A Federal High Court sitting in Lagos has confirmed that the Federal Inland Revenue Service (FIRS) has the legal authority to collect Value Added Tax (VAT) on transportation and food delivery services facilitated through platforms like Bolt.
In a judgment delivered by Justice Akintayo Aluko, the court upheld the earlier ruling of the Tax Appeal Tribunal, which had supported FIRS’s power to charge and collect VAT from independent drivers and vendors operating via digital platforms.
The judge also awarded N1 million in legal costs in favour of FIRS against the Bolt operators.
The dispute began when Bolt operators approached the Tribunal to stop FIRS from enforcing VAT on services provided by independent vendors and drivers. They argued the move was contrary to Section 10 of the VAT Act. However, the Tribunal dismissed the suit on May 26, 2023.
Unhappy with that outcome, the operators, represented by their lawyer Elvis Asia, filed an appeal at the Federal High Court. They urged the court to overturn the Tribunal’s ruling and declare that their designation as agents to enforce VAT compliance for third-party service providers conflicted with Section 10 of the Act.
Among six legal issues raised, the appellants contended that the Tribunal had misinterpreted Sections 10(3) and 10(6) by ignoring key conditions in earlier subsections. They also argued that the FIRS’s guidelines misclassified non-resident platforms like Bolt as VAT-eligible providers of services delivered by local drivers and vendors.
They further maintained that Bolt itself does not deliver transportation or food services, and therefore should not be treated as a taxable supplier. In addition, the appellants challenged the Tribunal’s view that they lacked the legal standing to contest their appointment by FIRS, arguing that the decision relied on legal provisions (Sections 31 of FIRSEA and 49 of CITA) not raised during the hearing.
The operators claimed that even if FIRS’s actions were valid under the law, the nature of the transactions involved did not justify their appointment as VAT agents.
In response, FIRS counsel Moses Idaho urged the court to throw out the appeal, stating the appellants’ claims were speculative and misrepresented the Tribunal’s position.
Delivering his verdict, Justice Aluko ruled in favour of FIRS on three of the six issues presented—specifically Issues 1, 4, and 6. He ruled Issue 3 in the appellants’ favour, while Issues 2 and 5 were struck out.
The judge stated, “Going by the evidence relied upon by the Tax Appeal Tribunal as revealed in the Records of Appeal, which form the basis of its judgment under scrutiny, 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 disturb the judgment of the Tribunal. Consequently, the judgment of the Tribunal delivered on 26th May 2023 is affirmed.
The appeal thus fails, and it is accordingly dismissed. Cost of the action assessed in the sum of N1,000,000 (One Million Naira) only is awarded in favour of the Respondent against the Appellant.”
