The Federal High Court in Lagos has upheld a Tax Appeal Tribunal ruling that validates the Federal Inland Revenue Service’s (FIRS) authority to impose and collect Value Added Tax (VAT) on food and transportation services offered through digital platforms such as Bolt.
The judgment confirms that operators of these platforms must act as VAT collection agents for independent service providers using their apps.
Justice Akintayo Aluko awarded N1 million as the cost of the action in favour of FIRS against the Bolt operators.
The court held: “Going by the evidence relied upon by the Tax Appeal Tribunal as revealed in the Records of Appeal, which form the basis of its judgment under scrutiny, the respondent acted within the law in appointing the appellant pursuant to Section 10(3) of the VAT Act.
“There is no valid reason to disturb the judgment of the Tribunal.
“Consequently, the judgment of the Tribunal delivered on 26th May 2023 is affirmed.
“The appeal thus fails, and it is accordingly dismissed.
“Cost of the action assessed in the sum of N1million only is awarded in favour of the respondent against the appellant.”
Bolt operators had filed suit TAT/LZ/VAT/074/2022 before the Tribunal, seeking an order to restrain FIRS from imposing VAT on services offered by independent drivers and vendors, arguing that such action violated Section 10 of the VAT Act.
The Tribunal dismissed the suit on May 26, 2023.
Dissatisfied, the operators, through their counsel Elvis E. Asia, leading Blessing Uwejewah and P.O. Okujere, appealed to the Federal High Court, asking it to overturn the decision.
They sought a declaration that their appointment by FIRS as agents responsible for VAT compliance on behalf of independent suppliers was inconsistent with Section 10 of the VAT Act.
The appellants raised six issues for determination. Key among them was the argument that the Tribunal erred by affirming their appointment as FIRS agents under Sections 10(3) and (6) without considering the preconditions in subsections (1) and (2).
They also contended that FIRS’s Simplification Guidelines exceeded the scope of Section 10 by wrongly categorising non-resident suppliers like Bolt as taxable suppliers of goods and services provided by Nigerian vendors.
Additionally, the appellants argued that Bolt itself does not engage in transportation or food vending and thus cannot be treated as a taxable supplier under the VAT Act.
They further claimed the Tribunal erred in holding that they lacked locus standi to challenge their appointment and relied on Sections 31 of the FIRSEA and 49 of CITA, which were not raised in their pleadings or argued in court.
They concluded that even if the appointment and guidelines were valid under the law, the nature of the transactions involved did not justify such confirmation.
FIRS’s legal team, led by Moses Idaho alongside Olufemi Asekun, urged the Federal High Court to reject the appeal filed by the Bolt operators. They argued that the claims made by the appellants lacked substance and were based on misinterpretations of the Tribunal’s earlier decision, warranting dismissal and the imposition of significant legal costs.
In delivering the judgment, Justice Akintayo Aluko ruled in favour of the FIRS on three of the six issues raised, specifically issues one, four, and six. He upheld one issue in favour of the appellants and struck out the remaining two.
