Case No: Civil Appeal No.117 of 1999
Judge: M. M. Ruhul Amin ,
Court: Appellate Division ,,
Advocate: Dr. Kamal Hossain,Mr. A. J. Mohammad Ali,,
Citation: V ADC (2008) 507
Case Year: 2008
Appellant: N.G. Shaha Steel Industries (Pvt.) Ltd.
Respondent: Customs, Excise & VAT Appellate Tribunal
Subject: Writ Jurisdiction,
Delivery Date: 2005-5-15
Md. Ruhul Amin, J.
M.M. Ruhul Amin, J.
M. A. Aziz, J.
N.G. Shaha Steel Industries (Pvt.) Ltd.
Customs, Excise VAT Appellate Tribunal, Dhaka and others.
May 15, 2005.
The High Court Division discharged the Rule holding that no question of law is involved in the writ petition. The contention is purely a question of fact as to whether the appellant by concealing the actual production evaded VAT or not and such a question of fact cannot be decided in writ jurisdiction. …. (5)
Dr. Kamal Hossain, Mahmudul Islam and Rokanuddin Mahmud, Senior Advocates instructed by ASM Khalequzzaman, Advocate-on-Record-For the Appellants.
A.J. Mohammad Ali, Attorney General instructed by Ahsan Ullah Patwary, Advocate-on-Record-For the Respondents.
Civil Appeal No.117 of 1999
(From the judgment and order dated 23.05.1999 passed by the High Court Division in Writ Petition No.281 of 1998.)
M. M. Ruhul Amin J.
This appeal by leave is directed against the judgment and order dated 23.05.1999 passed by a Division Bench of the High Court Division in Writ Petition No.281 of 1998 discharging the Rule Nisi.
2. Short facts are that the appellant-company is a manufacturer of GP sheets and CGI sheets. Zinc Ingot and BP sheets are used as raw materials for production of the same and the appellant-company imports the raw materials from abroad. The appellant-company does not generally sell GP sheets, but converts those into CGI sheets for the purpose of sale. GP sheets and CGI sheets are liable to VAT at the rate of 15% on the assessable value of all the supplies under the VAT Act. On the promulgation of VAT Act 1991, the appellant submitted declarations to the VAT authorities declaring the assessable value of CGI sheet at Tk. 36,000/- per metric ton on 20.06.1991, on 25.04.1992 at Tk.36,000/- per metric ton, on 09.05.1992 atTk. 32,000/- per metric ton and on 24.06.1992 at Tk.34,200/- per metric ton. Accordingly they paid VAT as per the said declarations. By letter dated 29.09.1992 respondent No.4 determined the assessable value of GP and CGI sheets at Tk. 25,000/- and 36,000/- per metric ton respectively payable from 01.10.1992. The appellant on 15.08.1993 submitted raw materials component description of its production "and declared its assessable value at Tk. 36,500/- and Tk. 37,000/- per MT for GP sheets and CGI sheets respectively. Respondent No.4 by letter dated 23.08.1993 asked the appellant for further information which the appellant furnished by letter dated 25.08.1993. Respondent No.3 by letter dated 09.11.1993 determined the assessable value of GP and CGI sheets at Tk. 41,700/- and 42,000/- per metric ton respectively to be effective from 10.11.1993 upto 31.12.1993 showing the use of raw materials and wastage. Thereafter on the representation of the manufacturers, respondent No.2 by an order dated 23.11.1993 determined the assessable value of GP and CGI sheeets at Tk.37,700/- and Tk.38,000/- respectively. The appellant has been paying VAT accordingly as per the said assessment. On being asked by respondent No.4 the appellant submitted a fresh declaration of the assessable value of GP and CGI sheets at Tk.37,200/- and Tk. 37,500/- per metric ton respectively, details of raw materials used in the production and cost analysis on 11.01.1994. Respondent No.3 then by an order dated 27.04.1994 determined the assessable value of GP sheet and CGI sheets effective from 28.04.1994 at Tk. 39,700/- and Tk. 40,000/- per metric ton respectively showing raw materials components and wastage. The appellant has been paying VAT accordingly.
3. Respondent No.2 in normal course conducted a special audit for the period from July 1991 to December 1993 and a report was submitted recommending realization of Tk. 39,96,916.68/- from the appellant by demand note and adjustment on the basis of calculation as shown in the report. The appellant made the payment as per recommendation of the audit report. The appellant was surprised to receive a show cause notice dated 21.09.1994 from respondent No. 2 alleging that the appellant evaded payment of Tk. 2,16,05,049/- as VAT concealing the actual production. The appellant duly replied to the show cause notice on 12.10.1994 denying allegations and explaining the entire facts and circumstances. Respondent No.2 upon hearing the parties passed an order rejecting submissions of the appellant and holding that it was liable for payment of the above sum as VAT for the concealed production. The appellant preferred an appeal before The Appellate Tribunal which after hearing the parties dismissed the appeal stating, inter alia, that (i) the appellant between 01.07.1991 and 31.05.1994 should have produced 1 metric ton of GP and CGI sheets by using 1,000 KG BP sheet but the records show 65,934.801/- metric ton which meant a shortfall of 252.110 metric ton, the price of which was Tk. 1,00,84,400/- and VAT for which was Tk. 15,12,660/-; (ii) the appellant concealed 3348.782 metric ton of its production the value of which was Tk.13,39,49.260/- on which VAT payable was Tk. 2,00,92,389/-; and (iii) the total VAT evaded by the appellant was Tk.2,16,05.049/- by concealment of production and the appellant-company was liable to pay the amount. The appellant challenged the appellate order dated 30.11.1997 in the writ petition.
4. The respondents by filing an affidavit-in-opposition contended that it was detected that the appellant made false declaration by showing much higher inputs than the actually required quantity given for every unit and thus concealing the actual quantity of output through which the appellant-company evaded a huge amount of VAT due to the Government exchequer. That when the falsity of the declaration was detected a high-powered committee was constituted to investigate the matter. In course of investigation the committee unearthed the whole matter of VAT evasion and thereafter, the evaded VAT was demanded. The determination of base value fixed on the basis of the declaration cannot bind the VAT authorities which are duly authorized to re-fix the base value and realize the evaded VAT on the re-fixed basis from the date of submission of such declaration by the appellant as per Rule 3 of the VAT Rules,1991 and the conditions attached to the declarations in MUSAK-I submitted by the appellant.
5. The High Court Division discharged the Rule holding that no question of law is involved in the writ petition. The contention is purely a question of fact as to whether the appellant by concealing the actual production evaded VAT or not and such a question of fact cannot be decided in writ jurisdiction,
6. Leave was granted to consider the submission that the High Court Division erred in law in not appreciating that the point of law involved in the writ petition, whether the appellant-company can be charged with evasion of payment of VAT on a hypothetical production figure or on actual production and the submission that since no allegation was made that the appellant had actually produced a higher quantity of CGI sheets and concealed them no question of tax evasion arises and the further submission that the allegation is that the appellant could have produced more CGI and GP sheets from out of the raw materials and thus the alleged evasion was based on a hypothetical basis and not on actual basis and as such the said allegation is illegal and has no basis in law.
7. We have heard Dr. Kamal Hossain and Mr. Mahmudul Islam the learned Counsels for the appellant and Mr. A. J. Mohammad Ali, the learned Attorney General for the respondents and perused the judgment of the High Court Division and other connected papers.
8. The learned Counsels for the appellant submitted that the appellant-company can not be charged with evasion of payment of VAT on the basis of hypothetical production figure and as there is no allegation that the appellant had actually produced a higher quantity of CGI and GP sheets question of evasion of VAT does not arises.
9. The learned Counsels lastly argued that the allegation is that the appellant could have produced more CGI and GP sheets from out of the raw materials which means that the alleged evasion was based on a hypothetical basis and not on actual basis and hence the same had no legal basis.
10. Mr. A. J. Mohammad Ali, the learned Attorney General appearing for the respondents submitted that the contention of the respondents is that in fact the appellant had actually produced a higher quantity of CGI sheets and concealed them in order to evade payment of VAT. He further submitted that the actual process of production was verified by a special committee in presence of the appellant's representative and the respondent being satisfied with the actual production of the appellant, the demand was made. He further submitted that the contention of the appellant is a disputed question of fact and hence the High Court Division rightly refused to decide the same in writ jurisdiction.
11. It appears that respondent No.2 after detection of evasion of VAT by the appellant on audit, the appellant was directed to deposit the same in the Government treasury. The appellant being aggrieved moved the Customs, Excise and VAT Appellate Tribunal which after hearing the parties by order dated 30.04.1997 dismissed the appeal. The Tribunal found that a special committee was constituted by the authority to re-examine the matter and on the basis of the report of the said committee Collector found that the allegation against the appellant was correct. Accordingly the Tribunal found no ground to interfere with the order of the collector. It further appears that evasion of payment of VAT was first detected by the inspection team and then the proceeding was started against the appellant. The appellant having denied the allegation a special team was also constituted and the said team examined the process of production by using BP sheet and Zinc ingot in the appellant's factory and confirmed the concealment of actual production of GP sheets and consequent evasion of the said amount of VAT. We have also perused the report of the special committee regarding examination of the process of production by using G.P. sheet and Zinc ingot in the appellant's factory.
12. Therefore, we are of the view that the claim of the respondents for payment of VAT of Tk.2,16,05,049.00/-was not based on a hypothetical calculation rather the actual process of production was examined by the special team in the factory of the appellant in presence of personnel of appellant mill and confirmed the concealing of the matter of actual production of CGI and GP sheet by the appellant, and consequently evasion of the said amount of VAT.
In the facts and circumstances stated above, we find no merit in the appeal.
Accordingly, the appeal is dismissed with costs.