The Nigerian Federal Court held that it is unconstitutional in the perspective of the Constitution of the Federal Republic of Nigeria to collect Value-Added Tax (VAT) in hotels, restaurants and event centres.
Trustees of Hotel Owners and Managers Association of Lagos approached the court with an issue regarding the provision of the Value-Added Tax (VAT) Act covering the goods and services including the goods and services consumed in hotels, restaurants and event centres in Lagos State and also whether the provisions of Hotel Occupancy and Restaurant Consumption Regulations 2017 about the same are inoperative. They argued that consumption tax imposed by Lagos State Internal Revenue Service (LIRS) and VAT should not be enforced at the same time.
The Attorney General of Lagos State claimed in opposition that the matters involved is a residual matter lying within the scope of the State House of Assembly and the Constitution does not make any provision regarding the same.
The Nigerian Federal Court affirmed that the imposition of tax as per VATA on goods and services consumed in hotels, restaurants and event centres are unconstitutional and only LIRS is entitled by the constitution to impose and collect taxes for goods and services consumed in hotels, restaurants and event centres.