A Federal High Court sitting in Port Harcourt, Rivers State, has dismissed a suit by the Federal Inland Revenue Service, FIRS, seeking to stop the Rivers State Government from commencing collection of Value Added Tax, VAT.
However, in a statement on Monday evening, the Service has told VAT payers to continue to pay tax to it, despite a stern warning from Governor Nyesom Wike to stop intimidating corporate bodies in the state.
Wike, in a statewide broadcast, also ordered the state Inland revenue service to begin the process of collecting the taxes.
He added: “Following the recent judgment of the Federal High Court, Port Harcourt, which upheld the constitutional right and authority of state governments to impose, collect and utilize value added taxes (VAT) within their respective territorial jurisdictions, the Rivers State Government enacted the Rivers State Value Added Tax Law 2021 to regulate the effective administration of VAT in Rivers State.
“As expected, the federal government, through the Federal Inland Revenue Service (FIRS), disagreed and filed an appeal coupled with a request for stay-of-execution of the judgment before the Federal High Court.
“While the appeal was pending and without any stay-of-execution of the subsisting judgment, the FIRS went about to bully corporate bodies and business entities from paying the VAT to the Rivers State Government even when they knew that an appeal does not serve as a stay neither was there anything to stay in a declaratory judgment.
“As a mere agency of the federal government without any political authority the effrontery and impunity exhibited by the FIRS against the Rivers State Government was ill-advised and highly provocative.
“However, being a government that believes in the rule of law, we decided on our own to suspend the enforcement of the Rivers State VAT Law 2021 pending the outcome of the FIRS’s application for stay-of-execution.
“Today, the FIRS has failed in its attempt to frustrate the enforcement of the state’s law on VAT with the Federal High Court’s dismissal of its application for stay-of-execution of the judgment.
“It is important to reiterate the fact that we did no wrong in exercising our legal right under our constitutional democracy to stop the continuing breach, denial and curtailment of the constitutional right of states to lawfully impose and collect value added and other related taxes within jurisdiction to the exclusion of the federal government.
“And in doing so, our singular and progressive objective was to contribute to the advancement of fiscal federalism by enabling the federating states to explore and exploit their potential and capacity for generating greater internal revenues with which to fund their development goals and reduce the outdated over-reliance on pitiable Federal allocation and other handouts….
“But, this is not our own making. Like the right to derivation, this is also a constitutional prescription, which we all swore as political leaders to respect and defend as the supreme law of the land.”
Justice Pam, in his ruling, noted that in as much as the state government and the state legislature has enacted a law in respect of the VAT that courts were bound to obey laws.
He noted that the Rivers State Government and the State Assembly, have duly enacted Rivers State Value Added Tax No. 4, 2021, which makes it a legitimate right of the state to collect VAT.
The judge said the law remained valid until it has been set aside by a court of competent jurisdiction, adding that the law enacted by the Rivers State legislature remained valid
Pam, however, said granting the prayers of FIRS would amount to committing murder, noting that the prayers cannot stand and dismissed same.
Earlier, Justice Pam had read a letter that FIRS lawyers had served the court seeking for stay of any ruling on their application
But, in the absence of any requisite document that ought to have been attached to the letter, the Judge dismissed the letter.
Meanwhile, the Counsel for Rivers State Government, Mark Agu, commended the court for standing for justice, noting that the state assembly had already made a standing law on VAT.
Agu disclosed that FIRS had approached the court with two prayers but that they withdrew the first prayer seeking for injunction and wanted the court to stay the execution of that judgement.
He said: “The first Defendant, FIRS, sent their appeal against the judgement of the Honourable court delivered wherein the court allowed the Rivers State Government to collect their VAT.
“Subsequently after the judgement Rivers State has its own law on that, the Rivers State Law on VAT No. 4, 2021. Having appealed, they were asking for an injunction and secondly asking for stay on the judgement.
“Today, the court has delivered its ruling dismissing the said application for stay, though, without cost.
“The court’s reasoning is that if it should grant stay it is more or less like overruling itself and the court is empowered to recognize all laws enacted by the national assembly or the state house of assembly, therefore the law stands as substantive.
“Therefore the issues of collection of VAT as it stands today Rivers State is still entitled to still collect.”
But, counsel for FIRS, Reuben Wanogho, expressed displeasure with the stand of the court, noting that FIRS would not hesitate to appeal the ruling.
Wanogho said: “The court has delivered its ruling on the bases of how it saw the facts of the case. We do not agree with the ruling and we will take all necessary steps to challenge it. That is why the appellate System is there.
“The appellate System is there to enable us ventilate out grievances if for any reasons the court makes a pronouncement me we do not agree with it.
“For sure we feel that the ruling should have gone in our favour but, the court has taken a position against us, so we will do the needful by taking it up immediately before the court of appeal.
“We will challenge it. And we are hopeful that at the court of appeal we should be able to find our way. The appeal system is there to correct errors.
“The natural consequences of the ruling is that the Rivers State Government will be collecting the VAT, but we will take steps to ensure that we amelioration situation as quickly as possible.”