Amid severe criticism for grabbing multiple banks against Chattogram-based S Alam Group, the National Board of Revenue (NBR) has found evidence of value-added tax (VAT) evasion amounting to Tk 14.14 billion against 10 companies of the industrial conglomerate.
This information was revealed during an investigation by the Chittagong Customs, Excise, and VAT Commissionerate.
A preliminary investigation report in this regard was finalised last week.
The companies involved are: S Alam Steels, Chemon Ispat, S Alam Refined Sugar, SS Power, S Alam Power Plant, S Alam Properties, S Alam Cold Re-Rolling Mills, Masud Printing and Packaging, S Alam Bag Manufacturing Mills, and S Alam Cement Industries.
Additionally, in recent months, the same VAT commissionerate found evidence of VAT evasion totaling at Tk 35 billion against two other companies of the group, S Alam Vegetable Oil and S Alam Super Edible Oil. The matter has now reached the courts.
In total, VAT officials have discovered evidence of VAT evasion amounting to nearly Tk 50 billion against 12 companies of the S Alam Group.
VAT evasion is considered a more serious offence than income tax or customs evasion because VAT is collected from consumers. Evasion means that consumers' money is not deposited into the government's treasuryZahid Hussain, former lead economist, World Bank Dhaka office
In addition to VAT issues, investigations are ongoing regarding income tax evasion by the group's head, Saiful Alam, and his family members.
Following the student-people uprising, former prime minister Sheikh Hasina left the country on 5 August. During her administration, the S Alam Group was one of the major beneficiaries. Saiful Alam and his family have faced various allegations over the past decade, including bank takeover and money laundering, with claims that these activities were facilitated by state support.
Speaking to Prothom Alo, former lead economist, World Bank Dhaka office, Zahid Hussain, said VAT evasion is considered a more serious offence than income tax or customs evasion because VAT is collected from consumers. Evasion means that consumers’ money is not deposited in the government’s treasury.
He said that VAT evasion represents two types of offences: the failure to deposit due revenue into the government treasury and consumer deception.
Zahid Hussain suggested that those guilty of VAT evasion should face exemplary punishment, including fines and possible imprisonment for defrauding consumers.
VAT evasion details
On 19 August, a 20-member investigation team was formed to investigate VAT evasion by 18 companies of the S Alam Group, most of which fall under the jurisdiction of the Chittagong commissionerate. The team was given one month to audit the sales and production records of these companies for the past five years.
After the initial investigation, evidence of VAT evasion was found against 10 companies, with the most significant being S Alam Refined Sugar Limited in Ichhanagar, Chattogram, which evaded Tk 7.55 billion. S Alam Cold Re-Rolling Mills in Patiya was second, evading Tk 2.16 billion. SS Power in Bashkhali, which operates a 1,300-megawatt power plant, evaded Tk 2 billion.
Other companies are: Chemon Ispat (Tk 1.47 billion), S Alam Steels (Tk 560 million), S Alam Power Plant (Tk 210 million), S Alam Cement Industries (Tk 105 million), S Alam Properties (Tk 600 million), Masud Printing and Packaging (Tk 200 million), and S Alam Bag Manufacturing Mills (Tk 3.1 million).
The Chattogram VAT commissionerate has issued notices to these companies, but there is no response from them yet.
Investigations are also ongoing for other companies within the group, including S Alam Steel (Unit-2), New S Alam Shoes and Burmese, Autobots Automobiles, Platinum Spinning Mills, Grand Spinning Mills, Infinity CR Strip Industries, and Ocean Resort.
Commissioner Syed Musfiqur Rahman from the Customs, Excise, and VAT Commissionerate said audits of S Alam Group companies are part of standard operations to detect VAT evasion, and any identified evasion will be collected legally. Legal action would be taken if necessary.
Previous two firms evaded Tk 35 billion in VAT
In June, VAT officials found evidence of around Tk 35 billion of VAT evasion against two companies of the S Alam Group: S Alam Vegetable Oil and S Alam Super Edible Oil.
These companies hid their sales information from the fiscal year 2019-20 and committed VAT evasion by underreporting their sales in returns.
The VAT evasion amounts were Tk 19.11 billion for S Alam Vegetable Oil and Tk 16.20 billion for S Alam Super Edible Oil. This matter is also pending in court.
Ongoing tax evasion investigation of S Alam
After the new government took power, the NBR's Central Intelligence Cell (CIC) began investigating tax evasion among the country's top six industrial groups. Information regarding the bank accounts of Saiful Alam, his family members, and their businesses has been requested.
It was found that accounts in six banks associated with the S Alam Group and its family members held deposits of Tk 259.65 billion. These banks are: Islami Bank, Commerce Bank, Al-Arafah Islami Bank, First Security Islami Bank, and National Bank, all of which were under the control of the S Alam Group.
Moreover, an FDR of Tk 10 million was found under the name of the family’s domestic worker, Marzina Akhtar.
Saiful Alam, better known as S Alam, spends most of his time abroad and has not been publicly seen since the fall of Sheikh Hasina's government.
* This story, originally published in print and online edition, has been rewritten in English by Rabiul Islam