High Court dismisses FIRS’ stay of execution application over VAT in Rivers State

The Federal Inland Revenue Service (FIRS) has lost its bid to secure a stay of execution in its application seeking to stop the Rivers State government from collecting Value Added Tax (VAT) in the state to which the oil-rich state got a Federal High Court judgement in August.

A Federal High Court sitting in Port Harcourt dismissed the FIRS application in suit number FHC/PH/CS/149/2020 in which the IFRS through a motion on notice applied for a ‘stay of execution’ on the earlier judgement of the court presided over by Stephen Dalyop Pam, that declared that it was the constitutional role of state governments to collect VAT, and not FIRS.

Pam, in his ruling on the FIRS application for a ‘stay of execution’, said granting the application would negate the principle of equity.

He noted that the Rivers State Government through the State Assembly has duly enacted Rivers State Value Added Tax Edict No. 4, 2021, which makes it a legitimate right of the state to collect VAT.

According to the judge, every court in the country is constitutionally mandated to obey every legislation enacted by both the National and State Assembly respectively.

He explained that the Rivers State government law on VAT remains valid until it has been set aside by a court of competent jurisdiction.

Read also: Lagos dares FIRS, insists on collecting VAT

Pam stated that since FIRS was, ab initio, acting in error by collecting VAT in Rivers State, and has a huge burden of refund of those monies, there was a need not to allow it to incur further liability.

He declared that the FIRS application “is refused and dismissed” in the light of the fact that all subsisting law concerning the collection of VAT stands in favour of the Rivers State government.

The dismissal of the FIRS application further threatens the federal government’s revenue collection projection of N7.9 trillion for the 2021 fiscal year.

According to a revenue performance report obtained from the budget office of the federation, the federal government’s projected revenue for 2021 was N7.9 trillion, of which N3.9 trillion was earmarked as a pro-rata target for the first six months.

Earlier, the judge had read a letter that FIRS lawyers had served the court seeking a stay of execution on any ruling on their application. But, in the absence of any required document that ought to have been attached to the letter, the judge dismissed the letter.

Counsel to Rivers State government, Mark Agwu, speaking in reaction to the ruling, said 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 a stay, it is more or less like over-ruling 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 VAT law No 4) stands. It is a substantive law. The issue of collection of VAT as it stands today, Rivers State Government is still entitled to so collect. That is where we are today.”

But lead counsel to the Federal Inland Revenue Services (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 said they do not agree with the ruling and have already resolved to take all necessary steps to challenge it.

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