KARACHI – The Sindh High Court (SHC) has issued a sharp rebuke to Zahid Masood, Chief Commissioner of the Corporate Tax Office (CTO), Inland Revenue, Karachi, signaling potential consequences for his handling of a prolonged sales tax registration dispute. The court has warned that unsatisfactory conduct could lead to formal proceedings against him.

SHC Scrutinizes Revisional Authority’s Legal Standing

In a recent ruling, the SHC raised doubts about the Finance Act 2024’s removal of appeal rights against suspension orders, replaced by a Revisional Authority under Section 21(5) of the Sales Tax Act, 1990. The court criticized this body’s apparent hesitation to rule on suspension matters, citing ongoing blacklisting processes as a justification for inaction. The SHC stressed that such behavior contradicts the intent of Section 21(5) when paired with Section 21(2). It further cautioned that if the Revisional Authority declines to act, it cannot claim taxpayers have an alternate remedy.

Petition Highlights Stalled Revisional Decision

The dispute stems from a petition contesting a delayed Order in Revision—mislabeled as a review order. The petitioner asserts their Revision Application under Section 21(5) was dismissed solely due to pending blacklisting proceedings initiated by the Commissioner. This left the Revisional Authority unwilling to issue a final ruling on the sales tax registration suspension, directing the petitioner back to the Commissioner for a blacklisting resolution instead.

Court Dismisses Chief Commissioner’s Defense

The SHC firmly rejected the Chief Commissioner’s position, clarifying that sales tax suspension and blacklisting are distinct issues, not interdependent processes. Under Section 21(2), the sole legal recourse for a suspension order is revision—not an indefinite wait tied to blacklisting outcomes. The court outlined key distinctions:

  • A pre-suspension notice precedes any sales tax registration suspension.
  • A separate show-cause notice applies to blacklisting actions.
  • Taxpayers must not be stranded without remedy amid unresolved blacklisting delays.

SHC Condemns Chief Commissioner’s Tactics

Referencing a prior case (Petition No-D-697 of 2025), the court recalled the Chief Commissioner’s promise to resolve the matter within a week—a commitment unmet by the subsequent revisional order, which lacked finality. The SHC suggested this pattern reflects an intent to mislead the judiciary and prolong the petitioner’s legal uncertainty, obstructing timely justice in tax disputes.

Chief Commissioner Summoned for April 15, 2025 Hearing

Based on these observations, the SHC has summoned Zahid Masood to appear in person on April 15, 2025. The court hinted at escalated measures should his explanation fail to satisfy judicial expectations.

Broader Impact on Taxpayers and Businesses

This case underscores critical flaws in Pakistan’s tax administration, raising questions about fairness and efficiency. The ruling could shape future handling of sales tax disputes and blacklisting under the Finance Act 2024, offering taxpayers a potential safeguard against procedural stagnation.

For businesses grappling with suspended sales tax registrations, the SHC’s stance signals a push for equitable legal interpretations, curbing bureaucratic overreach. Stay tuned as this precedent unfolds.