The Federal Tax Ombudsman in Islamabad has ordered the FBR to correct a Tier-1 retailer’s penalty decision.
The Tier-1 Retailer complaint disagreed with IRAO Enforcement-II, CTO Karachi Order No. 413 of 2021. This judgment purportedly fined the complaint Rs. 1,000,000 for not integrating with Point of Sale (POS) without legal permission and outside the officer’s jurisdiction.
This purportedly unlawful decision caused the IRAO to issue a recovery notice for Rs. 1,000,000 and shut down the company premises. The premises were de-sealed after paying 50% of the penalty, Rs. 500,000. Based on IRAO’s improper ruling, Commissioner-IR Appeals VII, Karachi, approved the punishment without hearing the plaintiff.
The Commissioner also upheld the Rs. 1,000,000 penalty under Section 33 Clause 25A. The IRAO issued a show cause notice for this penalty on 26.08.2021, and this provision was added to the Act on 15.09.2021. The show cause notice dated 26.08.2021 was unlawful since this provision did not exist.
The Supreme Court of Pakistan ruled in C.P.L.As nos. 488-K & 489-K of 2006 that jurisdiction is a crucial issue for the court to consider and may be addressed at any time.
The 29-10-2023 IRAO order violates the law, processes, and principles of natural justice, making it maladministration under Section 2(3)(i)(a)(b)(c) & (ii) of the FTO Ordinance.
Thus, the Federal Tax Ombudsman orders the FBR to instruct Commissioner-IR Karachi to correct the decision on his own or at the complainant’s request, following due procedure and the law. Despite approval from the Honourable SHC, the FBR should investigate the Board’s circular breach and give new instructions to all Inland Revenue field formations. Compliance reports are due in 45 days.