In a very recent interview in New York, Nigeria’s attorney general, Abubakar Malami was quoted as saying: “A lot has precluded the state from collecting value-added tax. One, generally speaking, as you rightly know, the issue of the Value-Added Tax, VAT, is an issue on the Exclusive Legislative List.”
“And the implication of being in Exclusive Legislative List matter is that only the National Assembly can legislate on it. The question that you may perhaps wish to address your mind on is whether there exists any national legislation that has conferred the power on the state to collect VAT. And my answer is ‘no’.
These claims have drawn the ire of some senior lawyers in Nigeria. They challenge the attorney to point out where VAT was mentioned in the Exclusive Legislative List of the 1999 Constitution of the Federal Republic of Nigeria (as amended).
Human rights lawyers, Mr. Femi Falana (SAN), Dr. Mike Ozekhome (SAN), and Mr. Ebun-Olu Adegboruwa (SAN), among others, separately disagreed with their learned colleague, the attorney general.
Mr. John Baiyeshea (SAN) expressed the opinion that whether it is the federal government or the state that is legally empowered to collect VAT, is a decision which only the court, not the attorney general or any lawyer, can make.
Since Justice Stephen D. Pam of the Federal High Court in Port Harcourt ruled that the Federal Inland Revenue Service (FIRS) lacked the power to collect taxes not listed under Items 58 and 59 of Part I of the Second Schedule to the 1999 Constitution, and granted the relief sought by the Rivers State Government barring the FIRS from collecting VAT in Rivers State, the collection of the value added tax (VAT) has remained contentious.
The FIRS challenged the decision of the Federal High Court at the Court of Appeal, Abuja Division, which had earlier denied the request for stay of execution. The Appeal ordered that all parties maintain the “status quo.”
Dissatisfied with the decision of the appellate court that directed all parties to maintain the status quo, the Rivers State Government approached the Supreme Court, asking it to set aside the decision of the appellate court.
Falana argued that in both E.C. Ukala versus FIRS and Attorney-General of Rivers State versus FIRS, the Federal High Court held that there “is no constitutional basis for the FIRS to demand and collect VAT, Withholding Tax, Education Tax and Technology Levy in Rivers State or any other state of the federation.”
“In other words, the VAT cannot be located in either the Exclusive or Concurrent Legislative List. Hence, it is a residual matter within the legislative competence of the House of Assembly of each State of the Federation,” Falana noted.
In disagreement with Attorney General Malami’s position, Ozekhome observed that the VAT “is not anywhere reflected in the Exclusive Legislative List of the 1999 Constitution.”
Adegboruwa reinforced Ozekhome’s viewpoint, challenging the AGF to explain why the FIRS wrote a letter to the National Assembly to list the VAT on the Exclusive Legislative List if it was already there.
He, therefore, contended that the VAT “is not on the Exclusive Legislative List at all. If indeed it were on it, why would FIRS write a letter to the National Assembly, seeking to put VAT on the Exclusive Legislative List?”