New procedures establish approval requirements for sealing non-integrated businesses and set out rules for the seizure and confiscation of non-compliant goods.
ISLAMABAD, September 29, 2026: The Federal Board of Revenue (FBR) has introduced new procedures for sealing and de-sealing the business premises of non-integrated persons and strengthened rules governing electronic production monitoring, including the seizure and confiscation of goods that fail to meet prescribed requirements.
Through SRO 1662(I)/2026, the tax authority has amended the Sales Tax Rules, 2006, under Sections 50, 33 and 40C of the Sales Tax Act, 1990.
The amendments establish a formal approval process for sealing business premises, specify conditions for reopening them and introduce procedures for confiscating goods and transport vehicles involved in violations of production monitoring and identification requirements.
FBR establishes procedure for sealing business premises
The amended Chapter XIV-AD of the Sales Tax Rules, 2006, now covers procedures for sealing and de-sealing business premises. It also introduces a sub-chapter specifically dealing with persons other than Tier-I retailers who fail to integrate their businesses with the FBR’s prescribed monitoring systems.
Under the new provisions, the Commissioner Inland Revenue having jurisdiction over the premises may initiate sealing proceedings where a person required to integrate their business fails to comply with the applicable requirements.
An Inland Revenue officer not below the rank of Assistant Commissioner must submit a written report to the commissioner detailing the circumstances supporting the proposed action.
The commissioner must examine the report and conduct any necessary inquiry, including verification of claims that non-compliance resulted from a malfunction of the FBR’s computerised system, failure by an authorised vendor, or an interruption in electricity or telecommunications services.
The report must then be forwarded to the relevant Chief Commissioner Inland Revenue, setting out the reasons for recommending or rejecting the proposed sealing.
Chief Commissioner to approve sealing
The amended rules require the Chief Commissioner Inland Revenue to issue a written order either authorising or rejecting a sealing proposal, with reasons recorded in the order.
Where sealing is approved, the order must identify the officers and officials responsible for carrying it out and specify whether the entire premises or only a particular section, production line or filling line is to be sealed.
If the entire premises is to be sealed, the reasons must be recorded in writing. A copy of the order must also be served on the affected person before the sealing operation begins.
Where premises fall within the territorial jurisdiction of another field formation, the relevant chief commissioner must request the FBR to notify the team responsible for implementing the order.
The commissioner may also seek assistance from the police or another competent authority where necessary for the safe and effective execution of the sealing operation. The Chief Commissioner Inland Revenue must also communicate the sealing order to the FBR’s Member Inland Revenue (Operations) for information.
Conditions for de-sealing business premises
The rules state that the premises of a non-integrated registered person will remain sealed until the prescribed penalty has been imposed and paid and the required monitoring system has been integrated with the FBR’s computerised system.
The integration requirement covers production monitoring systems, video surveillance, digital eye technology and other monitoring mechanisms prescribed under the law.
Integration must be completed in the presence of an FBR team constituted by the relevant Commissioner Inland Revenue. The team must include a technical expert to ensure that installation and integration are properly completed.
Following installation, the Commissioner Inland Revenue must issue a written certificate to the Chief Commissioner within three days, confirming that the prescribed system has been installed in accordance with the law and rules and is free from technical and functional errors.
Expanded scope of electronic production monitoring
The notification also amends Chapter XIV-BA of the Sales Tax Rules, 2006, clarifying the scope of electronic monitoring, tracking and identification of production and related business activities.
The provisions cover registered persons or classes of registered persons, manufacturers or classes of manufacturers, goods listed in the Third Schedule to the Sales Tax Act, 1990, and other taxable goods or categories specified by the FBR through an official notification.
The board may prescribe different implementation dates for different persons, manufacturers, goods, sectors or classes of taxpayers.
Under the revised rules, production monitoring systems, video surveillance, video analytics, digital eye technology and other prescribed mechanisms may be used to monitor production, sales, clearances, stock and associated activities.
These systems are intended to capture operational data in real time, identify and count goods, transmit information to the FBR’s Central Control Unit or another designated system, record unexpected stoppages or tampering, reconcile production quantities and support data-driven enforcement.
Only authorised vendors permitted
The amendments require manufacturers and other persons covered by the monitoring regime to procure and install production monitoring systems and related equipment exclusively through FBR-authorised vendors.
Authorised vendors must ensure that installed systems and equipment meet the technical specifications, standards and requirements approved by the board.
Businesses covered by the rules must provide access to their production facilities for installation, routine operation, inspection, maintenance, repairs and upgrades of monitoring systems.
They must not manufacture, process, pack, clear, remove, sell, supply or otherwise deal in specified taxable goods except through the prescribed monitoring mechanism and in accordance with FBR requirements.
Applicable tax stamps, banderoles, stickers, labels, barcodes and other prescribed identification marks or devices must also be affixed to specified goods before their removal or supply.
Non-compliant goods and vehicles liable to confiscation
A significant part of the notification establishes a dedicated framework for the seizure and confiscation of goods that do not comply with production monitoring and identification requirements.
Specified taxable goods manufactured, produced, removed, transported, supplied or otherwise dealt with outside the prescribed monitoring system may be seized and confiscated under Section 40C of the Sales Tax Act, 1990, and the relevant rules.
Vehicles or other means of transport used to move such goods may also be seized and, following adjudication, confiscated.
Goods listed in the Third Schedule and chargeable to tax on retail price may additionally face confiscation if they are imported or manufactured and supplied without the retail price being printed as required under the law.
Mandatory inventory and seizure documentation
The amended rules prescribe a formal process for seizure operations.
Before seizing goods or a conveyance, the authorised Inland Revenue officer must record the reasons for the action in writing and prepare an inventory containing details including the description, quantity, brand, make, packaging, batch number and identifying characteristics of the goods.
The inventory must be signed by the seizing officer and the person from whose possession the goods are taken. If that person is absent or refuses to sign, at least one witness must sign the inventory.
The officer must also issue a seizure memorandum stating the grounds for seizure, the date and location, details of the goods and conveyance, and particulars of the person from whose possession they were taken. A copy must be provided to that person immediately.
Seized goods must be transferred within 48 hours to an Inland Revenue officer authorised by the commissioner. If no such officer is available, the goods may be deposited at the nearest Regional Tax Office, Corporate Tax Office, Large Taxpayers Office or Tax Facilitation Centre, with the relevant chief commissioner informed.
Where no such office is reasonably accessible, the commissioner may designate another location for secure storage. The owner is responsible for the expenses associated with storing and preserving the seized goods and conveyance.
Show-cause notice and adjudication timelines
The adjudicating authority, an Inland Revenue officer not below the rank of Assistant Commissioner with jurisdiction over the proceedings, must issue a show-cause notice within seven days of seizure.
The notice must specify the alleged violation, particulars of the goods and conveyance, grounds for proposed confiscation and the date and place of the hearing. The recipient must be given at least 14 days to submit a reply.
Adjudication proceedings must ordinarily be completed within 30 days of seizure. Where circumstances beyond the authority’s control prevent completion within that period, the commissioner may grant an extension of up to 15 additional days, provided the reasons are recorded in writing.
After providing an opportunity for a hearing, the adjudicating authority must issue a reasoned order either confiscating the goods and conveyance where the legal requirements are established or releasing them where the alleged violation is not proved or confiscation is not authorised.
In addition to confiscation, penalties and default surcharge may be imposed where applicable under the law.
For goods covered by the specified retail-price provision, the rules allow the adjudicating authority to permit redemption after confiscation upon payment of a fine of not less than 20 per cent of the total retail price of the goods. Appeals against orders issued under the new sub-chapter may be filed in accordance with the Sales Tax Act, 1990.
Stronger framework for monitoring and enforcement
Through SRO 1662(I)/2026, the FBR has formalised the process for sealing non-integrated business premises while expanding the operational and enforcement framework for production monitoring.
The amended rules establish approval requirements, safeguards for affected businesses, technical verification procedures and defined timelines for handling seized goods.
The changes also provide the tax administration with a structured mechanism to address non-compliance involving production monitoring systems, prescribed identification marks and the movement of taxable goods.