FBR moves constitutional court against PHC ruling on tobacco unit sealing

The Federal Board of Revenue (FBR) has approached the Federal Constitutional Court, seeking to restore its enforcement powers under the Federal Excise Act, 2005, after the Peshawar High Court set aside action against cigarette manufacturing units, Business Recorder reported. 

The FBR filed three petitions seeking leave to appeal against the December 18, 2025, ruling of the Peshawar High Court, arguing that the judgment raises key questions regarding the scope of constitutional jurisdiction.

The case relates to a December 12 operation in Mardan, where tax officials conducted searches at cigarette manufacturing units after obtaining warrants on suspicion of federal excise duty evasion.

During the operation, authorities recovered around 2.75 million kilograms of unprocessed tobacco from multiple storage sites and sealed the units under provisions of the Federal Excise Act and Rules.

The department stated that the action was based on “reason to believe” that the stock was undeclared and that the facilities were operating in violation of excise laws.

Following the operation, show-cause notices were issued to initiate proceedings for determination of tax liability under the applicable legal framework.

The affected companies challenged the action before the Peshawar High Court, which ruled in their favour and declared the sealing of the manufacturing units unlawful, while allowing authorities to continue inquiries in accordance with the law.

In its petitions, the FBR argued that the High Court intervened prematurely, as the matter was still at the show-cause stage and no final determination had been made.

The department maintained that constitutional jurisdiction should not be used to bypass statutory remedies available under fiscal laws and cited precedent supporting this position.

It also contested the High Court’s interpretation of “reason to believe,” arguing that such assessment should be based on available material at the time of action rather than conclusive findings after adjudication.

The FBR further submitted that sealing of the units was a regulatory measure aimed at protecting revenue interests and not a punitive step, and requested the constitutional court to set aside the High Court’s ruling.