Two state-owned corporations are now engaged in a tussle over refund and payment of arrear value added tax (VAT).
The Biman Bangladesh Airlines has been demanding refund of the money it had paid as VAT to the Shadharan Bima Corporation (SBC) along with aviation premium insurance until 1998 under an exemption it received from paying VAT since 2013.
The SBC, on the other hand, has been pressing the Biman to pay the arrear VAT amount for the period between 1998 and 2013.
Biman argued that if the government could exempt it from the VAT payment since 2013, why it should not be treated effective from the very beginning. It also argued that it was a VAT-exempted organisation as defined in the existing VAT law (clause no-3).
SBC officials said Biman did not pay a VAT of around Tk 138 million after 1998 under different pretexts and by taking recourse to legal actions, before getting the exemption from paying VAT against reinsurance (abroad) in 2013.
The non-payment of VAT by Biman has forced the SBC to become a defaulter in the eyes of the NBR, now risking attachment of its bank account, they added.
SBC's deputy general manager Jakir Hossain told the FE that in the recent months, the SBC requested the Biman authorities several times to pay the outstanding VAT for resolving the stalemate.
But they (Biman) did not respond positively and rather asked the SBC to refund the money it had paid as VAT on insurance premium so far, he said.
"I think an inter-ministerial meeting can help find a solution to resolve the standoff," he suggested.
The SBC retains only two per cent of Biman's aviation insurance premium and the rest 98 per cent is being reinsured abroad, officials said.
Biman filed a writ petition with the High Court where the NBR and the SBC made defendants. The writ petition remained pending until now while the NBR was not responding positively about the VAT payment, another SBC official said.
On the other hand, the NBR continued to put pressure on the SBC for paying the due VAT against the aviation insurance.
Failing to realise the VAT despite repeated reminders, the NBR had suspended the bank accounts of the SBC some eight years back.
But on request by the top officials of the SBC, the NBR had withdrawn the account suspension order a day after it was issued.
Managing director of SBC Syed Shahriyar Ahsan told the FE earlier that the corporation is entitled to collect VAT against aviation insurance premium and deposit it to the NBR.
"If you (Biman) do not pay, there is no scope of paying it from our own pocket," he said.
In a meeting earlier at the NBR, the SBC was told that under the existing rules, the corporation is bound to pay VAT by colleting from its clients. Thus, it has to collect the money from the Bimnan and pay it to the exchequer.
Contacted over phone, a senior Biman official on condition of anonymity said that Biman as a VAT exempted company was not liable to pay the tax. He, however, did not elaborate further on what basis it asked the SBC to refund the money it had paid as VAT earlier.