The National Board of Revenue (NBR) has recently turned down a plea from the Bangladesh Petroleum Corporation (BPC) on adjustment of arrear VAT against its refund claim.
The BPC owes Tk 20.20 billion in arrear Value Added Tax (VAT) to NBR. It has now requested the NBR to adjust the VAT arrear against the refund claim with Tk 31.51 billion on account of duty and VAT collected during the import of furnace oil earlier.
The revenue board has found no legal provision that allows it to offer the corporation the refund of the paid customs duty and VAT on furnace-oil imports for power production.
"The NBR will have to issue a Statutory Regulatory Order (SRO) for the corporation to offer it the facility. But it cannot be on retrospective basis," said a senior VAT official.
There is no possibility of getting refund of the claimed amount of VAT, he added.
Officials said BPC's demand for refund of the amount as import duty and adjust it with the arrears of VAT failed to get the finance minister's nod.
The NBR had sent to the minister a summary explaining the situation. The finance minister shook his head in disapproval of the BPC claim.
As such, the NBR stuck to its position to realise the defaulted amount of Tk 20.20 billion as VAT at local stage from the corporation within the shortest possible time, officials said.
Recently, commissioner of Chittagong customs, excise and VAT commissionerate Syed Golam Kibria sought NBR's instructions to move forward to realize the overdue VAT.
Responding to queries from the FE, Mr Kibria said BPC owes VAT at local stage which cannot be adjusted with the import-stage taxes.
"There is no scope to adjust the BPC's claimed import duty and VAT worth Tk 31. 51 billion with the arrears in VAT at local stage worth Tk 20.20 billion," he said.
"We have informed the corporation about the decision of the government high-ups."
Officials said the BPC had demanded adjustment or refund of the paid tax on furnace oil it imported in 2011 for power-production purpose.
However, the NBR needs to incorporate name of the BPC in the SRO by amending it.
As per Customs law SRO 20/2011/ 2327, customs duty and VAT at import stage of furnace oil is refundable for some companies and organizations if it is imported for power generation. However, the companies have to claim refund of the paid tax within six months of import.
BPC imported the furnace oil in 2011 but did not claim refund.
Section 33 of the customs law says: Refund to be claimed within six months: 1.No refund of any customs duty or charges claimed to have been paid or overpaid through inadvertence, error, misconstruction or any other way shall be allowed, unless such claim is made within six months of the date of payment.
However, the BPC proposed that the NBR amend its SRO to make it effective from 2011 incorporating name of the corporation so that it could enjoy the refund.
The VAT official said the process would need approval by the finance minister and vetting by law ministry.
Padma Oil Company, Meghna Petroleum, Jamuna Oil and Standard Asiatic Oil Company Limited owe an aggregate amount of VAT worth Tk 20.20 billion to the exchequer.
The arrears from the BPC subsidiaries were found having accumulated in the period between July 2013 and June 2015.
BPC is gaining profit with the downslide in fuel prices on the international market. In FY 2015-16, its profit trebled to Tk 121.86 billion compared to previous year's.
Despite several attempts, the BPC chairman could not be contacted over phone for his comment on the tug-of-war over payment among the intra-governmental agencies.
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