The Supreme Court recently delivered judgement on the case brought to it by the Federal Government challenging the Lagos State Government over who has the right to make laws on tourism specifically where the National Assembly had already legislated on the same issue through the NTDC Act. Recall, the Lagos State Government had enacted Lagos State Hotel Licensing Law 2003 (and its amendment) and the Hotel Occupancy and Restaurant Consumption Law 2009 which were both controversial making the Federal Government question its constitutionality.
The issues surrounding the case were;
- Whether matters pertaining to tourism fall under the exclusive legislative list of the Constitution of the Federal Republic of Nigeria 1999.
- Whether the Lagos State House of Assembly and the Lagos State Government can enact and promulgate laws on matters within the exclusive legislative list.
- Whether the Lagos State House of Assembly and the Lagos State Government can enact and promulgate laws which directly conflict with the provisions of an existing law of the National Assembly and if it can supersede the National Assembly law.
The Supreme Court delivered its Judgement and remarkably it was is support of Lagos State. According to PWC who reviewed the Judgement reports;
The apex court dismissed the federal government’s suit and delivered its judgment in favour of Lagos state. It was the view of the court that the NTDC Act went beyond its powers as stated in the Exclusive Legislative List of the Constitution which is to regulate “tourist traffic”. This effectively challenged the constitutionality of the NTDC’s powers to unilaterally regulate and control of hotels and tourism in Nigeria. The court therefore validated the respective laws of Lagos State.
What does this mean for hotels?
This has wide reaching implications for operators of hotel, restaurants bars etc as they now all fall under the regulation of the Lagos State Government. Here is PWC again;
“…any building used as a guest house, inn, lodge, motel, tavern, night club, restaurant, event centre and any other place for the sale of food and drink within the premises of a hotel and includes fast food outlets and restaurants operating outside the premises of a hotel.”
The Licensing Law does not clearly define an event centre or a restaurant. These were defined in the Hotel Occupancy and Restaurant Consumption Law as follows:
• Event centres includes hall, auditorium, fields and places designated for public use at a fee.
• Restaurant includes any food sale outlet, bar, tavern, inn or café, whether or not located within a hotel.
Both definitions have a wide scope and are potentially ambiguous. For example, an educational institution that provides its playing field or assembly hall for events such as weddings would be required to register as a ‘hotel’ based on the above definitions. Also, if any food outlet is considered a restaurant it would mean that the man or woman selling roasted corn on the road side would be required to register as a hotel and pay the tax.
On Consumption Tax?
The judgment did not address the issue of the imposition of tax and whether or not Lagos State has the constitutional right to impose the tax. However, PWC also gave their initial opinion in this regards
One can reasonably expect that the Lagos Internal Revenue Service (LIRS) would seek to enforce the payment of the 5% consumption tax. It should however be noted that the Supreme Court judgment did not specifically validate the tax so it is expected that the ongoing case in this regard should continue.
The fallout of this is for every business falling under this umbrella to gear up for a reinvigorated Lagos State Internal Revenue to begin an aggressive drive to recover as much money as possible either through licensing fees or even taxes. Businesses in other states must take note too as this will soon become an example for their host State Internal Revenues to follow.
It shows that we still have characters (people) at the apex court who can deliver true Judgement but not on election matters where the influence of money will not make them to deliver truthful Judgement. Reference to Hon. Justice Salami issue (Former President of the Court of Appeal)where he was unjustly forced to retired because he said the truth.