S Alam Group has sent a rejoinder to our story headlined "Two S Alam firms evaded Tk 3,500 crore in VAT, says NBR" published in The Daily Star's online version on June 30, 2024, and print version on July 1, 2024.
We received the rejoinder on July 2, 2024, a day after the Group sent an identical protest note to various newspapers, and about a dozen national and local dailies ran the rejoinder as adverts on July 2, 2024. Below we are running the full, unedited rejoinder (paragraph numbering is ours) along with our response.
The rejoinder
1. It has come to our notice that a renowned newspaper namely The Daily Star has published a news report in its online version on 30.06.2024 at 4:25 PM and subsequently published in its print version on 01.07.2024 with the headline "Two S Alam firms evaded Tk 3,500 crore in VAT, says NBR". In the said News Report, it has been falsely stated that S. Alam Vegetable Oil Limited and S. Alam Edible Oil Limited have unpaid Value Added Tax, and consequent penalty worth over Tk. 7,000 crore which they allegedly evaded through various means in three years between 2019-20 to 2021- 2022. The said news report made further false allegation that during the period from 2019 to 2022, these two companies evaded Tk. 3,538 crore in VAT for which these two companies have been imposed penalty of Tk. 3,531 Crore. In the said news report, it has falsely been alleged that these two companies evaded revenue by showing lower value of raw material purchase in VAT Return than that reported in their annual reports during the three financial years. In the said news report, further false allegation has been made that the said two companies evaded VAT by deducting less amount of VAT at source. It is further falsely alleged that despite selling edible oil to different purchasers, the said two companies did not pay VAT on those sale transactions. In the said news report it is further falsely alleged that in order to evade VAT, soybean and palm oil were sold after producing the items with the ingredients procured from local sources or collected by any other means. It is further alleged that Tk. 8100.39 core worth of raw materials have been procured locally against which the company failed to submit any VAT challan or Bill of Entry.
2. All the above allegations are absolutely false, frivolous, baseless and the said report has been published with ulterior motive. Both the companies submitted reply to the VAT authority on 27.12.2023 and thereafter submitted an explanation to their reply on 18.03.2024. In the explanation dated 18.03.2024, both the companies produced a clear picture that firstly the said two companies deducted VAT at source in accordance with law and no VAT was evaded which is supported by the evidence produced before the Commissioner of VAT.
3. Secondly, Tk. 10,320 Crore and Tk 9,207 Crore were shown in the respective audit report as sale which were actually received as advance money by issuing DO letters in favour of the intending purchasers for future sales which ultimately did not take place and the amounts so received by the aforesaid two companies were ultimately returned to the buyers through their respective bank accounts. The context of advance sale is a common practice in the local market of edible oil and is recognized business practice all over the country. The return of the amount of those advance sales are well documented.
4. Thirdly, the raw materials for production of edible oil are not available in the local market and those have to be imported by way of L/C. All these explanations were sufficiently placed before the Commissioner of VAT with relevant documents. However, the Commissioner of VAT deliberately avoided from reflecting the same in his determination order. However, in the said news report as well as in the order passed by the VAT Commissioner on 09.06.2024, this explanation of the two companies have willfully been suppressed only to scandalize the said two companies. During the proceeding before the VAT Commissionerate, these two companies requested to allow them opportunity of personal hearing as well as for producing their detailed evidence in supporting their explanation.
5. Lastly, on 04.06.2024 both the companies filed applications before the Commissioner of VAT for fixing the date of hearing on 10.07.2024 or any day thereafter. However, the VAT Commissionerate passed an order on 09.06.2024 without affording these two companies the opportunity of hearing which is a clear violation of section 73 read with 85 of the VAT and Supplementary Act, 2012 as well as of principles of natural justice. Interestingly, the Commissioner in his orders both dated 09.06.2024 totally suppressed the fact of filing of application by these companies on 04.06.2024 only to justify his order.
6. These two companies never evaded any amount of VAT whatsoever and we are confident that if we are given a proper opportunity to produce our explanation along with the supporting documents, we will be able to establish the fact that no VAT has ever been evaded. These two companies challenged the said orders of the VAT Commissioner by filing two writ petitions before the Hon'b1e High Court Division of the Supreme Court of Bangladesh on 30.06.2024. The Hon'b1e High Court Division vide order dated 01.07.2024 was pleased to issue Rule Nisi in the said two Writ Petitions. We already informed the newspaper authority about the pendency of the said two Writ Petitions at 02:00 PM on 30.06.2024. However, the Daily Star published the said news report on their online edition at 4.25 P.M on 30.06.2024 and subsequently published in print version on 01.07.2024 totally concealing the fact that the said order passed by the Commissioner of VAT was already sub-judice before the Hon'b1e High Court Division. This amounts to frustration of administration of justice and therefore, is a serious contempt of the Hon'ble High Court Division.
7. We strongly deny and object to the said false, frivolous, baseless and motivated news report published in The Daily Star. We reserve our right to take appropriate legal action against the said false news report.
Our response
Firstly, the content of our news report was based on findings of an audit by the field office of NBR's Customs, Excise & VAT Commissionerate, Chattogram, and a subsequent review by a five-member committee headed by an additional commissioner, Chattogram VAT Commissionerate. The Daily Star simply reported on the VAT Commissionerate's findings that the said two companies have unpaid VAT and consequent penalty worth Tk 7,000 crore.
So the claim in the second paragraph of the rejoinder that "all the above allegations are absolutely false, frivolous, baseless and the said report has been published with ulterior motive" is totally untrue. The Daily Star published the story in public interest, and with no other motive whatsoever.
The VAT demand adjudication order by the VAT Commissionerate came in June 2024, about eight months after the field office submitted its audit report in October 2023. During the audit and review process, the two S Alam firms were given the opportunity to explain the discrepancies in sales and purchase data they presented in their audited annual financial reports and in their VAT returns. This mismatch between two sets of data, presented by the two companies themselves to the authorities, were discovered by the government's VAT wing, and not by The Daily Star.
In its own admission to the VAT authorities, the two companies said that they "presented inflated values in their audited financial reports to avail bank loans," to which the NBR review committee said that "if this is true, they have clearly committed a criminal offence." The review report further said that the related bank has also "acted very unprofessionally" if it sanctioned loans based on an "imaginary and untrue" financial statement.
We reported these findings and observations of the revenue collector found, and not a single word more.
As is our practice in line with internationally accepted standards, we approached their parent company on June 27, 2024, three days before we went online and four days before we ran the report in our print version. Between our first contact and the publication, we have spoken to S Alam Group Executive Director (Finance) Subrata Kumar Bhowmik and the Group's legal counsel Md Mustafizur Rahman multiple times over the phone and exchanged eight text messages via WhatsApp. Md Mustafizur Rahman also sat with The Daily Star at its office on June 29, 2024, to offer their explanations. The meeting lasted about 80 minutes.
In fact, much of the explanations offered in paragraph 3, 4 and 5 of this rejoinder have been included in our story, quoting Mustafizur. We even sent a draft of his comments before publication, asking him to see if it reflected the company's version, and he said by phone "it's okay" and did not suggest any changes, deletion or addition.
To be clear, we dedicated 442 words for the Group to clarify their position in our story. This is only from our telephonic and face-to-face conversations with the Group representatives. If we count the 347 words that we also have incorporated in our story from the NBR's VAT wing report as their explanation on the VAT evasion allegation, we have dedicated 789 words for the Group in our 2830-word story.
About two hours before we were ready to go online, S Alam Group sent a notice asking us not to publish the story since they have filed writ petitions against the orders of the VAT Tribunal. Since we did not comment upon or discuss the merits of the writ petition, we went ahead with our publication which reports on the findings of the NBR field office as provided in its orders.
The Daily Star never engages in "motivated" reporting as the last paragraph of the rejoinder falsely claims. We repeat, we publish stories in public interest, and a story on allegations of VAT evasion worth Tk 3,538 crore and consequent penalty amounting to another Tk 3,531 crore have huge public interest.
The rejoinder does not dispute any facts or present any proof to counter the content of our story. We stand by our report.