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Corporate - 4 weeks ago

Tk 3,000 cr VAT dispute with Padma Oil yet to solve

Staff Correspondent : There is a tug-of-war between Chittagong VAT Commissionerate and Padma Oil Company over Tk 1,400 crore VAT. State-owned company Padma Oil sells jet fuel to foreign airlines. They are not paying VAT by showing it as export. But the VAT Commissionerate claims that the bill should be taken in dollars in case of export. But Padma Oil bills in local currency rupees. So, it’s sold. They have to pay VAT.
According to the VAT authorities, VAT evasion of Tk 1,411 crore has been detected in the audit conducted from 2015 to 2019. And if we calculate till February 2024, this number can double at around Tk 3,000 crore.
A meeting between the two parties held at the National Board of Revenue (NBR) yesterday. This information is known from the source of NBR.
According to a letter sent by Chittagong VAT Commissionerate to NBR’s VAT policy member, Padma Oil Company, a subsidiary of Bangladesh Petroleum Corporation (BPC), is selling jet fuel to foreign airlines operating on international routes. Accepting bill of sale in local currency Tk 1,411 crore.
And if the product is sold for taka, VAT is applicable on it. Accordingly, the VAT Commissionerate, conducting an audit from 2015 to 2019, issued a claim of VAT evasion of Tk 1,411 crore to Padma Oil.
A meeting was held in NBR in view of this. NBR Chairman and Managing Director of Padma Oil participated in that meeting. It was decided that Padma Oil itself will form a committee to review the matter. Later, the committee reported that during that period, against the sale of 25 crore liters of jet fuel on domestic routes, Tk 60 crores of VAT was applicable and against the sale of Tk 172 crores liters of jet fuel on international routes, Tk 1411 crores of VAT was applicable.
Later Padma Oil Company paid VAT of Tk 60.77 croreagainst sale of jet fuel on domestic route. However, Tk 1,411 crore of VAT claimed against the sale of jet fuel on international routes has not been paid. VAT Commissionerate claims, VAT will be applicable on it. Chittagong VAT Commissionerate has sought NBR’s intervention for this.
In this regard, Chittagong VAT Commissioner Syed Mushfiqur Rahman told Daily Industry that Padma Oil sold jet fuel on international flights and took a bill in local currency. So, VAT is applicable. But their demand is not to sell, but to export. In case of export, the bill should be taken in dollars. That didn’t happen. So, Padma Oil has to pay VAT. There is no option to not pay VAT in law.
However, Padma Oil Company Managing Director Masudur Rahman told, “We have written to NBR through BPC. Our demand is correct. They want VAT, it is not right. It will not be VAT. There is no problem with it.

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