IN THE SUPREME COURT OF BANGLADESH HIGH COURT DIVISION
(SPECIAL STATUTORY JURISDICTION)
VALUE ADDED TAX APPEAL NO. 71 OF 2013
IN THE MATTER OF:
An appeal under section 42(2)(Ga) of the Value Added Tax Act, 1991.
And
IN THE MATTER OF: Royal Cement Limited
.... Appellant.
-Vs-
Customs, Excise and VAT Appellate Tribunal and others.
....Respondents. Mr.Munshi Moniruzzaman with Ms. Shuchira
Hossain, Mr. Yousuf Khan Rajib, Ms. Nahid Sultana Jenny, Mr. Shakib Rejowan Kabir, Mr. S.M Shamsur Rahman, and Mosammat Suraiya Khatun, Advocates
...... For the appellant. Ms. Nasima K. Hakim, Deputy Attorney General, Mr.Md. Hafizur Rahman, Mr. Md. Ali Akbor Khan, Mr. Elin Imon Saha, and Mr. Ziaul Hakim, Assistant Attorney Generals.
........ For the respondent-government.
Heard on 11.01.2024, 25.01.2024 Judgment on 31.01.2024
Present:
Mr. Justice Md. Iqbal Kabir
and
Mr. Justice S.M. Maniruzzaman
S.M. Maniruzzaman, J:
In the instant Appeal filed under Section 42 (1) (Ga) of the Value Added Tax Act, 1991 (in short, the Act, 1991) is directed against the
1
judgment and order dated 09.06.2013 passed by the respondent No.1, under
Nathi No. CEVT/Case (VAT)-93/2013/2451 dated 11.06.2013 dismissing
the appeal and thereby affirming the order dated 29.03.2012 passed by the respondent No. 2 under Nathi No. 4bÑ/H(12)5/j§pL-j§mÉ¢i¢š ®O¡oZ¡/ l−um ¢p−j¾V/2010/1368(1-3).
Facts, relevant for disposal of the appeal, in short, are that the
appellant is a private limited company incorporated under the Company
Act, 1994 and is engaged in the business of manufacturing cement by using
imported raw materials establishing a factory in the name “Royal Cement Limited”. In course of business, the appellant obtained VAT registration certificate from the concerned VAT office under the Act, 1991 for the
purpose of payment VAT and since then it has been paying VAT regularly
with satisfaction of the VAT Authority. For the purpose of payment of
VAT of its manufacturer cement, the appellant submitted price declaration
along with cost analysis on 18.01.2012 under Section 5 of the Act, 1991
read with Rule 3 of the Value Added Tax Rules, 1991 (Rules, 1991) which
was received by the respondent No. 3, Assistant Commissioner and Divisional Officer on 18.01.2012. On receipt thereto, the Divisional Officer
by his order dated 08.02.2012 enhanced the value by ignoring the declared
price of the appellant without following the provisions of law.
Challenging the order dated 08.02.2012, the appellant preferred
appeal before the respondent No. 2 (Commissioner) under Rule 3(7) of the
Rules, 1991 wherein the appellant categorically stated that provision of
Section 5(2) of the Act, 1991 and Rule 3(3) of the Rules, 1991 have/had
not been exhausted by the Divisional Officer and he most illegally and
whimsically fixed the base value of the appellant’s manufacturer cement. However, the respondent No. 3 without considering the said provision of law rejected the appeal and thereby affirmed the value fixed by the Divisional Officer by his order dated 29.03.2012.
Against the said order of the Commissioner, the appellant preferred appeal before the Tribunal under Section 42(1)(Ga) of the Act, 1991 and the Tribunal after hearing the contending parties dismissed the appeal and thereby affirmed the order of the Commissioner as well as Divisional Officer by its order dated 09.06.2013.
Being aggrieved thereby the appellant preferred the instant appeal before this Court under Section 42 (1) (Ga) of the Act, 1991.
Ms. Nahid Sultana Jenny, learned Advocate appearing for the appellant mainly submits that the alleged fixation of price on the basis of deductive method ( ) is beyond the scope of Act and Rules, 1991, consequently the fixation on the basis of such deductive method is illegal and liable to be set aside. Ms. Jenny next submits that at the time of fixing the value, the authority must bear in mind the procedure laid down in Section 5(2) of the Act, 1991 read with Rule 3 (3) of the Rules, 1991 which authorizes the VAT authority to look into the price declaration, but it does not authorize them to go to the market and collect the retail price and fix the value by applying deductive method of the retail price. The Tribunal without considering the same passed the impugned Order which is illegal and liable to be set aside. Ms. Jenny further submits that the Divisional Officer (respondent No. 3) most illegally approved the value by enhancing the declared price, and he failed to take notice of the provision of Section 5(2) of the Act and Rule 3(3) of the Rule, 1991. Moreover, the appellant has/had declared the correct value of its goods, but the said respondent illegally rejected the same without considering the cost factor and other relevant things and without giving opportunity of meaningful hearing at the time of fixing the price and without holding any enquiry as required by Rule 3(3) of Rules, 1991 has most illegally enhanced the price and as such the Tribunal erred in law in affirming the order of the respondent Nos. 2 and 3 which is liable to be set aside.
In support of the said argument, learned Advocate relies the decision in the case of Chittagong Cement Clinker Grinding Co. Ltd-vs-Chairman, National Board of Revenue and others reported in 60 DLR (HCD) 287.
On the other hand, Mrs. Nasima K. Hakim, learned Deputy Attorney General appearing for the respondent No. 2 submits that the Divisional Officer after conducting market survey and comparing the value of the similar items under the same jurisdiction as per the provision of Rule 3(3) of the Rules, 1991 and upon hearing the appellant fixed the base value of the appellant’s manufacturer cement. Moreover, both the appellant authorities below on concurrent findings of the said fact affirmed the value of the Divisional Officer and as such there is no illegality of value so fixed by the Divisional Officer as well as the Tribunal.
We have heard learned Advocate for the appellant, learned Deputy Attorney General for the respondent VAT Authority have perused the memo of appeal and relevant materials on record so appended thereto.
It appears from record that the appellant submitted price declaration under Mushok Form I of its manufacturer cement before the Divisional Officer wherein the appellant proposed to fix the value of 50 Kgs. Cement (Engineering Brand) of Tk. 275.00 and bulked cement (1000 Kgs) of Tk. 5,143. On receipt thereto the Divisional Officer, increased the value of the 50Kgs cement of Tk. 316 per bag and bulk cement (1000 Kgs) of Tk. 588.80.
In this regard the moot contention of learned Advocate for the appellant is that the Divisional Officer without following the provision under Rule 3(3) of the Rules, 1991 determined the value of the appellant manufacturer cement. In order to appreciate the said argument let us first have a look at the relevant provision of the VAT Rules i.e. Rule 3 of the
Rules, 1991 for cursory glance:
“ । , ,
।-
ৎকত ক ৎপািদত
, , -
ৎপাদ (input-output co-efficient)
" - "
, ,
• ……………………………………………….. …………………………………………………. ( ) - ( )
,
" -
…………………………………………. …………………………………………..
) - ( ) ( ) , ,
,
,
, , ।
( ) , ( )
, ( )
" - " , , " - " , ( )
,
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• ।
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Thus, from a plain reading 3(3) it appears that from investigation or
survey after declaration of value bare in accordance with Sub Rule (1) or (2) or Rule 36 carried on for the purpose, by the Divisional Officer, Circle Revenue Officer or any other VAT Officer authorized by the Commissioner or from investigation or survey carried out and based on the amount of value addition and division of similar goods, actual cost, value declared and approved or information related to market value, maintained at the Circle, Division or Commissioner's office, if it appears, value base declaration of the goods is incompatible to Section 5 of the Act, or value base declared for the goods is significantly lower than that the goods of similar nature and quality, or the amount of value addition shown in form "Mushak-I" or "Mushak-I kha" is substantially low, or declared value base is substantially lower because of any special relationship between supplier and receiver of the goods, and for this reason, less VAT or VAT and Supplementary Duty where applicable, was or may have been paid, Divisional Office then after giving the registered person reasonable opportunity of being heard can determine reasonable value base, based on information collected or received and from the date of declaration all tax
payable shall be determined and paid in accordance with that value base. However, it appears from the order dated 08.02.2012 passed by the Divisional Officer fixing the base value of the petitioner’s manufacturer
cement, wherein the Divisional Officer categorically stated inter alia; “
f¢lj¡eJ
q¡l Lj
pjS¡a£u
ৎপািদত ।
।”
It, however, further appears that the Commissioner after considering the documents as well as hearing the parties and after holding survey of the market value of the similar items rejected the appeal by his order dated 29.03.2012 holding;
“ , , , , , cçl ,
, h¡ó
• /- ।
/- ।
ৎপাদনকারী
, ।”
The Tribunal after hearing the contending parties and considering the
evidences on record dismissed the appeal holding inter alia;
“ ৎপািদত
/- ।
. % % ৎপাদন %
/-
. ।
ৎপািদত
/- ।
/- . -
/- .
, ।
,
।” However, in the instant appeal, on perusal of the order of the
Tribunal as well as the authorities below, it, however, appears that the Divisional Officer and also Commissioner after holding market survey by the Assistant Revenue Officer (Mr. Sujon Kumar Datta) and considering the value of the similar item manufactured by M/S Aramit Cement Limited fixed the base value of the appellant’s manufactured cement at the rate of Tk. 316.00 per bag (50kgs) and fixed of the bulked item of cement (1000Kgs) at the rate of Tk. 5,961.80 following the provision of Rule 3 (3) of the Rules, 1991.
We have gone through the judgment Chittagong Cement Clinker Grinding Co. Ltd (Supra) so referred by learned Advocate for the appellant and it appears that the petitioner of the said judgment challenging the order of the Divisional Officer dated 17.08.2000. The High Court Division
wherein observed inter alia:
“The provision for determination by such departmental officers of the base-value of such goods, which a manufacturer is entitled to supply at his consideration, appears to have been made under rule 3 in derogation of sub- section (2) of section 5 of the VAT Act. When the law does not put any embargo in fixation of the price by a manufacturer of its goods no rules or decision of the VAT authority can impose any such flat or minimum value for such goods in the country, adversely affecting the interest of such manufacturer.”
After pronouncement of the said judgment (Judgment dated
16.01.2008) Section 72 of the Act, 1991 has been amended by the legislature under the Finance Act, 2008. Section 72(2) (Ka) provides (after amendment) as follows:
“( ) , , ,
,
,
;”
Pursuant to the said provision of Section 72( ), Rules 3 of the Rules, 1991 has been amended by the Government inserting procedure for fixation
base value of the goods. In view of the above the judgment so referred by
the learned Advocate for the appellant is not applicable in the present case. Considering the facts and circumstances of the case, we do not find
any error of law in passing the impugned order of the Tribunal and as such
we are inclined to dismiss the appeal, accordingly, the appeal is dismissed.
The impugned order dated 09.06.2013 passed by the respondent No.
1 under Nathi No. CEVT/Case(VAT)-93/2013/2451 dated 11.06.2013 dismissing the appeal and thereby affirming the order dated 29.03.2012 passed by the respondent No. 2 under Nathi No. 4bÑ/H(12)5/j§pL-j§mÉ¢i¢š ®O¡oZ¡/l−um ¢p−j¾V/2010/1368(1-3) is hereby affirmed/upheld.
There will be no order as to costs.
Send down the lower Court’s record at once.
Md. Iqbal Kabir, J:
I agree.
M.d. Mashud sider A.B.O.