FBR to Suspend Sales Taxpayers Denying Access to Business Premises

The Federal Board of Revenue (FBR) has announced strict measures against sales taxpayers who refuse to grant access to their business premises for monitoring by tax officers. Under the updated Sales Tax Rules 2006, a sales taxpayer who obstructs the deputation of tax officers to oversee stocks, production, or clearances at manufacturing facilities risks suspension or blacklisting.

According to the revised rules, if the Commissioner or the FBR has sufficient grounds to believe that a registered taxpayer should be suspended or blacklisted, a standardized procedure will be followed to ensure consistency across Large Taxpayer Offices (LTOs) and Regional Tax Offices (RTOs). This action is in line with Section 21(2) of the Sales Tax Act.

The updated procedure empowers Commissioners to suspend a taxpayer’s registration through the system without prior notice if there is evidence of fake invoicing, tax evasion, or fraud. The suspension will remain in effect pending further inquiry.

In a move to ensure transparency, the FBR has also decided to hold public hearings before taking action against sales taxpayers. This step aims to provide taxpayers with an opportunity to present their case and address any allegations before final decisions are made.

The basis for such satisfaction may, inter alia, include the following:

1. Non-existence of the registered person at the given address.
2. Refusal to allow access to business premises under Sections 40B and 40C, or refusal to furnish records under Sections 25 and 37 of the Sales Tax Act to an authorized Inland Revenue Officer.
3. Activity exceeding five times the sum of the capital and liabilities declared in the balance sheet.
4. Making more than 10 percent of purchases from, or more than 10 percent of supplies to, other suspended persons in the month of suspension, except in cases of suspension based on Clause B, or where the value exceeds Rs. 50 million, whichever is higher.
5. Non-filing of sales tax returns for three consecutive months, null filing of sales tax returns for six consecutive months, or committing any act that falls within the ambit of tax fraud, the FBR added.