The Jos Judicial Division of the Court of Appeal has reaffirmed the obligation placed on Legal Practitioners by the Value Added Tax Act Cap VI 2004 (as amended) (“VAT Act”) to register with the Federal Inland Revenue Service (“FIRS”) for the payment of VAT.
The Appellant, Al-Maseer Law Firm, commenced an action at the Federal High Court in Jos seeking a declaration from the Court that a Legal Practitioner is not a taxable person within the contemplation of the VAT Act and is not under any obligation to render VAT to the FIRS. The FIRS defended this action, contending that the Appellant is a Legal Practitioner engaged in providing services to its clients for profit and is therefore taxable within the meaning and context of the Act, in so far as such service does not fall within the category of exempted services specified in the First Schedule of the Act.
The Federal High Court considered the arguments of the parties and delivered judgment, agreeing with the Respondent’s position and dismissing the Appellant’s action in its entirety. The Appellant, being dissatisfied with the judgment of the Federal High Court, appealled to the Court of Appeal in Jos. In dismissing the Appellant’s appeal, the Court of Appeal held that the VAT Act does not limit itself to only suppliers of goods but extends the duty of collection and remission of VAT to those who only supply services. A lawyer or firm of lawyers in private practice undoubtedly supply legal services to the public for a fee and are thus caught by this provision and bound to charge and remit VAT to the FIRS. The Court of Appeal also held that it was mandatory for taxable persons such as the Appellant to register with the FIRS for the payment of VAT or be held liable for a penalty for the sum of N10,000 for the first month of failure and N5,000 for each subsequent month of not registering.
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