The Value Added Tax (VAT) authority, in its initial findings through audit, has detected Tk 610 million alleged evasion by Islam Oxygen Ltd.
It has found the mismatch between paid and payable VAT of the oxygen manufacturer and supplier company from July 2016 to June 2021, said a letter - sent to the company.
In the letter, the VAT commissioner of Dhaka East zone requested the company authority to attend a hearing with written explanation on October 25.
The zone has sent copies of the letter to the National Board of Revenue (NBR) with the details of its initial demand.
According to the letter, the VAT zone would consider the raised demand final in case of failure of the company to provide satisfactory evidences.
The findings came at a time when the company is planning to go public and hold a road-show, on the same day of hearing (October 25) at a city hotel. It has plan to introduce itself to institutional investors in the road-show.
The company pledged to raise Tk 930 million from the capital market through offloading shares under book-building method. Manufacturing plant of the company is located in Narayanganj's Tarabo area.
The NBR sources said the audit was carried out by cross-checking information of VAT and income tax returns as well as annual audited financial report of the company - prepared by chartered accountants.
The investigation team collected information by sending several letters to the income tax authority, the Registrar of Joint Stock Companies and Firms (RJSC), and to the company.,
It has scrutinised and cross-checked the audited financial reports of last five years - submitted to the income tax authority and the VAT authority.
The team found actual sales information in those reports, and detected the mismatch between VAT returns and annual financial statements, the letter noted.
The VAT zone alleged that the company concealed actual sales information to avoid payment of VAT.
In the fiscal years (FY) 2016-17, 2017-18 and 2018-19, its actual sales value was Tk 2.38 billion, and payable VAT at a rate of 15 per cent was Tk 311 million, the letter mentioned.
The VAT zone also alleged that the company intentionally showed lower sales value in VAT returns to avoid payment of actual VAT.
In FY 2019-20 and 2020-21, it showed total sales worth Tk 2.30 billion, and its payable VAT was Tk 300 million, the letter said.
During the audit period of these five FYs, the company did not properly comply with the provision of VAT deducted at source - as the deducting authority - against purchase of different services and products, according to the investigation.
As per the VAT and Supplementary Duty Act 2012, such irregularities are punishable offence.
According to the audited financial report, net profit of the company was Tk 414.8 million in FY 2020-21 against Tk 263.4 million in FY 2019-20.
Talking to the FE, Md Nurul Islam, Managing Director of the company, referred to company secretary Md Akhtaruzzaman to talk about the issue.
When contacted, Mr Akhtaruzzaman said they are yet to get any official letter to comment on the issue. A top official of the Bangladesh Securities and Exchange Commission (BSEC) said they are yet to get any application from the company to allow it to go public.
According to the BSEC rules, tax clearance certificate is mandatory for a company to offload shares.
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