Court declared collection of value added tax by federal government illegal

A Federal High Court sitting in Port Harcourt, Rivers State, has declared the collection of Value Added Tax (VAT) and Personal Income Tax by the Nigerian federal government as illegal and unconstitutional.

The suit (FHC/PH/CS/149/2020) between the Attorney-General for Rivers State and Federal Inland Revenue Service (FIRS) as the first defendant and the Attorney General of the federation, Abubakar Malami, as the second defendant.

The court decided in favour of the Rivers State as the rightful arm to receive personal income tax and VAT originating from the state.

The presiding judge, Stephen Pam, ruled that the Nigerian government’s constitutional powers did not include VAT collection but those items in 58 and 59 of the Exclusive Legislative List.

Pam issued an order of perpetual injunction limiting FIRS and the AGF from coercing residents of Rivers State to pay VAT and personal income tax to FIRS.

The court declared that FIRS was not entitled to receiving VAT, education tax, technology levy and withholding tax from any state in Nigeria and further dismissed the objections the defendant filed that hearing the case was not within the court’s jurisdiction.

The judge dismissed the defendant’s plea for the case to be transferred to the Court of Appeal for interpretation