IN THE SUPREME COURT OF BANGLADESH HIGH COURT DIVISION

(SPECIAL ORIGINAL JURISDICTION)

WRIT PETITION NO. 106 OF 2014

IN THE MATTER OF:

An application under Article 102(2)(ii) of the Constitution of the People’s Republic of Bangladesh.

And

IN THE MATTER OF: John Anisul Bahar Cooper

.... Petitioner

       -Vs-

The Government of Bangladesh and others. ....Respondents.

Mr. Hasan Mohammad Reyad, Advocate

.... For the Petitioner.

Ms. Nasima K. Hakim, Deputy Attorney General with Ms. Tahmina Polly, Mr. Ali Akbor Khan, Mr. Md. Hafizur Rahman, Mr. Elin Imon Saha and Mr. Ziaul Hakim, Assistant Attorney General

  ... For the Respondents-government.

Heard on 30.01.2024 and 06.02.2024 Judgment on 11.02.2024.

Present:

Mrs. Justice Md. Iqbal Kabir

              and

Mr. Justice S.M. Maniruzzaman

S.M. Maniruzzaman, J:

In this Rule Nisi, issued under Article 102 of the Constitution of the People’s Republic of Bangladesh, the respondents have been called upon to show cause as to why the impugned order No. 15/Mushok/2013 dated 08.12.2013 issued under Nothi No. 4/Mushak/8(20)Cooprs/Bichar/2013/766 by the Commissioner, Customs, Excise and VAT Commissionerate, Dhaka

(North) [respondent No. 02], should not be declared to have been passed without lawful authority and is of no legal effect.

At the time of issuance of the Rule further operation of the impugned demand dated 08.12.2013 was stayed by this Court for a prescribed period.

Facts,  relevant  for disposal of  the Rule,  in short,  are  that  the petitioner is a businessman engaged in the business of bakery products in the name and style “M/S Cooper Cake and pastry”. In course of business, the petitioner obtained VAT registration certificate bearing No. 5111018858 from the concerned VAT office under the Value Added Tax Act, 1991 (in short, the Act, 1991) for the purpose of payment VAT and since then he has been paying VAT regularly with satisfaction of the VAT Authority.

Suddenly, the office of the respondent No. 2 entered into the petitioner’s one of outlet situated at Maskat Plaza, Uttara, Dhaka and seized the business and commercial document by issuing Mushak Chalan-5. After auditing of those documents, the audit team found that huge VAT was evaded by the petitioner and accordingly started an Oniom Case No. 10 of 2013 dated 17.07.2017. 

 Pursuant to the said Oniom Case, a proceeding had been initiated by the respondent No. 2 issuing show cause notice under Section 55(1) of the Act, 1991 dated 26.08.2013 contending inter alia that the Central Intelligence Cell (CIC) upon audit of the seized documents it was deducted that the petitioner evaded VAT for the period of January, 2005 to December, 2005 amounting to Tk. 24,34,748/-, January, 2006 to December, 2006 to the tune of Tk.29,75,809/-, January, 2007 to December, 2007 to the tune of Tk. 2,21,435/- (January, 2005 to December, 2007) total Tk. 56,31,992/-. By the said notice, the petitioner was asked to pay the said demanded amount and also asked appear before the authority for hearing by filing written objection.

On receipt thereto, the petitioner replied to the said notice denying all the material allegations so made in the notice and prayed for exoneration him from the allegation of evaded VAT stated in the notice. The respondent No. 2 upon hearing the petitioner and on perusal of the materials on record made the demand final under Section 55(3) of the Act, 1991 by his order dated 11.12.2013 directing the petitioner to pay of Tk. 56,31,992/- under Section 55(3) and thereby imposed penalty to the tune of Tk. 57,00,000/- under Section 37(2) of the Act,1991.

Being aggrieved thereby, the petitioner moved this  application before this Court and obtained Rule along with interim order of stay.

Mr. Hasan Mohammad Reyad, learned Advocate appearing for the petitioner submits that the respondent No. 2 had been initiated proceeding against the petitioner under Section 55(1) of the Act, 1991 by issuing show cause notice dated 26.08.2013 directing to pay unpaid VAT to the tune of Tk. 56,31,992/- from the period of January, 2005 to December, 2007 which is absolutely time barred under Section 55(1) of the Act, 1991 and pursuant the said time barred proceeding, the respondent made the demand final under Section 55(3) of the Act, 1991 and as such the impugned demand has been issued without jurisdiction. Mr. Reyad next submits that the respondent No. 2 had been initiated proceeding under Section 55 of the Act, 1991 but the impugned demand was made by the said authority under Section 55(3) of the Act, 1991 demanding  VAT  and  thereby  imposed  penalty  to  the  tune  of  Tk. 37,00000/- without initiating any proceeding under Section 37(2) of the Act, 1991. In view of the above the demand so passed by the respondent No. 2 is absolutely without jurisdiction.

On  the  other  hand  Ms.  Nasima  K.  Hakim,  learned  Deputy Attorney General appearing on behalf of the respondent VAT Authority submits that the demand so made by the VAT authority under Section 55(3) of the Act, 1991 is appealable order under Section 42 of the Act, 1991 but the petitioner having failed to exhaust said statutory forum filed the instant writ petition and as such the Rule is not maintainable.

We  have  heard  learned  Advocate  for  the  petitioner,  learned Assistant  Attorney  General  for  the  respondent-government  and  gone through  the  writ  petition,  relevant  materials  on  record  so  appended thereto.

In order to appreciate the respective arguments, it is necessary to examine  the  impugned  demand-cum-show  cause  notice  dated 26.08.2013 (Annexure-M to the supplementary affidavit), very initiation of proceedings against the petitioner for recovery of the unpaid VAT, which is quoted below-

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As it appears from record that pursuant to the audit conducted by

CIC, the respondent No. 2, Commissioner issued the show cause notice upon the petitioner on 26.08.2013 under section 55(1) of the Act, 1991 (Annexure-M to the supplementary affidavit). In response thereto, the petitioner submitted written reply on 04.09.2013 (Annexure-I). On receipt thereto and after hearing the petitioner, the said respondent has finalized the demand under section 55(3) of the Act, 1991 vide order dated 11.12.2013 with the following findings;

“                                                                                   ,                  ,                    

¢m¢Ma Sh¡h Hhw hÉ¢š²Na öe¡e£a Ef¢ÙÛa fË¢a¢e¢dl ®j±¢ML hš²hÉ Hhw H cçl l¢ra ®lLXÑfœ J c¢mmfœ CaÉ¡¢c fl£r¡¿¹ ®cM¡ u¡u

®k fË¢aù¡el                 , ,  /-(R¡èæ mr

¢hl¡eîC) V¡L¡ j§pL g¡y¢Ll ¢hou¢V p¾cq¡a£ai¡h Ëj¡¢Za J fË¢aùa

hmhv j§mÉ pwk¡Se Ll

BCe,                           ( )   য               p,          ,

   ,            57,00,000/-(p¡a¡æ mr V¡L¡)

•                                                                                                              j§pL                 (   ) ¢c-

el jdÉ el                        য য                  

c¡¢MmLl¡l SeÉ Bcn fËc¡e Ll¡ qmzz”

On examination of the aforesaid demand-cum-show cause notice

dated 26.08.2013 issued by the respondent No. 2 (Annexure-M to the supplementary affidavit) it appears that VAT was demanded for calendar January,2005 December, 2007 amounting of TK. 56,31,992/- (fifty six lac thirty one thousand nine hundred ninety two) under section 55(1) of the Act, 1991. Section 55 of the VAT Act is quoted below;

55z Ae¡c¡u£ J Lj f¢ln¡¢da j§mÉ pwk¡Se Llpq AeÉ¡eÉ öó J Ll Bc¡uz

1.   d¡l¡ 37 Hl ¢hd¡eL r¥æ e¡ L¢lu¡ ®krœ ®L¡e¡ ¢eh¢åa hÉ¢š²l fZÉ plhl¡q h¡ fËcš ®ph¡l Jfl fËcu j§mÉ pwk¡Se Ll h¡, rœja, j§mÉ pw- k¡Se Ll J pÇf§lL öó ®L¡e¡ L¡lZhna d¡kÑ h¡ f¢ln¡d Ll¡ qu e¡C h¡

Lj d¡kÑ h¡ Lj f¢ln¡d Ll¡ qCu¡R Abh¡ i¤mhnax ®gla fËc¡e Ll¡ qCu¡R

h¡ d¡l¡ 13 Hl Ad£e j§mÉ pwk¡Se Ll, pÇf§lL öó, Bjc¡¢e öó, BhN¡¢l

öó , AeÉ¡eÉ öó J Ll (BN¡j BuLl hÉ¢aa), i¤mhnax fËaÉfÑZ Ll¡ qCu¡R h¡ h¡wm¡cn plhl¡qL«a ®L¡e¡ fZÉ h¡ ®ph¡l Jfl fËcu Ll h¡ öól ¢hfl£a i¥mhna h¡ i¤m hÉMÉ¡l L¡lZ pjeÄu Ll¡ qCu¡R, ®pC ®rœ Eš² hÉ¢š²L a¡q¡l Jfl ®k a¡¢lM Eš² öó J j§mÉ pwk¡Se Ll fËcu qCu¡¢Rm h¡ Lj f¢ln¡¢da qCu¡¢Rm h¡ ®gla fËc¡e Ll¡ qCu¡¢Rm fËaÉfÑZ Ll¡ qCu¡¢Rm h¡ pjeÄu Ll¡ qCu¡¢Rm pC a¡¢lM qCa ¢ae hvpll jdÉ pw¢nÔø j§mÉ pwk¡Se

Ll LjÑLaÑ¡ ®e¡¢Vn à¡l¡ ®e¡¢Vn E¢õ¢Ma öó h¡ j§mÉ pwk¡Se Ll c¡¢h L¢lu¡

Eq¡a E¢õ¢Ma pjup£j¡l jdÉ Eš² öó h¡ j§mÉ pwk¡Se Ll f¢ln¡dl SeÉ

L¡lZ cnÑ¡e¡ ®e¡¢Vn S¡¢l L¢lhez

a®h naÑ b¡L ®k, ®krœ ®L¡e¡ ¢eh¢åa hÉ¢š² h¡ fË¢aù¡e Ll gy¡¢L ®cJu¡l

E®ŸnÉ ®L¡e¡ abÉ ®N¡fe Lle, ¢hL«a Lle h¡ ¢jbÉ¡ abÉ fËc¡ef§hÑL j§pL

Q¢ma ¢qp¡h h¡ Ll Q¡m¡efœ Cp¤É Lle, ®pCrœ BaÈfrpjbel p¤®k¡N Hhw k¤¢š²p‰a öe¡¢e fËc¡el fl EŸnÉj§mL Afl¡d fËj¡¢Za qCmH C Ef-d¡l¡l

Ad£e hÉhÙÛ¡ NËq®Zl ®r®œ Eq¡a E¢õ¢Ma ¢ae hvpl pjup£j¡ Eš² hÉ¢š²l

Jfl fË®k¡SÉ qC®h e¡ h¡ pw¢nÔø j§mÉ pwk¡Se Ll LjÑL¡ a E Ñš² hÉ¢š²l Jfl

c¡¢h Ll¡l ®r®œ h¡¢la qC®he e¡z

2.    Bjc¡¢eL«a f®ZÉl ®r®œ ®L¡e¡ j§mÉ pwk¡Se Ll h¡, ®rœja, j§mÉ pwk¡Se Ll J pÇf¤lL öó, ®L¡e¡ L¡lZhnax f¢l®n¡d Ll¡ e¡ qCu¡ b¡¢Lm h¡ i¥mhna Lj f¢ln¡¢da

qCu¡ b¡¢Lm h¡ ®gla fËcš qCu¡ b¡¢L®m Eq¡ Customs

Act Hl section 32 ®a fËcš ¢hd¡e Ae¤k¡u£ Bc¡u Ll¡

qChz

3.    Ef-d¡l¡ (1) Hl Ad£e öó J Ll fËc¡®el SeÉ ®kC

hÉ¢š²l ¢eLV qCa c¡¢h Ll¡ qu ®pC hÉ¢š² Eš² Ef-d¡l¡l Ad£e L¡lZ cnÑ¡e¡ ®e¡¢V~n E¢õ¢Ma  pjup£j¡l jdÉ ¢m¢Mai¡h Eš² c¡¢hl ¢hl¦®Ü Bf¢š E›¡fe L¢l®m a¡q¡®L öe¡¢el p¤®k¡Nc¡e L¢l®a qC®h Aaxfl Eš² hÉ¢š²l E›¡¢fa Bf¢š ¢h®hQe¡ L¢lu¡ pw¢nÔø j§mÉ pwk¡Se Ll LjÑLaÑ¡ Eš² Bf¢š c¡¢Mml eîC ¢c®el j®dÉ h¡ ®L¡e Bf¢š c¡¢Mm Ll¡ e¡Cm Eš² Ef-d¡l¡l A¢d®e ®e¡¢Vn S¡¢ll a¡¢l®Ml eîC ¢c®el jdÉ ®e¡¢Vn c¡¢hL«a öó J Lll f¢lj¡Z, fËu¡Seh¡d, f¤ex¢edÑ¡lZœ²j Q¨s¡¿¹ L¢la f¡¢lhe, Hhw Eš² hÉ¢š² ®e¡¢Vn c¡¢hL«a h¡, ®rœja, f¤ex¢edÑ¡¢la öó J Ll f¢ln¡d L¢la

h¡dÉ b¡¢Lhez

4.    Ef-d¡l¡l (1) Hl Ad£e öó J Ll fËc¡el SeÉ ®kC

hÉ¢š²l ¢eLV Cqa c¡¢h Ll¡ qu, ®pC hÉ¢š² ¢m¢Mai¡h Eš² c¡¢hL«a AbÑ ¢L¢Ù¹a f¢ln¡dl CµR¡ hÉš² L¢lm L¢jn¡e¡l avLa«ÑL ¢edÑ¡¢la naÑ J ¢L¢Ù¹a Eš² c¡¢hL«a öó J Ll f¢l- n¡dl SeÉ Bcn fËc¡e L¢la f¡¢lhez

Ah naÑ b¡L ®k, ¢L¢Ù¹ fËc¡el pjup£j¡ Ru j¡pl A¢a¢lš² qCh e¡z

Thus, from a plain reading of quoted Section 55 of the VAT Act,

it appears that the law prescribed that the demand is to be made within 3(three) years from the date on which the such VAT stands payable.

Section 55(3) provides that if the person from whom duties and taxes have been demanded under Sub-section (1) makes objection in writing against the show cause notice issuance under Sub-section (1) the concerned VAT officer shall be given opportunity of being heard and he may after considering the objection raised by the said person shall re-fix finally if necessary, the amount of duty demanded by the notice.

In the instant case it, however, appears that the show cause notice dated 26.07.2019 (Annexure-G of the supplementary affidavit) was issued by the respondent No. 2, demanding unpaid VAT from the period of January, 2005-December, 2005 which was beyond the period as prescribed in Section 55(1) of the Act, 1991.

Pursuant to the said time barred proceeding the respondent No. 2 made the said demand final under Section 55(3) of the Act, 1991 directing the petitioner to pay Tk. 56,31,392 as outstanding VAT and Tk. 57,00,000/- as penalty under section 37(2) of the Act, 1991 which is absolutely illegal and barred by initiation.

The another issue in question in the instant Rule is that whether the proceeding for recovery of the unpaid or less paid or evaded VAT and imposition of penalty can be initiated simultaneously by the VAT authority both under Sections 55 and 37 of the Act, 1991. The said issue has been resolved in various decisions passed by this Court categorically observing, inter-alia, that the provisions of section 37 of the VAT Act is a penal provision which can be exercised only after determination of VAT evaded by any person under a given scenario; whereas section 55 of the VAT Act provides for realization of unpaid or less paid VAT and other taxes. Section 55(1) clearly empowers among others to the concerned authority to issue notice of show cause or make demand, as the case may be, for unpaid or less paid VAT. Section 55(3) provides for hearing on the basis of reply, if any, submitted to such notice and after such hearing to make the demand final.

 But, in the instant case the concerned respondent issued demand- cum-show cause notice and subsequent passed adjudication and appeal order mixing up both sections 55 and 37 of the VAT Act, 1991.

In the case of United Mineral Water and PET Industries Ltd.- Vs- Commissioner of Customs Excise and VAT reported in 61 DLR (HC) 734, it has been observed, inter alia-

“If the entire provision of section 55 is considered then it would be clear that section 55 empowers the concerned VAT authority to take steps for realization of unpaid or less paid VAT or tax, upon first issue of a notice asking to show cause and then, upon hearing, within 90 days to dae a final demand in respect of any VAT or tax unpaid evaded or less paid.”

Further, it has been observed:

“On the other hand, section 37 of the said Act defines various offences and punishments for such offence. Before any final demand could be made under section 55(3), none of the provisions of section 37 could be resorted to. It is needless to say as the fiscal law demands strict interpretation so equally demands for strict application by an authority authorized to apply. The VAT Act is a comprehensive tax law. It has defined the tax to be paid as VAT on the specified sales and/or services. Similarly, it has laid down elaborate procedure for realization of the tax and punishment for any violation or omission. The concerned authority is therefore, duty bound to follow the procedure as laid down in the Act for each and every action. The Act does not empower any of the authorities created to become Zealot to overpower and/or n overawe any tax payer. Invoking and/or resorting to section 37 while issuing a notice under section 55(1) of the VAT Act therefore, could not be said to have been issued bonafide for the simple reason that at the time of issue of the notice, the authority concerned had not yet arrived at as to any evasion of VAT by the petitioner.”

In the case of  Provati Insurance Company Ltd. -Vs-

Commissioner of Customs Excise and VAT reported in 17 BLC (HC) 450, it has been observed-

“In absence of compliance with the requirements of section

55(1) of the Act, thereafter of demands made twice as

required under section 37(2)(Kaka), the penalties under

section 37(2) and 37(3) have been illegally imposed.”         Similar view has been expressed in the case of Abdul Motaleb -

Vs-  Commissioner of Customs Excise and VAT Appellate Tribunal reported in 64 DLR (HC)100, where it has been observed-

“Nothing short of prior compliance of section 55 of the VAT Act, the VAT authority by any stretch of imagination cannot go for an action under section 37 of the Act, which is a penal provision. Liability has to be fixed first under section 55 of the Act nothing more nothing less.”

In the case of Mr. Baker Cake and Pastry Shop & others -Vs-

Commissioner, Customs, Excise and VAT and others reported in 66 DLR (HC) 359, it has been observed-

“After the amendment of the Act in the year 2010 section 55

of the Act has taken a new look. Now the offences under

Section 37 can be dealt with by giving notice but under

section 55 of the Act. By no means it can be said that the

amendment has changed the settled proposition of law.”      From the attending facts and circumstances of the case and the

decisions so have been cited to above, we are of the view that the notice of demand-cum-show cause dated 26.08.2013 had been issued under Section 55 of the Act, 1991 from the period of January, 2005-December, 2007 is barred under Section 55(1) of the VAT Act, 1991. Consequently, the  impugned demand dated 08.12.2013  issued  pursuant  to the  time barred proceeding is wholly illegal. Moreover, the said respondent has imposed penalty of Tk. 57,00,000 under Section 37(2) of the Act, 1991 without initiation on any proceeding of the said Section in that Court the demand notice has also been issued without lawful authority.

In view of the above, we find substance in the submission made by learned Counsel for the petitioner and thus merit in the Rule.

In the result, the Rule is made absolute, however, without any order as to costs.

The impugned order No. 15/Mushok/2013 dated 08.12.2013, vide Nathi No. 4/Mushak/8(20)Cooprs/Bichar/2013/766 issued by Commissioner of Customs, Excise and Vat Commissioner, Dhaka (North) [respondent No. 02] is hereby declared to have been passed without lawful authority and hence of no legal effect.

Communicate the copy of the judgment and order to the concerned respondents forthwith.

Md. Iqbal Kabir,J:

I agree.

Md. Mashud sikeder-A.B.O.