The Sindh High Court (SHC) has ordered proceedings against Zahid Masood, the Chief Commissioner of the Corporate Tax Office (CTO), Inland Revenue, Karachi, if his conduct and response regarding the sales tax petition fail to meet the court’s satisfaction. The case highlights concerns surrounding the suspension of a sales tax registration and the ongoing blacklisting proceedings, which have caused significant delays in resolving the issue for the concerned taxpayer.
The case centers around the revisions made under the Finance Act 2024, which has eliminated the provision for an appeal against suspension orders. In its place, a new revisional authority has been established under Section 21(5) of the Sales Tax Act. However, the Chief Commissioner has raised objections about making decisions regarding the suspension of sales tax registration, citing the pendency of blacklisting proceedings. The SHC, in its order, found this stance questionable, as it believes it contradicts the provisions outlined in Section 21(5) and Section 21(2) of the Sales Tax Act.
The petitioner had challenged an Order in Revision, which was incorrectly referred to as a review order. The petitioner’s application under Section 21(5) of the Sales Tax Act, 1990, had been dismissed on the grounds that the sales tax registration had been suspended and blacklisting proceedings were still pending. As a result, no final decision had been made regarding the suspension, and the petitioner had been advised to approach the concerned Commissioner for a decision on the blacklisting. However, the SHC has raised concerns that this reasoning does not appear to align with the provisions of the Act.
According to the SHC, the Chief Commissioner’s stance that the suspension order and blacklisting proceedings must be resolved together is incorrect. The court emphasizes that there should be separate remedies for the suspension of a sales tax registration and the blacklisting process. Furthermore, the SHC asserts that a registered person should not be left without recourse while awaiting a decision on blacklisting. Notably, a pre-suspension notice is issued before suspending a sales tax registration, whereas a separate show-cause notice is issued for blacklisting purposes. Therefore, the court believes that the Chief Commissioner’s refusal to issue a decision on the suspension independently of the blacklisting issue is unjustified.
This case comes after the petitioner had earlier filed a petition (No-D-697 of 2025) to challenge the suspension of their sales tax registration. The SHC had been informed that the Chief Commissioner had failed to pass any orders regarding the suspension, leading to the petitioner being advised to pursue a final decision. In a hearing following that petition, the Chief Commissioner assured the court that a final order would be passed within a week, but no such decision was forthcoming.
The SHC, in its ruling, has expressed concerns that the Chief Commissioner’s actions may not only be delaying the resolution of the case unnecessarily but also attempting to deceive the court by dragging the matter out. The Chief Commissioner has been vested with the authority to address taxpayer grievances and should not prolong the process or leave taxpayers without a remedy due to the blacklisting proceedings.
The SHC has instructed the Chief Commissioner to personally attend the next hearing of the case on April 15, 2025, where further decisions regarding this matter will be made. The court’s intervention underscores the importance of timely and just resolution of tax-related disputes, particularly when it impacts the rights of taxpayers awaiting a final decision on their sales tax registrations.