Reconceiving Faizul Islam Vs. Bangladesh: An Analysis in Light of VAT Act

Introduction

Value Added Tax (VAT) means consumption of tax. On buyer’s perspective, VAT is adding tax on the purchase price, On the other hand, from the seller ‘s perspective, it is a tax only on the “value added” to goods, service or material, at the stage of its distribution or manufacture.[1] VAT on a particular goods or service is determined on the basis of adding actual level of value of the said goods. As a good citizen it is a moral obligation for those who are bound to pay tax according to their income and spending. The VAT case of 2016, Faizul Islam (Md.) and Others Vs. Bangladesh and Others[2] is related to imposing VAT on a particular section of populace; however, people were claiming such VAT as an extra burden and unfair to them.

Synopsis of the Fact

In 2012, the government imposed 4.5 percent VAT on educational expenses in English medium schools and expanded the TAX up to 7.5 percent in 2015. The government withdrew 7.5 per cent VAT on education services of private universities after a few days of fights by students who obstructed roads in Dhaka and elsewhere and caused mass suffering. The English medium schools in the country started to gather a 7.5 percent VAT from the students following a revenue board order issued on June 5, 2014 amid protests from guardians and students The High Court on September 17 remained the acknowledgment realization of the value added tax on the tuition fees asking the government to clarify the legitimateness imposition of the value added tax following a writ petition filed by two guardians Md Faizul Islam and Md Selim Azam whose children had studied English Medium schools in Dhaka. The High Court division said that the imposition of the value added tax on education for only the English medium students was discriminatory, arbitrary and in contrary to the constitution and the education policy of the government.[3]

Issue of the Case

Whether the imposition of VAT on a certain class of schools is liable to be persisted or not?

Submission on behalf of the Appellant

1. The learned counsel mentioned the article 15 and 17 of the constitution and stated that these articles ensure basic necessities and free and compulsory study to the citizens of the state and country is mandated by the constitution to take all the effective measures to attain and establish those basic necessities. But the impinged imposition of VAT upon English medium school is purely contrary to such principles.
2. Learned counsel also submitted that, under Article 19 of the constitution, the state guaranteed ‘equal opportunity’ to its citizens and also ensured no ‘inequality’ to a particular group or class of citizen. But only imposing VAT on English medium schools totally negates the principle of equality of opportunity and is without any lawful authority.
3. Article 27 and 28 ensure that all citizen is equal before the law and are entitled to equal protection of law that means forbids discrimination but the imposing VAT violates these article which is unlawful.
4. The withdrawal of VAT from private universities, medical and engineering colleges but stayed only for English medium schools is discriminatory. By that decision the government made a clear classification in the education system which is contradictory to the constitution.

Submission on behalf of the Respondent

1. The learned deputy attorney general avers that the Article 15 and 17 of the constitution ensures basic necessities and free and compulsory study to the citizen of the state and on the strength of such mandate, the state has established many primary and secondary schools and colleges and has been providing educational opportunity for free whereas English medium schools have not been set up through any statute and follows foreign syllabus and guidelines. Hence, no contravention of Article 15 and 17 of constitution.
2. The government has taken VAT according to VAT act from English medium school since 2002 as they have been teaching service in a commercial manner. They are giving VAT at a rate of 4.5% from 2012 and entitled to pay VAT at the 7.5% as per government policy and legislation. And this VAT will be given by School, not the parents of students.
3. Universities and colleges from which the VAT has been withdrawn are instituted by their own statute but English medium schools have no such statutory backing to run their schools.

Judgement

The High Court division held that Imposition of VAT on English Medium Schools at the rate of 7.5% issued by the National Board of Revenue is declared to have been issued without any lawful authority illegal and is of no legal effect. Consequently, the imposition of VAT is struck down. The certain class of school are not liable to persist 7.5% VAT anymore.[4]

Reasoning

1. Imposing VAT on a certain class of school is not justified because there is no such finding anywhere in the constitution where it says that students studying in English Medium school have ever been differentiated from the students of Bangla Medium school. Hence, on the face of constitutional mandate, a gross discrimination has been created by imposing VAT upon English Medium schools which is contrary to the provision of Article-15 and Article-17 of the constitution.
2. ‘Equality of opportunity’ mentioned in Article-19 of constitution, has also been violated in imposing VAT upon English Medium school because if the state fails to make equality towards its citizens, then the citizen has got no other option rather than file a petition.
3. As English medium school do not have their own statute like other educational institutions and the basis of that idea government was compelled to withdraw the VAT upon those educational institutions. Which is totally discriminatory treatment upon English medium school and bears no legal basis.

Impact on Imposing VAT

The students of the Private Universities and students and engineering colleges as well as Private Medical of the country, started launching large scale protests demanding withdrawn of such VAT on their tuition fees to be paid by the concern private universities and medical and engineering colleges,[5] and the said movement, at a certain point, paralyzed Dhaka city on 10^th September 2015 again on 13 and 14 September respectively.

Bowing down to such protest, the revenue board was then compelled to cancel of such VAT on the tuition fees of the Private Universities as well as Private Medical and Engineer colleges by issuing a special order.

Conclusion

The whole scenario clearly indicates that a part of people has been singled out and are being victimized and also being compelled to pay the VAT since 2014. However, from the above legal analysis and discussion, it goes without saying that imposing VAT itself is an unfair one. When a law is found to be biased which provides advantage to a specific part of people and deprives a small section of citizens of enjoying the same privilege, then it cannot remain in place anymore.

Writer: Dewan Alif Ovi; Student, Department of Law and Human Rights; University of Asia Pacific.

Footnote:     

[1] Rehana Ismail, ‘Value Added tax (VAT) – in View of Bangladesh’ [2017] 19(1) IOSR Journal of Business and Management (IOSR-JBM) 8.

[2] LEX/BDHC/0187/2016.

[3] Tritiyo matra, ‘English medium students: VAT illegal, HC’ (Tritiyo Matra, 13 December 2016) <http://www.tritiyomatra.com/news/15233/local/2016/12/english-medium-students-vat-illegal,-hc> accessed 10 march 2021.

[4] Ashif, ‘SC: VAT cannot be extracted from students’ (Dhaka Tribune, 14 February 2017) <https://www.dhakatribune.com/bangladesh/court/2017/02/14/sc-vat-cannot-extracted-students> accessed 10 march 2021.

[5] Mushfique Wadud, ‘Government withdraws VAT on private universities’ fees’ (University World News, 15 September 2015) <https://www.universityworldnews.com/post.php?story=20150915193445894> accessed 10 March 2021.