The Appellate Division’s chamber court has suspended the effect of a High Court directive ordering the National Board of Revenue (NBR) to recover Tk666.91 crore in disputed taxes from Grameen Kalyan, pending further proceedings.
However, the court has not stayed the High Court’s ruling on the legality of the tax demand itself.
Chamber Judge Justice Md Rezaul Haque passed the order on Sunday after a hearing and scheduled the appeal for December 13.
Senior lawyer Abdullah Al Mamun appeared for Grameen Kalyan.
Speaking to bdnews24.com after the hearing, he said the organisation had filed a leave-to-appeal petition challenging the High Court verdict and sought a stay on the additional directive to recover the taxes before the Appellate Division could determine the validity of the ruling.
“The Appellate Division is the authority to determine whether the High Court ruling is correct. Until the Appellate Division hears the appeal fully and delivers its judgment, the NBR cannot recover this Tk666 crore for now,” he said.
On September 10, a High Court bench comprising Justice Md Mojibur Rahman Mia and Justice Rezaul Karim rejected separate writ petitions filed by Grameen Kalyan. In its full verdict, published on October 12, the court directed the NBR to issue demand notices and recover the outstanding taxes, while withdrawing an earlier stay on collection.
According to state lawyer Abdus Samad Azad, the disputed tax demand covers five financial years, from 2012–13 to 2016–17.
The amounts are Tk189.25 crore for 2012–13, Tk132.77 crore for 2013–14, Tk114.02 crore for 2014–15, Tk115.23 crore for 2015–16 and Tk115.63 crore for 2016–17, bringing the total to Tk666.91 crore.
### Background of the dispute
Established in 1996, Grameen Kalyan is an organisation within the Grameen family. Muhammad Yunus, former chief adviser to the interim government, is its founder and former chairman.
According to court documents, the organisation was formed with funds of Tk320.18 crore received as grants and loans from various donor agencies.
A subsequent agreement between Grameen Kalyan and Grameen Telecom provided for investment in Grameenphone using funds from Grameen Kalyan. Under the arrangement, Grameen Kalyan was entitled to receive 42.65% of the profits generated from the investment.
The dispute centred on whether the money received by Grameen Kalyan should be treated as dividend income or income from other sources.
The tax authorities maintained that the receipts were income from other sources and therefore subject to tax at the applicable general rate. Grameen Kalyan, however, argued that tax had already been deducted at source when the dividends were paid, and that taxing the same income again would amount to double taxation.
In 2017, the tax authorities reviewed the matter. Exercising their power under Section 120(1) of the Income Tax Ordinance, the inspecting additional tax commissioner classified the receipts as income from other sources. The authorities subsequently raised the tax demand for the five assessment years.
Grameen Kalyan challenged the decision through two separate writ petitions before the High Court and also sought a review from the tax commissioner. The review application was rejected under the applicable legal provisions because the organisation had not paid the admitted tax liability, according to the court verdict.
The High Court initially dismissed the two writ petitions on August 4, 2024, but withdrew the judgments on August 29 after concerns emerged over a judge’s previous involvement in the cases as a deputy attorney general representing the government. The matters were subsequently assigned to another High Court bench.
In its latest full verdict, the High Court held that Grameen Kalyan and Grameen Telecom were separate legal entities and that their tax liabilities had to be assessed independently.
Referring to an equity participation agreement signed between the two organisations on April 13, 2011, the court observed that Grameen Kalyan was not a shareholder of Grameenphone and had no direct claim to its shares. Therefore, the money received from Grameen Telecom could not be treated as dividends from Grameenphone, the court said.
The High Court ruled that classifying the receipts as income from other sources and imposing tax at the general rate was lawful. It also described the arrangement as a “classic example of tax evasion”.
The court further said it had found no evidence that tax had been deducted at source or deposited into the government treasury in the name of Grameen Kalyan. Tax payment documents issued in the name of Grameen Telecom could not establish that Grameen Kalyan had paid its own tax liability, it said.
The verdict also referred to a similar tax assessment for the 2017–18 financial year. A reference case filed by Grameen Kalyan challenging that assessment was dismissed on November 9, 2023.
Abdullah Al Mamun said Grameen Kalyan had invested in equity shares of Grameen Bank since 2004, with the investment made in the name of Grameen Telecom and dividends distributed under an agreement between the two organisations.
He argued that advance tax had been deducted at source against the investment since 2004 with the authorities’ approval. The tax demand was raised only in 2017, when the receipts were reclassified as additional income, he said.
“If my income is treated as additional income, where will the advance tax you deducted from me go? I cannot pay tax twice,” he said.
The lawyer also argued that the tax authorities should have examined Grameen Telecom’s position alongside that of Grameen Kalyan. He maintained that there was no scope for tax evasion because tax had been deducted at source from the relevant payments.
Grameen Kalyan is continuing its legal challenge to the tax demand, he added.
The chamber court’s latest order temporarily prevents the NBR from recovering the disputed amount under the High Court’s additional directive. The underlying legal dispute will now proceed before the Appellate Division.
