KSRM Group faces Tk231cr VAT evasion charge

KSRM, the country's top rod manufacturer, has been accused of evading VAT of over Tk231 crore in the last five years by concealing sales details. 
 

The Chittagong Customs, Excise and VAT Commissionerate recently filed a case against the company after raiding one of its factories last month. 

They seized the company's commercial documents and two computers during the raid.

"We raided KSRM's factory based on information that it has been evading VAT for a long time. The documents we seized revealed the company's wrongdoing," said Ahsan Ullah, deputy commissioner of Chittagong commissionerate.

But KSRM said it was not aware of Chittagong commissionerate's statement headlined "Revenue evasion of Tk231 crore by KSRM Steel Plant Limited", which was sent to various media outlets. 

It said the VAT commissionerate had already seized some of its documents but did not take its statement. It also said it had not been informed of the matter either in writing or orally. 

Chittagong commissionerate's investigation report, seen by The Business Standard (TBS), said KSRM had evaded over Tk85.29 crore in VAT on the sale of manufactured goods and Tk145.87 crore on the purchase of raw materials.

KSRM Steel Plant Limited marketed over 16.74 crore tonnes of manufactured MS rods from July 2006 to May this year. 

The company was supposed to forward the exchequer VAT amounting to Tk188.71 crore against the sale. 

But it deposited Tk103.42 crore and evaded more than Tk85.29 crore in VAT.

Besides, KSRM was supposed to pay Tk145.88 crore in VAT Deducted at Source against the purchase of 19.98 lakh tonnes of raw materials from January 2017 to May 2021. 

The company did not provide any source tax deduction documents or returns against all purchases during this period, according to the Chittagong commissionerate's report.

Mohammad Akbar Hossain, commissioner, Chittagong Commissionerate, said a show-cause notice would soon be issued against the company. 

He said the company would have to pay the same amount of evaded revenue in fines along with applicable interests. 

The money has to be deposited in the government treasury, he said. 

There is an annual demand of 60 lakh tonnes of MS rods in the country. A total of 235 factories produce 60-70 lakh rods every year. Of these, KSRM alone supplies about 7-8 lakh metric tons of rods to the market every year.

Meherul Karim, CRO of KSRM Steel Plant, said he was not aware of the allegations.

"We have a separate VAT and Legal Department to look into VAT related matters," he told TBS.

Habibur Rahman, an official of KSRM's VAT department, said, "It's true that people from the Chittagong Commissionerate raided a factory and took some documents. However, we have not yet received any documents from the commissionerate."

KSRM's statement
 

KSRM in a statement said they should have been the first to know if the documents seized during the Customs raid revealed revenue evasion. 

Instead, KSRM is being humiliated with the statement sent to the media, it said. 

It said KSRM is always committed to paying legal dues. It also said if it was informed about the matter, it would have got the opportunity to pay the dues. 

"There was also an opportunity to fix the payment deadline. But we were not given the opportunity to defend ourselves in this matter," the statement said. 

"It is not logical to send a press release to the media on the day of closure. This way, we do not have the opportunity to give any kind of statement without verifying and being aware of the truth of the matter. This is basically a unilateral decision. We have not had any discussions with the concerned people before. But this decision will damage our brand image. This is unexpected."