Registration suspended sans notice: FTO rules in favour of supplier of textile chemicals

ISLAMABAD: The Federal Tax Ombudsman (FTO) has ruled in favor of a Karachi-based textile chemicals supplier whose sales tax registration was suspended without proper service of notice, directing the Federal Board of Revenue (FBR) to decide the case strictly on merit in accordance with Supreme Court bindings precedents.

Details revealed that a registered sales tax payer operating from Gulshan, Karachi moved a complaint before FTO through Advocate Shiraz Khan, wherein it was highlighted that the complainant discovered in October 2025 that his registration had been suspended without any prior notice or show-cause notice. The Commissioner CTO Karachi had suspended his registration on allegations of tax fraud involving purchases worth Rs. 73.7 million from Shadab Corporation, labeled as a non-existent supplier.

The FTO’s investigation revealed a critical procedural lapse. While the department claimed to have sent a pre-suspension notice, confirmation from postal authorities established that the notice (UMS tracking number 92397241) was returned undelivered to the FBR’s branch clerk. FTO observed that when the notice was returned by postal authorities, it should have been sent electronically to the email address available in the system “in the interest of justice and the principle of audi alteram partem and Article 10-A of the Constitution.”

The FTO ruling emphasized the fundamental principle of “audi alteram partem” – that nobody should be condemned unheard. Citing the Supreme Court judgment in Hazajo case 2005 SCMR 678, the order noted that violation of this principle “would be enough to vitiate even most solemn proceedings.”

Copyright Business Recorder, 2026