Through the instant writ petition, the petitioner, Commissioner Inland Revenue ("CIR") South Zone, Regional Tax Office, impugns order dated 18.01.2024 passed by the President of Pakistan whereby the representation filed by the Federal Board of Revenue ("FBR") against the order dated 23.08.2023 passed by the Federal Tax Ombudsman ("FTO"), was rejected. Vide the said order dated 23.08.2023, the FTO allowed the complaint filed by respondent No.3, Muhammad Younis, against the retention of Rs.500,000/- which was paid by him for having his premises desealed.

2. The record shows that on 18.04.2023, a notice was issued by the Assistant Commissioner, Inland Revenue to respondent No.3 providing him an opportunity to install a Point of Sales Software integrated with the computerized system of FBR as required by Section 3(9A) of the Sales Tax Act, 1990 ("the 1990 Act") failing which the petitioner's premises would be sealed under Rule 150ZEP of the Sales Tax Rules, 2006 ("the 2006 Rules").

3. Section 2(43A) of the 1990 Act defines "Tier1 retailer" to mean inter alia a retailer who has acquired Point of Sale for accepting payment through debit or credit cards from banking companies or any other digital payment service provider authorized by the State Bank of Pakistan.

The proviso to Section 3(9A) of the said Act requires all Tier-1 retailers to integrate their retail outlets with FBR's computerized system for realtime reporting of sales.

4. The said notice dated 18.04.2023 was issued to respondent No.3 after it was ascertained that he fell in the category of Tier-1 retailer as defined in Section 2(43A) of the 1990 Act, and therefore liable to install Point of Sales Software as required by Section 3(9A) of the said Act. Through the said notice, respondent No.3 was warned that if he did not install Point of Sales Software, proceedings under Section 33(25A) would be initiated against him and his premises would be sealed.

5. Since respondent No.3 did not install Point of Sales Software, another notice was issued to him on 04.05.2023 by the Assistant Commissioner, Inland Revenue requiring him to install Point of Sales Software failing which his premises would be sealed. Despite this respondent No.3 did not install Point of Sales Software. This caused the office of the Chief Commissioner, Inland Revenue to pass a sealing order on 24.05.2023 which resulted in the petitioner's premises being sealed. 6. Rule 150ZER of the 2006 Rules provides the procedure for de-sealing of business premises of non-integrated Tier-1 retailers. Rule 150ZER(1) of the said Rules provides that the CIR having jurisdiction shall impose a penalty prescribed under Section 33(25A) of the 1990 Act to ensure its payment.

7. On 27.04.2023, respondent No.3 filed an application for de-sealing his premises and paid a penalty of Rs.500,000/- as envisaged by Section 33(24) of the 1990 Act. After this was done, the CIR vide order dated 25.05.2023 passed a desealing order pursuant to which the petitioner's premises were de-sealed.

8. On 02.06.2023, respondent No.3 filed a complaint before the FTO seeking the return of Rs.500,000/- deposited by him. Vide order dated 23.08.2023, respondent No.3's said complaint was allowed and the CIR was directed to refund the amount of Rs.500,000/- to him within a period of 30 days. The representation filed by the FBR against the said order dated 23.08.2023 was turned down by the President of Pakistan vide order dated 18.01.2024. The said concurrent orders have been assailed by the petitioner in the instant writ petition.

9. Learned counsel for the petitioner, after narrating the facts leading to the filing of the instant petition and taking me through the relevant provisions of the law, submitted that the FTO and the President of Pakistan could not direct the petitioner to refund Rs.500,000/- which was paid by respondent No.3 as penalty which had been imposed on him by the CIR. He submitted that the penalty of Rs.500,000/- had been imposed in terms of Section 33(25A)(a) of the 1990 Act which provides for a penalty of Rs.500,000/- for first default to be imposed on a person who has not complied with the requirements under Section 3(9A) of the 1990 Act; and that the penalty of Rs.500,000/- has been imposed on respondent No.3 by the CIR in exercise of the powers conferred by Rule 150ZER of the 2006 Rules. Learned counsel for the petitioner prayed for the writ petition to be allowed and for the concurrent orders passed by the FTO and the President of Pakistan to be set-aside.

10. I have heard the contentions of the learned counsel for the petitioner and have perused the record with his able assistance. The facts leading to the filing of the instant petition have been set out in sufficient detail in paragraphs 2 to 8 above and need not be recapitulated.

11. Rule 150ZER of the 2006 Rules empowers the CIR to impose a penalty prescribed in Section 33(25A) of the 1990 Act in order to de-seal the premises with respect to which a sealing order is passed under Rule 150ZEP of the said Rules. The power of the CIR to impose a penalty under Section 150ZER is not independent of Section 33(25A) of the 1990 Act.

12. Section 33(25A) of the 1990 Act provides for a penalty of Rs.500,000/- for first default on a person required to integrate his business as stipulated under Section 3(9A), and who fails to get himself registered under the 1990 Act. The said section also provides for a penalty of Rs.1,000,000/- for second default after 15 days of the order for first default. In the case at hand, the penalty of Rs.500,000/- had been paid by respondent No.3 in order to have his premises desealed. This was done after the notice of first default. The proviso to Section 33(25A) of the 1990 Act provides that if the retailer integrates his business with the FBR's computerized system before the imposition of penalty for second default, the penalty for first default shall be waived by the CIR. It is not the petitioner's case that respondent No.3 as a Tier-1 retailer had not (after the imposition of the said penalty) integrated with the FBR's computerized system. That is why the occasion for the imposition of a penalty for second default did not arise. This being the factual position, I do not find any jurisdictional infirmity in the concurrent orders passed by the FTO and the President of Pakistan. Consequently, the instant petition is dismissed in limine.