The Federal Tax Ombudsman has directed FBR field formations to verify taxpayer details, premises and authorisation before sealing any business.
KARACHI: The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to ensure that its field formations exercise the power to seal taxpayers’ business premises strictly in accordance with the law and prescribed procedures.
The direction came while disposing of a review petition concerning the sealing of a business premises in Karachi under an order issued against a different taxpayer.
The FTO’s latest decisions list includes a review matter relating to complaint No. 12151/KHI/IT/2026, underscoring the forum’s continuing role in addressing complaints of tax maladministration.
Business premises sealed against wrong taxpayer
The matter concerned Shop No. G-67, Ground Floor, Saima Paari Mall, Hyderi, Karachi, which had been sealed under an order dated May 5, 2026.
According to the record, the order was issued against M/s Beejays Pret, NTN 2348594-9. However, the premises actually sealed belonged to M/s Beejays Fabrics, NTN 4782283-3, a separate registered taxpayer.
The FTO consequently held that the sealing action had been carried out without lawful authority and constituted maladministration.
The FTO’s mandate includes investigating and redressing maladministration by tax functionaries, including actions that are contrary to law, rules or established procedures.
FTO orders de-sealing of premises
Following its original findings issued on August 4, 2026, the FTO had recommended that the concerned Commissioner Inland Revenue, Regional Tax Office-I (RTO-I) Karachi, immediately de-seal the business premises.
The Chief Commissioner Inland Revenue, Corporate Tax Office (CTO) Karachi, was also directed to conduct an inquiry into how an order issued against one taxpayer had been executed against another and submit a compliance report within 30 days.
The FTO noted that its use of the word “immediately” was deliberate because continued closure of an operating business could have serious consequences.
The forum’s complaint system provides for recommendations to rectify maladministration and monitors compliance with those recommendations.
Department files review petition
The Department subsequently filed a review petition on September 2, 2026, relying substantially on factual circumstances that had already been considered during the original proceedings.
These included an alleged common trade name, family relationship, social media representation and the status of the business premises in the complainant’s registration profile.
The review petition was heard on September 23 and 24, 2026.
During the hearing, the concerned Commissioner-IR informed the FTO that the business premises had now been de-sealed.
The complainant confirmed that the grievance concerning the sealing had been resolved and stated that he no longer wished to pursue his compensation claim.
FTO says sealing powers must be used carefully
With the premises restored, the FTO said no further relief was required regarding the individual grievance.
However, the forum stressed that the underlying issue was not merely a technical discrepancy.
It noted that the May 5 sealing order had been issued against a different registered taxpayer, while the coercive action was carried out against premises belonging to a person with a separate NTN.
The FTO reiterated that a statutory power carrying serious civil consequences must be exercised only against the taxpayer and premises lawfully covered by the relevant authorisation.
The forum also noted that sealing a business can physically interrupt commercial operations and affect employees, customers, business commitments and a taxpayer’s ability to earn a livelihood.
It therefore advised the concerned Commissioner to exercise the utmost care when resorting to the power to seal business premises.
FTO withdraws inquiry recommendation
The FTO took note of the fact that the premises were eventually de-sealed after the matter was brought to the Commissioner’s attention.
As the complainant also decided not to pursue compensation, the forum concluded that the immediate grievance had been redressed.
The FTO therefore decided that it was unnecessary to determine or award compensation.
It also decided that its earlier recommendation for an inquiry to fix responsibility on the officers or officials involved in executing the sealing action need not be pursued.
The recommendation for the inquiry was consequently withdrawn.
However, the FTO made clear that the withdrawal did not amount to approval of the original sealing action, which it had already found to have been undertaken without lawful authority.
FBR directed to verify taxpayer details
The FTO recommended that FBR issue necessary instructions to all concerned field formations to ensure that the statutory power to seal business premises is exercised strictly within the applicable law, rules and prescribed procedures.
Before executing a sealing order, officers should ensure that the taxpayer or person named in the authorisation, NTN/STRN or other relevant taxpayer identifier, premises proposed to be sealed and jurisdiction of the authority correspond with the authorisation and applicable law.
The forum said the highest degree of care and responsibility should be observed before any sealing order is executed.
With the premises de-sealed and the compensation claim no longer being pursued, the FTO said the immediate grievance stood redressed.
The review petition was accordingly disposed of, with the earlier order of August 4, 2026 modified in light of the subsequent developments.
The FTO’s official decisions portal publishes its latest decisions and provides complaint numbers for taxpayers seeking information about individual cases.