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ISLAMABAD: The Islamabad High Court (IHC) has stopped the Federal Board of Revenue (FBR) from taking action against a restaurant of Islamabad, as restaurant was sealed on the allegation of non-issuance of verified sales tax invoices by Tier-I retailer.

The IHC has also summoned Chief Commissioner and Commissioner Regional Tax office (RTO) Islamabad to explain their position - why the unit has been declared as Tier-I retailer.

“Till the next date of hearing,” the FBR should not take coercive action against the restaurant.

On the other hand, the restaurant categorically informed the court that it is providing services but they are not Tier-I retailer.

According to the order of the IHC in favour of M/s The Lost Tribe, Sector: F-11, the petitioner is a registered taxpayer and operates a well-reputed restaurant in Islamabad under the name “The Lost Tribe”, duly registered with the Federal Board of Revenue (FBR).

The learned counsel, the petitioner states that the petitioner is a restaurant providing services in Islamabad.

On 27.01.2025, a raid was carried out at the premises of the Lost Tribe Restaurant) in Sector F-11 and the restaurant was sealed: The sealing order incorporates the pictures of three debit/credit card receipts issued by the restaurant, which are not invoices.

The allegation against the petitioner in the sealing order is that it has been found in breach of rule 150 ZEO of the Sales Tax Rules, 2006, which provide in the event that a Tier-1 retailer issues three unverified receipts.

In a single day, the premises of such retailers or are liable to be sealed. He contends that the petitioner is a service provider and not a Tier-1 retailer in terms of definition provided in Section 2(43)(a) of the Sales Tax Act, 1990.

He states that even in the event that It was assumed that the petitioner was a Tier-1 retailer, sealing action could only have been taken after Commissioner Inland Revenue in terms of rule 150 ZE0(3) of the Sales Tax Rules, 2006, had confirmed that the invoices in question were unverified.

But no such efforts were made and no audience was provided to the petitioner. He states that the action has been taken in breach of right to natural justice and due process guaranteed by Article 10-A of the Constitution. He states that after the sealing order the petitioner sought Its de-sealing, which was allowed subject to payments in the amount of Rs 500,000 and Rs 2.5 million, which were made by the petitioner under protest.

He states that no order was passed directing that the petitioner is liable for such payment and such instruction was communicated, which was verbally communicated as the petitioner business was suffering.

Let notices be issued to the respondents for 04.02.2025, who will file report and para-wise comments before the next date of hearing. Let Respondents No 5 and 6 appear before the Court in person to satisfy the court that the manner in which authority was exercised was not colourable.

The petitioner shall deposit the requisite fee for issuance of the notices today, the IHC order added.

Copyright Business Recorder, 2025

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