South governors back court action on tax
Don’t join Lagos, says FIRS
For hours on Thursday, legal fireworks were on display at the Court of Appeal in Abuja over the Value Added Tax (VAT).
Lagos and Rivers states asked the court to stop the Federal Inland Revenue Service (FIRS) from further collecting VAT pending the determination of the suit challenging the legality of its action.
The FIRS prayed the appellate court to reject Lagos’ bid to be joined in its appeal seeking to upturn the Federal High Court judgment which gave the authority for VAT collection to the Rivers State government.
In Enugu, governors of the 17 Southern states, at their third summit this year, gave their backing to the judgment allowing states to collect VAT.
FIRS appealed the August 9 judgment of Justice Steven Pam of the Federal High Court in Port-Harcourt voiding the VAT Act and holding that states could collect VAT.
Opposing Lagos’ application to be joined as a respondent in the appeal, FIRS claimed the state was not a necessary party, and that if Lagos must be joined, then the rest of the 34 states should also be joined.
Counsel for Rivers, Chief Ifedayo Adedipe (SAN), applied orally to the court to exercise its powers under Order 4 Rules 6 of the court’s Rules to appoint either a receiver or manager to take custody of the res (subject of dispute) pending the determination of the appeal.
Lagos Attorney-General, Moyosore Onigbanjo (SAN), added that the court needed to balance the equity as it relates to its earlier order directing parties to maintain status quo antebellum.
He said: “I think it is also necessary to restrain the FIRS, because they collect the VAT, distribute to all the states and keep their own four per cent.
“If, at the end of the day, the court agrees with the judgment of the Federal High Court, how do we retrieve the funds that have been shared?”
Justice Haruna Simon Tsanami, who led a three-member panel, directed them to make the application formal by providing the necessary facts, including ascertaining the amount being collected as VAT.
Other members of the panel are Justices Bature Gafai and Peter Affen.
The court reserved a ruling on Lagos’ application to be made a respondent.
After listening to arguments by counsel, the appellate court said parties would be informed when the ruling is ready.
Arguing Lagos’ application, Onigbanjo said his client was a necessary party as it would be affected by the outcome of the case.
He noted that, as a federating unit/state in Nigeria, Lagos was entitled to collect VAT by virtue of the Federal High Court judgment that annulled the VAT Act.
Onignajo argued that even the appellant (the FIRS) recognised that Lagos State has an interest in the case, which he said, was evident in the affidavit it filed, wherein copious reference was made to the Lagos State Government.
He further argued that since FIRS, in an affidavit supporting its application for stay of the judgment, recognised the interest of the Lagos State Government in the case, “it cannot now turn around to say the Lagos State Government has no interest in this case and should not be joined”.
He added: “It cannot blow hot and cold or speak from both sides of its mouth.”
Onigganjo also contended that it was unfair for the FIRS to oppose Lagos’ request to be heard in the case after making allegations against the state.
He added that even the court recognised the interest of Lagos in the case when it extended its order on maintenance of status quo to the state, which was not yet a party in the case.
Onignajo prayed the court to join his client as a respondent.
Adedipe adopted Onignajo’s argument and urged the court to allow the application by Lagos.
Following the observation by Onigbanjo that the written address filed by the Attorney General of the Federation (AGF) was incompetent, the lawyer representing the AGF, Tijani Gazali (SAN) withdrew the address and the court struck it out.
Counsel for FIRS, Mahmud Magaji (SAN), objected to the joinder application filed by Lagos State, arguing among others, that the state was not a necessary party.
Magaji faulted the competence of the application and urged the court to discountenance it.
On second thoughts, Magaji said if the court was willing to join Lagos, it should extend such indulgence to the other states of the federation.
