MILESTONE and EMERGENT, describe the judgement of a High Court, in Port Harcourt Rivers State, south-south Nigeria, on revenue generated in the State – including Value Added Tax, VAT. The court, presided by Justice Stephen Dalyop Pam, ruled that Rivers State, and not Nigeria’s Federal Inland Revenue Services, FIRS, the federal government’s agency for revenue collection, should collect Valued Added Tax, VAT and Personal Income Tax, PIT, in the state.

Justice Pam issued an order of perpetual injunction restraining the FIRS and the Attorney General of the Federation, first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, personnel income tax and Value Added Tax. The Suit No FHC/PH/CS/149/2020 was filled by the Attorney General of Rivers State.

Eleven reliefs sought by Rivers State government in the suit were granted by the court. It stated that there was no constitutional basis for FIRS to demand and collect VAT, Withholding Tax, Education Tax and Technology levy in Rivers State, or any other State of the Federation.  The constitutional powers and competence of the federal government, the court further stated, was limited to taxation of incomes, profits and capital gains; which did not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 58 of the Exclusive Legislative List of Nigeria’s 1999 Constitution [as amended].

Justice Pam dismissed the objections filed by the defendants that the court lacked jurisdiction to hear the suit; that the case should be transferred to the Court of Appeal for interpretation.  Further objection by the defendants that the National Assembly ought to have been made a party in the suit was also dismissed. The judge stated that the issues of taxes raised by Rivers State government were issues of law; which the court was constitutionally empowered to entertain.


After diligent review of the issues raised by both the plaintiff and the defendants, Justice Pam said, the plaintiff has proven beyond doubt that it was entitled to all the eleven reliefs it sought in the suit, and were so granted. The judge agreed with Rivers State government that it was the State, not FIRS, that was constitutionally entitled to impose taxes enforceable or collectable in its territory of the nature of consumption or sales tax, VAT, education and others taxes or levies; other than taxes and duties specifically reserved for the federal government by items 58 and 59 of Part 1 of the Second Schedule of Nigeria’s 1999 Constitution [as amended].

AS A LANDMARK JUDGEMENT, it is expected that the federal government will stretch it to the full limit – perhaps, up to the supreme court. The judgement could embolden State governments to test some other provisions on the “concurrent and exclusive legislative lists” in Nigeria’s 1999 Constitution [as amended], in court.  It will, also, open through the backdoor, the clamour for “Restructuring” in the country for the autonomy of Nigeria’s federating states, and whittle down the over bloated power of Nigeria’s federal government.

Consequences of the judgement is that it will shake-up revenue collection in the country, especially, VAT, which is one of the major sources of revenue collection by the federal government.  It will shape and impact immensely on revenue collection by state governments and federal government, if the judgement stands. It will further define the independent and autonomy of Nigeria’s State governments in a federation.

Legal experts, economists and financial analysts have begun to analyse the judgement based on legal, federation principles, moral and common-sense principles. They agreed with the River State High Court judgement, that revenue generated from a federating state, should not be forwarded to the centre federal government for sharing to all states of the federation – more so, when some of the federating states are opposed to key sources of generating VAT revenue, such as alcohol beverages that are banned in such states.


THE ADVANTAGE of the judgement is that it will enable State governments to establish certain activities or facilities, from which Value Added Tax, VAT, can be collected.  For states, such as Nigeria’s northern Kano State, where sales and consumption of alcoholic beverages are banned by the State government on religious ground; no VAT revenue will be generated by the government.

Analysts believe that lethargic and uncreative State governors, who go cap-in-hand each month to the centre federal government, for revenue they did not work for, or are opposed to; would wake up and think out of the box. Kano State government, through its local security outfit, Hisbah police, brazenly, storm beer parlours, recreational and entertainment facilities, to cease alcohol beverages worth millions of Nigeria, and publicly destroy them.

In November 2020, Kano State Hisbah Board, through its Hisbah police, destroyed 1,975,000 bottles of beer with contents, worth over N200 million, conveyed in 20 trucks, according to Sheikh Harun Muhammad Ibn Sina, Kano State Hisbah Board Commander-General. The Board got a court order to destroy the alcohol drinks. The alcoholic drinks were confiscated from traders in Kano metropolis.  Hisbah police was established to enforce compliance with Islamic Sharia law, which forbids the consumption of alcohol.

The destruction of the bottles of beer was carried out at Kalebawa, in Dawakin Tofa Local Government Area of the state, and supervised by the Deputy Governor of the State, Nasiru Yusuf Gawuna; on the directives by the State Governor Abdullahi Umar Ganduje.  Gawuna said the destruction of the bottles of beer was to prevent the consumption of alcohol and all other intoxicants that can distort the mental capability of a person, which is forbidden in Islam.

The Deputy Governor’s Chief Press Secretary, Hassan Musa Fagge, in a statement on the destruction of the bottles of beer, quoted Ganduje to have said that the Hisbah Board was established with the aim of preventing “evil social acts in the society”. The statement added that: “Even in Kano we have banned the consumption of beer in all parts of the State”, Ganduje was quoted to have said.


Perhaps, to compensate Hisbah local police for a job well done, in destroying over N200 million of citizens assets, means of individual and family livelihood, and means of generating huge Value Added Tax, VAT; that is shared by the federal government to Kano State, Ganduje promised to enhance the welfare of Hisbah, which included, increase their salaries and kitting of the security outfit with new uniforms before the year 2020 runs out.

“My administration is proud of the way you discharge your duties. Therefore, I wish to urge all stakeholders to continue to give you all the support you need to succeed,” the Governor Ganduje was quoted to have stated.