Justice Rilwanu Aikawa of the Federal High Court in Lagos has declared Lagos State Hotel occupancy and Restaurant consumption tax law and regulation as constitutional, valid and operative.
Justice Aikawa made the declaration while delivering judgment in a Suit filed by the Registered Trustees of Hotel Owners and Managers Association of Lagos, seeking to stop the State Government from further enforcing the law.
Joined as defendants in the suit are the Attorney General of Lagos State and the Federal Inland Revenue Service (FIRS).
The plaintiff had urged the court to strike out the Hotel Occupancy and Restaurant Consumption Law, Cap H8, Laws of Lagos State 2015.
They also asked the court to restrain the State Government from enforcing the provisions of its new Hotel Occupancy and Restaurant Consumption (Fiscalisation) Regulations 2017.
They had argued in suit that since the Value Added Tax (VAT) by Federal Inland Revenue contains provisions relating to consumption, it had ‘covered the field’ and as such, no State law can impose any similar tax.
However, Justice Aikawa held in his judgement that Lagos State is the only constitutional and lawful body permitted to assess, impose and collect tax from customers for goods and services consumed in hotels, restaurants and event Centres in the State.
The Court, therefore, invalidate sections 1, 2, 4, 5 and 12 of the Value Added Tax Act for being inconsistent with the provisions of the Constitution of the Federal Republic of Nigeria 1999 as amended.
The judge further granted an order of perpetual injunction to restrain the Federal Inland Revenue Service from collecting tax from customers for goods and services consumed in hotels, restaurants and Event Centres in Lagos State.