The Federal High Court in Lagos has ruled in favour of the Federal Inland Revenue Service, affirming its authority to collect Value Added Tax on food delivery and transport services offered through digital platforms such as Bolt.

Justice Akintayo Aluko delivered the judgment on Thursday, dismissing an appeal filed by Bolt’s Nigerian operators against an earlier decision by the Tax Appeal Tribunal.

The tribunal had held that such services are liable to VAT under existing tax laws.

“There is no valid reason to disturb the judgment of the Tribunal,” Justice Aluko held. “The Respondent acted within the law in appointing the Appellant pursuant to Section 10(3) of the VAT Act. Consequently, the judgment of the Tribunal delivered on May 26, 2023, is affirmed.”

The dispute arose after Bolt’s Nigerian operators challenged the Federal Inland Revenue Service’s decision to impose VAT on services provided by independent drivers and food vendors operating through the Bolt platform. The company argued that since these service providers are third parties and not direct employees, the platform should not be held liable for VAT on their transactions.

Bolt’s operators filed suit No. TAT/LZ/VAT/074/2022 before the Tax Appeal Tribunal, arguing that the FIRS’s move to impose VAT violated Section 10 of the VAT Act, given that Bolt does not directly provide transport or food services but merely facilitates transactions between users and independent service providers.

However, the Tribunal dismissed the suit on May 26, 2023. In response, the operators—represented by counsel Elvis E. Asia, with support from Blessing Uwejewah and P.O. Okujere—appealed to the Federal High Court. They contended that their designation by the FIRS as VAT collection agents was invalid and inconsistent with the provisions of the VAT Act.

In their appeal, the appellants raised six issues for the court’s determination. At the heart of their argument was the claim that the FIRS’s VAT Compliance Simplification Guidelines for Non-Resident Suppliers had wrongly classified Bolt as a “supplier.” They argued that the platform merely connects users with independent drivers and food vendors and does not directly render any service, making the FIRS’s categorization and resulting VAT liability improper.

“Bolt does not offer transportation or food vending services and therefore cannot be classified as a taxable supplier under the VAT Act,” their counsel argued, adding that the Tribunal had erred in affirming their appointment without addressing the conditions outlined in subsections (1) and (2) of Section 10.

The appellants also contested the Tribunal’s finding that they lacked locus standi to challenge their appointment as VAT collection agents, accusing the lower body of relying on legal provisions—specifically Sections 31 of the FIRS Establishment Act (FIRSEA) and 49 of the Companies Income Tax Act (CITA)—which were neither pleaded nor argued during the proceedings.

FIRS, represented by lead counsel Moses Idaho and supported by Olufemi Asekun, urged the Federal High Court to affirm the Tribunal’s decision, describing the appellants’ claims as speculative and lacking merit.

In his judgment, Justice Akintayo Aluko found merit in only one of the six issues raised by the appellants (Issue 3), while siding with the FIRS on three others (Issues 1, 4, and 6). He struck out the remaining two (Issues 2 and 5), effectively reinforcing the Tribunal’s earlier ruling in favour of the tax authority.

“The appeal thus fails and it is accordingly dismissed,” the judge ruled, adding, “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.”