Bench:

Mr. Justice Md. Ruhul Quddus and

Mr. Justice S.M. Maniruzzaman

Writ Petition Number 2697 of 2014

Seagull Hotels Ltd., Hotel Motel Zone, Cox’s Bazar Beach, District- Cox’s Bazar

.......... Petitioner

-Versus-

The Commissioner of Customs, Excise and VAT Commissionerate, Chittgong and others

....Respondents

Mr. Mustafizur Raham Khan with Ms. Sumaiya Ifait Binte Ahmed with Mr. Shafayet Ahmed, Advocates

.........for the petitioner

Mr. Amit Talukder, Deputy Attorney General with Mr. Ali Akbor Khan, Mrs. Afroza Nazneen Akhter and Mr. Md. Rayhan Kabir, Assistant Attorney Generals

.......for respondent number 1

Judgment on 16.03.2023

S.M. Maniruzzaman, J:

In this rule, the respondents have been called upon to show cause as to why the Memo Number 4th/A(12)05/Mushak/Seagull Hotels/56-Dhara/14/63 dated 23.02.2014 (Annexure-A) issued by the Assistant Commissioner, Customs, Excise and VAT, Cox’s Bazar Division (respondent number 2) under rule 43 of the Value Added Tax Rules, 1991 demanding Taka 22,89,874/- from the petitioner should not be declared to have been issued without lawful authority and is of no legal effect and or such other or further order or orders should not be passed as to this Court may seem fit and proper. At the

time of issuance of the rule the operation of the impugned Memo was stayed by this court for a limited period which was subsequently extended from time to time.

Facts, relevant for disposal of the rule, are that the petitioner is a private limited company incorporated under the Companies Act, 1994 and is engaged in the business of a deluxe hotel in Cox’s Bazar. It has been operating four restaurants, namely, Rangdhanu, Parijat, Niharika and Abashar and a bar namely Mahua in the hotel premises. The restaurants and the bar are situated in separate and distinct places of the hotel. Alcoholic beverages are served only in the bar. It recovered and paid Value Added Tax (in short, VAT) at the rate of 15% from its customers rendering service from the restaurants at the time in question. Moreover, as per service rendered through the bar, the petitioner also received and paid Supplementary Duty (in short, SD) at the rate of 10% and paid to the government through treasury challan. Suddenly, Revenue Officer (respondent number 3) issued a demand letter dated 07.11.2010 upon the petitioner directing to pay an amount of Taka 3,27,973/- as SD for the period of July, 2010 to August, 2010. He issued a similar demand on 24.03.2011 directing to pay SD and VAT of an amount of Taka 6,05,650.37/- for the period of September, 2010 to December, 2010 and issued further demand on 26.07.2011 directing to pay an amount of Taka 13,28,468.36/- as SD and VAT for the period of January, 2011 to June, 2011 (Annexure- B, B-1 and B-2 respectively).

In response to the demand dated 26.07.2011, the petitioner made a reply dated 22.08.2011 to the Commissioner, Customs, Excise and VAT Commissionerate, Chittagong (respondent number 1) contending that the VAT and SD were received only in relation to the services rendered by the bar, which was the only place in the hotel where alcoholic beverage were served. The petitioner realized VAT only against the service rendered in its restaurants and paid it accordingly.

Respondent number 2 without considering the said reply issued a demand notice on 08.10.2012 (Annexure-D) upon the petitioner referring to the earlier 3(three) demands (Annexure- B, B-1 and B-2) and directed to pay total unpaid VAT and SD of Taka 22,89,874.34 for the period of July, 2010 to June, 2011 within 7 (seven) days from receipt.

In response thereto, the petitioner made another reply dated 26.12.2012 (Annexure-E) contending that it had received VAT and SD from its customers only in relation to the services rendered through the bar, which was the only place in the hotel where alcoholic beverages were served. The petitioner recovered VAT only against the service rendered through its restaurant. It was further contended that the another