KATHMANDU, Jan 31: Supermarket Bhatbhateni, accused of conducting business using fake VAT bills, has been ordered by the Supreme Court (SC) to pay more than Rs 1.6 billion to the government. After the order of the Supreme Court, it has been confirmed that Bhatbhateni conducted business through fake VAT bills. Bhatbhateni now has to pay the amount to the government after the SC upheld its previous verdict that the supermarket had evaded tax.
In response to the tax assessment by the Inland Revenue Department (IRD), Bhatbhateni had appealed to the SC. Although the SC validated the tax determined by the IRD in 2020, the recent decision was reached on Tuesday after Bhatbhateni filed another appeal. Following the affirmation by the Supreme Court's full bench of Justices Kumar Chudal, Tek Prasad Dhungana, and Balkrishna Dhakal, Bhatbhateni is now obligated to settle the tax liability.
As per the court's decision, Bhatbhateni is now required to pay more than Rs 1.60 billion to the government. Min Bahadur Gurung is the owner of Bhatbhateni. On January 13, 2020, a joint bench of Chief Justice Cholendra Shamsher JBR and Judge Prakash Kumar Dhungana upheld the IRD's tax assessment, determining that approximately Rs 1 billion was owed. Since then, a penalty of Rs 150 million per annum, totaling Rs 600 million over four years, has been calculated. Additional charges may also be applicable.
Despite the SC’s ruling, Bhatbhateni, having appealed for a review without making the payment, was granted that opportunity. Even after the verdict was re-evaluated, upholding the previous order, Bhatbhateni is now obligated to pay Rs 1.60 billion to the government. After the Supreme Court's decision, it was confirmed that Bhatbhateni used fake VAT bills, said the director general of the IRD, Dirgha Raj Mainali.
VAT evasion is a severe financial offense," stated Mainali. "It has been established that Bhatbhateni utilized fake and counterfeit invoices." Mainali added that the IRD would now proceed to collect the specified amount that Bhatbhateni is required to pay.
In 2021, the Supreme Court allowed a review of the Bhatbhateni Supermarket and Departmental Stores Pvt Ltd tax evasion case. After the Supreme Court's permission, Bhatbhateni's tax evasion case was heard again.
In June 2021, the full bench of Justices Tej Bahadur KC, Bam Kumar Shrestha and Manoj Kumar Sharma allowed the review to re-evaluate the verdict on Bhatbhateni in 2020.
After four years of tax evasion, the IRD ordered Bhatbhateni to pay the amount. Bhatbhateni went to the revenue tribunal against the order of the IRD. After the Revenue Tribunal upheld the decision of the IRD, Bhatbhateni went to the Supreme Court as the last resort. Gurung, the owner of Bhatbhateni, went to the Supreme Court against the tax assessment.
The IRD’s market monitoring team conducted an emergency inspection in January 2011 and investigated Bhatbhateni's purchase account, bills, bank statements, ledgers and other documents. During examination of Bhatbhateni's documents from July 2007 to January 2011, it was found that the supermarket had evaded tax by using fake bills.
The IRD took statements from Bhatbhateni's owner Gurung as well as authorized representative Dan Bahadur Rai and ordered to pay the tax. Gurung went to the Supreme Court against the order of the IRD.
Initially, the Large Taxpayers Office asked Bhatbhateni to pay four years of VAT, claiming that the supermarket had used fake receipts. Against this, Bhatbhateni approached the IRD for an administrative review. The IRD approved the decision of the Large Taxpayer Office.
Bhatbhateni appealed to the revenue tribunal for the second time against the administrative decision made by the Large Taxpayers Office. Bhatbhateni had approached the Supreme Court seeking to appeal against the Revenue Tribunal and the Large Taxpayer Office.