(Updated) Appeal Court Joins Lagos in VAT Collection Tussle

The Court of Appeal, Abuja, on Thursday, joined Lagos State as a respondent in the appeal challenging the judgment of a Federal High Court which faulted the federal government’s collection of Value Added Tax (VAT) in Rivers State.

The appellate court, in a ruling in Lagos’ application for joinder, held that the applicant established beyond doubt that it has substantial and sufficient legal right and interest to protect in the revenue collection dispute.

A three-member panel of the Court of Appeal had on September 16 reserved ruling in the application after taking submissions for and against the joinder application.

Lagos State, in the application, argued that it will be affected adversely if it was not heard before decisions were made in the matter.

Justice Stephen Pam of a Federal High Court in Port Harcourt had, in a judgment delivered on August 9, held that the Rivers State Government and not the Federal Inland Revenue Service (FIRS) has the right to collect VAT and Personal Income Tax (PIT) in the state.

Justice Pam, in the judgment subsequently restrained the Attorney General of the Federation (AGF) and FIRS (1st and 2nd defendants) from collecting VAT in Rivers and directed the Rivers State Government to take charge of the duty.

As a result of the court’s decision, the Lagos State government commenced a move to stop the collection of VAT by the FIRS in the state.

However, having failed to stay the judgment of the Federal High Court, FIRS had approached the appellate court to challenge the judgment.

The service also applied for two orders; the first seeking to stay the execution of Justice Pam’s judgment and the second, an interlocutory injunction restraining Rivers from collecting VAT in the state.

But because of the request of Lagos, the two applications could not be taken as the court said priority should be given to the Lagos application for joinder.

Arguing the motion, Attorney General (AG) of Lagos State, Mr Moyosore Onigbanjo (SAN), had submitted that Lagos has vested interest in the VAT collection, adding that the decision of the court would affect it when delivered.

Onigbanjo noted that FIRS, in its appeal against the judgment of Justice Pam, made some allegations against it and that it would be in the interest of justice for it to be allowed to join in the appeal to ventilate its defence.

“From the contents of the appellants affidavit, Lagos has been made a necessary party in the appeal by some references to it and for it to be bound by the final decision, it is in the interest that it should be allowed to make defence to allegations against it,” he said.

Similarly, the counsel to Rivers State, Mr Ifedayo Adedipe (SAN), in adopting his processes, aligned himself with the submission of Onigbanjo and urged the court to join Lagos as a party in the appeal.

But, the counsel to the appellant, Mr Mahmoud Magaji (SAN), vehemently opposed the Lagos request, claiming that the state has not shown how its interest would be jeopardized if not allowed in the matter.

Magaji further faulted the application on the grounds that it breached section 243 (1),(a), (b) of the 1999 Constitution, which forbids a respondent from challenging the judgment.

He subsequently urged the panel to dismiss the application for lacking in merit.

Delivering ruling in the joinder application, Justice Haruna Tsammani held that the application has merit and subsequently ordered that all processes filed in respect of the suit be served on Lagos as a third respondent to enable it respond as required by law to the appeal filed by FIRS.

While the court fixed October 7 for continuation of further hearng in the matter, it said further proceedings will be at the Port Harcourt Division of the Court of Appeal, adding that the application was taken in Abuja because of the court’s vacation which ended last week.