Court Backs FIRS to Levy VAT on Food Deliveries via Bolt

A Federal High Court in Lagos has endorsed the Tax Appeal Tribunal’s decision, confirming the Federal Inland Revenue Service’s (FIRS) authority to levy, collect, and remit Value Added Tax (VAT) on transportation and food services offered by independent drivers and vendors utilizing platforms like Bolt.

Justice Akintayo Aluko also imposed a cost of N1 million in favor of FIRS against the Bolt operators.

The Bolt operators had initiated the lawsuit before the Tribunal, seeking to prevent FIRS from imposing VAT on services rendered by independent drivers and vendors, contending that such actions contravened Section 10 of the VAT Act.

However, the Tribunal dismissed the suit on May 26, 2023.

Discontented with the ruling, the operators, represented by their counsel Elvis Asia, appealed to the Federal High Court, requesting a reversal of the decision.

They sought a declaration that their designation by FIRS as agents responsible for VAT compliance on behalf of independent suppliers conflicted with Section 10 of the VAT Act.

The appellants presented six issues for determination. Among the pivotal arguments was the assertion that the Tribunal erred in affirming their designation as FIRS agents under Sections 10(3) and (6) without considering the prerequisites in subsections (1) and (2).

They further contended that FIRS’s Simplification Guidelines overstepped the bounds of Section 10 by incorrectly classifying non-resident suppliers such as Bolt as taxable suppliers of goods and services offered by Nigerian vendors.

Additionally, the appellants argued that Bolt itself does not engage in transportation or food vending and thus should not be treated as a taxable supplier under the VAT Act.

They further asserted that the Tribunal erred in determining that they lacked locus standi to contest their appointment and relied on Sections 31 of the FIRSEA and 49 of CITA, which were not presented 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 warrant such confirmation.

In response, FIRS’s counsel, Moses Idaho, urged the court to dismiss the appeal with substantial costs, characterizing the appellants’ claims as speculative and a distortion of the Tribunal’s ruling.

In his judgment, Justice Aluko resolved Issues 1, 4, and 6 in favor of FIRS; Issue 3 in favor of the appellants; and dismissed Issues 2 and 5.

The court declared, “Based on the evidence relied upon by the Tax Appeal Tribunal as revealed in the Records of Appeal, which underpin its judgment under review, 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 overturn the Tribunal’s judgment. Consequently, the judgment of the Tribunal delivered on 26th May 2023 is upheld.

The appeal thereby fails, and is accordingly dismissed. The cost of the action, assessed at N1,000,000 (One Million Naira) only, is awarded in favor of the Respondent against the Appellant.”