- The Supreme Court’s Appellate Division ruled that products made in economic zones are not exempt from VAT, overturning a previous High Court decision.
- The ruling was delivered by a three-member bench on March 3 and released on the Supreme Court’s website last week.
- The court upheld a 2020 circular by the National Board of Revenue that removed VAT exemptions for certain goods.
- This decision nullified a 2021 High Court ruling favoring companies in Meghna Group’s City Economic Zone.
- The appeal was filed by the NBR against the High Court’s judgment responding to writ petitions from companies linked to Meghna Group.
- These companies had a 10-year tax exemption granted in 2019, effective until 2026, but a 2020 SRO excluded key commodities from this exemption.
- Companies argued they set up operations based on promised long-term fiscal benefits under the BEZA Act, 2010.
- The court rejected the argument that BEZA’s directive could override the finance ministry’s authority.
- Tax exemptions are discretionary and not absolute entitlements, subject to statutory conditions.
- The government can amend, withdraw, or modify exemptions based on public interest or policy changes.
- The doctrine of promissory estoppel does not apply to fiscal policy decisions without statutory guarantees.
- The Ministry of Finance acted within its legal authority in issuing the 2020 SRO.
- Tax exemptions are policy tools and can be withdrawn unless contractually assured.
- Exemptions are meant to encourage investment but must be balanced against public interest.
- Governments can review or withdraw incentives if they cause market distortions or benefit concentration.
Source: newagebd.net
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
