The National Board of Revenue has issued final demand notices to four mobile operators asking them to pay Tk 883.35 crore in second phase of outstanding SIM replacement tax within 90 days.
In four separate demand notices to Grameenphone, Banglalink, Robi and Airtel (now merged with Robi), the Large Taxpayers’ Unit (Value-Added Tax) of the revenue board on Monday said that the companies dodged the amount in supplementary duty and VAT on sales of SIM between July 2012 and June 2015.
The mobile operators evaded the tax against around 2.41 crore SIM cards through SIM replacement process under which the operators sold the SIMs to new subscribers but declared those as replacement to original subscribers, according to the demand notices of the LTU.
Of the amount, GP dodged the highest amount of Tk 378.95 crore against 1.06 crore SIMs, Robi Tk 285.20 crore against 75.26 lakh SIMs, Banglalink Tk 168.91 crore against 45.75 lakh and Airtel evaded Tk 50.26 crore against 13.59 lakh SIMs in the period through selling new SIMs which they claimed as replacement.
Officials of the LTU said that they found the evasion in second phase scrutiny of VAT returns of the companies.
Mobile operators on June 22 lost a legal battle at NBR’s VAT appellate tribunal regarding previous dispute over SIM replacement tax worth Tk 2,048 crore for the period from July 2007 to December 2011 and filed writ petition at Appellate Division against the verdict.
The LTU on June 29 issued primary demand notices along with show-cause notices for the second phase SIM replacement tax asking the companies to explain within 15 days why they will not pay the amount to the government exchequer.
The operators can also attend hearings to place their arguments against the LTU’s claim, according to the show-cause notices.
Representatives of the operators attended hearings with the LTU officials but the hearings failed to bring any consensus as both parties remained stuck on their arguments.
‘We issued the demand notices as their arguments were not acceptable,’ LTU (VAT) commissioner Md Matiur Rahman told New Age on Monday.
The operators failed to provide necessary documents, he said.
Officials of the revenue board said that from the beginning of the scrutiny of VAT returns, the LTU asked the operators to provide documents including subscriber agreement form and subscriber replacement form as a proof of SIM replacement but they failed.
Rather, they tried to delay the process, they said.
At the hearings, mobile companies placed three arguments against the second phase demand of the LTU.
The operators argued that the LTU could not justify the evasion through random sampling for huge number of replaced SIMs.
The SIM replacement tax issue is also a sub-judice matter, according to the operators’ letter to the LTU.
The issue may also be settled through administrative process by the tripartite committee of the NBR, they said.
LTU assistant commissioner Md Badruzzaman Munshi said that they detected the evasion through random sampling of SIMs as per instruction of the NBR while previously the High Court ruled out petitions of the operators against the random sampling process.
There is no alternative to following random sampling process as the operators did not supply the documents every month with VAT returns despite legal binding, he said, adding that it was not possible to check millions of SIMs manually.
The VAT authority also has to claim any unpaid or dodged tax within five years, he added.
Officials said that the operators now could file appeal before the VAT appellate tribunal by paying 10 per cent of claimed tax or file writ petition before High Court.
The LTU will take steps including freezing the bank accounts to collect the tax if the operators don’t go for legal battle within three months, they said.
Since early 2012 when the LTU demanded the first phase SIM replacement
tax, mobile operators denying the allegations of selling the SIMs to new subscribers said that they had just replaced the SIMs to old subscribers
Association of Mobile Telecom Operators of Bangladesh secretary general TIM Nurul Kabir said that the demand had been made on fictitious base like previous demand.
‘We think the LTU did not follow the right process and has forcefully imposed the demand which will create a big challenge for the investors when they are preparing to invest in huge amount in 4G service,’ he said.
The issue should be reviewed at the policymakers’ level of the government, he added.
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