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VAT Dispute: Rivers drags FIRS to supreme court, seeks disbandment of appeal court panel

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In a new twist, the Rivers State government has filed an appeal at the Supreme Court to challenge the ruling of the Court of Appeal in the Value Added Tax (VAT) dispute between the state and the Federal Inland Revenue Service (FIRS).

The state has asked the supreme court to set aside an order of the court of appeal which directed the state to maintain the status quo on the collection of VAT pending the determination of an appeal filed by the FIRS.

The Rivers state government, represented by a Senior Advocate of Nigeria (SAN), Emmanuel Ukala, alongside 3 other senior lawyers, filed a notice of appeal at the apex court with the Attorney-General of Rivers State as the appellant while the FIRS and Attorney-General of the Federation (AGF) are listed as respondents.

What the Rivers State Government is seeking in the appeal

In the 10 grounds of appeal dated September 13 and lodged before the Supreme Court, the state government informed the apex court that it was dissatisfied with the decision of the appellate court delivered on Friday last week in which all parties were directed to maintain status quo.

It explained that the implication of the ruling of the appellate court was that parties were restored to their positions before a Federal High Court in Port Harcourt granted the Rivers State government the right to collect VAT, instead of the FIRS on August 9.

In one of the grounds of appeal, Rivers State alleged that the appeal court erred in law when it relied on the provisions of Section 6(6) of the Constitution and its inherent jurisdiction to found its decision to make an order to maintain status quo in the matter, pending the determination of an appeal filed by FIRS.

The state government said that the appellate court in relying on its inherent jurisdiction to make the order failed to appreciate that its inherent jurisdiction cannot be applied in contravention of statutory provisions.

The state government, therefore, sought relief of the Supreme Court to allow the appeal, set aside the decision of the appeal court which they complained about, and dismiss the oral application for interim injunction made by the FIRS.

It also asked the apex court to order that the substantive appeal by the FIRS and all other processes, be heard and determined by a new panel of the Court of Appeal.

What you should know

Recall that on August 9, Justice Stephen Pam of the Federal High Court Port Harcourt ruled that the Rivers State Government is legally empowered to collect VAT and not the FIRS.

Armed with the judgement, the Rivers State House of Assembly immediately passed the VAT collection bill 2021 which was subsequently signed into law by the state governor, Nyesom Wike on August 19.

Displeased with the decision of the court, the FIRS filed a motion on notice to apply for a stay of execution on the earlier judgement delivered by Justice Pam, which was subsequently turned down by the court.

The FIRS later approached the Court of Appeal in Abuja with a civil motion seeking a stay of the execution of the judgement earlier granted by the court in Rivers pending the determination of the case.

The court, in its ruling, refused the application, saying the federal agency failed to file an application to set aside the tax law recently enacted by the Rivers State House of Assembly.

The FIRS later approached the Court of Appeal in Abuja with a civil motion seeking a stay of the execution of the judgement earlier granted by the court in Rivers pending the determination of the case.

A three-man panel of the appellate court led by Justice Haruna Tsammani then directed all parties to maintain the status quo and refrain from taking action that would give effect to the judgement delivered by Justice Pam, pending the hearing and determination of the instant suit.

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