Nepal | April 07, 2020

SC indicts Bhatbhateni for tax evasion

Umesh Poudel

Kathmandu, January 15

Bhatbhateni Supermarket and Departmental Store, a reputed shopping chain, has been found to have evaded income tax and value added tax worth Rs 724.04 million since 2007.

Hearing the case filed by different firms against the decision of the Revenue Tribunal that they should pay the determined tax amount, a division bench of Chief Justice Cholendra Shumsher JB Rana and Justice Prakash Kumar Dhungana on Monday concluded that five firms, including Bhatbhateni Supermarket, had evaded taxes and directed the government to initiate legal proceedings for tax collection from the companies.

The other companies against which the SC made the decision in cases of tax evasion include Arun Intercontinental, AIT Pvt Ltd, Shankar Oxygen Gas and BS Baniya Store and Firm. The apex court had decided that companies had evaded income tax and value added tax.

As per the SC decision, the five companies have evaded tax worth Rs 787.32 million. Bhatbhateni evaded income tax worth Rs 485.56 million and VAT worth Rs 238.48 million. Arun Intercontinental dodged income tax worth 20.08 million and VAT worth Rs 4.75 million. AIT evaded VAT worth Rs 24.18 million. Shankar Oxygen Gas is liable to pay income tax worth Rs 12.91 million and VAT worth Rs 1.06 million and BS Baniya Store and Firm evaded income tax worth Rs 208,427 and VAT worth Rs 115,096.

The SC had rejected the claims made by the defendants that they did not use fake VAT bills or evade income tax.

Bhadrakali Pokharel, spokesperson for SC, confirmed that the apex court had ordered the aforementioned companies to pay the income tax, VAT, as well as fines and interest.

“The responsible government agencies will now have to determine the fines and interests on the tax amounts and adopt legal ways of collecting the total amount from these companies,” Pokharel said.

She added that it would take a few days before the Supreme Court would issue the full text of the final verdict.

In February 2011, the Inland Revenue Department had raided Bhatbhateni Supermarket and found that it had been evading taxes by presenting fake VAT bills. After reviewing the documents from 2007 to 2013, the department had said that the store was liable to pay a total of Rs 724.04 million, excluding interest and penalty, to the government in back taxes.

Similarly, the department had raided the office of AIT Pvt Ltd in December 2009 and found that the company had been conducting transactions with fake VAT bills.

Binod Bahadur Kunwar, director general of IRD, said the department would take necessary action to collect the income tax and VAT from the companies after they received the full text of the final verdict from the SC.

Based on the information many companies had been increasingly issuing fake VAT bills, the IRD had formed a committee led by the then deputy director general of IRD Laxman Aryal on 23 December 2009. The committee had found that 518 companies, including the aforementioned firms, had evaded income tax worth Rs 3.33 billion, VAT worth Rs 3.7 billion and Rs 20.50 million in excise between 2007 and 2013. The cases of the remaining companies are sub-judice.


A version of this article appears in print on January 16, 2020 of The Himalayan Times.


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