The Court of Appeal sitting in Abuja has ordered all the contending parties to maintain the status quo on the collection of Value Added Tax (VAT) pending the determination of the appeal filed before the Federal Inland Revenue Service (FIRS).

The appellate court, in its order, which is the latest twist in the series of legal tussles over who has the responsibility to collect, asked the parties to refrain from taking action that would give effect to the judgement of the Federal High Court in Port Harcourt, which states that Rivers State government and not the FIRS should collect VAT.

Justice Haruna Tsammani, who led the 3-man panel of the appellate court, gave the order on Friday while ruling on an appeal filed by the FIRS and subsequently deferred the hearing of an application by the Lagos State to be joined as an interested party in the matter, till September 16, according to ChannelsTV.

However, the Lagos State government had through its Attorney-General and Commissioner for Justice, Moyosore Onibanjo, SAN, protested against the issuance of an order for the maintenance of status quo, insisting that such order could not be binding on it, since it was yet to be joined as a party in the appeal by FIRS.

The FIRS has been collecting the VAT for almost 3 decades until the Rivers State government decided to challenge the legality or otherwise of that.

Lagos State applies to be part of suit

The Lagos State government, in a new development, applied to be joined as a co-respondent to the suit filed by the FIRS at the appeal court.

Onigbanjo, who represented the state government at Friday’s hearing, informed the court that the interest of the state was at stake, stressing that if they were not joined, it would amount to a breach of a fair hearing.

He then urged the court to take the application for the joinder first before the application for the stay of execution filed by the FIRS.

However, the counsel to the FIRS, Mahmud Magaji (SAN), urged the court to hear the main application first, as it was of utmost priority.

The court of appeal, in its ruling, held that the motion of joinder by the Lagos State government be heard and gave the applicants 2 days to file their written addresses.

Also, the respondents were given 2 days to file their response, while the applicants were given a day to reply on the point of law.

What you should know

It can be recalled that earlier in August, Justice Stephen Pam of the Federal High Court Port Harcourt had ruled that Rivers State government and not the FIRS should collect VAT and Personal Income Tax.
Armed with the judgement, the Rivers State House of Assembly immediately passed the VAT collection bill which was subsequently signed into law by the state governor, Nyesom Wike on August 19.
Not happy with the decision of the court, the FIRS filed a motion on notice to apply for a stay of execution on the earlier judgement delivered by Justice Pam, which was subsequently turned down by the court.
The judge said that FIRS failed to file an application to set aside the tax law recently enacted by the Rivers State House of Assembly adding that the state law on VAT was valid and subsisting.
The FIRS later approached the Court of Appeal in Abuja with a civil motion seeking a stay of the execution of the judgement earlier granted by the court in Rivers pending the determination of the case.