Highlight of the Chapter :

9.01
9.02
Define VAT. As per the provisions
of the Value Added Tax Act, 1991
who will pay the value added tax?
(2!",(211"
#hat are the ar$u%ents for and
a$ainst VAT?(2&"
9.03
9.04
Define VAT accordin$ to the VAT
Act, 1991 with exa%ple. 'xplain the
different types of taxes char$ed under
VAT Act, 1991. (29" (riefly
descri)e the advanta$es and
disadvanta$es of VAT. (212"
9.01. Define VAT. As per the provisions of the Value Added Tax Act, 1991 who will
pay the value added tax?(00!",(011"
Answer# VAT is a tax, which is char$ed on the *increase in value* of $oods and services at each
sta$e of production and circulation. +t is levied on the added value that results fro% each
exchan$e. +t is also char$ea)le on the value of all i%ported $oods. +t differs fro% .a sales tax
)ecause a sales tax is levied on the total value of the exchan$e. VAT is a si%plified and
transparent syste% of tax in which tax is levied on the value additions, at each sta$e in the
production,distri)ution with provision of set,off of tax paid on earlier sta$e.
i" The $xford Dictionary of %urrent &n'lish # Value Added Tax %eans -a tax on the a%ount
)y which the value of an article has )een increased at each sta$e of its production-.
ii" D. (. )tout. Value added tax *is a %ultiple tax i%posed at a flat rate upon the annual sales
proceeds of a co%pany less all its purchases fro% other )usiness (i. e., excludin$ direct i%ports".
iii" *. +. *hatia . -VAT is a tax not on the total value of the $oods )ein$ sold, )ut only on the
value added to it )y the last seller. The seller, therefore, is lia)le to pay a tax not on its $ross
value, )ut on net value, that is the $ross value %inus the value of inputs-.
iv" %anadian ,oyal %o--ission on Taxation (%,%T" # *A tax. on value,added %i$ht )est )e
descri)ed as a sophisticated turnover tax, where the cu%ulative tax factor is re%oved )y taxin$
each transaction only in respect of the addition to sale value which has occurred in the sta$e
i%%ediately prior to the transaction in /uestion*.
9.0. .hat are the ar'u-ents for and a'ainst VAT?(00/"
Answer#
VAT $ive a nu%)er of ar$u%ents as to the %erits of VAT. 0or exa%ple 'vans, Taylor 1
2o3%an listed the %erits of VAT. 4o%e of the i%portant points are as follows.
i. +t increases the cost of consu%ption, thus sti%ulatin$ savin$s and invest%ent.
ii. The 5overn%ent $ets its %oney earlier, it doesn*t have to wait until after the final sale.
iii. +t is used to sti%ulate exports, the exporter $ets a re)ate for the tax paid.
09 Chapter
Value Addition
Tax(VAT" (VAT"
iv.+%porters pay the VAT )ased on the prices of their i%ports. The tax is paid on $oods
purchased, whether %anufactured do%estically or i%ported. T i%ported $oods are not $iven an
advanta$e over locally %anufactured products.
v.+t catches service co%panies, which historically have )een exe%pted fro% sale taxes. A service
co%pany has to char$e the tax to its custo%ers in order recover the tax paid on its purchase of
supplies and e/uip%ent.
0urther different authors and concerned authorities provide the followin$ ar$u%ents in favour of
VAT 6
vi"+t opens up avenues for collection of %ore revenue for socio,econo%ic develop%ent of a
country.
vii" +ts scope is wider and resists distortion in production and consu%ption.
viii"+t provides a $ood syste% of re)ate and refund which prevents tax on tax i. e recurrin$ tax.
ix"+t provides a psycholo$ical advanta$e to the tax payers in that the tax payers pay out in
instal%ent.
x" +t helps avoidance of cascadin$ effects accross different levels of production, har%oni3ation
of tax )urden and ad%inistrative ease.
9.00. Define VAT accordin' to the VAT Act, 1991 with exa-ple. &xplain the
different types of taxes char'ed under VAT Act, 1991. (009"
Answer# VAT is a tax, which is char$ed on the *increase in value* of $oods and services at each
sta$e of production and circulation. +t is levied on the added value that results fro% each
exchan$e. +t is also char$ea)le on the value of all i%ported $oods. +t differs fro% .a sales tax
)ecause a sales tax is levied on the total value of the exchan$e. VAT is a si%plified and
transparent syste% of tax in which tax is levied on the value additions, at each sta$e in the
production,distri)ution with provision of set,off of tax paid on earlier sta$e.
i" The $xford Dictionary of %urrent &n'lish # Value Added Tax %eans -a tax on the a%ount
)y which the value of an article has )een increased at each sta$e of its production-.
ii" D. (. )tout. Value added tax *is a %ultiple tax i%posed at a flat rate upon the annual sales
proceeds of a co%pany less all its purchases fro% other )usiness (i. e., excludin$ direct i%ports".
iii" *. +. *hatia . -VAT is a tax not on the total value of the $oods )ein$ sold, )ut only on the
value added to it )y the last seller. The seller, therefore, is lia)le to pay a tax not on its $ross
value, )ut on net value, that is the $ross value %inus the value of inputs-.
iv" %anadian ,oyal %o--ission on Taxation (%,%T" # *A tax.on value,added %i$ht )est )e
descri)ed as a sophisticated turnover tax, where the cu%ulative tax factor is re%oved )y taxin$
each transaction only in respect of the addition to sale value which has occurred in the sta$e
i%%ediately prior to the transaction in /uestion*.
T78'4 90 VA:;' ADD'D TA<
Accordin$ to the provisions of the Value Added Tax Act, 1991, three different types of taxes are
char$ed.
1.Value Added Tax. +%porters, %anufacturers and service providers, havin$ %ini%u% annual
turnover of T=. & lac, have to pay 1>? tax on their value addition under 4ection @ of the VAT
Act.
2.Turnover Tax. Turnover tax A @ per cent is levia)le on those persons and or$ani3ations whose
turnover a%ount is not %ore than T=. B lac under 4ection ! and 4ection C of the VAT Act and
the VAT Dules respectively.
@.4upple%entary Duty. :uxurious, non essential and socially undesira)le $oods are su)Eect to
supple%entary duties at different rates ran$in$ fro% 1 per cent to > per cent under 4ection B
of the VAT Act.
9.01.*riefly descri2e the advanta'es and disadvanta'es of VAT. (01"
Answer#
Value Added tax is )eco%in$ popular throu$hout the world )ecause of its followin$ advanta$es.
1. 9ne of the )est reasons for institutin$ a value,added tax is that the syste% encoura$es personal
savin$s and invest%entFprincipal ele%ents of a healthy econo%yF)y taxin$ only
consu%ption.
ii. VAT has %ore revenue potential than other alternative indirect taxes.
iii.VAT syste% acts as a supple%entary tax that can help %a=e up for revenue lost due to inco%e
tax evasion. +t is $enerally %ore )road,)ased and entails a trail of invoices that helps i%prove tax
co%pliance and enforce%ent.
iv. 4ince VAT is carried throu$h the retail level, it offers all the econo%ic advanta$es of a tax
that includes the entire retail price within its scope, at the sa%e ti%e the direct pay%ent of the tax
is spread out and over a lar$e nu%)er of fir%s instead of )ein$ concentrated on particular
$roups, such as wholesalers or retailers.
v. 9ne particular advanta$e is that of the widenin$ of the tax )ase )y )rin$in$ all transactions
into the tax net. 4pecifically, VAT $ives the $overn%ent the opportunity to )rin$ )ac= into the
tax syste% all those persons and entities who were $iven tax exe%ptions in one for% or another
)y the previous re$i%e.
vi. A si$nificant advanta$e of the value added for% in any country is the cross,audit feature. Tax
char$ed )y one fir% is reported as a deduction )y the fir%s )uyin$ fro% it. 9nly on the final sale
to the consu%er is there no possi)ility of cross audit.
vi. VAT %ay )e selectively applied to specific $oods or )usiness entities as a control
%echanis%. +t %ay also effectively )e used to protect local industries.
vii. +t is %ore e/uita)le and transparent.
D+4ADVAGTA5'4 90 VAT
The %ain disadvanta$es which have )een identified in connection with the Value Added Tax are
as follows.
i. The -value added tax- has )een critici3ed as the )urden of it relies on personal end,consu%ers
of products and is therefore a re$ressive tax (the poor pay %ore, in co%parison, than the rich".
ii. Devenues fro% a value added tax are fre/uently lower than expected )ecause they are difficult
and costly to ad%inister and collect.
iii.VAT increases inflation. +n developin$ countries, so%e )usiness%en sei3e al%ost any
opportunity to raise prices, and the introduction of VAT certainly offers such an opportunity.
iv.+t is also ar$ued that VAT places a heavy direct i%pact of tax on the la)or,intensive fir%
co%pared to the capital, intensive co%petitor, since the ratio of value added to sellin$ price is
$reater for the for%er. This is a real pro)le% for la)or,intensive econo%ies and industries.
v.Hertain industries (s%all,scale services, for exa%ple" tend to have %ore VAT avoidance,
particularly where cash transactions predo%inate, and VAT %ay )e critici3ed for encoura$in$
this.
Highlight of the Chapter :
10.0
1
10.0
2
Define the followin' ter-s as per
%usto-s Act, 19/9. (i"3erson4in4
char'e(ii"5oods(iii"%usto-s
area. (00/",(011"
.hich 'oods are prohi2ited to 2e
2rou'ht into *an'ladesh under
%usto-s Act, 19/9? (00/",
(00!",(011"
10.0
3
10.0
4
.hat is -eant 2y anti4du-pin'
duty?(010"
Discuss the relevant provisions of
the custo-s authorities and their
powers (01"

10.01. Define the followin' ter-s as per %usto-s Act, 19/9 # (i"3erson4in4char'e6 (ii"
5oods6 (iii" %usto-s area. 00/
Answer#
1. 8erson,in,char$e. -8erson,in,char$e- %eans ,
(i" in relation to a vessel, the %aster of the vessel6
(ii" in relation to an aircraft, the co%%ander or pilot in,char$e of the aircraft6
(iii" in relation to a railway train, the conductor, $uard or other person havin$ the
chief direction of the train6
iv" in relation to any other conveyance, the driver or any other person havin$ control of the
conveyance. I;Js 2(/"K
2. 5oods. -5oods- %eans all %ova)le $oods and includes,(i" Honveyances
(ii" 4tores and %aterials
(iii"(a$$a$e
(iv" Hurrency and ne$otia)le instru%ents
(v" 'lectronic data. I;Js 2(1"K
10 Chapter

Customs Act
3. Husto%s,area. -Husto%s,area- %eans the li%its of the custo%s,station specified under section
1 and includes any area in which i%ported $oods or $oods for export are ordinarily =ept )efore
clearance )y the custo%s authorities. I;Js 2(i"K
10.0..hich 'oods are prohi2ited to 2e 2rou'ht into *an'ladesh under %usto-s
Act, 19/9?(00/",(00!",(011"
Answer#
Go $oods specified in the followin$ clauses shall )e )rou$ht,
whether )y air or land or sea, into (an$ladesh.,
(a" counterfeit coin6
()" for$ed or counterfeit currency notes @9I and any other counterfeit productK6
(c" any o)scene )oo=, pa%phlet, paper, drawin$, paintin$, representation, fi$ure, photo$raph,
fil% or article CI , video or audio recordin$, HDs or recordin$ on any other %ediaK6
(d" C1I $oods havin$ applied thereto a counterfeit trade %ar= within the %eanin$ of the 8enal
Hode ( Act <:V of 1!&", or a
false trade description within the %eanin$ of the (Trade%ar=s Act, 29 (Act Go. 19 of 29""6K
(e" $oods %ade or produced outside (an$ladesh and havin$ applied thereto any na%e or trade
%ar=, )ein$ or purportin$ to )e the na%e or trade %ar= of any %anufacturer, dealer or trader in
(an$ladesh unless,
(i" the na%e or trade %ar= is, as to every application thereof, acco%panied )y a definite
indication of the $oods havin$ )een %ade or produced in a place outside (an$ladesh6 and
(ii" the country in which that place is situated is in that indication shown in letters as lar$e and
conspicuous as any letter in the na%e or trade %ar=, and in the sa%e lan$ua$e and character as
the na%e or trade %ar=6
(f" piece,$oods %anufactured outside (an$ladesh (such as are ordinarily sold )y len$th or )y the
piece", unless the real len$th thereof in standard C2I %etresK or other %easure%ent for the ti%e
)ein$ applyin$ in (an$ladesh has )een conspicuously sta%ped on
each piece in Ara)ic nu%erals6 C@I LLLK
CCI ($" $oods %ade or produced outside (an$ladesh and intended for sale, and havin$ applied
thereto, a desi$n in which copyri$ht exists under the 8atents And Desi$ns Act, 1911 (Act Go. ++
of 1911" and in respect of the class to which the $oods )elon$ and
any fraudulent or o)vious i%itation of such desi$n except when the application of such desi$n
has )een %ade with the license or written consent of the re$istered proprietor of the desi$n6 and
(h" $oods or ite%s produced outside (an$ladesh involvin$ infrin$e%ent of (Hopyri$ht Act, 2
(Act Go. 2! of 2"K or infrin$e%ent of layout desi$n of inte$rated circuit that are intended for
sale or use for co%%ercial purposes within the territory of (an$ladesh."K
10.00..hat is -eant 2y anti4du-pin' duty?(010"
Answer#
Anti Du%pin$ Duties.
This is a tariff on i%ports specifically placed on $oods sold )elow %ar=et price. +t is a way of
increasin$ the price of $oods which are too cheap.
Du%pin$ is said to occur when the $oods are exported )y a country to another country at a price
lower than its nor%al value. This is an unfair trade practice which can have a distortive effect on
international trade. Anti du%pin$ is a %easure to rectify the situation arisin$ out of the du%pin$
of $oods and its trade distortive effect. Thus, the purpose of anti du%pin$ duty is to rectify the
trade distortive effect of du%pin$ and re,esta)lish fair trade. The use of anti du%pin$ %easure as
an instru%ent of fair co%petition is per%itted )y the #T9. +n fact, anti du%pin$ is an instru%ent
for ensurin$ fair trade and is not a %easure of protection per se for the do%estic industry. +t
provides relief to the do%estic industry a$ainst the inEury caused )y du%pin$.
10.1.Discuss the relevant provisions of the custo-s authorities and their powers
(01"
Answer#
(i" Authorities . 0ot the purposes of the custo% Act, 19&9, the G(D %ay, )y notification in the
official 5a3ette under sec,@ of the Act %ay appoint, in relation to any area or function specified
in the notification, any person to )e,
(a" Ho%%issioner of Husto%s6
()" Ho%%issioner of Husto%s (Appeal"6
(c" Ho%%issioner of Husto%s ((ond"6
(d" Ho%%issioner of Husto%s (Valuation and +nternal Audit"6
(e" Director 5eneral (Husto%s +ntelli$ence and +nvesti$ation"6
(f" Director 5eneral (+nspection"6
($" Director 5eneral, (Duty 'xe%ption and Draw)ac="6
(h" Director 5eneral (Trainin$"6
(i", an Additional Ho%%issioner of Husto%s or Additional Director $enera
Director (Hontrol +ntelli$ence cell".
(E" Moint co%%issionee of custo%s or Director or Eoint director (Hontrol +ndelicell".*
(=" a Deputy Ho%%issioner of Husto%s or a Deputy Director6
(1" an Assistant Ho%%issioner of Husto%s or an Assistant Director6*
(%" an 9fficer of Husto%s with any other desi$nation.-
(ii" 3owers and duties of officers of custo-s . An orticer of custo%s appointed under section @
shall exercise sudi powers and dischar$e such duties and are conferred or i%posed on hi% )y or
under this Act6 and he shall also )e co%petent to exercise all powers and dischar$e all duties
conferred or i%posed upon any officer su)ordinate to hi%. 2ere it is to )e noted that the G(D
%ay, )y $eneral or special order, i%pose such li%itations or conditions on,the exercise of such
powers and dischar$e of such duties as it thin=s fit.
(iii" Dele'ation of 3owers # The G(D %ay, )y notification in the official 5a3ette, and su)Eect to
such li%itations or conditions, if any, as %ay )e specified therein, e%power )y na%e of
desi$nation,
(a"Any additional Ho%%issioner of Husto%s specified at clauses (a", (c" and (d" of section @ to
exercise any of th powers of a Hollector of Husto%s6
()"any Moint Ho%%issioner of Husto%s specified at clauses (a", (c" and (d" of section @ to
exercise any of the powers of an Additional Hollector of Husto%s or a Ho%%issioner of
Husto%s,6
(c" any Deputy Ho%%issioner of Husto%s to exercise any of the powers of a Moint - Hollector of
Husto%s or an Additional Ho%%issioner of Husto%s6
(d"any Assistant Ho%%issioner of Husto%s of exercise any of the powers of a Deputy
Ho%%issioner of Husto%s6
(e"any other officer of Husto%s to exercise any of the powers of any Assistant Ho%%issioner of
Husto%s.