M&C represented the auction purchasers in the High Court proceedings challenging the imposition of VAT on auctioned immovable property.
The High Court Division comprising Mr. Justice Sardar Md. Rashed Jahangir and Mr. Justice Md. Ziaul Haque delivered a significant judgment on 1 September 2026, declaring the imposition of 15% VAT upon purchasers of immovable property acquired through judicial auction to be without lawful authority and of no legal effect.
The matter arose from the auction of mortgaged immovable property by the Artha Rin Adalat under Section 33(1) of the Artha Rin Adalat Ain, 2003. The Petitioners, having become the highest bidders for the property at Tk. 24,00,00,000/- and deposited the full auction value, were subsequently directed to pay 15% VAT on the auction value along with requisite stamp duty. Challenging the said direction, the Petitioners filed a Writ Petition before the High Court Division. They subsequently challenged S.R.O. No. 177-Ain/2025/305-Musak dated 27.05.2025, insofar as it sought to bring purchasers of immovable property within the expression “auction purchaser of commodity”.
The Petitioners contended that the Value Added Tax and Supplementary Duty Act, 2012 defines “commodity” as tangible movable property and does not extend to immovable property. They further relied upon the statutory exemption under Section 26 read with Paragraph 7(ছ) of the Second Part of the First Schedule, which exempts the sale or transfer of land and buildings and their registration, subject to the statutory exception. It was also submitted that Section 32ক does not empower the National Board of Revenue to create a fresh tax liability or enlarge the scope of the parent legislation.
Reliance was also placed on previous High Court judgments holding that transfer of immovable property falls outside the scope of VAT and that an auction purchaser of immovable property cannot be equated with an auction purchaser of commodity. Article 83 of the Constitution of the People’s Republic of Bangladesh, requiring taxes to be levied only under the authority of an Act of Parliament, was also relied upon.
Upon hearing the parties, the High Court Division was pleased to make both the Rule and Supplementary Rule absolute, declaring the direction requiring the Petitioners to pay 15% VAT at source on the auction value to be without lawful authority and of no legal effect. The Court further declared the impugned S.R.O., insofar as it included purchasers of immovable property within the expression “auction purchaser of commodity”, to be without lawful authority and of no legal effect. The judgment confirms that no VAT is payable on the value of immovable property purchased through a judicial auction conducted by an Artha Rin Adalat and that delegated legislation cannot impose a tax liability beyond the authority granted by Parliament.
A M Mahbub Uddin Khokon, Head of Chambers, Saqeb Mahbub, Partner and Sajid Hassan, Associate represented the clients on behalf of Mahbub & Company.
