Six showrooms of the Bangladeshi apparel and tailoring brand Top Ten have evaded Tk45.76 crore in value-added tax by underreporting sales and failing to deposit mandatory VAT deductions, according to audit reports.
Audits conducted by multiple units of the National Board of Revenue (NBR) found major discrepancies between the company’s commercial records and the amounts declared in its VAT filings.
The revenue board has filed six separate VAT-evasion cases against the company and has served final demand notices.
The Central Intelligence Cell audited three of the cases, while the Dhaka South VAT Commissionerate and Cumilla VAT offices reviewed the remaining outlets.
All six audit reports identified suppressed sales, unpaid VAT on tailoring services and non-compliance with rent-related VAT requirements.
According to the audit findings, Top Ten Fashion Ltd (New Market) evaded Tk30.76 lakh, Top Ten Mart Ltd (New Market) Tk13.98 crore, Top Ten Fabrics & Tailors Ltd (New Market) Tk21.54 crore, Top Ten Mart Ltd (Dhanmondi) Tk65.86 lakh, Top Ten 11 (Cumilla) Tk10.48 lakh, and another Cumilla outlet Tk9.16 crore.
Combined, the six cases amount to Tk45.76 crore in VAT evasion, excluding fines and interest.
“We have already issued final demand notices against the six cases. In response, the Top Ten authority has sought 15 days to explain,” said Jewel Ahmed, commissioner of the Dhaka South VAT Commissionerate.
“Failure to provide a proper explanation will lead to legal action against the brand,” he added.
NBR documents showed that one showroom recorded fabric sales of Tk48.37 crore and tailoring fees of Tk16.12 crore in the 2019–20 fiscal year. However, in its VAT returns the company reported fabric sales of only Tk9.33 crore and tailoring fees of Tk1.51 crore.
This means the company understated fabric sales by Tk39.04 crore and tailoring fees by Tk14.61 crore.
The applicable VAT on the understated amounts stood at Tk2.72 crore and Tk1.32 crore – a total of Tk4.05 crore.
In the same fiscal year, the company also failed to pay Tk3.33 crore in source VAT and Tk87 lakh in rent-related VAT.
The company failed to provide any documentation proving payment of the outstanding Tk8.25 crore in VAT, which the report said clearly establishes the offence of VAT evasion.
The unpaid VAT and supplementary duties are recoverable under the Value Added Tax and Supplementary Duty Act 2012 and the Value Added Tax and Supplementary Duty Rules 2016.
A senior official of the Dhaka South VAT Commissionerate said delays in payment would trigger penalties under the law, increasing the company’s total liabilities to Tk70 crore.
So far, the Top Ten authority has paid only Tk30.76 lakh against the outstanding dues.
Md Mahbub, assistant general manager of Top Ten, alleged that NBR officials “prepared the audit documents as they wished”.
“Our legal team is working on the issue and we will submit our explanation on time,” he said.
