Karachi, March 18, 2025 – The Sindh High Court (SHC) has suspended a sales tax suspension order while expressing concerns over the conduct of the Chief Commissioner of Inland Revenue, Karachi.
The case, filed under Constitutional Petition No. D-1076 of 2025, challenged the order in revision dated March 7, 2025, where the petitioner’s request under Section 21(5) of the Sales Tax Act, 1990, was dismissed on the grounds that blocking proceedings were still pending. The court found this reasoning flawed, stating that suspension and block listing are independent matters and should not be treated as a single process.
The petitioner had earlier filed a separate case (C.P. No. D-697 of 2025) where the tax authorities assured the court that a final order would be passed within a week. However, the impugned order failed to provide a conclusive decision, prompting the court to question the Chief Commissioner’s commitment to resolving taxpayer grievances.
The bench noted that a suspension order under Section 21(2) requires prior notice, while blocking proceedings under Section 21(4) involve a separate show cause process. The court observed that the department appeared uncertain about the correct legal procedure, leading to unnecessary delays that left the petitioner without a remedy.
The court further referenced a prior order (C.P. No. D-5428 of 2024) where it had clarified the legal framework surrounding suspension and block listing, emphasizing that authorities must follow due process before deregistering a taxpayer or blocking refunds. The court criticized the tax department for failing to differentiate between the relevant legal provisions, causing unwarranted hardship to businesses.
In light of these concerns, the court suspended the sales tax suspension order dated February 14, 2025, and maintained the status quo regarding blocklisting proceedings. The case will be heard again on April 15, 2025, with the Chief Commissioner required to attend and justify the tax authority’s approach.
The court warned that if the Chief Commissioner’s explanations were unsatisfactory, it might initiate further proceedings against him.