Danish Condensed Milk Bangladesh Limited, a concern of Partex Group, evaded value-added tax payments amounting to Tk3.24 crore in fiscal years 2021-22 and 2022-23, according to an investigation by the Large Taxpayers Unit, VAT (LTU-VAT).
As per an audit report prepared by the unit, the leading diary product manufacturer also unlawfully claimed input tax credits during the same two-year period.
Officials of the National Board of Revenue (NBR) confirmed that the report indicates how Danish Condensed Milk deliberately availed illegal rebates and withheld VAT payments, resulting in significant revenue loss.
Besides, NBR officials allege that even though these findings have been confirmed, the company is still delaying its due payments.
The LTU-VAT commissionerate had formed an audit committee for the company back in 2023 after finding discrepancies in its accounts. The committee then submitted its report later that same year.
The report revealed that although the cost of raw materials used in producing condensed milk increased 7.5 per cent, the company did not submit a revised input-output coefficient as required.
Instead, it continued using the previous coefficient for a prolonged period and claimed excessive input tax credits, the report said.
As such, the company unlawfully claimed input tax rebates of Tk3.62 crore over the period without updating its VAT returns.
The committee recommended cancelling these illegal rebates under the VAT and Supplementary Duty Act, 2012.
Additionally, Danish Condensed Milk deducted VAT at source amounting to Tk24 lakh against various purchases but failed to deposit the amount into the government exchequer.
Altogether, the total VAT evasion during the period stood at Tk3.24 crore.
LTU-VAT Commissioner Atiqur Rahman told TIMES of Bangladesh the VAT evasion identified by the audit has been officially accepted and acknowledged by the company itself.
Therefore, no separate hearing was required to prove the allegations.
However, Rahman alleged the company is delaying its due payments.
He informed that Danish Condensed Milk was sent a final reminder in December, warning that legal action will follow if the dues are not cleared.
“As part of legal measures, we may initially freeze the company’s bank accounts if payment is not made in accordance with the law,” Rahman said.
Audit officials noted the irregularities were not isolated accounting errors but occurred over an extended period through the same method.
Citing these findings, the LTU-VAT commissionerate had initially issued a show-cause notice to Danish Condensed Milk on 24 August, 2023.
In a written reply in October last year, Danish Condensed Milk agreed to repay the evaded sum and informed that it already deposited Tk32 lakh.
The company had also requested permission to pay the remaining Tk2.92 crore in 18 instalments.
But following delays in instalment payments, the LTU-VAT commissionerate again sent a reminder in December.
Asked for a comment, Sayedul Azhar Sarwar, head of business at Danish Condensed Milk, said they received the notice, which allows three months to respond.
“We will submit our reply within the stipulated time,” he said, adding that they already paid part of the amount and discussions are ongoing on how to pay the rest.
