23/07/2026
Tax Ombudsman proposes stricter safeguards and supervisory oversight before enforcement actions that interrupt lawful business operations.
The Federal Tax Ombudsman (FTO) has recommended that the Federal Board of Revenue (FBR) formulate and notify a special administrative protocol for tax enforcement actions that could disrupt the continuity of lawful businesses, stressing that such measures should be exercised only as a last resort.
The recommendation was made in an order issued while deciding a review petition concerning the suspension of a taxpayer’s sales tax registration. The Ombudsman observed that actions such as suspending sales tax registration, sealing business premises or taking other enforcement measures capable of bringing legitimate commercial activities to a standstill require stronger procedural safeguards and greater supervisory oversight.
FTO calls for comprehensive enforcement protocol
The FTO recommended that the Chairman FBR ensure the introduction of a Special Administrative Protocol governing all administrative actions that may interrupt lawful business operations.
According to the Ombudsman, the proposed protocol should require:
• Strict verification that all statutory preconditions have been fulfilled before enforcement action is initiated;
• Proper and legally verifiable service of all mandatory notices in accordance with applicable laws;
• A meaningful opportunity to be heard unless immediate action is expressly authorised by law;
• Recording of reasons demonstrating the legality, necessity and proportionality of the proposed action;
• Prior approval from an appropriately senior supervisory officer before implementing measures capable of disrupting business operations;
• Expeditious internal review where business disruption is alleged to have resulted from factual errors, procedural irregularities or maladministration; and
• Periodic supervisory reviews to ensure extraordinary measures remain in force only for as long as legally necessary.
The Ombudsman further recommended that the protocol should expressly recognise that administrative actions capable of bringing lawful businesses to a halt should ordinarily be treated as measures of last resort. Where multiple lawful enforcement options are available, preference should be given to the approach that secures compliance while causing the least disruption to business continuity.
New category for ‘Business Continuity Cases.
In a significant institutional recommendation, the FTO proposed that complaints involving the suspension of sales tax registration, sealing or locking of business premises, or similar actions that substantially interrupt lawful commercial activities should be treated as a separate category titled “Business Continuity Cases.
The Ombudsman directed the FTO Secretariat to prepare a dedicated Business Continuity Cases Protocol within 30 days to ensure:_*
• Immediate identification of such complaints;
• Priority processing
• Continuous monitoring
• Expeditious investigation and adjudication; and
• Timely relief, wherever legally permissible, before commercial losses become irreversible.
Constitutional right to conduct business
The FTO observed that Article 18 of the Constitution guarantees every citizen the right to carry on any lawful trade, business or profession, subject to regulation by the state.
While acknowledging that tax authorities possess legal powers to suspend registrations or seal premises, the Ombudsman noted that such actions may have consequences extending well beyond tax disputes, affecting:
• Commercial viability
• Employment
• Contractual obligations and
• Business reputation.
The order emphasized that the more severe the consequences of an administrative action, the greater the need for procedural discipline, fairness and supervisory care before such powers are exercised.
Case highlights concerns over legal remedies*
The review petition arose after a taxpayer’s sales tax registration was suspended, disrupting its normal business operations.
Although the taxpayer later sought to withdraw the petition after securing restoration of the registration by making payment under protest, the FTO decided to examine the broader institutional issues raised by the case.
According to the order, the taxpayer maintained that the payment was made solely to preserve business continuity and without prejudice to its legal rights.
The Ombudsman observed that the case highlighted an important concern: businesses facing immediate operational disruption may be compelled to comply with disputed tax demands simply to avoid irreversible commercial losses, thereby reducing the practical effectiveness of available legal remedies.
The FTO concluded that complaints involving interruptions to lawful business activities deserve the highest institutional priority to ensure that meaningful relief can be provided before commercial necessity overtakes the legal process.
