VAT, Tax and Customs Dispute Resolution
Rahman’s Chambers has a long-standing practice in assisting clients in taxation matters. Besides, advising clients on transactions we assist them in courts and tribunals. We have handled several cases involving corporate taxation, VAT and customs in different forums with excellent success record. We have a team of lawyer and consultants with specialized knowledge and significant experience on taxation matters. The Chambers and Partners 2023 Asia Pacific Guide ranked Rahman’s Chambers for Dispute Resolution. Their editorial states: “Rahman’s Chambers houses a well-regarded litigation practice in Bangladesh “ They also added work highlight as follows: “Rahman’s Chambers defended Larsen & Toubro against a tax penalty amounting approximately to USD1 million, imposed due to Larsen’s delay in filing its tax returns.
– Chambers & Partners, 2023 – 2020
“Offers further capabilities in international trade, commercial litigation and project finance”
– Chambers & Partners, 2019
“Their response times are excellent and they make you feel generally very well informed…”
– Chambers & Partners, 2018
Rahman’s Chambers whom we have contacted in 2007 seeking assistance for disputes arising with the National Board of Revenue (NBR) Income Tax office, involving rejection of trading account and imposition of estimated profit based on assumption… successfully handled the income tax reference case pending in the High Court and also successfully argued before the Court the legality of such assumptions and rejection of the trading account and its expenditures upon remand. Finally the tribunal, once recommended from the High Court upon perusal of relevant receipts, vouchers, verifiable transactions, passed favorable judgment in our favor…
For full recommendation click here.
Our Completed works are:
- We have advised and assisted our client on a complex issue of misdeclaration and impersonation. Someone completely not connected managed to get a BL in the name of our client as a consignee and notify party while importing illegal cargo by giving false declaration. The consignment could not be released as customs authority suspected and interfered.
- We have successfully concluded a hearing before Hon’ble Mr. Justice Syed Refaat Ahmed and Hon’ble Mr. Justice Sashanka Shekhar Sarkar, Annex Building Court No. 26, Supreme Court of Bangladesh on complex issues involving legal interpretation of GRI, World customs laws, NBR orders involving HS code classification of a new AI-based data processing machine for an RMG (dyeing) manufacturing unit. The judgment passed by the Hon’ble Court is a landmark because it affirmed for the very first time in our jurisdiction a set procedure to be followed by customs while determining the HS code of imported goods. This will certainly reduce arbitrary determinations as often applied by junior officers of customs. We represented a leading MNC in the RMG sector.
- We have appeared before a high powered committee of NBR formed for determination of HS classification of complex ICT products
- We regularly handle HS codes related disputes for several companies including MNCs including Signify in different forum i.e. customs appeal, appellate tribunals, and High court.
- Recently, we have assisted our client Gildan in a dispute involving classification of AI enabled product used for garments and textile sector and also appeared before a high powered committee of NBR formed for determination of classification of complex ICT products.
- We have successfully completed two customs valuation disputes through ADR for a major multinational company. While the matter was pending for hearing in the customs appellate tribunals, we have decided to try statutory ADR options. We have assisted in the process of ADR, negotiation and finalizing the settlement agreement and finally claiming the duty difference.
- We regularly handle valuation related disputes for several companies including MNCs in different forum i.e. customs appeal, appellate tribunals, and High court.
- We have handled disputes involving price declaration impacting the valuation of a major multinational mobile phone company.
- We have handled a complex dispute alleging illegal removal of raw materials (imported under bond facility) and imposition of penalty for such removal successfully before the Customs Tribunal by proving the falsity of the allegation with bundles of documentary evidence
- We have handled a writ involving non-compliance of bonded warehouse conditions and removal of raw materials from one bond house to another without permission and associated duties, penalty, and baseless assumptions of customs authority for the sale of bonded items for the major garments industry.
- We have handled disputes in the RMG sector involving the violation of customs bond-related penalty and claims involving shortage/sale of raw material, removal of raw material and transfer of raw material, etc.
IMPOSITION OF PENALTY
- We are assisting our client, Larsen & Toubro (L&T), in resolving disputes involving the imposition of a penalty of nearly USD $ 10,00,000 for the delay in filing tax returns involving its several project operations, relating to power plants, metro rail, etc., before taxation tribunals.
- We have handled disputes involving rejection of trading account transactions and imposition of fictitious profit.
- We have handled disputes involving the disallowance of expenses of different nature and showing them as income.
- We have handled disputes involving the calculation of estimated profit based on another comparable industry.
TRADE VAT/INPUT VAT
- We have handled disputes involving input VAT and mismatching with an inventory list and related non-declaration, imposition of penalty, etc.
- We have successfully challenged and resolved VAT claims through ADR at the Appellate tribunal stage involving the destruction of raw materials for Grameen Danone Foods Ltd.
Practice Guide – Taxes & Finance
VAT, Tax and Customs related legal support is high in demand in Bangladesh. Particularly for companies, new investors & entrepreneurs knowing the different formalities involving taxation is a big challenge because of its complexity. In particular with income tax, different statutory requirements for e.g. advance tax on income, deduction of tax at source, tax exemptions, tax rebate, procedures for filing annual tax returns along with its assessments, etc and their correlation which may be found difficult without proper knowledge. On the other hand, entirely new regulations are applicable to VAT. Understanding ATV (advance trade VAT), VAT rebate/input at different stages of trade, obligations of consumers, supplier, service provider and different MUSAK filing along with the filing of monthly returns is equally complex. Finally, rules and regulations applicable for various Custom duties, supplementary duties, regulatory duties and its relations with HS code and product valuation is a complex area of law that requires sound knowledge to deal with the issue efficiently. In case of any disputes, legal support is often required for challenging any claim, issues, Order before the Higher Authority or Tribunal which may even go up to the High Court & Appellate Division.
Application required to be filed before Commissioner against demand and assessment Based on the VAT Act related Divisions of High court and Appellate Division. Raising all issues before Commissioner is important for placing a successful argument in later forums.
If the Commissioner refuses to accept our legal and factual position, we prefer appeal to the Commission Appeal. Unless their is any jurisdictional issue involved and/or the law itself is challenged, exhausting forum as per requirement of law is important.
Appellate Tribunals comprises with Chairman and members who are ranked equivalent to High Court Division. An appeal can be filed from the decision of the Commissioner Appeal to Tribunal. We assist our client for the entire process.
Finance Act 2022 amended the VAT Act 2012 in respect of pre-deposit amount required for filing of appeal before Tribunal, Commissioner. The calculation will be based on the disputed demand of VAT only excluding penalty, if any. This will surely be extremely helpful for the appellants as often, the total amount with penalty is so big that appellant cannot afford to pay the pre-deposit amount. Appellant is often required to file petition for hardship to make the amount tolerable.
The High court writ jurisdiction can be entertained against the decision of Appellate Tribunal as a last resort on procedural grounds. our success rate before High court on VAT matters is very high. Generally interference by High court is found fruitful as Hon’ble High Court is prepared to go into details and takes lengthy submissions from both parties.
On the otherhand, the High court Tax Reference jurisdiction is unlike VAT and Customs is a permanent jurisdiction whereas per Tax Ordinance reference case can be filed. High Court can be entertain if a legal issue is involved against the decision of Appellate Tribunals. Our success rate before High court on Income tax matters is very high.
Similarly over customs issues High court by way of writ exercises it’s power where tribunals acted beyond its limit and where statute have not provided any remedy.
Our apex court decided in a recent case that once a hardship application is submitted involving deposit of percentage of duty or issuance of Bank guarantee instead, such application is required to be disposed of judiciously. Discretion does not mean arbitrary exercise of power, discretion have to apply judiciously. This decision will be helpful for the importers as there may be more option to invoke writ jurisdiction based on this ground in case of arbitrary refusal to accept bank guarantee.
Similarly, our apex court decided that in case of failure of the customs authority to complete provisional assessment within the statutory period of 120 working days as prescribed under section 81 (2) of the Act, or failure to extend the period for final assessment from the Board, the provisional assessment made by the customs authority on the basis of declared value/ HS Code shall be deemed to be treated as final.
The recent amendment in VAT, Tax and Customs Act allowed the parties to take the matter before Facilitators. The facilitators are generally professional retired Govt. Officials, lawyers, chartered Accountants who are expert in the respective matters. Who plays the role akin to mediators analyzing factual and legal position of parties and help the parties to resolve the dispute amicably. The Chamber has very high rate of success before ADRs.
Related Resources - Library
We have a rich library with a mixture of printed and online legal databases. We have printed version of All England Commercial Cases, Indian Digest of Supreme Court cases, Yearbook Commercial Arbitration of Wolter Kluwer and most law reports of Bangladesh. We subscribe to the online legal database Manuputra providing access to most reputed law reports. Read more
Our Reported Cases
- Grameen Danone Foods Ltd Vs. Commissioner of Taxes 6 CLR (HCD) (2018) 25.