A Federal High Court sitting in Lagos on Thursday declared Lagos State Hotel occupancy and Restaurant consumption tax law and regulation as constitutional, valid and operative.

According to Justice Rilwanu Aikawa, the judgment was delivered 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.

It will be recalled 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. The suit stated that since the Value Added Tax (VAT) by Federal Inland Revenue contains provisions relating to the consumption, it had ‘covered the field’ and as such, no State law can impose any similar tax.

However, the recent judgment stated that 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.

The Court, therefore, invalidate 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.

Likewise, the court 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.

All Hotels, Restaurants, and Events center managers and operators are hereby enjoined to henceforth comply with the provisions of the Hotel Occupancy and Restaurant Consumption Tax Law and regulations of Lagos State as declared in the judgment of the Federal High Court.

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