The capricious tariff fixation prompted the High Court yesterday to order the government, upon a writ petition, to explain within four weeks why its imposition of Tk 1,200 in taxes on SIM and RUIM cards and fixing their price at Tk 2,172 would not be declared illegal.

The court in a rule also stayed the statutory regulatory order (SRO) of the National Board of Revenue (NBR) with regard to the petitioner until the disposal of the rule. This means the SRO would not be applicable for the petitioner purchasing a SIM or RUIM card.

The court order follows a writ petition filed by freelance telecoms journalist Abu Saeed Khan, who writes for The Daily Star. The respondents of the case are the NBR chairman, NBR second secretary (VAT Implementation-Goods), Bangladesh Telecommunication Regulatory Commission and its chairman, and Bangladesh, represented by the finance secretary.

The petition also named four pro forma respondents GrameenPhone Ltd, Sheba Telecom Ltd, TM International Ltd and Pacific Bangladesh Telecom Ltd.

The petitioner said the NBR's SRO fixed the tariff value for SIM/RUIM cards and new cellphone connections at Tk 2,172 by calculating 35 percent supplementary duty and 15 percent VAT proportionate to Tk 1,200 in total disregard for the original price of these cards, which is arbitrary, illegal and capricious.

According to the Customs Act 1969, the government is supposed to impose duty on the actual price. But in fixing the tariff value for SIM cards, the NBR followed an arbitrary principle to realise Tk 1,200 and nothing else, the petitioner noted.

"It is like asking people to grow their feet bigger to fit the size of the shoes," petitioner's lawyer Advocate Asaduzzaman told the court.

The government cannot fix a tariff value without having any contemporaneous documents to show that the international market price of a particular item of import or export has either gone up or come down.

He also argued that only the BTRC has the right to fix the tariff value on telephone connections under Section 31(2)(e) of the Bangladesh Telecommunication Act (BTA) 2001. The NBR's fixation of tariff value is contrary to the provisions of sections 49 (a)(b)(d) and 29 of BTA 2001, which is why it is illegal.

The NBR, under the VAT Act, is authorised to fix a tariff value in public interest by publishing an official gazette notification; instead, through the SRO it fixed the tariff without explaining in the interest of the public how this tariff value has been set.

Cellphone is not a luxury product but an essential tool of communications for ordinary people in the rural and urban areas and it is not against the public interest. So, it is beyond the purview of imposition of supplementary duty, the petitioner argued.

The NBR stated that the mobile phone operators would have to pay a 35 percent supplementary duty, being Tk 760, and a 15 percent VAT on the tariff value in addition to the supplementary duty, being Tk 439.83, making a total of Tk 1,200 to be paid for every new SIM/RUIM card. It is evident that the tariff value has been fixed in order to ensure the collection of the said Tk 1,200 and not on the basis of market price or in public interest.

The actual price of a SIM-RUIM card on the international market is between US$ 2 and 4, equalling 120 to 240 in taka, the petitioner told the court and submitted copies of invoices showing the import price paid by a mobile operator and documents showing the standard international market price of SIM cards on which customs or import duty is paid.

Barrister Rokanuddin Mahmud moved the petition with the assistance of advocates Asaduzzaman, Syed Afzal Hasan Uddin, and Faiz Ahmed.