The Court of Appeal sitting in Lagos has ruled that the Federal Inland Revenue Service (FIRS),can collect Value Added Tax from. Lagos Hotel Owners Association of Nigeria.
It quashed the Federal High Court judgment in favour of the Lagos Hotel Owners Association of Nigeria.Justice Rilwanu Aikawa of the Federal High Court on October 3, 2019, declared that the FIRS lacked the powers to collect VAT from the association’s members.
It further struck out a counter-claim filed by the Lagos State Government against the FIRS.
The Federal High Court had held that Consumption Tax on goods and services consumed in hotels, restaurants and event centres is a residual matter, which is within the exclusive legislative competence of a state government.
It upheld the powers of the Lagos State Government to charge and collect Consumption Tax from hotels, restaurants and event centres within the state.
It further stopped the federal government from collecting VAT on goods consumed in hotels, restaurants and event centres.
According to the court, Consumption Tax on hotels, restaurants and event centres is in the purview of the state government based on the 1999 Constitution and the Taxes and Levies (Approved List for Collection) Act (Taxes and Levies Act).
The court said the provisions of the VAT Act in respect of the consumption of goods and services in hotels, restaurants and event centres are inconsistent with the Constitution and the Taxes and Levies Act and are therefore void.
It further held that under the Taxes and Levies Act, Consumption Tax arising from transactions involving the sale of goods and services in hotels, restaurants or event centres is to be collected by the state government.
The court also stated that since the Taxes and Levies Act (as amended in 2015) was enacted after the VAT Act of 1993, its provisions have tacitly repealed any provisions of the VAT Act concerning hotels, restaurants and event centres and should thus prevail.
It, therefore,stopped the FIRS from collecting VAT on transactions relating to the consumption of goods and services in hotels, restaurants and event places in Lagos.
But, FIRS proceeded to the Court of Appeal and subsequently secured a stay of execution pending the outcome of the appeal filed.
