Court Sets Aside Kano Consumption Tax Law

Justice John Tsoho of the Federal High Court in Abuja has set aside the provisions of Sections 96 and 97 of the Kano State Revenue Administration (Amendment) Law, No. 3 of 2017 which empowers the state government to collect consumption tax in the state. Delivering judgment in the suit filed by the Nigeria Employers Consultative Association (NECA) and Retail Supermarkets Nigeria Limited, operators of Shoprite, against the Attorney-General of the Federation, Kano State Attorney-General and Kano State Inland Revenue Service, Justice Tsoho also set aside Section 7 (b) Item 13 of the Schedule to the Taxes and Levies (Approved List for Collection) Act (Amendment) Order No. 77, 2015. He declared that the imposition of consumption tax vide Sections 96 and 97 of the state law over the same goods and services which are already subject to Value Added Tax amounted to double taxation. By Order No. 77, 2015, Dr. Ngozi Okonjo-Iweala in her capacity as the Minister of Finance, added item 13 to the Schedule of the Taxes and Levies (Approved List for Collection) Act (Amendment). Consequent upon this, the Kano State government enacted the Revenue Administration (Amendment) Law, No. 3 of 2017. Sensing that it was unfair, unjust and prejudicial to their businesses and fortunes of the plaintiffs and it members NECA and Retail Supermarkets Nigeria Limited, through their lawyers, Joseph Nwobike & Co, commenced an action against defendants They asked the court to determine whether having regard to the provisions of the Value Added Tax (VAT) Act, Cap VI, Laws of the Federation of Nigeria, 2004, which are already being implemented by the federal government as a consumption tax for the benefit of both the federal and states governments, the provisions of Sections 96 and 97 of the Kano State Revenue Administration (Amendment) Law, No. 3 of 2017, did not amount to double and multiple taxation. The plaintiffs asked whether in view of the provisions of items 7, 8 and 9 of Part II of the Second Schedule to the 1999 Constitution, the provisions of Section 7 (b) Item 13 of Schedule to the Taxes and Levies (approval List for Collection) Act (Amendment) Order No. 77, 2015 is unconstitutional. They also asked whether, having regard to the provisions of the VAT Act, Cap VI, Laws of the Federation of Nigeria, 2004, which are already being implemented by the federal, Section 96 and 97 of the Kano State Revenue Administration (Amendment) Law 2007 ought not to be set aside. The plaintiffs contended that Sections 96 and 97 of the Kano State Revenue Administration (Amendment) Law, No. 3 of 2017 are inconsistent with items 7 and 8 of Part II of the Second Schedule to the Constitution. They argued that the imposition of consumption tax vide Sections 96 and 97 of the Kano State Law over the same goods and services which are already subject to VAT amount to double taxation. The defendants in their preliminary objection argued that the court did not have jurisdiction to hear the suit. They also asked the court to dismiss the suit. But Justice Tsoho in his judgment, dismissed the preliminary objection. The court said it had jurisdiction pursuant to Section 251 (1), (b), (q) and (r) of the 199 Constitution (as amended), citing the case of Attorney-General of Lagos State vs. Eko Hotels Ltd (Pt. 1619) 518 SC. He resolved the three issues raised by the plaintiffs for determination in their favour: That Sections 96 and 97 of the Kano State Revenue Administration (Amendment) Law, No. 3 of 2017 are inconsistent with items 7 and 8 of Part II of the Second Schedule to the Constitution; that the imposition of consumption tax vide Sections 96 and 97 of the Kano State Law over the same goods and services which are already subject to VAT amounted to double taxation. The court granted reliefs 1, 2, 3, 4 and 5 sought in the originating summons in favour of the plaintiffs The court consequently perpetually restrained the 2nd and 3rd defendants and their agents from further implementing the provisions of Sections 96 and 97 of the Kano State Revenue Administration (Amendment) Law 2017.Send]]>