Islamabad, Feb 2: The Islamabad High Court (IHC) has temporarily halted the Federal Board of Revenue’s (FBR) actions against a restaurant, M/s The Lost Tribe, in Sector F-11 after it was sealed over allegations of non-issuance of verified sales tax invoices.
The IHC has also summoned the Chief Commissioner and Commissioner of the Regional Tax Office (RTO) Islamabad to explain why the restaurant was categorized as a Tier-I retailer. The restaurant, which provides services but claims not to fall under the Tier-I retailer category, disputed the FBR’s action and highlighted procedural lapses in the case.
The restaurant was raided on January 27, 2025, and sealed after the FBR accused it of issuing unverified receipts instead of sales tax invoices, in violation of Rule 150 ZEO of the Sales Tax Rules, 2006. The rule mandates that Tier-I retailers issuing unverified invoices face the penalty of having their premises sealed.
READ MORE: DPM/FM Dar Chairs Inter-Provincial Preparatory Meeting for Pak-Qatar BPC to Strengthen Bilateral Ties
However, the restaurant’s legal team argued that it is not a Tier-I retailer, but a service provider, and that no verification of the receipts was carried out. Furthermore, they claimed that the FBR failed to give them an opportunity to contest the sealing, violating their right to natural justice and due process under Article 10-A of the Constitution.
The IHC ordered the FBR to refrain from taking coercive action against the restaurant until the next hearing. The court directed the relevant authorities to submit reports and comments by February 4, 2025, and required the Commissioner and Chief Commissioner to appear in person to justify their actions.
The IHC also demanded that M/s The Lost Tribe deposit the required fee for issuance of notices to the respondents. In the meantime, the restaurant’s seal will remain lifted, though it was required to make payments of Rs. 500,000 and Rs. 2.5 million under protest.
The next hearing is scheduled for February 4, 2025, where the court will review the respondents’ reports and decide further actions based on the arguments presented.
