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Several hundred crore taka VAT evaded by Indian Power Mech


Published : 10 Aug 2022 09:46 PM | Updated : 10 Aug 2022 09:46 PM

Power Mech Projects Limited, a foreign company operating in the power sector of Bangladesh, allegedly evaded several hundred crores of taka in value added tax (VAT) in the last seven years. 

The Indian company is paying no heed to the instruction of the Central Intelligence Unit (CIC) of the National Board of Revenue (NBR) to submit various documents, sources in the revenue department said. 

They said CIC sent letters to the company at least six times to furnish the documents but all those fell flat.

Bangladesh Post made several futile calls to reach S Kishore Babu, Chairman and Managing Director of Power Mech Projects Limited, over the phone for his version about the alleged VAT evasion. Later, a message was sent to him seeking his comments, but he did not respond. 

When contacted, AKM Badiul Alam, Director General of the Central Intelligence Cell, declined to make any comment on the matter pleading that he has just joined the cell and does not know details about it.

Dr Iftekharuzzaman, Executive Director of Transparency International Bangladesh, suggested initiating a legal process against the Indian company to realise the VAT in arrears. 

“No one is above the law. Foreign companies operate within a framework in this country. So according to the rules, the Bangladesh government must collect revenue from the company,” he said.

The sources said Power Mech Projects secured several contracts for civil and architectural work on a number of projects, including Rampal Coal Power Plant in Bagerhat and Combined Cycle Power Plant in Bhola. 

According to them, the Indian company received a $70 million contract for civil and architectural work of all buildings, structures and associated work for the 1320MW power plant under construction in Rampal, near the Sundarbans, in January 2020.

Power Mech Projects also received a letter of award/work orders for covers, design, assembly, manufacturing, engineering, erection, testing, commissioning and handing over of steam turbine and aux generator, aux pumps, etc. for the power plant.

The total price of the contract awarded by Indian company BHEL (Bharat Heavy Electricals Limited), the engineering, procurement and construction contractor of the project, stood at around $16 million.

Besides, it received a letter of intent/work orders for erection, testing and commissioning of 220MW (Gas)/212 MW (HSD)-based dual fuel Combined Cycle Power Plant in Bhola involving approximately Tk 841.2 million.

The Indian company completed several other assignments. However, they did not pay any VAT to Bangladesh’s national exchequer since 2015-16 financial year. Currently, they do not have any running projects. 

CIC sent letters to Power Mech Projects at least six times asking them to submit papers like VAT/11/11Ka/VAT-6.3, copy of import bill of entry, invoice, a rent agreement for office establishment, project contract copy, annual audit report and other related documents. But they did not pay any heed.

CIC officials repeatedly asked the Power Mech Projects representative, who communicates with them, to furnish all these papers needed for the completion of the ongoing VAT audit of the company, but he did not respond to the instruction.

In the latest development, CIC wrote to the company on May 24 giving them June 2deadline to submit the documents and this time too they remained unmoved. The inaction of Power Mech Projects prompted the revenue authorities to write to BHEL on June 2 last seeking their cooperation. 

The letter said that initially it has been proved that Power Mech Projects did not clear VAT to the Bangladesh government. 

In the letter, Central Intelligence Cell accused the company authorities of making deliberate delay in submission of the required documents and reminded that both goods or service providers and receivers are legally bound to collect VAT or VAT at source and deposit the money to the national exchequer.

An official of the Rampal coal power plant projects said Power Mech Projects is doing most of the work for BHEL, which was awarded an EPC contract involving $1.6 billion for the Rampal power plant.

The Bangladesh Post correspondent failed to communicate with BHEL’s general manager and project manager, the head of the company’s Bangladesh operation, despite several visits to his office. His mobile phone was also found switched off. 

Pradeep Aswani, Manager (Finance) of BHEL and second top official of the company in the Bangladesh office, told the Bangladesh Post, “Power Mech Projects is our contractor. They’re still working on the Rampal power plant project.”

He, however, declined to provide any further information stating that he joined the Dhaka office eight months ago.