Shoprite in VAT controversy
By Peter Nkanga


February 23, 2010 01:15AM



http://234next.com/csp/cms/sites/Next/News/Metro/5530385-147/story.csp


On Monday, February 22, 2010, Justice Mohammed Liman, sitting in Court 10 of the Federal High Court, Ikoyi, adjourned the trial of Shoprite departmental store, which is being sued by the plaintiff, Rita Okoji, for excessive Value Added Tax (VAT) charges to members of the public.

The case, with suit number FHC/L/CS/5170/2008, was adjourned due to the court bailiff not serving counsel to the Federal Inland Revenue Service (FIRS), being a third party in the suit. “This is an aberration. When you file processes, it is the duty of the bailiff to serve all parties. The case is adjourned for trial till March 30, 2010. By then, all parties should be served with all processes,” Mr. Liman said.

Commenting, Mrs. Okoji’s lawyer, Omonigho Ogbe of Ogbodu Ogbe and Associate, said the defence was responsible for the case being adjourned in a bid to further stall a trial which has been ongoing since August 2008.

“The case is between my client and Shoprite. It was Shoprite that brought in FIRS as a third party, not us. So all the documents should have been served by Shoprite who brought them in,” Mr. Ogbe said.

Unsuspecting victims

On May 23, 2007, the Federal Government increased VAT charged on goods and services to 10%. After nationwide protests by Labour Unions, the government reverted to 5% by June 23, 2007.

But Retail Supermarkets Nig. Ltd., (trading as Shoprite), located at the Palms Shopping Mall, Lekki, Lagos, did not revert and for over one month kept charging 10% VAT to the public to an alleged amount of over N14million.

It was on July 3, 2007, while queuing to pay for some items at a counter at Shoprite, Mrs. Okoji saw “a very tiny sticker on the machine.”

“The notice on the sticker was advising all customers to keep their receipts so that they could claim their money as soon as Shoprite reverts to 5%, as against the 10% that was then charged. I met the manager who told me the same thing,” Mrs. Okoji said.

Mrs. Okoji said the notice claimed PriceWaterCooperHouse, an auditing firm, advised Shoprite to continue charging 10% VAT because there had not been an official directive from the government though the reversal took effect from June 23, 2007.

Counsel to Shoprite, Ibifubara Berenibara of AELEX legal practitioners and arbitrators, admitted Mrs. Okoji’s claim, stating that “in the absence of any official publication by the Minister of Finance in a gazette, it continued to charge VAT at 10%.” But this was countered by Mrs. Ogbe, who made reference to a PriceWaterHouseCoopers internet publication titled “Tax Alert- VAT Rate Back to 5%” stating FIRS position “formerly requesting taxpayers revert to 5%,” even before Shoprite did.

By July 25, 2007, FIRS Lagos Island Acting Regional Coordinator, G.O. Oshiga, discovered Shoprite was still charging 10% VAT and wrote to Shoprite’s managing director to reverse to 5% and remit the 10% VAT or face prosecution. Shoprite complied by July 26, 2007.

“You are expected to remit the VAT collected at the rate of 10% from 23rd May, 2007 to date to Federal Inland Revenue Service not later than seven days from the date of receipt of this letter in order to avoid criminal prosecution,” Mr. Oshiga wrote.

It wasn’t until August 14, 2007, while shopping, that Mrs. Okoji noticed Shoprite had reverted to 5% VAT.

She tried reclaiming the excess charges on previous purchases, but was told to go to FIRS to get her refund as they said they had remitted the 10% VAT to FIRS.

“The first time, they said they’ll refund to me but now they are sending me to FIRS. They know people don’t have the time to go there.

Meanwhile they are not telling their customers about the VAT refund. It is wrong,” Mrs. Okoji declared.

Mrs. Okoji is now praying the court to declare Shoprite’s action “wrong and illegal;” and compel them to advertise in two national dailies for all customers who were overcharged to come for a VAT refund.

this court case is unnecessary and an abuse of the already-overburdened judiciary.

Shoprite clearly put a notice that customers should come for their 5% refund later

Mr President, did you see the notice and are you aware of anyone that got a refund? From the article above, it was clear that Shoprite didn't keep to its word or why would it turn around and ask the customer to go to FIRS?

The reason the country has remained a dumping ground is because most Nigerians don't know their rights, this will not happen anywhere outside Nigeria, not even in South Africa the home of Shoprite.

It is only when people begin to rise to the occassion by taking up cases like this that positive changes will take place in our country.

It is worth going to court for and kudos to citizen Okoji for taking this up.

If Shoprite remitted the 10% VAT collected to FIRS,how do you expect them to give her money.She must claim from FIRS when she makes her annual income tax return.

Thats how it happens in South Africa and elsewhere where the system /law&order works.

The problem is not Shoprite,the problem is Nigeria's tax system and the incompetence that is inbred.

Moderator can you pls post this on the homepage and let's hear what people have to say because this is a matter that concerns everyone of us. It's about knowing our rights, when to act and when not to act.

Moved to Business/Money section.