Economy

Court rules Lagos Hotel Occupancy, Restaurant Consumption Tax Law as constitutional

A Federal High Court sitting in Lagos on Thursday declared the Lagos State Hotel Occupancy and Restaurant Consumption Tax Law and Regulation as constitutional, valid and operative.

Justice Rilwanu Aikawa gave the ruling while delivering judgment in Suit No. FHC/L/CS/360/18 between the Registered Trustees of Hotel Owners and Managers Association vs. the Attorney General of Lagos State & Anor.

According to Judge Aikawa, 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.

He, therefore, invalidated 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.

Similarly, the Judge 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.

Following the judgment, all Hotels, Restaurants, and Events Centre managers and operators have been enjoined by the Ministry of Justice to comply with the provisions of the Hotel Occupancy and Restaurant Consumption Tax Law and Regulations of Lagos State.

Recall that the Registered Trustees of Hotel Owners and Managers challenged the legality of the Lagos State Hotel Occupancy and Restaurant Consumption Tax Law and Regulation in 2018 in a suit stating that since the Value Added Tax (VAT) collected by Federal Inland Revenue Service contains provisions relating to consumption, it had ‘covered the field’ and as such, no State law can impose any similar tax.

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