Value Added tax (VAT), sales tax, and hotel occupancy and restaurant consumption tax are forms of consumption taxes whose economic burden rests on the final consumer.
The constitutional basis for imposing consumption taxes has been challenged at several times in Nigeria. The controversies surrounding consumption taxes have raged between the Federal and State governments on one hand, and between government authorities and operators of businesses who act as collecting agents, on the other hand.
On 8th December 2017, the Supreme Court of Nigeria upheld the 13th July 2007 decision of the Court of Appeal in Attorney-General of Lagos State v. Eko Hotels Limited & Anor which was to the effect that the VAT Act has covered the field of the Sales Tax Law of Lagos State and therefore takes precedence until such a time when the federal legislature repeals the VAT Act. The Supreme Court also decided that it would amount to double taxation for two different laws to impose consumption tax twice on a consumer for the same good or service.