SC stays order for Grameen Kalyan to pay Tk 666 crore

Supreme Court Chamber Court stayed the order issued by the High Court directing Grameen Kalyan, an organization owned by Muhammad Yunus, former chief adviser of the interim government, to immediately pay Tk 666 crore in income tax.

As a result, until the disposal of the appeal, the organization does not have to pay this money. However, the High Court verdict regarding the validity of the income tax claim has not been stayed.

Chamber Judge of the Appellate Division Justice Md Rezaul Haque issued the order on Sunday following two appeal petitions filed by Grameen Kalyan. Abdullah Al Mamun conducted the hearing in court on behalf of Grameen Kalyan.

Earlier, on 10 September, a High Court bench led by Justice Md Mozibur Rahman Miah delivered a verdict dismissing the rules issued following two writ petitions filed by Grameen Kalyan challenging the validity of the income tax claim. On 12 October, the full copy of the verdict was published on the Supreme Court website.

In the full verdict, the court observed that Grameen Kalyan “spared no effort to deprive the NBR of its rightful revenue.”

The court said, “This is a classic example of tax evasion by the applicant. The applicant is trying to evade tax by dragging out a settled matter. It was possible to view the matter differently right after the order was passed on Income Tax Reference (ITR) Application No. 363 of 2019. But by hanging the matter for a long time, the applicant spared no effort to deprive the opponent of its rightful revenue.”

In the verdict, the court showed that although Grameen Kalyan challenged the validity of the income tax of Tk 666 crore imposed for five years from the 2012-13 to 2016-17 assessment years following two writ petitions, the same organization paid similar income tax for the 2017-2019 assessment years. Although it challenged the validity of that income tax in court through ITR number 363 of 2019, it withdrew the application.

The court added, “Going against its own position, the applicant continues to speak on the same issue continuously and has become desperate to demonstrate extreme arrogance toward the order of this court - which in effect amounts to thumbing its nose at the order of the court.”

In the verdict, the court directed the respondents, including the NBR, to take necessary steps in accordance with the law and as quickly as possible to collect the outstanding tax from the applicant.

According to case documents, Taxes Zone-14 of Dhaka issued two separate notifications on 7 and 11 September 2017, demanding Tk 666 crore in income tax from Grameen Kalyan for the 2012-13 to 2016-17 assessment years, giving two weeks for a hearing.

Case details reveal that Grameen Kalyan had an agreement with Grameen Telecom, under which Grameen Telecom gives 42.50 percent of the dividend earned from one of its businesses to Grameen Kalyan.

Later, the income tax authority, re-evaluating the file under Section 120 of the Income Tax Act, found that no tax at source was deducted on that income earned from Grameen Telecom. As a result, authorities demanded Tk 666 crore in income tax.

However, Grameen Kalyan’s lawyer Abdullah Al Mamun said they paid tax at source. Although Grameen Kalyan requested one month to collect necessary documents, the tax authority rejected the request.

Later, when the review application was also rejected, the organization filed two writ petitions in the High Court, challenging the validity of the income tax of Tk 666 crore imposed for five years from the 2012-13 to 2016-17 assessment years.

Following the hearing on the writ petitions, the High Court issued a rule on 26 November 2017, and stayed the effectiveness of the notification demanding income tax for six months. Later, authorities extended the duration of that stay order in several phases.

On 17 October 2023, a High Court bench disposed of the rule by canceling the two notifications of the tax authority. At the time, the Awami League held power, the party that removed Yunus from the post of managing director of Grameen Bank after forming the government in 2009.

However, following the hearing on a leave to appeal filed against that verdict, the Appellate Division on 11 March 2024 directed the rule to be reheard and disposed of on merit. After hearing, on 4 August 2024 the High Court delivered a verdict dismissing the rule issued following the two writ petitions filed by Grameen Kalyan.

Following the fall of Sheikh Hasina in the July Uprising, the High Court withdrew that verdict. At the time, Yunus held the position of chief adviser of the interim government in power. Then the Chief Justice sent the case to a new bench for disposal.

By then, following the election, the BNP formed the government, marking the departure of Yunus’s interim government.