Tk7,000cr VAT dues, fines: S Alam's 2 oil companies to face account freeze, BIN lock

The business operations – both imports and local sales – of S Alam Super Edible Oil Limited and S Alam Vegetable Oil Mills Limited are likely to come to a halt due to their failure to pay over Tk7,000 crore in evaded value-added tax (VAT) and fines.

Although the edible oil-producing companies belonging to the S Alam Group were asked to pay around Tk3,600 crore in evaded VAT, along with an equal amount in fines, they have not made the payment, according to officials in the National Board of Revenue (NBR).

In this situation, the NBR is set to freeze the companies' bank accounts and lock their business identification numbers (BINs), they added.

Syed Mushfequr Rahman, commissioner of the Customs Excise and VAT Commissionerate in Chattogram under the NBR, told The Business Standard on Monday, "We wrote to them to pay the outstanding VAT, but they did not settle the amount. In this situation, a letter will be sent tomorrow [Tuesday] to freeze their bank accounts."

He added, "A letter will also be sent to the respective organisation tomorrow to deactivate their business identification numbers. In that case, all types of business activities, including import and export, will be halted for them [two companies in question]."

Sources indicate that along with imports and local sales, transactions of these two companies may also be halted if their BINs are locked.

The Chattogram-based S Alam Group is currently a controversial name in the business sector, also in the banking sector, of the country.

Following the fall of the Sheikh Hasina government on 5 August, various irregularities involving this group have come to light one by one.

The Bangladesh Bank has already reconstituted the boards of five banks that were controlled by S Alam Group and initially found to be involved in large-scale financial irregularities.

Additionally, the tax office has uncovered details of transactions exceeding Tk2 lakh crore over the last five years involving various institutions and individuals associated with the S Alam Group.

In 2023, the Chattogram VAT Commissionerate initiated an audit to investigate VAT evasion by two companies belonging to the S Alam Group. Last May, the audit report revealed VAT evasion amounting to Tk3,560 crore by these two companies. Alongside this, a show-cause notice was issued to the companies, accompanied by a fine of an equal amount.

However, the companies filed writ petitions in the High Court challenging the notice. In response to the writ, the court instructed the revenue authorities to clarify why the order should not be reheard.

A senior official from the Chattogram VAT Commissionerate, speaking on the condition of anonymity, said, "Afterward, the representatives of the two companies were summoned for a hearing, but they failed to appear."

Subsequently, the VAT office initiated legal proceedings to recover the outstanding dues.

Syed Mushfequr Rahman said, "It took them nine months from the first show-cause notice to the final notice, but they could not provide a satisfactory answer or make the payment."

Sources at the Chattogram VAT Commissionerate reported that on 27 August, debt recovery officer Asif Ahmed Anik, tasked with collecting dues, issued a notice titled "Due Tax Collection Certificate" to the two S Alam Group companies located in Karnaphuli, Chattogram, giving them 21 days to settle the amount owed.

TBS has obtained a copy of the notice, which states, "If no response is received within 21 days of the issuance of this certificate or if the dues are not paid, further action will be taken as per Section 95 of the existing Act."

For defaulting taxpayers, Section 95 of the VAT and Supplementary Duty Act includes measures such as freezing bank accounts, halting the supply of goods or services from business premises, locking BINs, shutting down business establishments, and even suspending utility services.

Applying this section, the VAT office is adopting a strict stance.

Will halting imports, locking BINs impact market?  

Currently, the annual demand for edible oil in the country is around 23 lakh tonnes. Of this, only about 3 lakh tonnes are produced locally from mustard, sesame, and sunflower, which accounts for approximately 13% of the total demand. This means that nearly 90% of the edible oil needs to be imported to maintain a stable supply.

S Alam Group imports about 30% of the domestic market demand for edible oil. In 2022, S Alam Group imported approximately 6.78 lakh tonnes of edible oil, investing over $918 million, or about Tk10,098 crore, according to a press release from November 2023.

Representatives from other edible oil marketing organisations believe there is little chance of a negative impact on the market.

Mohd Dabirul Islam Didar, general manager of finance and accounts at Bangladesh Edible Oil Limited, told TBS, "They (S Alam companies) have a significant stake in the supply chain, which means it will take some time for others to adjust. However, there should be no difficulty in the market."

He added, "We want genuine businesses to thrive in this sector. It's essential to maintain a level playing field."

When this correspondent contacted Md Mahmodul Hasan, deputy chief of the Bangladesh Trade and Tariff Commission, for further insights, he declined to comment.