FIRS to Lagos: We’ll continue to collect VAT until appeal court decides on legal dispute

The Federal Inland Revenue Service (FIRS) says it will continue to collect Value Added Tax (VAT) from businesses operating in the country.

Muhammed Nami, executive chairman of FIRS, made this known in a letter dated August 24 and addressed to Moyosore Onigbanjo, the attorney general and commissioner for justice in Lagos state.

The Lagos state government had directed the FIRS to stop issuing demand notices for payment of VAT in the state and to render accounts, within seven days, of all sums collected as VAT in the current accounting circle in the state.

The state government premised its demands on the decision of the federal high court in Port Harcourt, Rivers state.

The court had issued an order restraining FIRS from collecting VAT and Personal Income Tax (PIT) in the state.

The landmark judgement also implies that other state governments can follow and collect VAT in their jurisdictions.

But the FIRS had announced that the court ruling has been appealed, adding that it has also filed a stay of execution and advised the public to maintain a status-quo on the payment of the taxes.

In the letter addressed to the Lagos commissioner, Nami said since the Rivers court decision has been appealed, “the law does not allow a party to a suit to carry out an action to forestall the decision of the appellate court once an appeal has been entered”.

It added that there were contrary rulings by similar courts on the same matter.

FIRS added that parties must maintain the status quo until the decision of the appeal court.

“The instant judgement of the Federal High Court, Rivers State, is in conflict with the extant judgement of the Federal High Court, Kogi State on the same subject matter i.e. the validity of VAT Act as administered by the Service,” the letter reads.

“The conflict created by the later judgement can only be resolved by the appellate court; and the right of the appellate court in this wise should not be compromised.

“In view of the foregoing, parties have to maintain the status quo ante (i.e. their positions before the instant judgement of the Federal High Court, Rivers State).

“The FIRS shall continue to collect VAT and administer the VAT Act until the final resolution of the legal dispute by the relevant appellate court.”