What is the penalty for issuing a fake or unverified invoice from an integrated POS?

What does the law say?

Serial 24 of the penalty table in section 33 of the Sales Tax Act, 1990 applies to a person who is integrated with the Board or its computerized system for monitoring, tracking, reporting or recording of sales and similar transactions, and who either:

• conducts transactions in a way that avoids that monitoring, tracking, reporting or recording, or
• issues an invoice that does not carry the prescribed invoice number, barcode or QR code, or bears a duplicate invoice number or a counterfeit barcode or QR code, or defaces the prescribed invoice number, barcode or QR code.

The consequences in the table are:

Consequence	What serial 24 says
Penalty	Rs. 500,000 or 200% of the amount of tax involved, whichever is higher
Prosecution	On conviction by a Special Judge, simple imprisonment up to two years, or additional fine up to Rs. 2 million, or both
Sealing	The business premises are liable to be sealed by an officer of Inland Revenue in the manner prescribed
Abettor	On conviction by a Special Judge, simple imprisonment up to one year, or additional fine up to Rs. 200,000, or both

The “manner prescribed” for sealing is in rules 150ZEN and 150ZEO of the Sales Tax Rules, 2006, and de-sealing is in rule 150ZEQ.

When can an integrated shop be sealed?

Rule 150ZEO lets the Commissioner Inland Revenue with territorial jurisdiction start sealing proceedings on information that the retailer issued an invoice without the prescribed invoice number or QR code, with a duplicate number or counterfeit QR code, a defaced invoice, or other evidence of tampering. The information can come from:

• an invoice reported as unverified on the Tax Asaan application or the POS Dashboard;
• an invoice physically available, or obtained through mystery shopping under section 56C(2); or
• any other reliable source.

The Commissioner must verify the invoice through its number or QR code before declaring it unverified. Rule 150ZEO(4) then lists the situations in which the Commissioner seeks the Chief Commissioner’s written approval to seal:

• involvement in issuing unverified invoices;
• the store is disconnected from the FBR database for forty eight hours;
• invoices from an offline period are not entered in the system within the next twenty four hours; or
• the device does not keep a record of invoices during the offline period.

The Chief Commissioner allows or disallows sealing, decides whether one or more branches are sealed depending on which branches issued the unverified invoices, and notifies the sealing team. Rule 150ZEO(8), added in February 2025, says the premises “may be sealed on any violation made by registered person”.

How is it de-sealed?

Rule 150ZEQ sets the steps:

1. The Commissioner imposes a penalty by order under serial 24.
2. The de-sealing order is issued within 24 hours of payment of the penalty and the demand created during audit, provided any software bug has been removed.
3. The retailer may file an appeal against the order.
4. Within three working days after de-sealing, the Commissioner ensures a software audit, through an integrator, of all POS machines in all branches, and records sales during that period.
5. The Commissioner works out the under-declared sales from that audit and creates a demand for the tax sought to be evaded.
6. If the penalty is not paid, de-sealing happens after a month, and the premises are re-sealed after fifteen days if the default continues.

Worked example (illustrative figures)

Two integrated retailers in Faisalabad are each found to have issued invoices with counterfeit QR codes. The amounts are invented; the penalty formula is serial 24.

Retailer A. Tax involved on the invalid invoices: Rs. 90,000.

1. 200% of Rs. 90,000 = Rs. 180,000.
2. Compare with Rs. 500,000. The higher figure is Rs. 500,000.
3. Penalty: Rs. 500,000.

Retailer B. Tax involved: Rs. 400,000.

1. 200% of Rs. 400,000 = Rs. 800,000.
2. Compare with Rs. 500,000. The higher figure is Rs. 800,000.
3. Penalty: Rs. 800,000.

The crossover is Rs. 250,000 of tax involved, where 200% equals Rs. 500,000. Any demand created from the software audit under rule 150ZEQ is in addition to the penalty.

What if the POS simply lost internet for a day?

Rule 150ZEO(4) speaks of disconnection “for forty eight hours” and of offline invoices “not entered in the system in next twenty four hours”. A shorter gap whose invoices are entered in time is not one of the listed grounds, but rule 150ZEO(8) allows sealing on “any violation”, and the rules do not define that phrase further.

Common mistakes

• Treating Rs. 500,000 as a cap. It is a floor. The 200% measure applies when it is higher.
• Assuming only the offending branch can be sealed. The Chief Commissioner decides how many branches to seal, based on which branches issued unverified invoices.
• Thinking payment ends the matter. Rule 150ZEQ adds a software audit and a tax demand for under-declared sales.
• Confusing this with non-integration. A retailer that never integrated falls under serial 25A and rules 150ZEP and 150ZER, not serial 24.

What to check in the official text

Read serial 24 of the section 33 table in the official PDF, since the parsed text does not reproduce the table cleanly. Rule 150ZEQ(ii) conditions de-sealing on the requirements of Chapter XIV-AA of the Sales Tax Rules being fulfilled, but the same edition shows Chapter XIV-AA as omitted by S.R.O. 69(I)/2025 dated 29 January 2025. This page does not resolve that inconsistency; check whether a later notification has corrected the rule.