Safeguarding lawful businesses’ continuity: FTO directs FBR to formulate comprehensive protocol
ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed the Chairman Federal Board of Revenue (FBR) to formulate a comprehensive protocol aimed at safeguarding the continuity of lawful businesses during tax enforcement actions, warning that measures such as suspension of sales tax registration and sealing of business premises should be exercised only after strict compliance with legal safeguards.
In a detailed review order issued by Federal Tax Ombudsman Zafar Hijazi, the FTO observed that tax enforcement actions capable of disrupting business operations have far-reaching commercial consequences, including loss of customers, financial distress, contractual disruptions and damage to business reputation, which may not be reversible even if the taxpayer ultimately succeeds in legal proceedings.
To address the issue, the Ombudsman introduced a new category of complaints titled “Business Continuity Cases,” under which complaints involving suspension of sales tax registration, sealing or locking of business premises, or similar actions affecting lawful business operations will receive the highest institutional priority for investigation and adjudication.
The order directs the chairman FBR to formulate and notify a Special Administrative Protocol governing all administrative actions that may interrupt the continuity of lawful businesses. The proposed protocol should ensure verification of all statutory requirements before action is taken, legally valid service of notices, meaningful opportunities of hearing, recording of reasons, senior-level supervisory approval and periodic review of such actions.
The FTO further recommended that enforcement measures capable of bringing a lawful business to a standstill should ordinarily be treated as measures of last resort, and wherever the law allows more than one course of action, authorities should choose the option that secures tax compliance while causing the least disruption to legitimate business activities.
The directions were issued while deciding a review petition filed by a Karachi-based taxpayer whose sales tax registration had been suspended. The complainant alleged that the suspension was carried out without proper service of notices and without providing an effective opportunity of hearing, resulting in severe commercial losses. During the proceedings, the taxpayer informed the Ombudsman that it had deposited Rs 300,000 under protest to secure restoration of its sales tax registration while reserving its legal rights.
Allowing the review petition, the Ombudsman held that the earlier order had failed to adjudicate the core issue of whether the administrative process leading to suspension of the sales tax registration complied with mandatory legal and procedural safeguards. The order emphasised that the role of the FTO is to examine allegations of maladministration and ensure fairness, legality and procedural discipline in tax administration.
Copyright Business Recorder, 2026