KARACHI – The Sindh High Court (SHC) has issued a stern warning to Zahid Masood, Chief Commissioner of the Corporate Tax Office (CTO), Inland Revenue, Karachi, over delays in resolving a petition concerning sales tax registration suspension. The court has made it clear that if it finds his conduct unsatisfactory, proceedings will be initiated against him.
SHC Questions Legality of Revisional Authority’s Actions
In its latest order, the SHC expressed concern over the removal of appeal provisions against suspension orders under the Finance Act 2024. Instead, a Revisional Authority was introduced under Section 21(5) of the Sales Tax Act, 1990. However, the court noted that this authority appears reluctant to decide on suspension issues, using the pending blacklisting proceedings as an excuse.
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The SHC emphasized that this conduct is not aligned with Section 21(5) read with Section 21(2) of the Sales Tax Act. The court also stated that if the Revisional Authority refuses to act, then it cannot argue that an alternate remedy is available to the petitioner.
Petition Challenges Delay in Final Revisional Order
The case revolves around a petition challenging an Order in Revision (incorrectly referred to as a review order). The petitioner argues that their Revision Application under Section 21(5) was dismissed solely because the concerned Commissioner had initiated blacklisting proceedings, which are still pending.
As a result, the Revisional Authority refrained from issuing a final order on the suspension of the sales tax registration, leaving the petitioner in legal limbo. Instead, the petitioner was instructed to approach the Commissioner for a final decision on blacklisting.
Court Rejects Chief Commissioner’s Arguments
The SHC has rejected the stance of the Chief Commissioner, stating that sales tax suspension and blacklisting are separate issues and should not be treated conjunctively. The only legal remedy against a suspension order under Section 21(2) of the Act is revision—not an undefined waiting period for blacklisting proceedings to conclude.
Furthermore, the court noted that:
- A pre-suspension notice is issued before sales tax registration suspension.
- A separate show-cause notice is issued before blacklisting.
- A registered taxpayer cannot be left without legal recourse while waiting for blacklisting proceedings.
SHC Slams Chief Commissioner for Delays
The court recalled an earlier related case (Petition No-D-697 of 2025) in which the Chief Commissioner assured the court that a final decision would be passed within a week. However, the impugned order in revision failed to provide a conclusive decision.
The SHC noted that this conduct appears to be a deliberate attempt to mislead the court and prolong the petitioner’s troubles. Instead of resolving tax disputes, the Chief Commissioner has seemingly used his revisional powers to delay proceedings, preventing the petitioner from securing justice.
Court Summons Chief Commissioner on April 15, 2025
In light of these findings, the SHC has ordered Chief Commissioner Zahid Masood to personally appear at the next hearing on April 15, 2025. The court has also indicated that further proceedings may be initiated against him if his response remains unsatisfactory.
Legal and Business Implications
This case highlights serious concerns for businesses and taxpayers in Pakistan, as it questions the efficiency and fairness of the tax system. The decision will set a precedent for how sales tax disputes and blacklisting proceedings are handled under the Finance Act 2024.
For companies facing sales tax registration suspensions, the SHC’s observations offer hope that the law will be interpreted fairly, preventing unnecessary legal hurdles caused by bureaucratic delays.
