Islamabad – The Federal Board of Revenue (FBR) has approached the Federal Constitutional Court (FCC), challenging a decision of the Peshawar High Court (PHC) that ordered the de-sealing of three tobacco manufacturing companies in Khyber Pakhtunkhwa.
According to official sources, the FBR filed three separate petitions seeking leave to appeal against the PHC judgment dated December 18, 2025. The petitions were submitted through advocate Hafiz Ehsaan Ahmad Khokhar under Article 185 of the Constitution, raising key legal questions regarding the scope of constitutional jurisdiction under Article 199.
The case stems from a search operation conducted on December 12, 2025, when tax authorities acted on intelligence regarding possible evasion of federal excise duty by cigarette manufacturers. Acting under warrants issued by a competent court, officials conducted raids on three cigarette manufacturing units located on Nowshera Road in Mardan.
During the operation, officials reportedly recovered approximately 2.75 million kilograms of unmanufactured tobacco from five warehouses located at Sang-e-Mar Mar on the Swabi–Mardan Road. According to the FBR, the recovered stock was unaccounted for and lacked duty-paid documentation.
Based on these findings, the competent officer formed a “reason to believe” under Rule 28A(6) of the Federal Excise Rules, 2005, that the tobacco had been clandestinely stored and that cigarette manufacturing machinery was being used in violation of the Federal Excise Act, 2005. Consequently, authorities sealed the GLT unit and cigarette manufacturing premises under statutory powers granted by Sections 26 and 27 of the Act.
The FBR subsequently issued show-cause notices under Section 24 read with Section 33 of the Act, initiating formal adjudication proceedings to determine potential excise duty liabilities.
However, the affected companies challenged the department’s actions before the PHC through constitutional petitions. The court ruled in favor of the companies, declaring the sealing of the manufacturing units illegal while allowing authorities to continue investigations and assessments according to law.
In its appeal, the FBR argues that the PHC exceeded its constitutional jurisdiction by intervening despite the existence of adequate statutory remedies under Sections 33, 34, and 35 of the Federal Excise Act. The department maintains that the judgment contradicts the legal doctrine of exhaustion of remedies, which has been consistently upheld by the Supreme Court of Pakistan, including in the case reported as 2022 SCMR 92.
The petition further states that the high court interfered at a premature stage, as the matter was still under adjudication and no final determination of liability had been made.
FBR officials contend that the sealing of the manufacturing units was a preventive regulatory measure designed to safeguard federal revenue, rather than a punitive action. The FCC is now expected to decide whether the PHC’s ruling was legally justified or whether the case should proceed under the statutory framework of the excise law.