ISLAMABAD: The Federal Board of Revenue (FBR) has approached the Federal Constitutional Court (FCC), seeking enforcement of tax authorities’ powers under the Federal Excise Act, 2005, and the Federal Excise Rules, 2005.
The tax authority has filed three separate petitions requesting leave to appeal against a judgment issued by the Peshawar High Court on December 18, 2025. The petitions were submitted under Article 185 of the Constitution through Advocate Hafiz Ehsaan Ahmad Khokhar.
The case raises key constitutional questions regarding the scope of jurisdiction under Article 199 of the Constitution, particularly in tax-related matters.
According to the FBR, departmental officials, acting on credible intelligence about possible evasion of federal excise duty, secured search warrants and conducted operations on December 12, 2025, targeting three cigarette manufacturing units located on Nowshera Road in Mardan.
During the operation, conducted under the supervision of an Assistant Commissioner, authorities recovered approximately 2.75 million kilograms of un-manufactured tobacco from multiple warehouses situated at Sang-e-Mar Mar along the Swabi-Mardan Road.
FBR officials stated that the discovery of undeclared and un-reconciled tobacco stock, coupled with the absence of duty-paid documentation, led the competent officer to form a “reason to believe” under Rule 28A(6) of the Federal Excise Rules, 2005. The department concluded that the goods were being stored clandestinely and that manufacturing facilities were operating in violation of the law.
Subsequently, authorities sealed the GLT unit and cigarette manufacturing premises under Rule 28A(6), read with Sections 26 and 27 of the Federal Excise Act, 2005. A show-cause notice was later issued under Sections 24 and 33, initiating formal adjudication proceedings.
However, the respondent companies challenged the departmental actions before the Peshawar High Court under Article 199 of the Constitution. The High Court ruled in their favor, declaring the sealing of the units illegal, while allowing authorities to continue investigations and assessments in accordance with the law.
The FBR has contested this ruling, arguing that it contradicts the established legal principle of exhaustion of remedies, as upheld by the Supreme Court in prior judgments. The department maintains that constitutional jurisdiction should not be invoked prematurely when statutory remedies under fiscal laws are still available.
The petitions further assert that the High Court intervened at an early stage, even though only a show-cause notice had been issued and no final determination of tax liability had been made. According to the FBR, such notices merely initiate proceedings and do not constitute appealable adverse orders.
Additionally, the FBR has challenged the High Court’s interpretation of the term “reason to believe” under Rule 28A(6), arguing that it should be assessed based on the material available at the time of action, rather than on conclusive proof obtained after full adjudication.
Counsel for the FBR, Hafiz Ehsaan Ahmad Khokhar, contended that the recovery of a large quantity of undocumented tobacco and the failure to provide duty-paid evidence justified regulatory action under the law. He further argued that the High Court overstepped by substituting its own judgment for that of the competent authority, thereby encroaching on administrative discretion.
The FBR emphasized that sealing the manufacturing units was a preventive and regulatory measure aimed at protecting federal revenue, rather than a punitive action.
