News
Court Stops FIRS from Enforcing VAT on Goods Consumed in Hotels
Justice Rilwanu Aikawa of the Federal High Court in Lagos has barred the Federal Inland Revenue Services (FIRS), from enforcing VAT provisions on goods and services consumed in hotels, restaurants and event centres in Lagos State.
Justice Aikawa gave the order while delivering judgment in the suit seeking to restrain the Attorney General (AG) of Lagos State from enforcing the Hotel Occupancy and Restaurant Consumption (Fiscalisation) Regulations Law (HORC), 2017, in the view that VAT Act has covered the field.
In the suit the Registered Trustees of Hotel Owners and Managers Association of Lagos (HOMA) had sued the AG in Lagos State and FIRS in the suit no. FHC/L/CS/360/2018.
The HOMA had asked the court to declare that by virtue of Section 7, of the VAT Act, the second defendant (FIRS) was the only lawful and constitutional agency charged with the administration and management of consumption tax generally and particularly in Lagos state.
Justice Aikawa, in delivering the judgment, dismissed the suit and held that it was lacking in merit, adding that the plaintiff was obliged to comply with the HORC Law 2009 and the HORC Regulations 2017.
The court also raised two issues by herself; whether the Federal High Court had the jurisdiction to pronounce on the constitutionality of VAT. The court resolved that it has jurisdiction.
Aikawa also held that the issue of the powers of the minister to amend the schedule to the Taxes and Levies (Approved List for Collection) Act was not in dispute before the court and so no pronouncement could be made on it.
The court in dismissing the originating summons, as lacking merit and resolving the questions and reliefs sought in favour of the first defendant, held:
“That consumption tax is not stated in either the exclusive and concurrent legislative list, in the Constitution of Nigeria, therefore, the absence on the concurrent and exclusive lists, puts consumption tax on the residual list, which is within the legislative competence and powers of state governments.
“That VAT Act can’t cover the field over what the federal government has no power to legislate upon, under the constitution, therefore the determinant factor in the issue of covering the field, is whether there is power to make the Law.
“The provisions of VAT Act relating to consumption tax are inconsistent with the Nigerian constitution.
“The Minister of Finance has corrected the anomaly, by including consumption tax in the list of taxes collectible by state government, therefore, the responsibility for collecting consumption tax lies on the state government.
“The provisions of Sections 1, 2, 4, 5 & 12 of VAT Act are in breech of the 1999 constitution and the plaintiffs are obliged to comply with the HORC Law 2009 and the HORC Regulations 2017.
“FIRS are barred from enforcing VAT provisions as it relates to consumption tax on goods and services consumed in Hotels, Restaurants and Event Centres in Lagos State, ” the judgement read.
The Registered Trustees of HOMA had filed an originating summons asking the court to determine the following:
“Whether the VAT Act regulating imposition of tax on consumption of goods and services has not covered the field on taxation of goods and services consumed in hotels, event centres and restaurant in Lagos State.
“Whether by virtue of Section 7 of the VAT Act, the second defendant (FIRS) is not the only lawful and constitutional agency charged with the administration and management of consumption tax generally and particularly in Lagos State.
“Whether the provisions of the Hotel Occupancy and Restaurant Consumption (Fiscalization) Regulations 2017 are of no effect, in view of the fact that VAT Act has covered the field”.
Consequently, the first defendant, (AG Lagos State), filed a counter-claim urging the court to determine;
“Whether the provisions of Sections 1, 2, 4, 5 & 12 of VAT Act by which the FIRS imposes tax on customers for goods and services consumed in hotels, restaurants and event centres in Lagos State is inconsistent with the provisions of Sections 4(2), 4(a) & (b) and 4 (7) (a) & (b) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) and therefore unconstitutional and invalid?
“Whether by the provisions of Section 4 (7) of the 1999 Constitution of Nigeria, the provisions of the Taxes and Levies (Approved List for Collection) Act Cap T2 Laws of the Federation of Nigeria as amended by the Schedule to the Taxes and Levies order 2015) and the provisions of HORC Law 2009.
“Whether the counter-claimant is the only constitutional and lawful body empowered to assess, impose and collect taxes from customers of the Plaintiff for goods and services consumed in hotels, restaurant and event centres in Lagos State.
The first defendant sought some reliefs which included;
“A declaration that the provisions of Sections 1, 2, 4, 5 & 12 of VAT Act is inconsistent with the constitution and therefore invalid and unconstitutional.
“A declaration that the counter claimant (AG) is the only constitutional and lawful body empowered to assess, impose and collect consumption tax in Lagos State.
“A declaration that the plaintiff is obliged to comply and implement the provisions of the HORC Law, made pursuant thereto, in relation to good and services consumed in Hotels , Restaurant and Event Centres in Lagos State
“An order of perpetual injunction restraining the FIRS from implementing or enforcing the provisions of VAT Act on customers of the plaintiff for goods and services consumed in hotels, event centres and restaurant in Lagos State”.
Femi Adeoti, managing director and CEO, Inlaks, Africa’s foremost Information Technology and Infrastructure solutions provider in West Africa, has been announced as a winner of the 2020 Top CEOs & Next Bulls Awards organised by Business Day Media Limited in collaboration with the Nigerian Stock Exchange (NSE).
The MD/CEO whilst receiving the award dedicated it to the management and staff of Inlaks for their relentless service even during these trying times.
He also appreciated the board of the organization that drove changes within the organisation particularly in the pandemic which led to the company being recognized and the customers who have continued to support Inlaks while being ambassadors of all Inlaks’ solutions.
The CEO and Next Bulls awards, the sixth in its series, recognizes the CEOs of listed companies creating competitive shareholder value through sound strategy, disciplined execution and world class governance. In addition, it celebrates chief executives of quoted companies that have demonstrated the most impressive gains in both share price and service delivery.
Themed “Advancing Against all Odds,” this year’s award particularly recognised businesses that have been thriving in spite of the global harsh economic realities.
According to the organisers of the award, the indomitable Next Bulls are the CEOs raging forward at a time when many businesses are choosing to retreat, thus acknowledging Adeoti’s good leadership in the area of corporate governance, innovation and service delivery.
The CEOs award celebrates the CEOs of successful, privately-owned indigenous companies built by Nigerians, led by Nigerians and poised to lead their categories on the continent.
Established in 1982, Inlaks is Africa’s leading Information Technology systems integrator with presence in Nigeria, Ghana, Kenya, Gambia, Sierra Leone, Guinea, Liberia and Cameroon. As solutions provider, it offers core banking, agency banking, fraud management, cyber-security, cloud, data centre, enterprise risk management and software solutions.
Part of the criteria for selecting winners of this year’s awards held virtually on September 5, are stock price appreciation, Profit After Tax (PAT) growth, an unblemished regulatory compliance record, and positive marketplace reputation among customers in the period under review.
Winners are also selected based on significant interest shown by active and informed investors on the Nigerian Stock Exchange to invest in their stock should their boards ever decide to take them public.
The novel COVID-19 pandemic has caused the African Hotel and Tourism industry to lose over $50bn in revenue.
Dupe Olusola, MD, Transcorp Hotels
Amidst this, Transcorp Hotels Plc has suffered unprecedented losses and is looking to restructure the business strategy of its hotels and optimize its operations.
The management of Transcorp Hotels Plc has announced that it will be taking steps to ensure business continuity in the wake of the losses recorded due to the COVID-19 pandemic.
To this end, the hotelier is diversifying its portfolio and reducing its workforce as part of its cost management initiatives.
Mrs Dupe Olusola, managing director, Transcorp Hotels Plc, disclosed this during a Press Conference on Thursday saying “The impact of COVID-19 on the business is like nothing the company has ever witnessed. The hotel and hospitality industry in Nigeria has never faced a crisis that brought travel to a standstill, including the Ebola Virus Outbreak of 2014 and the recession of 2015. The slow pick up of international travel, restriction on large gatherings, the switch to virtual meetings and fear of the virus, has drastically reduced demand for our hotels and occupancy levels to its lowest of less than 5%.”
According to her “Despite the losses incurred we have fulfilled our obligations to staff. At the inception of the pandemic, we maintained a 100% salary payment to our over 900 employees in March and April. We also activated various cost-saving initiatives such as renegotiations of service contracts and restructuring of our loans. We suspended further commitment to buy fixed assets and operating equipment as well as reducing our energy consumption and maintenance costs. Despite undertaking these, it has become apparent that more fundamental changes need to be made for the business to survive. To this end, our workforce headcount will be reduced by at least 40%, and our reward system will be optimized.”
Mrs Olusola further disclosed that negotiations are ongoing to ensure that our colleagues who will be impacted are adequately compensated given the peculiarities of the economy at this time.
A health insurance package to reduce their health burden costs, especially during the pandemic, amongst other payment settlements, will be activated.
Equally, all Executives of Transcorp Hilton Abuja have now taken a pay cut.
As one of the leading hospitality brands in Africa, Transcorp Hotels Plc has stated its commitment to uphold service standards and ensure that all guests continue to experience the warmth and hospitality that it is known for.
The Lagos Chamber of Commerce and Industry (LCCI), the premier Chamber of Commerce and a leading voice in the organised private sector (OPS) in Nigeria, is set to host the 6th edition of the Information, Communication, Technology and Telecommunications (ICTEL) Expo.
The tech event is scheduled to take place virtually on Tuesday 22ndand Wednesday 23rd September at 9am daily. To this end, interested participants are urged to register online via www.ictelexpo.com.ng
Muda Yusuf, director general of the Lagos Chamber of Commerce and Industry (LCCI) said: “The ICTEL EXPO is positioned to be a veritable platform for both operators and regulators to network, showcase and explore with technology with the view to repositioning the ICT sector of the economy.”
Yusuf added “that this year’s edition promises to be the best ever in the series with the theme “Exploring Opportunities in the Digital Economy” This is intended to create a platform to discuss strategies for economic diversification and business sustainability with particular focus on ICT, especially with the current challenges posed by the COVID-19 pandemic. There would also be virtual conferences and exhibition during the two-day event.
Yusuf also emphasized that relevant agencies and departments of Government will be exhibiting and attending to other exhibitors and participants.
He stated that the Government Ministries, Departments and Agencies that have confirmed attendance to participate are Ministry of Communications; Nigerian Communications Commission (NCC) amongst others.
In addition, the Honourable Minister of Communications and Digital Economy, Dr. Isa Ali Pantami and the Executive Vice Chairman, Nigerian Communications Commission, Prof. Umar GarbaDanbatta, are expected as Special Guests.
Mrs. Funke Opeke, managing director, MainOne Cable and chairman, Presidential Committee on National Broadband Plan, is expected to deliver the Keynote Address on the first day.
While Mr. Victor Eburajolo, deputy group managing director, Kewalram Group, will be delivering the Keynote Address on the second day at the virtual Expo.
Yusuf stated that “so far, so good the excitement that the virtual Expo has generated has been phenomenal and we are indeed happy about it.”
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