(From the judgment and order dated 17.08.2004 passe High Court Division in Writ Petition No.4132 of 200
The Chairman, National Board of Revenue, Dhaka and others.
- Versus -
Rahim Steels Mills Co.(Pvt) Ltd. and another.
d by the
: .... Appellants.
: ....Respondent s.
For the Appellants. : Mr. A. M. Amin Uddin, Attorney
General (with Ms. Tahmina Polly, Assistant Attorney General) instructed by Mr. Haridas Paul, Advocate-on-Record.
For Respondent Nos.1-2. : Mr. Probir Neogi, Senior Advocate
(with Mr. Munshi Moniruzzaman) instructed by Mr. M. Ashrafuzzaman Khan, Advocate-on-Record.
Date of Hearing. : The 07th March, 03 rd May & 23 rd May, 2023.
Date of Judgment. : The 06 th June ,202 3.
This civil appeal by leave is directed
against the judgment and order dated 17.08.2004 pas sed by the High Court Division in Writ Petition No.4132 of 2002 making the Rule absolute.
Relevant facts for disposal of the civil appeal ar e that the respondents herein as petitioners preferre d Writ Petition No.4132 of 2002 before the High Court Divi sion invoking Article 102 of the Constitution impugning Memo No. 4/G(26)f¨vU/Ave/91/Ask-3/99/942 dated 15.07.2002 issued by the writ-respondent no.4 The Superintendent, Customs, E xcise and VAT, Sonargaon Circle, Narayangonj directing th e petitioner no.1 to pay the unpaid VAT and Memo
No. 4/G(26)f¨vU/Ave/91/Ask-4/02/1003 dated 29.07.2002 issued by the writ-respondent no.4 directing to cancel the rebate
availed by the petitioner no.1, otherwise threatene d to take action under Section 56 of the Value Added Tax Act, 1991 (hereinafter stated as the VAT Act, 1991); C ase of the petitioners is that the petitioner no.1 is a pr ivate limited company incorporated under the Companies La w and also registered with the VAT Authority; The petitio ner company is engaged in the business of manufacturing alloy steel casting, specialized steel, high strength def orm bars; In course of its business, the petitioner com pany supplied construction materials to local purchasers in foreign currencies as per instructions of the tende r
schedule floated locally; The petitioners supplied
2,211.50 metric tons of construction materials and
received foreign currencies of US$ 8,19,013.50 from the purchasers against aforesaid supplies as per tender
instructions; Banks situated locally issued encashm ent certificates infavour of the petitioners and formal ly informed the Bangladesh Bank regarding encashment o f the foreign currencies by the petitioner company.
Petitioners contention is that as per Section 3 o f the VAT Act, 1991 read with Rule 31 of the Value Ad ded Tax Rules, 1991 (hereinafter stated as the VAT Rul es, 1991) the aforesaid supplies in foreign currencies are deemed export on which VAT is not payable and
accordingly the petitioners did not pay VAT against
aforesaid deemed export. It may be mentioned here that the petitioners in their previous deemed export g ot drawback of the VAT paid by them on the supplied ra w materials but in the instant case as per the direct ion of the authority concerned the petitioners instead of
getting drawback of VAT availed rebate on the VAT p aid by
the petitioners on the raw materials used for produ ction of the construction materials.
After availing the rebate, the petitioners receive d a letter dated 27.01.2002 from the writ-respondent no .4 to deposit VAT on the sale price against the aforesaid
deemed export and also received another letter da ted 20.03.2002 from the writ-respondent no.5 the Inspec tor (Sadar), Office of the Superintendent, Customs, Exc ise and VAT, Sonargaon Circle, Narayangonj to deposit t he unpaid VAT of Tk. 47,14,325.00 (Forty Seven Lac Fou rteen Thousand Three Hundred and Twenty Five only) agains t the aforesaid deemed export alleging that the foreign
currencies received by the petitioners against the
aforesaid deemed export were not repatriated thro ugh Bangladesh Bank; The petitioners replied the letter s through his lawyer on 02.04.2002 stating that the f oreign currencies against the aforesaid supply were receiv ed by the petitioners through (i) American Express Bank
Limited, (ii) Standard Chartered Bank Limited, (iii ) Dhaka Bank Limited, (iv) IFIC Bank Limited and (v) Uttara Bank Limited who are the authorised dealers under t he
license from Bangladesh Bank to deal with foreign
currencies and those Banks issued encashment certif icates infavour of the petitioners filing necessary return s to the Bangladesh Bank; As such the foreign currencies
received by the petitioners through Authorised Deal ers (Schedule Banks) is a remittance/repatriation for t he purpose of Rule 31(1) of the VAT Rules, 1991.
In response of the said reply, the writ-respondent
no.5 directed the petitioners to furnish the docume ntary evidence that the foreign currencies against the d eemed export in question was repatriated through Banglad esh Bank by letter dated 11.04.2002; Accordingly, the
petitioners submitted encashment certificates to th e respondent no.5 vide letter dated 15.04.2002; There after, the writ-respondent no.4 its letter dated 22.05.20 02 directed the petitioners to cancel the rebate of Tk . 39,96,763.00 (Thirty Nine Lac Ninety Six Thousand S even Hundred and Sixty Three only) availed on the duties paid by the petitioners on the raw materials used for
production of the construction materials regarding said deemed export and to make necessary adjustment in the current account register; The petitioners in reply dated 05.06.2002 stated that the cancellation is illegal being in violation of the VAT Rules, 1991; Thereafter the
impugned letters dated 15.07.2002 and 29.07.2002 we re issued by the writ-respondents; Under the situation the petitioners preferred writ petition.
Upon hearing the petitioners, a Division Bench of the High Court Division issued a Rule Nisi upon the wri t- respondents to show cause.
The writ-respondent no.2 The Commissioner, Customs , Excise and VAT, Dhaka South, Segunbagicha, Dhaka
contested the Rule by filing affidavit-in-oppositio n, contending interalia, that the writ-petitioners hav e miserably failed to fulfil the requirements that ha s laid down in Section 3(2) of the VAT Act, 1991 and Rule 31 of the VAT Rules, 1991. The petitioners failed to subm it any export proceed realization certificates which are t he most vital documents to show that the payment recei ved by the petitioners in foreign currencies are repatriat ed through Bangladesh Bank and in absence of any expor t proceed realization certificate, the petitioners ar e disentitled to claim any rebate or exemption of VAT on the supply in question on account of deemed export .
Upon hearing the parties and perusing the annexure s annexed to the writ-petition, a Division Bench of t he High Court Division made the Rule absolute declarin g that the memo dated 15.07.2002 and 29.07.2002 have been issued illegally and without any lawful authority and as s uch are of no legal effect vide judgement and order dat ed 17.08.2004, which is impugned herein.
Being aggrieved, the writ-respondents as petitione rs preferred Civil Petition for Leave to Appeal No.966 of 2005 before this Division under Article 103 of the
Constitution and obtained leave granting order on
Consequently, instant civil appeal arose.
Mr. A. M. Amin Uddin, learned Attorney General wit h Ms. Tahmina Polly, learned Assistant Attorney Gener al, appearing for the appellants submits that the High Court Division committed an error of law based on facts i n not considering that the aforesaid transaction as state d by the writ-petitioners cannot be brought within the a mbit of deemed export inasmuch as the foreign currenci es received from the purchasers against the supply hav e not been repatriated through Bangladesh Bank as require d under Rule 31 of the VAT Rules, 1991 and therefore the demands were made legally and lawfully as such the
impugned judgment and order is liable to be set-asi de. He also submits that the High Court Division erred in law in interpreting Section 3(2) of the VAT Act, 1991 and Rule 31 of the VAT Rules, 1991 in the context of deemed
export as claimed by the respondents herein as suc h the impugned judgment and order is liable to be set-asi de.
On the other hand Mr. Probir Neogi with Mr. Munshi
Moniruzzaman, learned Advocates, appearing for the
respondents submits that Section 3(2) of the VAT Ac t, 1991 provides that notwithstanding anything contained in
Sub-Section 1 of Section 3 of the VAT Act, 1991, VA T shall be rebated at zero rate on the goods and the
service exported or deemed to have been exported fr om Bangladesh and since the words ißvbxK…Z ewjqv MY¨ as mentioned
in Section 3(2) of the VAT Act, 1991 includes the g oods
supplied by the respondents to international contra ctors for implementation of mega projects in Bangladesh a gainst foreign currency and consequently, the concern VAT circle received Musak-11 with zero percent VAT, and thus n o VAT is payable against the said supply as per Section 3 (2) of the VAT Act, 1991 as such the High Court Division r ightly passed the impugned judgment and order. He also sub mits that the respondents being successful bidders in an open tender supplied the goods to the purchasers on rece iving foreign currency as per the tender instructions and
encashed the foreign currency from authorised deale rs (Local Banks) of the Bangladesh Bank and thus the s upply of goods comes within the purview of Section 3(2) o f the VAT Act, 1991 read with the Rule 31(1) of the VAT R ules, 1991 and as such there is nothing to interfere with the impugned judgment and order.
Heard the learned Attorney General for the appella nts and learned Advocate for the respondents. Perused t he papers/documents contained in the paper book.
Admittedly, the respondents participated in an ope n tender floated locally and being successful supplie d the goods to the purchasers and received foreign curren cy as per the tender instructions. The respondents encash ed the foreign currency in the local Banks and annexed
encashment certificates. In this regard claim of th e respondents-writ petitioners is that since they sup plied the goods as per instructions of the locally floate d tender against which foreign currencies were encash ed through the authorised dealers of the Bangladesh Ba nk i.e. local Banks, as such, the aforesaid supply sha ll be treated as deemed export under Section 3(2) of th e VAT Act, 1991 read with Rule 31 of the VAT Rules, 1991.
Let us see the provisions of Section 3(2) of the VA T Act, 1991 and Rule 31 of the VAT Rules, 1991.
Section 3 of the VAT Act, 1991 runs as follows:
Ò3| g~j¨ ms‡hvRb Ki Av‡ivc|-
(A) ------------------------------------------------------------------- (Av) ------------------------------------------------------------------
Again, the provision of Rule 31 of the VAT Rules, 1991 are as follows:
Ò31| ¯’vbxq ev AvšÍR©vwZK `ic‡Îi wecix‡Z ˆe‡`wkK gy`ªvq cY¨ mieivn ev †mev cÖ`vb|-
No doubt that the respondent-writ petitioners
supplied the goods to the contactors and received f oreign currencies as per tender instructions. Now the only
question is whether the foreign currencies received by the supplier-respondents repatriated through the
Bangladesh Bank or not because Rule 31 (1) of the VAT Rules , 1991 clearly states that:
ÒD³ cY¨ ev †mevi wewbg‡q cÖvß ˆe‡`wkK gy`ªv ißvbxi mvaviY bxwZ Abyhvqx evsjv‡`k e¨vs‡Ki gva¨‡g cÖZ¨vewmZ nB‡j AvB‡bi aviv 3 Gi Dc-wewa (2) Abyhvqx ißvbxK…Z ewjqv MY¨ nB‡e|Ó
On perusal of the annexures annexed to the writ - petition it appears that the respondent - writ petitioners annexed some encashment certificate s to show that it has complied with Rule 31 of the VAT Rules, 1991 i.e. the
foreign currencies are repatriated through Banglade sh Bank. T wo of the annexed encashment certificate s are reproduce d below:
Standard Chartered Bank
Standard Chartered Grindla ys Bank Ltd.
2, Dilkusha Commercial Area
G.P.O. Box 502, Dhaka -1000, Bangladesh
Tel : (880 -2) 955 0181
Fax : (880 -2) 956 2332
Telex : Dhaka 642597, 642841& 632654 GBLD
We certify that having encashed Foreign
Demand Draft for an amount of Bangladesh Tk.3183117.00 ( Tk. Thirty One Lac Eighty Three Thousan d One Hundred and Seventeen only) @ BDT57.40 b elo w favouring M/S. RAHIM STEEL CO. (PVT.) LIMITED, 29/10 K.M. Das Lane, Tikatuly, Dhaka -1205, Bangladesh.
ntA ccount Num which has bee
b Date of nEncashme
Name of Statement sched n antd the period in which th relevant transaction has been/will be reported to
u Purpose e
1 S 1, J-1/03/30 January
Sale Proceeds Received Agains Supply of Hig strength Deforme bars Grade-60 fro CAMC- TEL- CC1
h d m
For Standard Chartered Grindlays Bank Ltd.
2, Dilkusha C/A, Dhaka. Authorised Signature
UTTARA BANK LIMITED Phone : 9666255,9568186 CORPORATE BRANCH Cable : CORPBANIJYA
Motijheel C/A, Dhaka-1000, Bangladesh. Telex : 632438 UBL CB BJ
CORP/FEX/2002/ April 8, 2002
We certify that the Cheque/Payment order No.3285846 dated 06.02.2002 for Tk.14,67,555.00 (Taka Fourteen Lac Sixty Seven Thousand Five Hundred Fifty Five) only
Eqv. US$=25,560.00 @ 57.42 (less our P.O. Commission Tk.100.00) has been issued on 06.02.2002 in favour of Rahim Steel Mills
Co. (Pvt.) Ltd. by debit to account No.FCAD-
165 maintained by us in the name of M/s. Mir Akhter Hossain Ltd. The transaction has been reported to Bangladesh Bank in Schedule J-
1/O-3 for the month of March, 2002.
For Uttara Bank Ltd. Corporate Branch (Signed)
The learned Advocate for the respondents argued tha t this encashment certificates proves that the foreig n currencies repatriated through Bangladesh Bank.
On perusal of the encashment certificates we do not
find any basis of such argument inasmuch as the
encashment certificates only shows that the transac tions regarding encashment of foreign currencies have bee n reported to Bangladesh Bank which in our opinion ca nnot be treated as repatriation through Bangladesh Bank. It may be mentioned here that the writ-respondent no.5 vide memo dated 11.04.2002 asked the petitioners to furn ish the documentary evidence that the foreign currencie s against the deemed export in question was repatri ated through Bangladesh Bank. But the petitioners only
submitted encashment certificates to the respondent no.5 vide letter dated 15.04.2002. There are no proceed
realization certificates in support of said deemed
export which amply proves that the claimed deemed
export do not come within the ambit of Section 3(2 ) of the VAT Act, 1991 and Rule 31 of the VAT Rules, 199 1. In the aforesaid transactions the respondent-writ
petitioners as a local supplier supplied the constr uction materials to the local contractors on receipt of fo reign currencies locally as per instructions of the local ly floated tender. The goods were not shipped abroad a gainst master Letter of Credit or any internationally acce pted export documents. Consequently, the respondents fai led to submit any proceed realization certificates against the claimed deemed export. Mere encashment certificat e cannot be treated as proceed realization certificat e.
Following observation of the High Court Division:
We have already indicated that deemed export is not an actual export. There is no
L/C nor the goods go out of the country. Therefore, in case of deemed export there cannot be export proceeds realisation certificate and they would be replaced by encashment certificate and that has been furnished in the instant case both to the respondents before filing of the writ petition and also before this Court as annexures.
It, therefore, appears to us that the transactions in question qualifies as deemed export and they have fulfilled the requirements of repatriation of the sale proceeds through Bangladesh Bank.
Based on purely misconception of law and ignorance of transaction in international business. High Court
Division misdirected itself in making the Rule abso lute with wrong findings beyond the scope of law.
Accordingly, the civil appeal is allowed.
The judgment and order dated 17.08.2004 passed by t he High Court Division in Writ Petition No.4132 of 200 2 is hereby set-aside.
The appellants VAT authority can make demand for th e evaded VAT amount and cancel the rebate illegally a vailed by the writ-petitioners.
However, there is no order as to costs.
The 06 th June, 2023 . Jamal/B.R./Words-*2804*