Karachi (Commerce Desk): The Sindh High Court has declared the raid conducted by the Federal Board of Revenue (FBR) and Customs in the Karachi Export Processing Zone illegal and ordered the return of the confiscated goods.
According to the petitioner’s lawyer, the company in question was operating with permission from the Export Processing Zone Authority and was engaged in the manufacturing of tobacco and cigarettes. However, the FBR conducted a raid on allegations of sales tax fraud, while Customs seized imported cigarettes and other goods despite applicable import regulations.
The government lawyer argued that, according to the FBR, the company’s financial statements were found to be suspicious, and the raid was conducted following reports of tax evasion through illegal tobacco production.
During the hearing, Justice Saleem Jessar observed that under the Sales Tax Act, approval from the commissioner and an opportunity for the concerned party to present its stance are mandatory before initiating an investigation into tax fraud. The court noted that the record did not show any formal approval for an inquiry against the petitioner.
The court further stated that at the time of obtaining the search warrant, it was not established that any ongoing legal proceedings existed against the petitioner, and the magistrate’s approval was also not in accordance with the law.
The court observed that Customs officials were called in after the raid despite no illegal activity being proven, whereas under customs law only information gathering is permitted at that stage.
The Sindh High Court ruled that the documents presented indicated the goods were legally imported and that there was no evidence on record to suggest smuggling.
The court emphasized that state institutions cannot exercise powers in violation of citizens’ constitutional rights. It further held that the raid, search warrant, and seizure actions were not conducted in accordance with the law and therefore declared them void.
The court ordered that all seized goods be immediately returned to the petitioner company.