HC questions govt demands of unpaid VAT from S Alam companies
The High Court today questioned the legality of government's demand for unpaid VAT and the consequent fines of over Tk 7,000 crore from S Alam Vegetable Oil Ltd and S Alam Super Edible Oil Ltd.
On June 9, the Customs, VAT & Excise Commissionerate, Chattogram, in its adjudication orders asked the two companies to pay Tk 3,538 crore in "evaded VAT", Tk 3,531 crore in fines, and interest on the amounts, to the state coffers within 15 work days. Customs said the value added tax was evaded in fiscal years 2019-20 and 2021-22.
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Today, the HC in two rules asked the respondents as to why the VAT determination orders -- issued by the commissioner of Customs, Excise & VAT Commissionerate, Chattogram, without hearing the two companies -- should not be declared illegal.
The respondents – the commissioner and deputy commissioners of the Chattogram commissionerate; and revenue officer of Customs, Excise & VAT, Karnaphuli Circle, Taltola Chowki, Patia, Chattogram -- were asked to come up with an explanation within 10 days.
The court also asked them why the commissioner of the Chattogram commissionerate should not be asked to dispose of the matter by strictly following sections 73 and 85 of the Value Added Tax and Supplementary Duty Act, 2012.
The HC bench of Justice Zafar Ahmed and Justice Sardar Md Rashed Jahangir issued the rules after two writ petitions were filed by the two companies.
The bench also fixed July 15 to hold a hearing on the rules.
During today's hearing, the companies' lawyer Ahsanul Karim told the bench that his clients on June 4 sought time from the commissionerate for their senior counsel to appear for hearings.
He said his clients were not heard before the adjudication orders were issued. The commissioner of the Chattogram commissionerate violated the principle of natural justice in passing the orders by not allowing his clients to defend themselves against allegations made in show-cause notices issued on October 4 and December 27 last year and on March 18 this year, the lawyer said.
Deputy Attorney General Nawroz MR Chowdhury representing the government told the court that the companies were given time on several occasions over the last one year to submit their statements before the commissioner to uphold the principle of natural justice.
But they had not done it. They cannot be given unlimited time under the relevant law, he said.
At one stage, Deputy Attorney General Samarebdranath Biswas told the HC that the companies' intention was not to pay the VAT.
Lawyer for the companies, Ahsanul said his clients never said that they would not pay the VAT.
According to an audit by the VAT wing of the National Board of Revenue, the companies have unpaid VAT and consequent penalties of over Tk 7,000 crore. They evaded VAT by presenting lower purchase and sales data in VAT returns and other means between 2019 and 2022.
The audit was subsequently reviewed by a five-member committee led by an additional commissioner of Chattogram VAT Commissionerate, which also arrived at the same conclusion.
The two companies denied any wrongdoing.
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