With a weak legal capacity in fighting tax cases, the National Board of Revenue (NBR) has been witnessing an increasing number of businessmen resorting to courts over tax disputes, a tactic economists term a common tendency towards tax dodging.
The revenue board is now in a hold-up over the collection of a whopping Tk49,696 crore as 32,254 customs, excise, income tax, value-added tax (VAT) and bond related cases await disposal.
For instance, Deshbandhu Sugar Mills Ltd – a local sugar refinery that imports raw sugar and markets the refined product – alone has three writs with the High Court (HC) and four cases with the Appellate Division against the NBR's Tk945.26 crore tax claim.
The revenue board says the company has not been paying customs duty since 2016 and has been shifting raw materials illegally from the bonded warehouse without clearing the revenue. As noted by the NBR, Deshbandhu filed the lawsuits to block payments of the dues.
The NBR recently sent a letter to the attorney general's office, seeking measures for a quick disposal of the cases filed by Deshbandhu. Apart from the writs with the HC and cases with the Appellate Division, the NBR has six other cases of Deshbandhu Sugar Mills pending with its Appeal Commissionerate.
Attorney General AM Amin Uddin acknowledged receiving the letter from the revenue board and said his office is taking measures for hearings in the cases as soon as possible. The cases will be disposed of quickly once the HC regular benches resume.
"The NBR has requested us to take steps to settle not only the Deshbandhu cases but also many others with the High Court and the Appellate Division", he told The Business Standard.
"Steps are being taken in this regard. The deputy attorney generals of the bench concerned in charge of moving the cases have also already been directed to that end."
Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), thinks filing lawsuits has become a common tendency as a means of tax evasion.
"The cases have been pending for years, without almost any initiative to settle them," he noted.
The PRI executive director said although the NBR had taken the initiative to settle revenue-related cases through Alternative Dispute Resolution (ADR), the move is now only on paper.
"So, the government has no choice but to turn to the courts for a speedy disposal of these cases," he commented, adding, "The NBR is negligent in settling such cases as some of the businessmen put in their efforts to prolong the legal battles."
Dispute unsettled even after 10 years
In 2010, the revenue board filed a Tk106 crore VAT evasion case against Soviet Machineries – a machinery importer for the pharmaceutical companies. The revenue board won the case at the Customs Excise and VAT Appeal Tribunal.
In 2013, the importer filed a writ petition with the High Court challenging the order. The petition is still awaiting disposal.
Humayun Kabir, a lawyer for the importer, told TBS that the hearing has not taken place as the writ petition has not been coming into the daily cause list of the HC. As a result, the payment of the amount claimed by the NBR is still pending.
Why do the cases take so long in disposal?
Company law expert Barrister Tanjib ul Alam told TBS that only two benches in the High Court have the jurisdiction to hear tax dispute cases. There are thousands of other civil cases in those two benches. The benches have to pay more attention to the hearings of other cases.
He said the HC should have one or two benches given over to a resolution of tax disputes.
Nasir Uddin Ahmed, former revenue board chairman, said the NBR lacks coordination with the attorney general's office in disposing of the cases quickly.
"There are also allegations of failure in presenting the necessary information to conduct the cases and lack of cooperation by the attorney general's office in getting the cases on the cause list," he noted.
He said the NBR has no legal wing to handle the cases. There is also a shortage of officials who have knowledge of revenue cases or are able to coordinate with the attorney general's office.
Nasir Uddin Ahmed said if the HC stays the revenue board order, the NBR is supposed to file the CMP (Civil Miscellaneous Petition) within a month. The relevant revenue officials could not do so in many cases, leading to delays in the disposal of cases.
Nasir Uddin Ahmed also referred to the inadequacy relating to the NBR tribunal as one of the reasons behind the problem.
Liakat Ali, lawyer for the revenue board lawyer, however, said the NBR has taken numerous steps to settle the cases promptly. But the businesses are preventing the recovery of the tax dues through delaying a disposal of the cases.
Filed the writs to keep business running: Deshbandhu lawyer
Barrister Shahriar Kabir, a lawyer for Deshbandhu Sugar Mills, told TBS that there had been no customs duty and RD (Regularity Duty) on the import of raw sugar from abroad earlier.
"Introducing customs duty and RD has put the sugar manufacturers in trouble. We filed the writs to keep the business of Deshbandhu running," added the lawyer.
Former Chief Justice ABM Khairul Haque called on the finance ministry, law ministry and commerce ministry to take steps to curb such tax evasion.
"It is not only businesses that are responsible for revenue fraud and lawsuits, but also many NBR officials who are involved. We often hear about the corruption of the revenue officials. Such corruption must be stopped," he told TBS.
The ex-chief justice also urged the incumbent chief justice to take initiatives to settle the tax dispute cases.
Contacted by The Business Standard, NBR Member Alamgir Hossain said the revenue board has its Legal and Enforcement Department to look into revenue evasion cases. "The department regularly monitors old cases," he stated.
"Besides, the NBR has an Alternative Dispute Resolution (ADR) office for a speedy disposal of cases. Our wings are also in regular touch with the attorney general's office for a quick disposal of the cases in court," added Alamgir Hossain.