FTO dismisses Rs70m tax evasion complaints, rejects frivolous cases

ISLAMABAD: A complaint involving alleged tax evasion of over Rs 70 million and the suspension of a sales tax registration has been closed by the Federal Tax Ombudsman (FTO), underscoring that the Office does not entertain frivolous complaints or matters already pending before courts of law. The case, which mainly raised questions about procedural non-compliance by tax administration, ultimately fell outside the FTO’s jurisdiction due to parallel litigation.

The complaint was filed under Section 10(1) of the Federal Ombudsman Ordinance, 2000, challenging the suspension of the complainant’s Sales Tax Registration Number (STRN). The complainant contended that the registration was suspended on May 2, 2025, without prior notice or an opportunity of hearing—allegedly in violation of Section 21 of the Sales Tax Act, 1990, read with Rule 12 of the Sales Tax Rules, 2006, and relevant case law of the Sindh High Court. It was further argued that, under the law, such suspension is temporary and becomes void if not followed by a blacklisting order within 90 days.

According to the complaint, despite the lapse of more than the prescribed period, the authorities neither issued a blacklisting order nor restored the STRN, resulting in financial losses and disruption of business operations.

However, the Revenue Division, in its comments, raised serious concerns regarding the complainant’s tax declarations. It was pointed out that the complainant—registered as a manufacturer of ice blocks—had declared an unusually high carry-forward amount of over Rs. 19 million without making any corresponding tax payments. This discrepancy translated into a potential sales tax liability exceeding Rs. 70 million, with officials questioning the plausibility of maintaining such large stock volumes in a business dealing with a perishable commodity like ice.

During proceedings, it also emerged that the complainant had filed a constitutional petition before the Sindh High Court seeking the same relief—namely, the restoration of the suspended registration—after approaching the FTO. The Ombudsman observed that both proceedings effectively sought identical outcomes.

In light of this, the FTO ruled that the matter had become sub judice, thereby falling outside its jurisdiction under Section 9(2)(a) of the FTO Ordinance, 2000, which bars the office from intervening in cases pending before a competent court. Consequently, the complaint was closed without further investigation, and the case record was consigned. The decision reinforces the Tax Ombudsman’s stance that while genuine grievances are addressed, frivolous or parallel litigations will not be entertained, ensuring that the forum is not misused and remains focused on legitimate taxpayer relief. FTO Office demonstrates Zero Tolerance in cases where any sort of tax fraud has been detected by tax authorities or under investigation at FBR.

Copyright Business Recorder, 2026