Following the judgment of the Lagos State High Court on the implementation of the Hotel Occupancy and Consumption tax law in the state, the Lagos Internal Revenue Service (LIRS) last week resumed the implementation of the law with the sanctioning of over 30 hotels, restaurants and event centres across Ikeja, Victoria Island and Lekki areas of the state.
Honourable Justice Hakeem Oshodi sitting at the Ikeja Division of the Lagos State High Court, had late last year upheld the state’s Hotel Occupancy and Restaurant Consumption law, which came into effect earlier this year.
According to Mrs. Shade Afolayan, deputy revenue manager and head of the distrain/enforcement unit, the sanctioning was carried out in line with Section 15 (1) – (6) of the new law, which empowers the revenue agency to sanction any defaulting entity after taking the available steps to compel compliance without result.
Section 15(1 a-b) states that “without prejudice to any other power conferred on the Service (LIRS) for the enforcement of payments due to Government under this or any other law, where an assessment has become final and conclusive and a demand notice has been served on a person to make payment, if payment is not made within the time limited by the demand notice, the Service may, in the prescribed form, for the purpose of enforcing payment of the tax due, distrain the defaulter by his goods or other chattels, bonds or other securities;  distrain upon the relevant facility or other place in respect of which the defaulter is the owner, and subject to the provisions of this section, recover the amount of tax due by sale of any of the things so distrained”.
Afolayan explained that due notices and the expected time frame stipulated by the law were given to the affected hotels and restaurant without positive response from them. She said the LIRS would stop at nothing in enforcing compliance with the law. She called on other hotels, restaurant and concerned entities, which are not complying to respect the law by doing what is right in accordance with the law.
Mr. Jide Sosan, revenue officer, who also led another set of the enforcement team, said there is nothing illegal about the actions of the state government. He noted that the state government has been committed to the rule of law in carrying out its operations.
According to him, the LIRS’s open door policy with the taxpayers should be embraced by taxpayers. Rather than wait until the expiration of ultimatums set by the law, Sosan advised taxpayers to always approach the revenue agency for dialogue and necessary actions whenever there is any issue concerning their tax obligation.
Another officer of the Board, who preferred anonymity, said investigations have revealed that some hotels, restaurants and other concerned entities are already charging consumption tax without registering or remitting such to the state government. He noted that plans are already ongoing to bring the culprits to book.  According to him, “they will be made to face the full weight of the law for defrauding the taxpayers and the state government as well”, he stated.
It would be recalled that in an originating summons filed by Mass Everest Hotels Limited and Chariot Hotels Limited against the Attorney General of Lagos State and the LIRS, the claimants had contended that the State Government could not validly make the consumption law in view of the provisions of section 4(2) and (3) of the Constitution and Section 1 of the Taxes and Levies (Approved List for Collection) Act. They also asked the court to restrain the State Government from enforcing the Law.
However, after hearing arguments from all parties, the Court held that the consumption law was validly passed by the Lagos State House of Assembly as it was separate and distinguishable from the taxes exclusively reserved to the Federal Government. It also held that the claimants had not represented themselves as consumers in their affidavit. As hotel operators, they lacked the locus standi to sue because they were agents for collection while the tax was on consumers only.
Justice Oshodi declared that, “the tax is limited, and not general. It is not targeted on incomes or profit or capital gains, but for the use or possession or for the right to the use or possession of any hotel , hotel facility or events centre, or who purchases consumable goods or services in any restaurant whether or not located within a hotel in Lagos State. The payer of the tax is the consumer, and it is paid when they “consume” the goods and services stated in the Law.”   

Tax offences and penalties (2)

Counterfeiting documents
Any person who:
•counterfeits or falsifies any document which is required by or for the transaction of any business under this law or any law being administered by the Board or the Internal Revenue Service (BIR); or
•knowingly accepts, receives or uses any document so counterfeited or falsified; or
•alters any such document after it is officially issued; or
•counterfeits any seal, signature, initial or other mark of, or used by, any officer for the verification of such a purpose relating to tax;
• being an employee of the Internal Revenue Service (IRS), initiates, connives or participates in the commission of any of the offences in paragraphs (a) to (d) of this section commits an offence and shall be liable on conviction to a fine of N500,000.00 or to imprisonment for a term of 3years or both.

Penalties for offences by authorised and unauthorised persons
Any person appointed for the due administration of this law or employed in connection with the assessment and collection of a tax who
•demands from any company an amount in excess of the authorised assessment of the tax; or
•withholds for his own use or otherwise any portion of the amount of tax collected; or
•renders a false return, whether orally or in writing of the amount of tax collected or received by him; or
•defrauds any person, embezzles any money, or otherwise uses his position to deal wrongfully with the Internal Revenue Service; or
•steals or misuses service documents; or
•compromises on the assessment or collection of any taxes, commits an offence and shall be liable on conviction to a fine equivalent to 200 per cent of the sum in question or to imprisonment for a term of three years or  both.
Any person, who while armed with an offensive weapon, causes injury to any officer or authorised officer of the Internal Revenue Service in the performance of his functions under this law, commits an offence and shall be liable on conviction to imprisonment for a term of 10 years.

Connivance to contravene the law
Any person who connives with one or more persons for the purpose of contravening any of the provisions of this law commits an offence and shall be liable on conviction to imprisonment for a term of one year.

Impersonating a revenue collector
Any person who not being a revenue collector holds of himself out as a revenue collector and attempts to collect or collects any revenue due to the State or a Local Government Council shall be guilty of an offence and be liable on conviction to a fine of two hundred and fifty thousand Naira (N250, 000.00) or imprisonment for three (3) years or both and any amount collected by him shall be forfeited to the State Government or relevant Local Government Authority.