RETHINKING THE LEGISLATIVE COMPETENCE OVER TAXABLE GOODS AND SERVICES WITHIN THE STATES IN NIGERIA: ATTORNEY GENERAL OF LAGOS STATE V. EKO HOTELS LIMITED IN FOCUS By Okechukwu Orisakwe.1

1.0. INTRODUCTION.
It is now basic knowledge that in the hierarchy of laws in Nigeria, the 1999 Constitution
(as amended) occupies the apex position and the validity of all other laws must be
measured by its provisions2. It thus follows that the power to make laws by any of the
legislative bodies established by the Constitution is a constitutional matter which can
only be determined by reference to the relevant constitutional provisions.
There have been several debates on the legislative competence of the National and
State Houses of Assembly to enact a law on the imposition and collection of taxes on
taxable goods and services within the states.3 These debates have found their ways into
the courts on a good number of cases4 but regrettably, the courts have been unable to
put an end to the discordant tunes in these debates. Recently, the Supreme Court had
the opportunity to lay the matter to rest, but further aroused the flow of juristic thoughts
and inks in respect of the matter. This work, therefore, seeks to convey the writer’s
position on legislative competence in respect of taxable goods and services within the
states which is fast becoming an issue of national and legal concerns. For a better flow
of this discourse, the writer has adopted the approach to, first and foremost, briefly
examine the Value Added Tax (VAT) Act as it relates to the subject-matter for discussion
herein; present the case of Attorney- General of Lagos State v. Eko Hotels Limited5and
discuss the decision in the case and the constitutional questions arising therefrom.
2.0. THE VAT ACT.
Value Added Tax is chargeable on the supply of taxable goods and services. The Black’s Law Dictionary6offers a more general and clearer definition as follows: A tax assessed at each stage in the production of a commodity, based on the value added at each step by the difference between the commodity’s production cost and its selling price.
The legal framework regulating VAT in Nigeria is the VAT Act7, an Act of the National Assembly which appears to have been enacted inpursuance of the powers conferred on the National Assembly by Section 4 of the 1999 Constitution and reiterated by the combined provisions of Section 1(1) and Part 1 of the Schedule to the Taxes and Levies (Approved List for Collection) Act8. Under the VAT Act, tax is chargeable and payable on the supply of all goods and services other than those goods and services exempted under the Act9. The rate at which VAT is computed in Nigeria is 5 per cent on the value of all the goods considered by the VAT Act as taxable goods and services10. VAT is collected through registered persons who are required to be registered as taxable persons11 with the Federal Inland Revenue Services (FIRS) six months from the commencement of business. The FIRS, through the VAT directorate and a network of local VAT offices throughout the federation ensure that VAT is collected on behalf of the Federal Government. It is an offence for a taxable person to fail to remit VAT.
3.0. ATTORNEY-GENERAL OF LAGOS STATE V. EKO HOTELS12 AND THE VAT ACT: ANALYSIS.
As we pointed out in the introduction to this discourse, the debate as to where the legislative power to impose tax on goods and services within the states lies, has become stronger. The Eko Hotel’s case is a perfect example of a situation where the contention was stretched to its elastic limit. The facts of the case are briefly as follow: Eko Hotels by way of an Interpleader Summons, sought a determination of the Federal High Court on the question as to which authority, as between the Lagos State government and the FIRS, was entitled to the remittance of taxes collected by it on the sale and consumption of goods and services by its customers. The FIRS had argued that by the provisions of the VAT Act, it was entitled to the sums collected as taxes. The Lagos government on its own part argued that by virtue of the Sales Tax Law of Lagos State 13, it was entitled to collect the sums. The Federal High Court held14 that the
authority to collect the sums was vested in the FIRS pursuant to the VAT Act. An appeal to the Court of Appeal 15 against the decision of the Federal High Court was dismissed and the decision of the Federal High Court upheld. Still aggrieved, the appellant lodged an appeal at the Supreme Court which unanimously upheld the decisions of the Court of Appeal and the Federal High Court and dismissed the appeal. For a smoother understanding of the central message of this discourse, we would be dealing with the judgment of the Supreme Court in the case, in the light of the first two (out of the four) issues 16 submitted to it for determination. The issues under reference are reproduced from page 112 of the report hereunder:

1. Whether the Court below was right when it held that the cases of: i) Attorney General of Ogun State Vs. Aberuagba (1985) 1 NWLR (Pt.3) 395, ii) Nigerian Soft Drinks Ltd. Vs Attorney General of Lagos State (1987) 2 NWLR (Pt.57) 444, cited to the trial Court as stare decisis, is a non issue and that none of those decisions was authority to say that the 1st respondent is obliged to remit proceeds of Sales Tax to Lagos State Government. (Ground 1).

2. Whether the lower Court was right when it held that the Value Added Tax Act has covered the field of Sales Tax and its provisions prevail over the Sales Tax Law of Lagos State. (Ground 2).

On the first issue, counsel for the appellant maintained that the cases of A.G Ogun v. Aberuagba17 and Nigerian Soft Drinks Limited v. A.G. Lagos State18 which were cited to the trial court and which both decided that Sales Tax Laws of the states imposing taxes on consumption of goods within the states are valid, were supposed to be authorities binding on the Federal High Court to direct it into pronouncing in favour of the Lagos state government. The respondents’ counsel reacted by arguing that the cases were not on all fours with the facts before the trial court in this case and was correctly distinguished by the trial court. In resolving this issue against the appellant, the Supreme Court held, inter alia, as follows:

In order to address this issue, it is important to take another look at the suit filed before the trial Court. As rightly pointed out by learned counsel for the 1st and 2nd respondents, the 1st respondent was not challenging the validity of the Sales Tax Law of Lagos State…”The rule of adherence to precedents finds its expression in the doctrine of stare decisis. The doctrine is simply that, a point or principle of law which has been once officially decided or settled by the ruling of a competent Court in a case in which it is directly and necessarily involved, it will no longer be considered as open to examination or to a new ruling by the same tribunal, or by those which are bound to follow its adjudication, unless it be for urgent reasons and in exceptional cases”… As the 1st respondent did not challenge the validity of the Sales Tax Law of Lagos State, Aberuagba’s case cannot constitute stare decisis in respect of the interpleader proceeding before the trial Court. In the Nigerian Soft Drinks Ltd case, the issue was whether, having regard to the decision of this Court in Aberuagba’s case, the Sales Tax Law of Lagos State is similar to the Ogun State Sales Tax Law and is therefore unconstitutional being a legislative exercise in respect of Item 61 of the Exclusive Legislative List to the extent that it imposes sales tax on interstate trade and commerce and interferes with taxable goods, the prices of which have been controlled by the Federal Government. The Lagos State Sales Tax Law was held to be valid because, unlike the Ogun State Law, Section 2 thereof did not impose tax in respect of taxable goods whose prices have been controlled by the Federal Government. The persons liable to pay tax were purchasers or consumers of any taxable commodities listed in the schedule to the law. In other words, under the Lagos State Sales Tax Law, the tax is not upon the goods but upon the consumer whereas under the Ogun State Sales Tax Law the charge was upon goods brought into the State. Again, the appellant did not challenge the validity of the Sales Tax Law. The case has nothing to do with a determination as to which of two contending parties is entitled to tax already collected under the VAT Act. I am of the view and I do hold that the two cases were rightly distinguished by the lower Court from the facts of the instant case. They did not constitute stare decisis and were not relevant to the determination of the issue before them. I accordingly resolve this issue against the appellant.19

With the greatest respect to his Lordship, the above pronouncement puts the doctrine of stare decisis on a path too narrow. It is difficult to reasonably agree with his Lordship that the Aberuagba’s case and the Nigerian Soft drinks’ case which had earlier decided on the validity of the Sales Tax Law could not, at least, guide the Federal High Court in deciding the case under review. Imposition and collection of taxes being a policy that is capable of expropriating, to say the least, the monies of citizens, must be in accordance with a written law. Therefore, it is difficult to see how a court of law can reach a conclusion that an authority is entitled to tax remittance in a situation where another authority claims to be entitled to collection of same tax without considering the provisions of the law under which each authority makes its claim and decide on which of the competing laws would prevail. The collection of taxes cannot exist in vacuo. The Supreme Court’s conclusion that the tax which was subject of the dispute in this case was collected pursuant to the VAT Act and should be remitted to the FIRS was, with due respect, without plausible basis. Again, we strongly note that the Court laid no premise for this conclusion. In so far as the goods and services in respect of which the taxes in question were collected were within the provisions of the Sales Tax Law of Lagos, the Federal High Court could not have pretended to shut its eyes to the extensive pronouncements of the Supreme Court in the Aberuagba’s case, one of which was that states have the power to enact Sales Tax Laws imposing and providing for collection of such taxes. While this case was pending at the Supreme Court, a learned writer had argued and predicted that:

There is no doubt that the states have power to impose sales tax on transactions within the states based on the decision in Aberuagba. I have no doubt that the appeal of Lagos State has a good chance of success at the Supreme Court in the case of AG Lagos State v Eko Hotel.20

Unfortunately, the sound prediction of the learned writer above has been greeted with disappointment.

In the final analysis on this first issue, we are of the firm view that a proper resolution of the Eko Hotel’s case could not have been achieved without deciding which law was valid and competent to give power to the competing parties to collect the taxes in question. It is from that foundation that the court could have proceeded to then identify which authority was recognised by that law to collect the taxes. There needed not be an invitation by the parties to the court to pronounce on the validity of the laws. It was a necessary inquiry that was not severable from the facts of the case. The court did not even need to raise it suo motu.It is the writer’s belief that this case, in the heydays of the apex court, could have warranted the invitation of amici briefs from other Attorneys-General, at the instance of the court, considering the national economic importance which the casecarried. The writer is, however, aware of the fact that there was a suit initiated by Lagos State in 2008 at the Supreme Court21 to determine the validity of the VAT Act. The case was struck out in 2014 on grounds of jurisdiction, having suffered setbacks for so long a time. It is hoped that Lagos State government would reinstitute this case at the Federal High Court to have it determined on the merits. The second issue submitted to the Supreme Court was whether the Federal High Court which tried the case was right in holding that the VAT Act had covered the field, thereby, putting the provisions of the Sales Tax Law in abeyance. The Supreme Court answered this question in the affirmative. It held as follows:
A convenient place to commence the resolution of this issue is to examine the application of the doctrine of covering the field as it relates to the powers of the National Assembly and State Houses of Assembly to make laws. In A.G. Ogun State & Ors. Vs. A.G. Federation (1982) NSCC (Vol.13) 1 @ 35 lines 18 to 30, His Lordship, Kayode Eso, JSC stated thus: “I take the view that when one considers this doctrine, the phrase covering the field means precisely what it says. Where a matter legislated upon is in the concurrent list and the Federal Government has enacted a legislation in respect thereof, where the legislation enacted by the State is inconsistent with the legislation of the Federal Government it is indeed void and of no effect for inconsistency. Where, however, the legislation enacted by the State is the same as the one enacted by the Federal Government, where the two legislations are in pari materia I respectfully take the view that the State Legislation is in abeyance and becomes inoperative for the period the Federal Legislation is in force. I will not say it is void. If for any reason the Federal Legislation is repealed, it is my humble view that the State legislation, which is in abeyance, is revived and becomes operative until there is another Federal Legislation that covers the field”….In the absence of any relief challenging the legitimacy of the VAT Act, I am of the considered view that the only issue the Court needed to determine was whether, as the law stood at the time the cause of action arose, the money already collected by the plaintiff under the VAT Act should be remitted to the 2nd respondent rather than the appellant. In the instant appeal, there is also no issue seeking the invalidation of the VAT Act. As rightly observed by learned counsel for the 2nd respondent, the Value Added Tax Decree No.102 of 1993 was promulgated by the Federal Military Government and remained in effect, with necessary amendments, until the coming into effect of the 1999 Constitution. Section 315 (1) of the 1999 Constitution provides as follows: “315 (1) Subject to the provisions of this Constitution, an existing law shall have effect with such modification as may be necessary to bring it into conformity with the provisions of this Constitution and shall be deemed to be (a) An Act of the National Assembly to the effect that it is a law with respect to any matter on which the National Assembly is empowered by this Constitution to make laws; and (b) A law made by a House of Assembly to the extent that it is a law with respect to any matter on which a House of Assembly is empowered by this Constitution to make laws.” At the time the cause of action arose, the VAT Act was deemed to be an Act of the National Assembly. At the risk of repetition, there was no prayer before the trial Court or the lower Court seeking to nullify the Act. Until there is a decision of a Court of competent jurisdiction invalidating it, it remains valid and subsisting… As rightly observed by the two lower Courts, the goods and services covered by both legislations are the same. It follows that the VAT Act has effectively covered the field in that regard. Section 7 (1) of the Act provides that the tax shall be administered by the 2nd respondent. In the circumstances, I am in complete agreement with the Court below, which affirmed the finding of the trial Court, that the VAT Act having covered the field on the issue of sales tax, its provisions prevail over the provisions of the Sales Tax Law of Lagos State. Thus, even if the Lagos State House of Assembly has the requisite legislative competence to enact the Sales Tax Law, which is not an issue before us, once an existing Federal law or an Act of the National Assembly has covered the field,
the Act of the National Assembly or such existing Federal law must prevail. This issue is accordingly resolved against the appellant.22

In his concurring judgment, Okoro JSC added what we consider to be an obituary to the doctrine of covering the field by interpreting out of context, the provision of Section 4(5) of the Constitution.23 His Lordship held:

There is no doubt that both the Value Added Tax Act and the Sales Tax Law of Lagos State provide for the collection of tax from the customer on consumable items stated in the schedules of the two laws. The rates and goods upon which charges are made under both laws are similar. It follows naturally that there is unhealthy competition between the two laws, thus throwing the consumer and collection agents into confusion. This is not the purpose of governance. Be that as it may, the law does not leave us without a remedy. By Section 4(5) of the 1999 Constitution of the Federal Republic of Nigeria (as amended), if any law enacted by the House of Assembly of a State is inconsistent with any law validly made by the National Assembly, the law made by the National Assembly shall prevail, and that other law shall, to the extent of the inconsistency, be void. I shall limit myself to the issue before this Court. We are neither asked to determine on the validity of Value Added Tax Act nor the Sales Tax laws of Lagos State. The issue for determination is whether the Value Added Tax Act has covered the field such that the Lagos State Sales Tax Law remains in insignificance. The doctrine of covering the field is essentially that where the main, principal or superior law has covered a given field or area, any other subsidiary law made in that area or field cannot operate side by side with the main, principal or superior law. If the inferior law is inconsistent with the principal law, it has to be declared void to the extent of its inconsistency. But where it is consistent with the principal law, it has to be left in abeyance.24

Before we proceed to examine the above judicial pronouncements, we need to observe that the Supreme Court has, by the decision in this case, created more confusion than it sought to remove. In one breath, the court stated that it would not pronounce on the validity or otherwise of the VAT Act because it wasn’t invited to do so, while in another breath the Court held that the VAT Act was an existing law under the constitution which was “valid and subsisting until declared invalid”. For a better flow of this discourse, we shall return to this issue. Let us look at the doctrine of covering the field which seems to constitute the bulk of the ratio in this case.
The court correctly recited the principle of covering the field but, unfortunately, failed to apply it correctly to the facts of this case. The consensus of judicial opinions is that the doctrine only applies where both the federal and regional legislatures have enacted a similar law in pursuance of their concurrent powers. For the avoidance of doubt, the matter legislated upon must be on the concurrent list, empowering both the federal and regional governments to enact laws in respect thereof.25 Taxation of goods and services within the states, as a matter, is neither on the exclusive nor the concurrent list, either expressly or by necessary implication, and therefore the issue of covering the field does not arise. The VAT Act to the extent that it imposes tax on goods and services within the commercial spheres of the states, as we would shortly explain, was enacted without legislative competence and has no field to cover in respect of taxable goods and services within the states. The law is long settled that where a matter is left out in both the exclusive and concurrent legislative lists, it becomes a residual matter over which the states alone can legislate.26 In the Aberuagba’s case, the Supreme Court, per Bello JSC (as he then was), held:

A careful perusal and proper construction of section 4 [of the 1979 Constitution] would reveal that the residual legislative powers of government were vested in the States. By residual legislative powers within the context of section 4, is meant what was left after the matters in the Exclusive and Concurrent Legislative Lists and those matters which the Constitution expressly empowered the Federation and the States to legislate upon had been subtracted from the totality of the inherent and unlimited powers of a sovereign legislature. The Federation had no power to make laws on residual matters27.

It follows from the foregoing that the concurring judgment of Okoro JSC which largely took umbrage under section 4(5) of the Constitution is unsupportable. Section 4(5) provides that any state law which is inconsistent with any law “validly” enacted by the National Assembly is void to the extent of its inconsistency. What the clear and unambiguous provision of this section means is that the validity of the Act of the National Assembly to which the section relates is indispensably crucial in any determination as to whether a state law is inconsistent with that Act. We have pointed out that the VAT Act is not, in all its provisions, validly made and section 4(5) of the Constitution is inapplicable to it in the circumstances. It is for a similar reason to this that section 315 of the Constitution referred to in the leading judgment cannot cure the defect in the VAT Act. Section 315 provides:

(1) Subject to the provisions of this Constitution, an existing law shall have effect with such modification as may be necessary to bring it into conformity with the provisions of this Constitution and shall be deemed to be
(a) An Act of the National Assembly to the effect that it is a law with respect to any matter on which the National Assembly is empowered by this Constitution to make laws; and
(b) A law made by a House of Assembly to the extent that it is a law with respect to any matter on which a House of Assembly is empowered by this Constitution to make laws.

It is glaring from the provisions reproduced above that an existing law is preserved only if it is in accordance with the legislative powers granted under the Constitution. Thus, although the VAT Act was enacted before the Constitution took effect, the legislative vires of its maker must at all times from the emergence of the 1999 Constitution, be determined according to the provisions of the Constitution. This now drives us to the point where we should explain strongly why the VAT Act remains questionable against the backdrop of constitutional provisions. We have earlier made the point that the VAT Act is enacted by the National Assembly, in the purported pursuance of the powers granted to it by the Constitution and later, by a community effect of section 1(1) and the Schedule to the Taxes and Levies (Approved List for Collection) Act, Cap T2, Laws of the Federation of Nigeria 2004. Let us pause here for a while to examine the latter. Section 1(1) of that Act provides as follows:

Notwithstanding anything contained in the Constitution of the Federal Republic of Nigeria,…or in any enactment or law, the Federal Government, State Government and local government shall be responsible for collecting the taxes and levies listed in Part I, Part II and Part III of the Schedule to this Act, respectively.

The opening statement of the above provision obviously seeks to fortify itself to wrestle the Constitution. Of course, it is obvious, from the words used thereat that the legislature, while it embarked on the voyage of enacting the Taxes and Levies Act, was aware of the constitutional atrocity it was proposing to commit. So, it wanted to intimidate the Constitution so it could have its way. However, the Constitution remains fearless to any provision of any law, notwithstanding the seeming strength of the language of such law. The Court of Appeal has had the opportunity to forcefully strike down a statute that challenged the constitution in this manner, relying on the decision of the Supreme Court in Nkwocha v. Governor of Anambra State.28 That statute is the Land Use Act which provides that the provisions of its section 47 would stand, “notwithstanding” the provisions of the Constitution. The Court of Appeal, per Omololu-Thomas JCA held, and rightly too, that:

[Section]…47 of the Land Use Act 1978 [does] not have …the same legislative force as…the Constitution…and therefore to the extent that those sections…are inconsistent with…the constitution, they are void…2

The legislative powers of the legislatures in Nigeria are only traceable to the Constitution and any law empowered by it further to vest legislative powers on the legislatures. The Taxes and Levies Act deviates from the expectation of the Constitution to the extent that it gives the National assembly powers to enact the VAT Act, to impose taxes on goods and services consumed within the states. Thus, both Acts are, to this extent, void for their inconsistencies with the Constitution.30We respectfully differ from the view taken by the Supreme Court to the effect that the VAT Act would remain valid until it is declared invalid by a court of competent jurisdiction. Section 1(3) of the Constitution provides that any law inconsistent with the provisions of the Constitution shall, to the extent of its inconsistency, be void. The meaning of the term “void” in law has become a legal catechism. Although a judicial decree is most appropriate to declare a thing void so as to allay all conjecture, any void thing is void ab initio and requires no judicial decree to make it so because a void thing never existed in the eyes of the law: a repost of Lord Denning’s popular statement here would be most appropriate:

If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set it aside. It is automatically null and void without more ado, though it is sometimes convenient to have the court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse31.

The VAT Act (to the extent that it imposes taxes on goods and services consumed in the states), being void under the Constitution cannot be said to be valid even without a judicial order. In the light of the foregoing, we are of the view that the States are the only competent authorities to enact a law, by whatever name christened, for the imposition and collection of taxes on goods and services within the states. It is also important before ending this discourse, to concede that no state has the power to enact any law for the imposition of taxes on goods and services having international and inter-state dimensions in their production and sales level before they are consumed. Sanni explains this point better:

While Sales Tax is a local tax, VAT has a local, inter-state and international dimension. The VAT borne by a final consumer in Lagos may have international and inter-state dimensions at the production and wholesale stage before getting to the retail stage. While a state in Nigeria is incapable of imposing a VAT under the Constitution, it is submitted that the Federal Government could do so pursuant to the decision in Aberuagba. Thus, it is possible for the VAT Act to be voided only to the extent that it imposes tax on supply of goods and services within the states while VATon inter-state and international stages are preserved.32

We agree with the submission of the learned author above. We only need to add that it does not really matter the title the law is given: it should walk within its constitutionally allocated path. This view is supported by the pronouncement of the Supreme Court in the Agberuagba’s case wherein it was held that:

It is axiomatic that in the absence of any constitutional provision, express or implied, to the contrary the respective taxing power of the Federation and of a State includes sales taxing power. Accordingly, the Federation is entitled to levy sale tax on any saleable matters within its competence. A state can also do the same within its competence. It must, however, be emphasized that it is not within the competence of a State:

(1) to make sales tax law affecting any of the matters in the Exclusive Legislative List; or

(2) to make any sales tax law in the Concurrent Legislative List which is inconsistent with any law validly made by the Federation; or

(3) to make any sales tax law in the Concurrent Legislative List on any matter in the Concurrent List where any law validly made by the Federation has covered the field.33

Later at the same page, the court continued on the powers of the Federation to levy tax on saleable matters:

Although the validity of the Ogun State Sales Tax Law is the only question in issue on this appeal, the validity of all the Sales Tax Laws of the other States are indirectly involved…having regard to all the relevant provisions of the Constitution, I am of the firm view, that the Constitution does not confer on the Federation exclusive power over trade and commerce in item 61. I hold that all the Governments (Federal. State and Local) have been accorded their respective shares to control trade and commerce. Accordingly, I would construe the words “in particular” in item 61 to be words of limitation and that the trade and commerce power of the Federation is limited to the sub-items (a) to (f) therein. For the avoidance of any doubt, I may emphasize that the Federal Government had power to make law on the items specified in sub-items (a) to (f). In this respect, international trade and commerce and inter-state trade and commerce are specifically reserved for the Federation while trade and commerce within a State is left as a residuary matter to the States. Accordingly, I would not invalidate the Sales Tax Law of Ogun State by reason of the proposition that, having regard to the generality of item 61, a State has no power at all over trade and commerce. I reject the proposition because it has no constitutional basis.

Every court, especially the Supreme Court, must be on the guard at all times to protect the Constitution in the slightest of opportunities given to it. Our noble Lord, Niki Tobi JSC, has put it more succinctly in the celebrated case of A.G. Abia State v. A.G. Federation35:

The Constitution of a nation is the fons et origo, not only of the jurisprudence but also of the legal system of the nation. It is the beginning and the end of the legal system. In Greek language, it is the alpha and omega. It is the barometer with which all statutes are measured. In line with this kingly position of the Constitution, all the three arms of Government are slaves of the Constitution, not in the sense of undergoing servitude or bondage, but in the sense of total obeisance and loyalty to it. This is in recognition of the supremacy of the constitution over and above every statute, be it an Act of the National Assembly or a law of the House of Assembly of a State. The supremacy clause is provided for in section 1(1) of the Constitution of the Federal Republic of Nigeria, 1999. All the three arms of Government must dance to the music and chorus that the Constitution beats and sings, whether the melody sounds good or bad. Regarding the first place section 1 occupies in the constitution, it is the adjectival variant of the noun gold. It is the same golden position in sports that the Constitution occupies in any jurisprudence and legal system, including ours.While I recognize the constitutional right of the legislatures, that is, the National Assembly and the House of Assembly of the States, to amend the Constitution, until that is done, they must kowtow (using the Chinese expression) to the provisions of the Constitution, whether they like it or not.36

4.0. CONCLUSION.
It is our respectful view that the Eko Hotels’ case was not given the requisite judicial attention it deserved. Again, Sanni37 reveals that while the appeal was pending before the Supreme Court, it suffered several setbacks due to the court’s lack of commitment to give it the attention it required. The constitutional issues raised by this case were, in our respectful view, glossed over by the apex court and should be revisited in the next opportunity. The case was not only of monumental economic importance to the revenue generation of the federal and state governments but was indeed an avenue to inquire and ensure that an organ of the government did not commit infraction on the hallowed provisions of our Constitution.
Although the writer respectfully allocates a fair share of the blame to counsel who represented Lagos for the outcome of this case, the failure of the Supreme Court in this case to pronounce conclusively on where the legislative competence lies in respect of taxable goods within the states cannot be said to have met the justice of the case and would continue to create problems, especially, that of double taxation. The writer has had a personal experience of this problem when he took a bottle of beer at a pub in Lagos which sold for One Thousand Naira but paid additional One Hundred Naira as tax. He was told that 5% of the beer price (that is Fifty Naira) was collected under the VAT Act while another 5% (another Fifty Naira) was collected under the Hotel Occupancy & Restaurant Consumption Law38 (popularly known as the “Consumption Tax Law”). This law was passed immediately after the Court of Appeal’s decision in the Eko Hotels’ case, perhaps, to mitigate the challenges faced by the Lagos government whose Sales Tax Law was declared void by the appellate court. Although it was christened a different name, it is substantially the same as the Sales Tax Law with restriction to the hospitality circles. One cannot blame the Lagos State government for enacting such a law because it is well within its constitutional vires to so do and there’s no judicial precedent (including the case under review) foreclosing the states from making such laws. If anything, Aberuagba’s case fortifies the power of the states in this regard. However, the application of that law, side by side with the VAT Act, would create the problem of double taxation which is not only unconstitutional but also an indirect robbery on the poor citizens.

 

 

  1. B. (Hons); BL (Hons); Associate at Aluko & Oyebode.
  2. . See section 1 of the 1999 Constitution of the Federal Republic of Nigeria (as amended, hereinafter referred to as
    “the Constitution” or “CFRN”).
  3. See, for example, A. Sanni. Indirect Taxes in Nigeria (Chartered Institute of Taxation of Nigeria, Lagos, 2014) Pg.
    103.
  4. See Attorney General of Ogun State v. Aberuagba (1985) 1 NWLR (Pt.3) 395; Nigerian Soft Drinks Ltd. v. Attorney
    General of Lagos State (1987) 2 NWLR (Pt.57) 444; Attorney General of Lagos State v. Attorney General of the
    Federation & Ors (2014) LPELR 22701 (SC); to mention a few.
  5. Hereinafter referred to as the “Eko Hotels Case” or “the case”.
  6. B.A. Garner. Black’s Law Dictionary (West Publishing Co, 2009, 9th ed) Pg. 1597- 1598
  7. Cap V1, Laws of the Federation of Nigeria (LFN) 2004.
  8. Cap T2, LFN 2004
  9. See section 2 and First Schedule to the VAT Act for taxable and non-taxable goods and services.
  10. See section 4 of the VAT Act.
  11. A taxable person is a person who trades in taxable goods and services.
  12. (2017) 12 S.C. (Pt I) 107
  13. Cap S3, Revised Laws of Lagos State 2003
  14. See Suit No FHC/L/CS/205/2004
  15. (2008) ALL FWLR (Pt 398) 235
  16. A discussion of the third issue would unavoidably be subsumed in the discussion of the first and second issues while the fourth issue being on jurisdiction of the Federal High Court to entertain the suit, is clearly of no relevance to the issues to be discussed in this work.
  17. (1985) NWLR (Pt 3) 395
  18. (1987) 2 NWLR (Pt 57) 444
  19. supra at 132 to 134, 136 to 137
  20. See A. Sanni. Indirect Taxes in Nigeria (Chartered Institute of Taxation of Nigeria, Lagos, 2014) Pg. 103
  21. Attorney General of Lagos State v. Attorney General of the Federation & Ors (2014) LPELR 22701 (SC).
  22. Supra at 141-142, 145-146
  23. 1999 Constitution of the Federal Republic of Nigeria (as amended).(CFRN)
  24. Ibid at 163 to 164
  25. See A.G. Ogun State & Ors. v. A.G. Federation (1982) NSCC (Vol.13) 1; Osun State Government v. Estisione H. Nigeria Limited & Anor (2012) LPELR-7936 (CA)
  26. See A.-G., Lagos State v. A.-G., Fed. (2003) 12 NWLR (Pt.833) 281 para C
  27. Supra at 405
  28. (1984) 6 S.C. 362
  29. Lemboye v. Ogunsiji (1990) 6 NWLR (Pt 155) 210 at 224-225
  30. See section 1(3) CFRN
  31. See MacFoy v. UAC (1962) AC 150 at 160
  32. Ibid at 103
  33. Supra at 413
  34. Supra at 415-416
  35. (2006) 16 NWLR (Pt 1005) 265
  36. Supra at 381
  37. Ibid at 102
  38. Cap H8 Vol 5, Laws of Lagos State 2015 (came into force on 22nd June 2009).

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