VAT Legal Tussle : FG Mulls Out Of Court Settlement With States

By Ayodele Oni

Indication has emerged that the Federal Government may resort to political solution in resolving the issue of the Value Added Tax, (VAT) with state Governors.

The Minister of Finance, Budget and National planning, Mrs Zainab Ahmed, hinted that the Federal Government may explore an out-of-court solution  legal battle between its agency, Federal Inland Revenue Service, (FIRS) Rivers and Lagos states over the collection of VAT.

The Minister, while featuring on Channels Television programme, noted that efforts were ongoing on the issue but she did not give details as the matter was subjudice.

Mrs Ahmed said she hoped there would be a political solution to the issue rather than a protracted court case.

The Federal High Court sitting in Port Harcourt, the Rivers State capital, had on August 9 ruled that Rivers State and not the FIRS should be the authority collecting VAT and Personal Income Tax in the state.

The FIRS then approached the Court of Appeal in Abuja to challenge the judgement. It also wrote to the Senate to seek the inclusion of VAT collection in the exclusive legislative list.

Following the failure of the FIRS to obtain a stay of execution, it sought from the appellate court to prevent the state government from enforcing the verdict.

Rivers State Government had enacted a law to empower the state to collect VAT. The governor, Nyesom Wike, signed the bill into law on August 19.

Lagos State, whose request for joinder as a respondent in the suit before the Court of Appeal was also granted by the court, also enacted its own VAT law. The governor, Babajide Sanwo-Olu, signed the bill into law on September 10.

Meanwhile, after approving Lagos State’s request for joinder as a party, the Court of Appeal, ordered all parties to maintain the status quo on the matter, a ruling the Rivers State Government had approached the Supreme Court to set aside.

The Court of Appeal also directed that the matter be moved from Abuja to its Port Harcourt Division for further hearing. The court is yet to decide on the substantive suit.

According to the minister, “I’m not supposed to be talking about issues in court but I do hope that this problem can be solved by sitting on the table; not on the pages of newspaper or disagreements in court because it is possible to solve it on the table, talking of political solution.

“There are a lot of efforts going on right now. As I said, I don’t want to discuss it because it’s in court so I have to be careful. But there will be a positive political solution. We are working towards an out-of-court solution.”