ISLAMABAD – April 16, 2025: The Federal Tax Ombudsman (FTO) has formally restrained the Federal Board of Revenue (FBR) from imposing penalties on sales tax registered persons in cases where delays in return filing were caused by the tax department itself.
The FTO issued a comprehensive order against the FBR, highlighting multiple complaints from the business sector regarding unjustified penalties and procedural delays. The FTO emphasized that there is no clause under the Sales Tax Act, 1990, or the Sales Tax Rules, 2006, that authorizes the FBR to prevent a registered person from filing a current period sales tax return. The FTO noted that denying this right can severely disrupt business operations, especially when suppliers withhold payments due to the taxpayer’s inactive status.
This action by the FTO stems from an Own Motion investigation under Section 9(1) of the FTO Ordinance, 2000. Numerous complaints had been submitted to the FTO, revealing a consistent pattern of delay by Commissioners Inland Revenue (CIRs) in granting permission to taxpayers to file overdue sales tax returns. Such permission, required under Section 26AB of the Sales Tax Act, must be requested electronically. However, the FBR’s own internal inefficiencies were causing undue delay, affecting the corporate sector’s ability to conduct business smoothly.
The FTO pointed out that in many cases, these electronic requests were being left unattended in the CIRs’ online systems, resulting in prolonged inaction. This negligence by FBR officials was cited as being detrimental to the “ease of doing business,” a priority repeatedly stressed by the government.
The FTO has directed the FBR to take corrective measures and ensure timely processing of permission requests. Additionally, the FTO warned the FBR that continued negligence in such matters would invite further scrutiny and possible disciplinary action.
This is the sixth major intervention by the FTO this year in matters involving the FBR, underlining growing concerns over the department’s operational efficiency. The FTO reiterated its commitment to upholding taxpayer rights and urged the FBR to align its procedures with the legal framework and the principles of fairness.