Shumi’s Hot Cake sued on allegation of Tk 10.52 crore VAT evasion

The VAT intelligence today filed a case against bakery shop Shumi's Hot Cake in the city's Uttara on allegation of evading Tk 10.52 crore value-added tax.

A team of the VAT Intelligence Department raided the factory cum head office of the company in Ahalia of Turag area on June 2 based on specific allegations of VAT evasion.

During the drive, the intelligence team found that the company has been preparing cakes by machine, although it has announced handmade cakes, said a press release of the VAT intelligence.

The cake maker has 26 sales outlets across the country, including the capital, and the factory-made products are supplied to these outlets.

As per the VAT law, 15 per cent VAT is applicable on machine-made cakes while only 5 per cent VAT if it is made by hand.

So far Shumi's Hot Cake has been paying 5 per cent VAT. In this case, the company was evading the revenue by paying VAT according to the rate of hand-made cakes, it said.

According to the submission of the company from July 2016 to April 2021, the company has evaded VAT of Tk 7.13 crore.

A total of Tk 10.52 crore will be recoverable, including an interest of Tk 3.38 crore at 2 per cent interest, as per the VAT law, the VAT intelligence said.

The case will be sent to the Dhaka North VAT Commission for taking legal action to recover the VAT revealed in the investigation, it said.

Md Robin, a manager at the factory of Shumi's Hot Cake, told The Daily Star that they came to know about the issue moments ago and are yet to know details about it.

"I cannot say anything about it right now. The management will share the details about it tomorrow (Wednesday) morning," he said when this correspondent asked about the payment of 5 per cent VAT.