The Rivers and Lagos state governments on Thursday failed to convince the Court of Appeal in Abuja to stop the Federal Inland Revenue Service from further collecting Value Added Tax (VAT).
The court refused oral applications for a restraining order against the FIRS made by the legal team of the two states.
Refusing to grant the requests, a three-man panel of the court, led by Haruna Tsanami, directed the lawyers representing the two states to file formal applications instead of oral applications.
The FIRS had appealed the judgement of the Federal High Court in Port Harcourt empowering the Rivers State government to collect VAT.
The Mr Tsanami-led panel had last Friday ordered parties to the case to maintain status quo, a decision Rivers and Lagos tried to overturn on Thursday.
The court had also adjourned till Thursday (today) for the hearing of an application by Lagos State, not yet officially a party to the suit, to be joined as a respondent to the FIRS appeal.
Emotion ran high after the legal teams for Rivers and Lagos states asked for a restraining order against the FIRS at Thursday’s proceedings.
The lawyers on the two sides of the divide had tense back-and-forth arguments over the prayer.
The legal teams of Rivers and Lagos, led by Ifedayo Adedipe and Moyosore Onigbanjo respectively, prayed for what they described as “preservative order” restraining the FIRS from collecting VAT and sharing the proceeds to states pending the determination of the substantive appeal.
“My Lords, the appellant (FIRS) collects VAT and shares amongst states of the federation.
“Therefore, if it is not stopped from doing so, and the court finds its action unconstitutional, it will be difficult to recover the VAT proceeds that must have been shared to the States,” Mr Adedipe, a Senior Advocate of Nigeria (SAN), said.
Mr Onigbanjo, the Attorney-General of Lagos State, and SAN, canvassed the same line of argument.
According to him, if FIRS is not restrained from collecting VAT and sharing it among the states of the federation, in the event the court finds its action inappropriate at the end of the day, “then it will be difficult to recover the VAT proceeds that must have been shared to the states.”
Reacting to the oral request by Rivers and Lagos lawyers, FIRS lawyer, Mahmud Magaji, also a SAN, faulted the arguments of his opponents in a combative tone.
“My Lords, I think my learned colleagues are testing the patience of the court, when it is clear that their application has no basis,” Mr Magaji said, adding that the Lagos government lacked the right to make such a request when it was yet to be joined as an interested party.
This submission drew Mr Onigbanjo’s ire who wanted to reply Mr Magaji, but for the intervention of a member of the Appeal Court panel, cautioning the FIRS lawyer to “exhibit higher sense of decorum in addressing his colleagues.”
In their responses to the request, the head of the appellate panel, Justice Tsammani, advised the respondents’ lawyers to file a formal request in respect of their concerns.
Lagos joinder application
Earlier, Mr Onigbanjo, while moving the joinder application for Lagos State to be joined as a respondent to the FIRS’ appeal, told the court that the state would be impacted by the outcome of the appeal.
The Attorney-General urged the court to join the Lagos State government.
Lagos State needed to apply to be joined as a party to the appeal because it was not part of the case at the Federal High Court which led to the judgment being contested by the FIRS.
Similarly, Mr Adedipe, counsel for the Rivers State government, did not object to the Lagos State joinder request.
However, the FIRS lawyer, Mr Magaji, vehemently opposed Mr Onigbanjo’s request.
“The joinder application of the applicant (Lagos State government) is faulty from the word go.
“Section 243 (1A & B) of the Constitution does not support a joinder application in a suit like this,” Mr Magaji said.
He further argued that the Lagos State government was not a party at the trial court in Port Harcourt, adding, “The judgement of the Federal High Court in Port Harcourt never mentioned the applicant.”
Also, in objection to the Lagos government’s request to be joined as a party, the FIRS lawyer contended that the state already filed an appeal at the Supreme Court concerning the VAT dispute, a claim that was swiftly denied by Mr Onigbanjo.
The Lagos Attorney-General told the appellate court that the suit Mr Magaji referenced in his argument concerned stamp duty collection rather than VAT, which he clarified involves all the 36 states of the federation.
Mr Onigbanjo further countered appellant’s (FIRS) claim that the Lagos State government was never mentioned in the trial court judgement.
“The Federal High Court in Port Harcourt in its judgement held that it was unconstitutional for the FIRS to collect VAT, thereby authorising the 36 states of the federation, among which is Lagos,” Mr Onigbanjo argued.
Court of Appeal reserves ruling
The court reserved its ruling on the Lagos State government’s joinder application.
A date is to be communicated to lawyers to the parties as soon as the ruling is ready.
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