The Lagos Zone of the Tax Appeal Tribunal has dismissed the case filed by Bolt Operations challenging the legality of the Federal Inland Revenue Service to appoint her as agent of collection of the Value Added Tax from the Food vendors and the Ride-hailers.
The Panel led by Hon. (Prof.) A. B. Ahmed held that the action of the Federal Inland Revenue Service to have appointed Bolt Operations to act as Agent of the Federal Government of Nigeria in the collection of VAT on the goods and services supplied by the food vendors and Ride-hailers on the Platform of the Appellant is patently not Ultra-Vires Section 10 of the VAT Act.
From facts, the Appellant- Bolt Operations had submitted that it’s not an entity incorporated in Nigeria and the company operates under a marketplace model by matching independent businesses with consumers and earning commission from the service of connecting the businesses with the customers or consumers.
The company averred that the drivers who make use of its platform are not its employees but rather independent providers of cab services and the company does not own any of the cars used by the drivers.
Bolt Operations asked for a determination of whether the Federal Inland Revenue Service erred in law when it appointed the Appellant, a Non-Resident Supplier as the agent to charge, collect and remit VAT on supplies made by Nigerian resident suppliers to their customers using the Appellants platform.
The Company objected to the obligation of charging VAT and argued that its not in line with the provisions of the VAT Act with regards to Non–Resident Service and also the Federal Inland Revenue Service’s imposition of the obligation to charge and account for the VAT which the drivers on its platform are legally exempted from doing is without any legal basis, and urged the Tribunal to grant the reliefs sought.
In defense, the Respondent- Federal Inland Revenue Service urged the Tribunal to hold that the provisions of the VAT Act having not been repealed, nor its powers constrained, the agency has unfettered powers to appoint any person or any other person including the Bolt Operations as an agent for collection under the VAT Act.
The Revenue Service further submitted that Bolt Operations having variously referred to itself as an agent to the drivers on its platforms, the Respondent is further relieved from the burden of having to so prove and urged the Tribunal to dismiss the Appeal for want of merit and make an Order declaring that the Respondent acted lawfully when it appointed the Appellant as a collecting agent for VAT in Nigeria.
In its well-considered judgment after careful evaluation of the evidence and submissions of both parties, the tribunal led by Hon. (Prof.) A. B. Ahmed as Chairman, Hon. P. A. Olayemi, Hon. Babatunde Sobamowo, Hon. Samuel Ohwerhoye and Hon. Terzungwe Gbakighir as members held that by virtue of the VAT Act, the Federal Inland Revenue Service is empowered to appoint any such other person to collect and remit VAT to the Federal Government of Nigeria and the discretion to so appoint “such other person” without any criteria is exclusively that of the agency.
The Tribunal held that the Suppliers of the goods (Food Vendors) or services (Ride-hailing) enlisted on Bolt’s platform renders vatable goods or service for which there is an obligation to withhold and remit VAT, and the Federal Inland Revenue Service leveraged on the power granted by the VAT Act to appoint the Appellant to act as the Agent of both the Food Vendors and Ride-Hailers that are on the platform of the Bolt Operations to charge, collect and remit the amount collected to the Revenue Service is valid.
The Tribunal ruled that the locus to challenge the decision to appoint Bolt Operations as the Agent of collection on the ground of exemption of goods and services supplied is not within the Company but the Food Vendors and Ride-hailers, that it will be a very tall order to require the tax administration to follow each individual food vendors and ride-hailers to collect the tax.