The National Board of Revenue (NBR) has identified Tk139.46 crore in unpaid value-added tax (VAT) by Navana Pharmaceuticals Limited, according to an official audit.
The review, conducted by the Large Taxpayer Unit (VAT) of the NBR, focused on the company’s transactions for the 2021–22 and 2022–23 fiscal years. The total includes principal VAT as well as accrued interest and penalties.
Syed Atikur Rahman, commissioner of LTU-VAT, told TIMES of Bangladesh that significant discrepancies were found during the audit, leading to a formal VAT evasion case against the firm.
He said the company attempted to delay payment by filing a writ in the High Court, but the court ruled in favour of the NBR, ensuring the evaded revenue cannot be avoided.
“Once the full High Court verdict is issued, necessary measures will be taken to recover the outstanding dues,” he added.
The audit report highlighted major inconsistencies between the company’s reported sales, filed returns, and financial statements. It noted underreporting of actual sales, inadequate records of production and supply, discrepancies between software-based and manual accounts, failure to submit sales data in the prescribed format, and mismatches between produced, supplied goods and declared VAT.
“These irregularities concealed the actual taxable sales and pose a risk to government revenue collection,” the report stated.
A subsequent re-audit following the company’s request confirmed that most of the initial observations remained valid. The report concluded that discrepancies between sales records, returns, and financial statements were not resolved, and the explanations and documents provided by the firm were insufficient to address the issues.
Navana Pharmaceuticals managing director Dr Sayeed Ahmed declined to comment, saying he had recently assumed the position.
Irregularities found by NBR
NBR has uncovered major discrepancies in sales records, incorrect data submission, off-record transactions, and non-payment of applicable taxes at Navana Pharmaceuticals.
The audit highlighted that the company’s reported sales, financial statements, and filed returns were inconsistent.
Officials stressed that accurate record-keeping in prescribed formats is mandatory, particularly for large firms, and violations can undermine revenue collection.
Navana Pharmaceuticals, based in Rupganj, Narayanganj, responded in writing, noting that during the audit period, the company exported 105 consignments to countries including Sri Lanka, Myanmar, Vietnam, Cambodia, Georgia, Kenya, and Togo.
The firm argued that under Section 21 of the Value Added Tax and Supplementary Duty Act, 2012, exported products are not subject to VAT, effectively exempting around Tk6.25 crore.
The company also claimed that the audit team calculated VAT based on the assessable value in the monthly VAT-9 return, including bills of export. Navana contended that exported goods should have been excluded, which would reduce VAT to around Tk9.51 crore.
An additional Tk3.26 crore claimed by the authorities was, according to the company, eligible for cancellation. Supporting documents, including bills of export and PRCs, were submitted to the NBR.
However, the audit committee stressed that all sales data must be fully recorded in the sales register. Their review found a discrepancy between the company’s total export value in the management information system (around Tk41.67 crore) and the sales register (aroundTk63.43 crore), forming the basis for the disputed VAT.
The committee also questioned production figures for the drug Navatrim Suspension. The company said an accounting error led to overstated production of around 15.58 crore units, valued at around Tk286.21 crore, with VAT of Tk42.93 crore.
Navana clarified that actual production was 12.98 lakh units, worth around Tk2.38 crore, with VAT of Tk35.77 lakh. The drug is not sold domestically and is produced solely for tenders and export.
The audit committee concluded that the sales register is a key record, and repeated errors cannot be accepted.
They noted inconsistencies between material usage, production, purchase, and inventory data versus sales accounts, and found no clear information on whether raw materials were sourced outside documented imports.
Based on these findings, the committee recommended maintaining the previous VAT claim.
