VAT Collection: Appeal Court Asks Parties to Maintain Status Quo.

On Friday, the Court of Appeal in Abuja ordered both Rivers and Lagos States to retain the status quo in the collection of Value Added Tax, VAT, pending the outcome of an appeal filed by the Federal Inland Revenue Service, FIRS.

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According to the appellate court, the injunction was issued to preserve the ‘Res’ (subject matter) of the case before it.

It specifically ordered all parties who had appeared before it to “refrain from taking any action to give effect to the verdict of the Federal High Court,” which awarded the Rivers State Government the right to collect VAT income instead of the FIRS.

FIRS is in its appeal marked CA/PH/282/2021, praying the appellate court to not only set it aside the High Court judgement, but to also stay its execution.

It applied for an order of injunction to restrain Rivers State from interfering with its rights, duties and obligations, pending the conclusion of the appeal.

Whereas Lagos State and Rivers State’s counsel, Mr. Emmanuel Ukala, SAN, urged the appellate court to hear the joinder application first, counsel for FIRS, Mr. Mahmud Magaji, SAN, and the Attorney-General of the Federation, Mr. Tijjani Gazali, SAN, opposed the request, insisting that the substantive appeal be heard first.

In a brief judgement, the Appeal Court panel stated that it was of the opinion that it would be in the best interests of justice to hear Lagos State’s joinder case first.

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Immediately following the ruling, the FIRS’s lawyer, Magaji, SAN, made an oral application for an order ordering all parties to maintain the status quo with regard to the subject matter of the appeal.

“My Lords, in view of the circumstances of this case and in view of the fact that this matter borders on revenue of this country, we will be urging this court to invoke its inherent powers in section 6(6) of the 1999 Constitution, as amended, and order that status quo be maintained pending the hearing and determination of our motion”, Magaji submitted.

While counsel to the AGF, Gazali, SAN, supported the application, both Rivers and Lagos States vehemently opposed it.“This application is strange.

The stay of execution would have been for the purpose of staying the enforcement of the judgement.

“My Lords, as it stands, that judgement is now the established status quo. It is common knowledge that the mere filing of an appeal does not constitute a stay.“We submit that there is no basis whatsoever for this application.

The judgement was clear that the Appellant has no legal or constitutional right at all.

“No material has been provided for this court to make an order with respect to the application”, Ukala argued as he urged the appellate court to refuse the request for order of status quo.

While taking the same stance as Rivers State, the Lagos State Attorney General claimed that the High Court judgement remained valid and binding until it was overturned.

Furthermore, Lagos State stated that such an order to maintain the status quo could not be binding on it because its joinder application had not been heard.

The appellate court panel, on the other hand, stated that it felt the necessity to retain the ‘Res’ of the appeal before it, stressing that “the issue is of very significant national importance.”

Before adjourning the hearing on Lagos State’s joinder application, the appeal court gave both the Appellant (FIRS) and the Respondents (Rivers and AGF) two days to file their reply.