Since its introduction in 1993, Value Added Tax (VAT) has continued to be the one of the most stable and highest yielding sources of tax revenue for the Federation. Statistics show that VAT has contributed ₦1.108 trillion, ₦1.19 trillion and ₦1.5 trillion respectively in the last three years of, 2018, 2019 and 2020. Despite its huge contribution to national revenue, the validity of VAT has been a contentious issue especially in the light of Consumption/Sales Tax imposed by some States of the Federation. This issue has been a subject of litigation in different courts up to the Supreme Court and the various judgments have reflected the divergent views on its validity or otherwise.
In yet another judgment delivered on 11 December 2020, the Federal High Court (FHC) in Emmanuel Chukwuka Ukala v. FIRS (Ukala’s Case) held that the powers of the National Assembly to make laws imposing taxes is limited to the profits/income of persons/companies, capital gains and stamp duties on instruments but does not extend to VAT. Given the far reaching pronouncements made by the FHC in this case, this article seeks to analyse the potential effect of the decision and its implications on the continued imposition of Value Added Tax in Nigeria.