The Federal Board of Revenue has empowered tax authorities to seal registered business premises that fail to connect to its monitoring system, with police assistance available if needed to enforce the closure. The power comes through fresh amendments to the Sales Tax Rules, notified by FBR this week, giving the authority a stronger enforcement mechanism to push businesses toward compliance with its digital monitoring requirements.
Under the revised rules, businesses covered by the framework must install a production monitoring, video surveillance or digital eye system, and keep it linked to FBR’s network. Registered taxpayers that do not comply will face enforcement action, with the sealing power giving FBR a direct way to compel businesses to connect rather than relying solely on penalties or notices. These monitoring systems are intended to give the tax authority real time visibility into a business’s production or sales activity, reducing the scope for underreporting income or output.
The notification lays out a step by step process before any premises can be sealed. An Assistant Commissioner or a more senior officer must first submit a written report to the Commissioner Inland Revenue, who is authorised to start proceedings on that basis. The Commissioner will then conduct an inquiry and forward the findings to the Chief Commissioner. This layered review process, moving from an initial report through an inquiry and up to the Chief Commissioner, is designed to ensure a business is not sealed without multiple levels of scrutiny beforehand.
The Chief Commissioner alone will decide, through a written order, whether the business is to be sealed. The order can cover the whole premises or only a specific part of it, and the business owner must receive a copy before the sealing is carried out, giving the business at least formal notice of the action being taken against it. A sealed premises will stay closed until the monitoring system is connected to FBR. To have the seal removed, the owner must pay a penalty and install the required system, with an FBR technical team present during installation to verify it meets the required standard. Once the system is in place, the Commissioner is required to issue a certificate within three days, giving businesses a clear and time bound path back to operation once they comply.
The notification also states that the electronic monitoring rules may be extended to additional businesses and manufacturers in the future, signalling that the compliance requirement could widen beyond the sectors currently covered. This provision suggests FBR views the current monitoring framework as a starting point rather than a fixed and final list of covered businesses, with the sealing power likely to apply to a broader range of registered taxpayers as the digital monitoring system expands across different sectors of Pakistan’s economy in the period ahead.
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