Although a panel of five justices led by Justice Dahiru Musdapher sat on the case yesterday, the attention of the panel was later directed to the fact that the case was a constitutional one which could only be heard by a seven member panel.

It is trite that when the original jurisdiction of the Supreme Court is invoked for the purpose of making pronouncement on certain issue of law or interpretation of the constitution, a panel of seven justices must entertain the case.

The apex court had to adjourn hearing in the case yesterday till February 14 to enable the Chief Justice of Nigeria, Justice Idris Legbo Kutigi convoke a panel of seven to hear the case on its merit.

Meanwhile, two states, including Ekiti and Plateau, have teamed up with the Federal Government to request a full panel of the Supreme Court sitting in Abuja to dismiss the constitutional lawsuit instituted by Lagos State Government seeking to invalidate Value Added Tax Act 2004.

The Act empowers the Federal Government to impose levy on all sales and supply of goods and services in the federation with the tax collected shared amongst all the states of the federation.

Both Ekiti and Plateau are contending that Lagos suit seeking to invalidate the Act amounted to an abuse of court process and that the cause of action in the suit related to acts of a Federal organ which could  not form the basis of invoking the original jurisdiction of the apex court.

Although Osun and Taraba States have differed with Ekiti and Plateau having maintained the same position with Lagos on the issue through their separate originating summons already lodged at the court’s registry, the seven-man panel of the Supreme Court is expected to take arguments from both sides next year.

The apex court is also likely to fix a date for judgment in the case on the day.
Vanguard recalls that Lagos Government had approached the Supreme Court on February 25, 2008, seeking interpretation of the 1999 Constitution on who has powers between it and the Federal Government to enact laws with regard to imposition and collection of tax on the supply of all goods and services within the state.

Lagos had joined all the states of the Federation as co-defendants in the suit.
In the originating summons filed by the state government, it posed three fundamental questions before the apex court for determination.

The questions include:

Whether upon the coming into effect of the Constitution of the Federal Republic of Nigeria 1999, the said Value Added Tax Act is an existing law within the meaning of section 315 of the said constitution, being a Federal legislation which is deemed to be an Act of the National Assembly?

·If the answer is in the affirmative, whether the combination of the provisions of sections 2,4,6 and 7 of the said Value Added Tax Act which empowers a Federal organ to impose and collect taxes on the supply of all goods and services other than those listed in the First Schedule to the said Act amounts to an imposition of tax on the supply of all goods and services within the Lagos state of Nigeria and within other states of the Federation

·If the answer to question 2 is in the affirmative, whether sections 2,3,4,5,6 and 7 of the said Value Added Tax Act are within the contemplation and competence of the powers conferred on the National Assembly under section 4 of the 1999 constitution and item 59 of the Exclusive Legislative list, Second Schedule thereto?

Should all the questions be resolved in favour of Lagos , it is inviting the apex court to issue in its favour the following:

·A declaration that the Value Added Tax Act Cap VI Laws of the Federal Republic of Nigeria 2004 is to the extent that it provides for the imposition and collection of taxes on goods and services in Lagos state (and other states of the Federation), outside the legislative competence of the National Assembly and is therefore unconstitutional, null and void and of no effect whatsoever

·An order for an account of all such taxes on goods and services in Lagos collected for and on behalf of the Federal Government by virtue of and in reliance of the said Act for the period of May 29, 1999 to date and for payment over to the Lagos State Government

·A perpetual injunction restraining the Federal Government of Nigeria by itself, its servants or any of its agencies from continuing to give effect to the provisions of the said Value Added Tax Act to impose and collect taxes on goods and services within the Lagos state of Nigeria

The Federal Government, had, pronto reacted to the suit by filing a preliminary objection.
The objection was brought pursuant to Order 2 Rule 29 of the Supreme Court Rules and section 232 (1) of the 1999 constitution praying for an order striking out or dismissing the suit on the following grounds:

·That the plaintiff’s cause of action relates to an Act of a Federal organ and cannot form the basis of invoking this honourable court’s jurisdiction to entertain this suit

(i)The acts grounding Lagos complaints are acts of the Federal Inland Revenue Service (FIRS) and consequently the Federal Inland Revenue Service is a necessary party in the matter

(ii)Where an agency of the Federal Republic of Nigeria is or ought to be a party in a matter, the original jurisdiction of the Supreme Court cannot be invoked

·The entire suit constitutes an abuse of court process and liable to be struck out

(i)The affidavit in support of the plaintiff’s originating summons shows that the plaintiff has been involved and engaged in various pending suits and or appeals

(ii)That the suit stated above are grounded on the same subject matter as this present suit and the plaintiff ought to pursue these suits to their logical conclusion

(iii)The plaintiff’s appeal in Appeal No CA\L\1428\05 which touches on the same subject-matter in this suit was dismissed and the plaintiff has not lodged any appeal against the said judgment

(iv)The Court of Appeal in its judgment in Appeal No CA\L\428\05 declared the plaintiff’s Sale Tax Law as null and void on all matters on which the National Assembly has legislated

(v)The cause of action (if any) as disclosed in this suit can be properly determined in the above suits and or appeals.

Also responding to the suit, both Ekiti and Plateau ganged up with the Federal Government to dismiss the Lagos suit.

But some states of the Federation including both Osun and Taraba have also filed separate originating summons before the Supreme Court canvassing the same argument of Lagos .

Although the other suits are yet to be heard, but it seemed the Supreme Court will follow tradition by using Lagos suit as a test case.

The outcome of the suit will determine the fate of similar suits maintained by other states of the Federation before the apex court.

The VAT Act which is being contested by Lagos Government was enacted in 1993 while the Federal Inland Revenue Services, a Federal Government agency, was authourised to assess, collect, administer and manage the tax.

The tax was levied on all sales and supply of goods and services in the Federation excluding the goods and services set out in the First Schedule to the VAT Act.

The FIRS has been performing this statutory function and the tax collected shared amongst all the states of the Federation including the plaintiff in the manner set out in the VAT Act.

The sharing formula was reviewed in 2007. The plaintiff till date continues to share from the VAT proceeds collected by FIRS under the VAT Act

Lagos subsequently enacted and sought to enforce a Sales Tax Law in Lagos State in respect of the sales and supply of the same goods and services covered by the VAT Act being administered and managed by FIRS

The attempt to enforce the Lagos State Sales Tax Laws was resisted and this created a conflict between the Lagos and the FIRS which is the Federal Government agency managing and administering VAT

The conflict resulted in the filing of several cases touching on the constitutionality of the VAT Act between Lagos government; the Lagos State Board of Inland Revenue, the Federal Government and its agency and agents in various configurations

While a few of these suits have been concluded, several ones remain pending in various courts.

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