The Chamber Court has suspended a High Court decision ordering Grameen Kalyan, an organisation founded by former interim government chief advisor Muhammad Yunus, to quickly pay the Tk 6.66 billion in taxes claimed by the National Board of Revenue (NBR).
However, the High Court’s verdict on the validity of the tax claim has not been suspended.
On Sunday, Chamber Justice Md Rezaul Haque gave the order after a hearing. He also fixed Dec 13 for the appeal hearing.
The two cases related to Grameen Kalyan were numbered 99 and 101 in the Chamber Court's agenda.
Senior lawyer Abdullah Al Mamun represented Grameen Kalyan.
After the decision, he told bdnews24.com that they had filed a leave to appeal against the High Court verdict, also seeking the suspension of the additional order given to the NBR to collect taxes before determining the validity of the verdict. The court took the matter into consideration and granted the stay order.
Mamun said, “The Appellate Division will decide whether the High Court verdict is right or wrong. The NBR will not be able to collect this Tk 6.66 billion until the full hearing by the Appellate Division and the verdict of the Appellate Division.”
On Sept 10, the High Court bench of Justice Mozibur Rahman Miah and Justice Rezaul Karim dismissed the rule filed by Grameen Kalyan.
In the full judgment published on Oct 12, the court issued a demand notice to the NBR and ordered it to collect the outstanding taxes. At the same time, it withdrew the stay order issued on the matter.
The dispute involves Tk 6.67 billion in unpaid taxes across five tax years, according to state lawyer Abdus Samad Azad.
The outstanding amounts are Tk 1.89 billion for 2012-13, Tk 1.33 billion for 2013-14, Tk 1.14 billion for 2014-15, Tk 1.15 billion for 2015-16 and Tk 1.16 billion for 2016-17.
The total claim stands at approximately Tk 6.67 billion.
Established in 1996, Grameen Kalyan is part of the Grameen family of organisations founded by Nobel laureate Muhammad Yunus, the former chief advisor of the interim government.
Yunus previously served as the organisation’s chairman.
According to case documents, Grameen Kalyan was formed under Section 28 of the Companies Act 1994, using a fund of Tk 3.2 billion received through grants and loans from various donor organisations.
It later entered into a joint investment agreement with Grameen Telecom.
Under the agreement, Grameen Kalyan's money was invested in Grameenphone and Grameen Kalyan was supposed to receive 42.65 percent of the profit earned from that investment. However, a dispute arose over whether this money should be considered as dividends or income from other sources.
The tax authorities were of the view that the money received by Grameen Kalyan was not dividend income; rather, it was income from other sources. As a result, tax at the normal rate would be applicable on that money.
On the other hand, Grameen Kalyan claims that tax was deducted at source while paying dividends from Grameenphone. As a result, if tax is claimed again on the same income, a situation of double taxation will arise.
In 2017, the tax authorities reassessed the matter. According to section 120(1) of the Income Tax Ordinance, the inspector additional commissioner of taxes, exercising the power to amend the order of the subordinate authority, considered the money as income from other sources.
A decision was given on Sept 26, 2017. Later, a total of Tk 6.67 billion was claimed from Grameen Kalyan for five tax years from 2012-13 to 2016-17.
Grameen Kalyan filed two separate writ petitions in the High Court challenging the validity of the tax commissioner's decision. The company also filed a review petition with the tax commissioner.
However, the court's judgment stated that the review petition was dismissed as per the provisions of Section 121A(4)(b) of the Income Tax Ordinance due to non-payment of the recognised tax liability.
Then, on Aug 4, 2024, a double bench of the High Court dismissed the two petitions and delivered a verdict. However, on Aug 29 of the same year, the bench withdrew the verdict.
The reason given was that the second judge of the bench had once contested as deputy attorney general for the government in these cases. Therefore, the documents were sent to the chief justice, considering that the two judgments would be defective.
Later, the chief justice sent the cases to the High Court bench headed by Justice Mozibur for disposal. After the hearing, on Sept 10, the bench of Justice Mozibur and Justice Rezaul dismissed two separate writs filed by Grameen Kalyan.
The full judgment of the High Court said that since Grameen Kalyan and Grameen Telecom are separate legal entities, their income tax should also be considered separately.
Citing the terms of the equity participation agreement signed between Grameen Kalyan and Grameen Telecom on Apl 13, 2011, the court said that according to the agreement, Grameen Kalyan is not a shareholder of Grameenphone and cannot claim any share in Grameenphone's shares. As a result, there is no scope to consider the money received from Grameen Telecom as dividend.
It is legal to tax the money at the normal rate by considering it as income from other sectors and the court referred to this activity as a “classic example of tax evasion”.
The verdict also said that there was no evidence of tax deduction at source in the name of Grameen Kalyan. Similarly, no valid invoice for depositing tax in the government treasury was found in the name of the company. Grameen Kalyan cannot claim to pay its taxes by showing invoices in the name of Grameen Telecom.
In addition, in the case of the 2017-18 tax year, the same type of income was considered as income from other sources and the reference case filed by Grameen Kalyan against that decision was dismissed on Nov 9, 2023.
According to the court's observation, the fact that it did not want to pay taxes in the previous tax years is contradictory to that position.
On Sunday, Grameen Kalyan's lawyer Mamun said that since 2004, Grameen Kalyan has been investing 42.3 percent in the equity shares of Grameen Bank. The investment was made in the name of Grameen Telecom and the dividends were distributed as per the agreement between the two institutions.
According to the lawyer, advance tax was being deducted at source against that investment since 2004 and it was allowed. After a long time, in 2017, the money was considered as additional income of Grameen Kalyan and tax was demanded.
Abdullah Al Mamun said, “If my income is excess income, then where will the advance tax that you have deducted from me go? I cannot pay double tax.”
He claimed that it was necessary to inspect the issue of Grameen Telecom along with Grameen Kalyan. He also claimed that there was no scope for tax evasion as Grameenphone deducted tax at source.
The lawyer said that they are challenging the tax claim based on the inspection of the then government in 2017.