The Federal High Court in Abuja has barred the Delta State Government from enforcing a five per cent consumption tax on transactions already covered by the federal Value Added Tax regime.
Justice Peter Lifu, in a judgment delivered on October 9, 2026, nullified provisions of the state’s Hotel Occupancy, Restaurants and Departmental Stores Consumption Tax Law, 2017, which imposed the levy.
The judgment followed a suit by the Nigeria Employers’ Consultative Association and Retail Supermarkets Nigeria Limited, operators of Shoprite stores, challenging the legality of the additional tax on goods and services already subject to VAT.
The plaintiffs argued that the levy created overlapping tax obligations for businesses and consumers, contending that Delta State could not impose a separate consumption tax to the extent that it duplicated the federal VAT regime.
The defendants, however, maintained that VAT and the state consumption tax differed in their application and collection. They also argued that the state law excluded VAT from the consumption tax calculation, thereby preventing double taxation.
Rejecting that argument, the judge held that differences in the methods of assessing and collecting the taxes were not enough to justify imposing an additional levy on transactions already covered by VAT.
In reaching his decision, Lifu considered a Supreme Court ruling in Attorney-General of Lagos State v. Eko Hotels Limited (2018), which addressed the relationship between federal VAT and state consumption taxes.
The court also relied on Section 4(5) of the 1999 Constitution, which provides that where a state law conflicts with a valid law enacted by the National Assembly, the federal law prevails to the extent of the inconsistency.
Consequently, the judge set aside Sections 3 and 4 of the Delta State law, as well as Section 7(b), Item 13 of the Schedule to the Taxes and Levies (Approved List for Collection) Act (Amendment) Order No. 77 of 2015.
He also issued a perpetual injunction restraining the Delta State Attorney-General and Commissioner for Justice, the state Board of Internal Revenue and their agents from implementing or enforcing the affected provisions.
Before deciding the substantive issues, the judge had dismissed preliminary objections by the Attorney-General of the Federation and the Delta State defendants challenging the court’s jurisdiction.
He held that the challenge to the validity of the federal amendment order brought the case within the Federal High Court’s constitutional jurisdiction under Section 251 of the Constitution.
The plaintiffs were represented by Dr Joseph Nwobike, SAN, of Osborne Law Practice, while J.O. Obaje appeared for the Attorney-General of the Federation. Isaiah Bozimo, SAN, represented the Delta State defendants.
