Petrobangla’s unpaid VAT, duty rise to Tk 27 billion

NBR sends show-cause notices

Doulot Akter Mala | Published: April 26, 2019 09:47:02 | Updated: April 27, 2019 19:08:16

The Value Added Tax (VAT) authorities have served four show-cause notices on Petrobangla and its associate companies, seeking Tk 27 billion revenue arrears.

The arrears accumulated from March 2017 to September 2018 as VAT and Supplementary Duty (SD).

The Large Taxpayers Unit (LTU) under VAT wing notified on Wednesday Petrobangla, Bangla-desh Petroleum Exploration and Production Company (Bapex), Bangladesh Gas Field Company Ltd and Sylhet Gas Field Company Ltd.

The primary demand notices, signed by LTU commissioner Muhammad Mubinul Kabir, were served under article 55 (1) of the VAT Act 1991.

The unit sought written explanations from the entities by the next 15 days to this end.

Of the accumulated arrears, Petrobangla owes Tk 18.25 billion, Bangladesh Gas Field Tk 7.53 billion, Sylhet Gas Field Tk 1.09 billion and Bapex Tk 128 million.

A senior VAT official spoke to the FE on Thursday about the sending of the demand notices to the entities.

He said fresh arrears accumulated following a review committee's report that has found Petrobangla and others supplied gas to consumers without VAT and SD.

The review committee comprises representatives from Petrobangla and other entities.

State oil and gas suppliers refrained from VAT and SD collection from gas tariff that was readjusted upward by the Bangladesh Energy Regulatory Commission (BERC).

LTU officials said the entities did not collect VAT and SD from consumers on an increased portion of gas price during the period.

"The BERC increased gas tariff by 22.70 per cent that came into effect in two phases from March 01, 2017, and June 01, 2017, respectively," wrote the LTU notice.

However, the commission on February 23, 2017, kept the increased amount outside the purview of VAT and SD.

To clarify the issue, the unit sought the National Board of Revenue's directives regarding VAT and SD exemptions by the BERC.

Officials said the revenue board has not issued any such VAT or SD exemption apart from three SROs (statutory regulatory orders), issued on October 03, 2018, and September 18, 2018.

On October 03, it withdrew 93.24 per cent SD, 15 per cent VAT and other taxes on import, production, trading and supply stage of gas, including liquefied natural gas (LNG).

The aim was to keep gas prices affordable after import of costly LNG.

The order came into effect on September 18.

LTU officials said they took opinion from the NBR high-ups on the applicability of VAT and SD for the period.

They said LTU would finalise the demand after getting response from Petrobangla and its companies.

It would take legal steps, including realisation of the amount based on documents, if the companies do not reply, the officials added.

A spat already exists between LTU and Petrobangla and its distributors-Titas, Karnaphuli, Bakhrabad and Jalalabad gas transmission and distribution companies-over VAT and SD payments worth around Tk 177 billion (excluding interest).

The state-owned companies collected VAT and SD from consumers on the prices of gas during 2009 and 2016.


Share if you like