Legal proceedings begin to freeze their bank accounts

The National Board of Revenue (NBR) has started legal proceedings relating to the freezing of bank accounts of four companies under Bangladesh Petroleum Corporation (BPC) for non-payment of VAT arrears worth Tk 26.89 billion.   
As a part of the process, officials said, the Value Added Tax (VAT) wing of the NBR has served two notices on the state-owned companies to clear the overdue tax or face legal action.
Under section 56 of the existing VAT law 1991, VAT officials can get bank accounts of a company frozen for non-payment of arrears. Before freezing the bank accounts, the VAT officials have to serve two notices on the company in default.
The Chittagong Customs, VAT and Excise Commissionerate issued a final notice recently on each of the four oil companies to pay the dues within this week to avoid the freezing of their bank accounts.
Padma Oil Company, Meghna Petroleum, Jamuna Oil and Standard Asiatic Oil Company Limited owe an aggregate amount of Tk 20.18 billion to the state exchequer.
The arrears were found having accumulated in the period between July 2013 and June 2015.
The oil-marketing companies also had defaulted on payment of Tk 6.71 billion until February of the current fiscal year.
As such, the VAT wing of the revenue board and the BPC will sit today (Wednesday) in the port city of Chittagong to settle the issue.
Talking to the FE, Syed Golam Kibria, commissioner of the commissionerate, said during the last ten months the tax authority had tried in all possible ways to realize the arrears from the BPC.
But the NBR did not get "any positive response" from the oil companies on payment of the due tax.
"We are not willing to do the unpleasant task as fuel supply will face disruption following the legal action," he said.
The VAT wing has obtained 'political decision' of the government before the launch of the move against BPC, he added.
He also hinted that another political consent would be obtained before freezing bank accounts of the four state entities.
He, however, assured that public interest would get precedence over anything while taking any action against the BPC.
BPC chairman Mahmud Reza Khan said both the parties will hold meeting Wednesday in Chittagong to resolve the issue.
"We are positive on scrutinizing the matter. If anything is due, we'll pay," he said.
The NBR sent the letters to the oil-marketing companies and they informed BPC about the matter, he said.
In the current Fiscal Year (FY), the NBR indentified the unpaid VAT with the state-owned oil-marketing companies.
In an analysis, VAT officials found that the companies paid Tk 5.44 for per-litre diesel as VAT and Advance Trade VAT (ATV) after collecting Tk 9.68 from the consumers in 2013-14. Also, the companies paid Tk 6.91 as VAT including ATV in 2014-15.
The VAT officials, during careful calculations, detected the companies having paid Tk 4.24 and Tk 2.77 less as VAT respectively in FY '14 and FY '15.
The Chittagong commissionerate found Padma, Meghna and Jamuna oil companies having paid Tk 6.03 billion less VAT at business stage on supply of fuel oils.
Of the due amount, Padma Oil owes Tk 6.03 billion, Meghna Petroleum Tk 7.36 billion, Jamuna Oil Tk 6.27 billion and Standard Asiatic Oil company Tk 498 million.
VAT officials said they identified the large amount of arrears through scrutinizing data on imported and refined petroleum.
In a circular on January 31, 2013, the ministry of energy and mineral resources fixed base-price of VAT, VAT at business stage and total payable VAT for imported and refined petroleum products.
According to the circular, total VAT on petroleum has been collected at Tk 9.68 for per litre of diesel from the consumers.
The VAT officials found out that the paid VAT was partially deposited with the public exchequer by the oil companies.
Earlier, NBR chairman Md Nojibur Rahman, also senior secretary of the Internal Resource Division (IRD) under the ministry of Finance, sent a demy official (DO) letter to the secretary of the ministry of energy and mineral resources requesting him to take necessary steps regarding payment of the VAT arrears.
He also raised the issue before the cabinet as the stuck-up revenue lying with the state-owned entities grabs a major portion of national revenue that shows a significant shortfall against the budgetary target for the outgoing fiscal.
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