeria. I respectfully disagree with your position sir,” the Commissioner for Justice submitted.

While addressing newsmen shortly after the hearing, the Chairman of the House Committee on Finance, Hon. Rotimi Olowo said, “it will make no sense if all money accruable to us in Lagos State is taken by the Federal Government. Lagos is working hard and we are sweating.”

He argued that there is a lot of pressure on the State Goverment in terms of infrastructure, saying with the proposed law on VAT in the state, would bring about holistic development in the state.