BAT Bangladesh wins Tk1,924cr tax dispute in court battle

British American Tobacco (BAT) Bangladesh has won the final court battle against the National Board of Revenue's (NBR) retrospective claim of Tk1,924 crore in value-added tax and supplementary duty.

The publicly-listed multinational tobacco giant has informed its shareholders that it obtained the certified copy of the Supreme Court's Appellate Division decision on Wednesday.

"As a result, there is no claim against the company in this matter," BAT Bangladesh interpreted the development to its shareholders.

In November 2013, the revenue board's large tax unit served the retrospective VAT and supplementary duty demand against the company by restating Bristol and Pilot brands in the mid-segment rather than the low segment.

Bangladesh taxes higher segment cigarettes more than that for the lower segment ones.

The company continued disputing the tax authority claims.

At one stage of the legal battle, the NBR won in the High Court in March 2016 and then the next month the company moved an appeal to the Appellate Division and obtained a stay on the High Court judgement.

After hearing the appeal, the Appellate Division delivered a verdict in BAT Bangladesh's favour in July 2018.

In March 2020, the revenue board filed a review petition against the Appellate Division judgement, and after holding a hearing in December 2021, the apex court dismissed the petition.

"It was confirmed by the Appellate Division that the retrospective VAT and SD demand of NBR to the tune of Tk1,924 crore against BATB was unlawful and unjustified," BAT said in its disclosure statement.

BAT Bangladesh is also fighting another legal battle with the NBR regarding a 2017-18 claim of Tk2,437 crore in Vat and SD. The company is enjoying Appellate Division stay orders on a High Court judgement that went against the company earlier. 

BAT Bangladesh, which opened its Dhaka factory in 1965, is the largest tobacco company in the country.

Against over Tk28,000 crore in annual gross revenue, it pays over Tk22,000 crore to the government in VAT and supplementary duty.

Out of its Tk6,290 crore in net annual revenue that comes after paying all the Vat and SD, it secured over Tk1,088 crore as net profit in 2020. 

With a total of over Tk24,000 crore in annual contribution to the national exchequer, BAT Bangladesh is the largest taxpayer in the country.

On Thursday, BAT shares closed at Tk650.8 at the Dhaka Stock Exchange.