Government's revenue authority moves to review a dozen cases of large taxpayers settled through ADR posthaste as it found entire claim to taxes written off, sources say.
High-ups at the National Board of Revenue (NBR) suspect that government might have been deprived of due revenue through mishandling of disputes under the alternative dispute resolution (ADR) system meant to leapfrog time-consuming court proceedings.
The ADR cases have been resolved by waiving entire amounts of demand of the government from the large corporates, official sources said.
Out of Tk 5.61 billion worth of claim, the NBR did not receive any taxes through the out-of-court settlement system, introduced in 2012 to ensure a win-win situation between taxpayers and taxmen, said a senior revenue official.
A committee headed by Member (VAT policy) Zakia Sultana and comprising two VAT commissioners has been formed for a review of one settled case of ADR involving Tk 1.57 billion to ascertain whether the government actually lost any revenue under the process, sources concerned said.
The LTU has settled the ADR case--with third-party suggestion--of a multinational company (British American Tobacco) writing off the government claim, officials said.
The VAT wing claimed the amount in 2016, on account of deduction of VAT at source on green-leaf collection, filing two cases. The company filed a writ petition in September 2017 to the High Court challenging the demand of LTU. Later, the company applied for ADR.
The LTU expedited the settlement of the case, disposing it within two months, as stated in the revival process. With the support of facilitator, the unit gave its consent in favour of the company-and the government did not receive any revenue.
The tax dispute was settled with decisions that 'double taxation' and 'direct tax' had been imposed on the company, according to the documents obtained by the FE.
In 2020-2021, 2021-2022 and 2022-23, the Large Taxpayers Unit (LTU) under the VAT wing of the revenue board resolved 15 ADR disputes wherein the NBR's claim was Tk 5.61 billion.
The large taxpayers listed in the ADR proceedings include RAK Ceramics, Banglalink Digital Communications Ltd, Grameenphone, Incepta Pharma, ACI Formulation, Premiere Bank and British American Tobacco, Bangladesh.
"The ADR process has been resolved within a short period by the units, which raised confusions among the NBR high-ups," the official said.
A competent source has said the review committee might submit its report Monday (today) with its observations after scrutinizing the relevant papers and documents.
The revenue official says the NBR can investigate any of the cases if it finds any loss to public exchequer though some experts say cases that have been settled through ADR cannot be reinvestigated or reopened as per the ADR law.
Abdul Mannan Patowary, a facilitator of ADR, who is also former member of the VAT wing, says as per ADR law there is no scope to reinvestigate an ADR case when both parties -- government and taxpayers -- reached a consensus and settled the case.
"I have sent back a number of ADR cases to the court considering the revenue impact of the government," he says.
He agrees that the government should not receive zero VAT under ADR process as its concept is to ensure a win-win situation.
Another former member of VAT wing, Farid Uddin differs on the observations. He says the VAT claim was disputed as the taxpayers raised objection on it.
"If government's demand for tax found unjustified, then ADR cannot be resolved in a win-win manner," he adds.
Industry-insiders have said the NBR recently sent back some of their applications for ADR following suspicion centring previous settlement of such cases.
They said the revenue authority once tried to encourage settlement of pending cases through ADR to expedite release of stuck-up revenue--now it is discouraging ADR.
Sources said the NBR high-ups decided to review many of the ADR cases now to investigate any irregularities in the process.
However, the decision has raised concern among the large taxpayers who were willing to settle their cases through ADR.
Waheeda Rahman Choudhury, who was commissioner of LTU at the time, said the ADR had been conducted and settled with permission of the court sans any irregularities.
Ms Rahman, now Commissioner of the Customs, Excise and VAT Appellate zone, said though the ADR process was settled under the unit, none from the NBR asked her yet to clarify the issue.
"I have not received any official letter or instruction seeking clarification on the matter," she adds.
In 2017-18 and 2018-19 financial years, the NBR earned Tk 24.13 billion by disposing of some 345 revenue-related cases through the ADR.
The ADR is a system that allows the NBR and taxpayers to settle tax-related disputes outside court with the assistance of a third party through discussions.
© 2024 - All Rights with The Financial Express
