Summary: (Against the judgment dated 18.03.2022 of the High Court of Sindh, Karachi passed in Special Customs Reference Application No. 05 of 2016). Customs Act (IV of 1969)--- ----Ss. 2(s), 157(2), proviso & 157(3)---S.R.O. 499(I) /2009,dated 13.06.2009---Smuggling---Vehicle carrying smuggled goods, confiscation of---No connection of owner of vehicle with smuggling---Burden of proof on owner ---An LPG bowser was found parked at a road side ; on search, foreign-origin High Speed Diesel/HSD was found in hidden cavities / a separate hole made in the roof of LPG bowser for transportation through vehicle-in-question---On the strength of the registration book found inside the vehicle-in-question, the petitioner being the owner was proceeded against, resulting in confiscation of both HSD and vehicle-in-question---Plea / defence of the petitioner / owner , seeking release of vehicle-in-question was that at the relevant time the vehicle-in-question, under an agreement , was with someone for transportation and that he was unaware of the smuggling of the goods i.e. foreign-origin HSD---Validity---Section 157 of the Customs Act, 1969 ('the Act 1969') unambiguously talks about the confiscation of the conveyance of whatever kind used in the removal of any goods liable to confiscation under the Act, 1969---Proviso to subsection (2) of section 157 of the Act, 1969 only caters for its release by an authorized officer of the customs as required by the prescribed rules pending adjudication of the goods involving its confiscation, subject to furnishing sufficient guarantee from the scheduled bank for due production of the conveyance at any time and place it is required by the appropriate officer to be produced---Subsection (3) of section 157 of the Act, 1969 also related to confiscation of vessel which includes, tackle, apparel and furniture---The distinction, however , was made in terms of the S.R.O. 499(I) / 2009, dated 13.06.2009 issued under first proviso to section 181 of S.R.O. 499(I) /2009,dated 13.06.2009 and such relaxation was not available where conveyance was found carrying smuggled goods in specially made cavities, hidden or being used exclusively and wholly for the transportation of the smuggled goods and where such activity was apparent---A hire agreement produced at the Tribunal stage was only a contract between two private persons and would not be convincing for the Court to take any different view, however, under the reference jurisdiction the High Court rightly discarded the effect of such agreement as nothing was produced in the two forums below---The burden to prove that the owner had no nexus with the smuggled goods or with such transaction and transportation was on the petitioner himself and which had not been discharged satisfactorily at all---Nothing was disclosed as to what amount was received by the petitioner under the contract nor the motor registration wing was informed of such contract as required under Motor Vehicle Rules, 1969---Surprisingly, the registration book was also found inside the vehicle, though an authority letter in said regard for driving the vehicle could have been sufficient as registration book was an important document to claim title --- Petitioner had also not satisfactorily discharged the burden that the hidden cavities or the separate hole made in the roof of LPG bowser for purposes of transporting goods was not in his knowledge and that such "rebuilding" of the LPG bowser has rendered its use for the transportation of LPG as unfit---When the petitioner had failed to disclose the disconnect between smuggled goods managed through his vehicle having special cavities for the transportation of the smuggled goods it would not leave the option to the owner to pay fine rather fell in the proviso to the Section 157(2) of Act, 1969 and, consequently, such options were not available---Thus, no case was made out to interfere with the impugned judgment passed by the High Court---Petition to leave to appeal was dismissed. Ms. Dil Kurram Shaheen, Advocate Supreme Court for Petitioner. Munawar Ali Memon, Advocate Supreme Court for Respondents (via video-link from Karachi). Ch. M. Javed, Chief Customs for Respondents. M. Tahir, Director Law, Customs for Respondents (At Islamabad). Rana Asadullah, Additional Attorney-General for Pakistan on Court Notice. Date of hearing: 7th May, 2025.

Summary: (a) Customs Act (IV of 1969) ----Ss. 2(s), 157 & 180—Confiscation of conveyance—Smuggling of petroleum product—Burden of proof on owner—Specially modified cavities in vehicle—Absence of bona fide defence Petitioner’s LPG bowser was seized by Customs Anti-Smuggling Organization while transporting foreign-origin high speed diesel (HSD); Show Cause Notice issued under S. 180—Petitioner contended the vehicle was on hire and smuggling was without his knowledge—Tribunal allowed appeal, setting aside confiscation—High Court, however, allowed reference under S. 196, holding petitioner failed to discharge burden of proving disconnection from the smuggled goods—Supreme Court upheld High Court’s view, emphasizing that under S. 157, burden lies on owner to show lack of nexus—Modification of LPG bowser with concealed compartments indicated knowledge or willful ignorance—Hiring contract, produced belatedly, was insufficient to rebut statutory presumption—Held, no right to release or redemption exists where vehicle is used exclusively for smuggling with concealed modifications. Cited Case: • Abdul Razzak v. Pakistan PLD 1974 SC 5 (distinguished) (b) Statutory Rules & Orders—S.R.O. 499(I)/2009 dated 13.06.2009 ----Application—Conveyance carrying smuggled goods in concealed compartments—Ineligibility for redemption Relaxation under first proviso to S. 181 of the Act via S.R.O. 499(I)/2009 not applicable where vehicle is found with hidden cavities or used wholly for smuggling—Petitioner’s bowser was structurally modified with concealed roof inlet for illegal transport—Held, such facts bar applicability of redemption option or imposition of fine in lieu of confiscation. (c) Evidence Act (I of 1872), General Principles—Burden of proof—Owner’s liability in smuggling cases Petitioner failed to produce documentary evidence of hire amount, report contract to Motor Vehicle Authority, or explain presence of original registration book in vehicle—Held, burden under customs law is affirmative; mere denial or unsubstantiated private agreement does not exonerate vehicle owner—Rebuttal of presumptive culpability requires cogent and credible evidence. Disposition: Leave to appeal declined—High Court’s judgment upheld—Petition dismissed—Confiscation of vehicle maintained due to exclusive use in smuggling operation and failure to rebut statutory presumption.

Summary: (Against judgment dated 21.11.2023 passed by the Lahore High Court, Lahore in S.T.R. No. 30 of 2015). Federal Excise Act (VII of 2005)--- ----Ss. 2(8d), 3, 12(12a), 34A, 40 & First Schedule, Table II---Federal Excise Rules, 2005, Rr. 2(mb) & 43A---Term "franchise"---Liability to pay duty---Determination---Respondent/taxpayer entered into various franchise agreements and was providing dutiable services, as set out in Table II of First Schedule to Federal Excise Act, 2005---Appellate Tribunal Inland Revenue held that in the relevant year 2012, it was the franchisee(s) who had to pay duty under Federal Excise Act, 2005 and the order was maintained by High Court---Validity---On a proper reading and application of Section 3 of Federal Excise Act, 2005 and Rule 43A of Federal Excise Rules, 2005, the liability to pay excise duty lay on the franchiser (respondent tax payer)---Supreme Court set aside order passed by High Court and the relevant question was answered in affirmative, in favor of authorities---Appeal was allowed. Ahmed Pervaiz, Advocate Supreme Court for Petitioner. Imtiaz Rashid Siddiqui, Advocate Supreme Court for Respondent. Date of hearing: 24th April, 2025.

Summary: (a) Federal Excise Act, 2005 ----S. 3(5)(c)---Franchise services---Liability to pay duty---Legal incidence of excise duty---Franchiser vs franchisee---Scope and interpretation Dispute regarding who bears legal incidence of excise duty on franchise services provided within Pakistan—Department contended liability lay on the respondent franchiser under S. 3(5)(c), while taxpayer argued Rule 43A shifted liability to franchisees—Held, parent statute clearly fixed legal obligation to pay duty on the person providing the service, i.e., the franchiser—Statutory scheme admits no exception unless expressly provided—Franchisees made liable only where franchiser is located outside Pakistan—Court reaffirmed distinction between legal incidence of tax (imposed by statute) and its economic burden (commercially passed on)—Held, delegated legislation cannot override or alter express provisions of parent statute—High Court and Tribunal erred in placing reliance on Rule 43A—Appeal allowed and legal incidence affirmed on franchiser. Cited Case: • British India Corporation Ltd. v. Collector of Central Excise AIR 1963 SC 104 (relied) (b) Interpretation of Statutes ----Delegated legislation---Limits---Subordinate legislation cannot override express provision of statute---Franchise excise regime Rule 43A of the Federal Excise Rules, 2005 held to be inapplicable to franchise agreements between Pakistani entities—Court observed that Rule 43A, though validly framed before insertion of S. 3(5), could not continue to operate once legal incidence was expressly codified in the parent statute—Any attempt to shift liability via rule-making beyond what is provided in the statute declared ultra vires—Distinguished from Sales Tax Act, 1990, where express power exists under S. 3(3A) to shift tax burden—No such enabling clause in the Federal Excise Act, 2005—Court clarified that tax rules cannot create primary liability where none exists under statute. (c) Tax Procedure---Reference under wrong statute ----Federal Excise Act, 2005---S. 34A---Sales Tax Act, 1990---S. 47---Wrong statutory provision invoked in tax reference---Effect Respondent argued that department filed reference before High Court under wrong law, i.e., S. 47 of Sales Tax Act, 1990 instead of S. 34A of Federal Excise Act, 2005—Court held this to be a procedural irregularity of no consequence—No objection raised before High Court, and same cause of action and forum involved—Petition maintained and appeal proceeded on merits.

Summary: (a) Customs Act, 1969 read with S.R.O. 565(I)/2006 dated 05.06.2006 as amended by S.R.O. 474(I)/2016 dated 24.06.2016 ----Exemption from customs duty---HS Codes 3402.1300 & 3402.1190---Manufacturers and formulators of agricultural pesticides---Approval by Ministry of National Food Security & Research---Scope---**Petitioner, importer and manufacturer of agricultural surfactants/surface-active agents such as stabilizers, emulsifiers, and solvents, sought customs duty exemption under SRO 565 as amended by SRO 474---Claim denied on ground that petitioner was not approved or recognized by Ministry of National Food Security & Research as a manufacturer/formulator of agricultural pesticides---Held, exemption under Column (3) of Table at Serial (3) of the SRO was subject to conditions mentioned in Column (2), including mandatory approval by Ministry---Mere classification under HS Code was insufficient to claim benefit of zero percent duty---Obligations under SRO were binding and petitioner’s failure to meet prerequisites disentitled it from exemption---No vested right was curtailed and petitioner may still challenge vires of SRO before appropriate forum if so advised---Petitions dismissed and leave to appeal refused. (b) Interpretation of SROs and Tax Exemptions ----Conditional exemptions---Legislative intent---SRO-based tax exemptions not absolute and must be interpreted strictly---Held, exemption clauses in SROs are construed narrowly, and compliance with specified conditions is mandatory---Failure to fulfill qualifying requirements renders claim untenable irrespective of nature of imported goods or similarity to exempted items---Distinction drawn between provisions of Sales Tax Act, 1990 and subject SRO held valid as former lacked comparable restrictive language.

Summary: (On appeal from the judgment dated 27.05.2013 of the Peshawar High Court, Peshawar passed in Civil Revision No. 1211 of 2011). (a) Customs Act (IV of 1969)--- ----Ss. 2 (s), 156 (1) (89) & 211 (2)---Notification SRO 491(I)/85, dated 23-05-1985---Smuggled vehicles---Possession---Lawful excuse, plea of---A uthorities were aggrieved of order passed by High Court in exercise of Reference jurisdiction pertaining to confiscation of vehicles in question which were alleged to be smuggled---Validity---Condition precedent for Section 156(1)(89) of Customs Act, 1969 to apply, is that goods in question should be smuggled, in terms of Section 2(s) of Customs Act, 1969, read with applicable notification thereunder---Vehicles in question could be considered smuggled if either (i) at the relevant time, the applicable notification in terms of Section 2(s)(ii) of Customs Act, 1969 included vehicles, or (ii) in terms of Section 2(s)(iii) of Customs Act, 1969 the vehicles were brought in by any route other than a route declared under Section 9 or 10 of Customs Act, 1969 or from any place other than the customs station---In cases of registered vehicles, if at the time the vehicle was intercepted, more than 3 years had elapsed for cases prior to Finance Act, 2007 and 5 years for cases thereafter, the defence of "lawful excuse" was indefeasible---It was reasonable to assume that if a vehicle stood registered, the government was presumed to have exercised due care and diligence with respect to its obligation to see whatever duties and taxes as payable to the government before a vehicle could be registered, stood paid---Vehicles in question were registered, which registration was duly verified, and they were presumed to have been brought lawfully; after completion of notified period in case of used vehicles also---Without any proof it could not be said that a person (last owner) was involved in registration of vehicle knowing fully well that no duties and taxes, as required under the law, were paid, and that therefore the vehicle was fraudulently registered, and the vehicle could be seized from him on his failure to produce documents of import and payment of duties and taxes thereon, and even beyond the period of three years or five years, as the case would be, as required under Section 211(2) of Customs Act, 1969---In most of the cases since first registration, the vehicles had changed many owners on the strength of registration book and no adverse inference could be drawn for the ultimate bona fide owners unless otherwise proved by the authorities, in which exercise they had failed---Verified registration book and official record was enough for bona fide presumption that a valid title existed---Vehicles in question were those which were either auctioned or were brought into Pakistan and were registered through a statutory process and the auction papers or registration papers of some other vehicles were not being used fraudulently---Where it was established that chassis/engine numbers had been tampered with after auction or registration to match the description of auctioned or registered vehicle, the lawful excuse was not available---Supreme Court declined to interfere in the orders passed by High Court as the questions had been answered cumulatively---Appeal was dismissed. Commissioner Inland Revenue v. Panther Sports 2022 SCMR 1135 rel. (b) Interpretation of statutes--- ----Pari materia provisions---Interpretation---Principle---Where two provisions are pari materia, by applying doctrine of statutory construction, there cannot be a different interpretation for them. (c) Customs Act (IV of 1969)--- ----S. 156 (1)(89)---Expression "lawful excuse"---Scope---Lawful excuse is an expression that is of wider import and (carries) lesser degree of burden than lawful authority---For proving a lawful excuse, which falls short of lawful authority, it is the excuse put forward by accused, rather than handling smuggled goods, that must be shown to be lawful. PLD 1955 PC 29 rel. Mrs. Misbah Gulnar Sharif, Advocate Supreme Court for Appellants (in C.A. No. 1088 of 2013). M. D. Shehzad Feroze, Advocate Supreme Court, Syed Rifaqat Hussain Shah, Advocate-on-Record and Shabbir Hussain, Superintendent Customs for Appelants (in C.As. Nos. 1231, 1233 and 1234 of 2013). Dr. Farhat Zafar, Advocate Supreme Court and Moin-ud-Din Ahmed Wani, Collector (Enforcement), Karachi for Appellants (in C.As. Nos. 1232, 1235 and 1236 of 2013). Raja Muhammad Iqbal, Advocate Supreme Court and Moin-ud-Din Ahmed Wani, Collector (Enforcement), Karachi for Appellants (in C.As. Nos. 142-K of 2015 and 462-463 of 2022). Kafeel Ahmed, Advocate Supreme Court for Appellants (in C.A. No. 938 of 2018) (via video-link from Karachi). Akhtar Hussain, Senior Advocate Supreme Court and K. A. Wahab, Advocate Supreme Court for Appellants (in C.As. Nos. 453-461 and 464-466 of 2022) (both via video-link from Karachi). Masood Ahmed, Director, Intelligence and Investigation, Customs, Imran Afzal, Additional Director and Shaheer Ahmed, ETO/E&T, Department for Appellant (department) (via video-link from Karachi). M. Younas Thaheem, Advocate Supreme Court for Respondent No. 2 (in C.A. No. 458 of 2022). Ex-parte for all other Respondents. Sirdar Ahmed Jamal Sukhera, Advocate Supreme Court Amicus Curiae. Date of hearing: 3rd March, 2025.

Summary: (a) Customs Act, 1969 ‑‑‑Ss. 2(s), 156(1)(8), (89) & (90), 187 & 211—Registered motor‑vehicles, already bearing verified provincial registration or sold through a Government auction, cannot be seized or confiscated merely because the present possessor is unable to produce original import documents—Once such owner shows (i) an authenticated registration book issued under the Motor Vehicles Ordinance, 1965 or (ii) genuine auction papers, a “lawful excuse” within the meaning of cl. (89) is established, shifting the burden to Customs to prove (through affirmative evidence) that the vehicle entered Pakistan via an unauthorised route or without payment of leviable duties—Failure by Customs to discharge that onus renders the seizure illegal.  Cited cases: Commissioner Inland Revenue v. Panther Sports 2022 SCMR 1135; Privy Council PLD 1955 PC 29. (b) S. 211, Customs Act—Limitation for record‑keeping—Importers and other stakeholders are bound to preserve import records only for three years (five years after Finance Act 2007)—Where more than the prescribed period has elapsed from the date of auction or first registration, no adverse inference can be drawn from non‑production of import papers, and seizure founded solely on that omission is unsustainable. (c) S. 2(s)(ii) & SRO 491(I)/85 (23‑5‑1985) as amended 14‑9‑1998—Motor‑vehicles brought into Pakistan before 14‑9‑1998 (when vehicles were first added to the notified list of goods) are not per se “smuggled goods” under cl. (ii); to attract that clause Customs must affirmatively show import through an undeclared route under S. 2(s)(iii). (d) Motor Vehicles Ordinance, 1965 ‑‑‑Ss. 23‑43 & 27—Statutory procedure for inspection and registration creates a presumption of regularity; a duly verified registration certificate is an “other document prescribed by law” for purposes of S. 187, Customs Act, and constitutes prima facie evidence of lawful title to the vehicle. (e) Tampering exception—Where the engine or chassis number has been obliterated, re‑punched or otherwise falsified to match a different vehicle, or where auction/registration documents are proved forged, the defence of lawful excuse is unavailable; such vehicles remain liable to confiscation under Ss. 156(1)(89) & (90). (f) Burden of proof—“Lawful authority” vs. “lawful excuse”—“Lawful authority” in S. 187 demands strict proof of a permit or licence, whereas “lawful excuse” in cl. (89) calls only for a plausible explanation; equating the two would impermissibly narrow the statutory defence. Once a plausible excuse is shown, Customs must prove smuggling by positive evidence—the mere absence of import documents does not suffice.  Cited cases: Privy Council PLD 1955 PC 29 (distinction affirmed). Disposition—All twenty‑three civil appeals filed by Customs dismissed; Sindh High Court judgments affirmed. Registered or auctioned vehicles to be released to respondents; only those proven to bear tampered identifiers or forged papers remain subject to confiscation in accordance with law.

Summary: (a) Customs Act, 1969 ----Ss. 2(s), 9, 10, 156(1)(8), (89), (90), 187, 211---Motor vehicles---Smuggling---Burden of proof---Lawful excuse--- Held, a motor vehicle registered through the official process under the Motor Vehicles Ordinance, 1965, and in possession of a verified registration book, is presumed to have been lawfully imported unless Customs Authorities establish otherwise through credible evidence---Failure of owner to produce import documents after expiry of statutory record-keeping period (five years under S.211, substituted by Finance Act, 2007) does not render the vehicle “smuggled” in terms of S.2(s)---Such owner has a “lawful excuse” under S.156(1)(89), and burden shifts back to the Customs Department to prove the charge of smuggling through positive evidence---Held, lawful excuse is a lesser burden than “lawful authority” under S.187 and suffices as a statutory defence to penal confiscation---Presumption of legality attaches to registration issued under the Motor Vehicles Ordinance, 1965. Cited Cases: • Commissioner Inland Revenue v. Panther Sports, 2022 SCMR 1135 • PLD 1955 PC 29 (Privy Council) • PLD 2003 SC 688 (Muhammad Akram case) (b) Customs Act, 1969 & Motor Vehicles Ordinance, 1965 ----S. 211 & Ss. 23–43 M.V.O., 1965---Registration of vehicle---Auctioned vehicles---Retention period of import records--- Where a vehicle is registered after lapse of five years from its auction or entry into Pakistan, presumption of regularity in official acts applies and no adverse inference can be drawn against the registered owner for non-production of import documents---Motor vehicle registration involves physical inspection and verification under Ss. 27–30 of the Motor Vehicles Ordinance, 1965, thereby reinforcing the presumption of legality unless fraud or tampering is established---Court held that once this statutory registration process is completed and verified, such vehicle cannot be treated as smuggled solely due to absence of import record beyond the statutory period. (c) Customs Act, 1969 ----Ss. 156(1)(89) & (90), 211---Tampered vehicles---Effect---Limitation of statutory defence--- Lawful excuse under S.156(1)(89) is not available in cases where it is proved that chassis or engine numbers were tampered with after registration or auction to match another vehicle’s description---Such alteration without prior approval under Motor Vehicles Ordinance nullifies statutory protection and permits Customs to proceed with confiscation---Held, exception to protection exists only where auction reports explicitly disclose tampering or such alterations were lawfully approved. (d) Interpretation of Statutes---General v. Specific Provisions ----S. 187 v. S. 156(1)(89) & (90), Customs Act, 1969---Lawful authority v. lawful excuse---Distinction--- Supreme Court clarified that S.187 (general provision) deals with lawful authority, i.e., documentation issued under law, while S.156(1)(89) & (90) (special provisions) refer to lawful excuse, which has a broader and more lenient threshold---Lawful excuse includes bona fide registration, passage of statutory period, and lack of knowledge of wrongdoing---Held, imposing the higher burden of S.187 on penal provisions under S.156 would defeat legislative intent---Interpretation must favor special provision in case of conflict. **(e) Search and Seizure---Procedure---Female passengers and privacy--- ----S. 162, Customs Act, 1969---Search guidelines---Respect for privacy--- While upholding the customs authorities' investigative powers, Court directed that searches and interceptions be conducted with due regard for individual dignity and privacy, especially in the case of women---Female customs officers and lady sepoys must be involved in such procedures to avoid undue hardship or violation of personal dignity---Strict compliance with statutory safeguards under S.162 emphasized. **(f) Public Administration---Presumption of official acts---Vehicle registration--- Statutory registration of a vehicle under the Motor Vehicles Ordinance, 1965 creates a presumption of legality in administrative actions---Where government agencies have registered a vehicle and verified ownership, it is presumed to be lawful unless fraud is proved---Held, seizure of such vehicles without clear evidence of wrongdoing or tampering is arbitrary and inconsistent with settled legal norms---Customs Authorities must adopt joint verification mechanisms with registration authorities to prevent such disputes in future. Disposition: Appeals dismissed. Questions of law decided in favour of registered vehicle owners. Customs Department failed to discharge burden to rebut presumption of lawful importation and possession.

Summary: (a) Limitation--- ----Fiscal laws---Principle of limitation is a crucial component of tax law, designed to ensure certainty, finality, and procedural discipline in legal proceedings---Limitation prescribes statutory time frame within which legal actions, including tax assessments and recovery proceedings must be initiated---Primary objective of limitation laws is to prevent undue delay, eliminate uncertainty and protect taxpayers from indefinite exposure to liability---Principle of limitation in tax law serves as a critical safeguard against arbitrary and indefinite proceedings, ensuring procedural fairness and adherence to statutory mandates---Interpretation of limitation provisions depends on legislative intent and statutory language---Where tax statutes prescribe a definitive time frame using prohibitive or restrictive language, such provisions are deemed mandatory, rendering any action beyond the prescribed period invalid---Such approach prevents tax authorities from exercising unfettered discretion in initiating or concluding proceedings outside the statutory framework. (b) Khyber Pakhtunkhwa Sales Tax on Services Act (XIX of 2022)--- ----S. 71---Khyber Pakhtunkhwa Finance Act (XXI of 2013), Ss. 40 & 68---Reference---Tax and assessment---Limitation---Adjournment period---Time frame---Dispute was with regard to exclusion of period attributed to taxpayer by seeking adjournments---Validity---Statutory provisions governing exclusion of time due to adjournments sought by taxpayer, are enshrined in Ss. 40(4) & 68(5) of Khyber Pakhtunkhwa Finance Act, 2013---Both provisions share similar language in principle but a fundamental distinction exists: provision of S. 68(5) of Finance Act, 2013 explicitly imposes a maximum cap of thirty days on exclusion of time due to such adjournments, whereas provision of S.40(4) of Khyber Pakhtunkhwa Finance Act, 2013 does not prescribe any such limitation---Such distinction is pivotal in determining correct computation of limitation period in each case---Appellate Tribunal Khyber Pakhtunkhwa Revenue Authority, while interpreting provisions of Ss. 40 & 68 of Khyber Pakhtunkhwa Finance Act, 2013, failed to consider that Show Cause Notices issued to taxpayer stemmed from audit, which fell within the ambit of S.40 of Khyber Pakhtunkhwa Finance Act, 2013, rather than S.68 of Khyber Pakhtunkhwa Finance Act, 2013---By applying thirty-day cap on the exclusion of time due to adjournments obtained by taxpayers, the Tribunal had misinterpreted the law---Correct legal approach required the Tribunal to assess the matter under S.40 of Khyber Pakhtunkhwa Finance Act, 2013 wherein no such cap was prescribed, and the period consumed due to adjournments sought by taxpayers was to be excluded in its entirety---Reasoning of Appellate Tribunal Khyber Pakhtunkhwa Revenue Authority was flawed as it improperly applied statutory cap to S.40 of Khyber Pakhtunkhwa Finance Act, 2013 to adjudication that was only applicable under S.68 of Khyber Pakhtunkhwa Finance Act, 2013, thereby rendering its decision legally unsustainable---High Court remanded the matter to Appellate Tribunal Khyber Pakhtunkhwa Revenue Authority for reconsideration, as the assessment was made within the prescribed limitation period---High Court directed Appellate Tribunal Khyber Pakhtunkhwa Revenue Authority to re-evaluate the case while duly accounting for all relevant documentation in computing the limitation period in accordance with the applicable provisions of Khyber Pakhtunkhwa Finance Act, 2013, and where found to be in time, proceed to decide the cases on merit---Reference was allowed in circumstances. Messrs Tri-Star Industries (Pvt.) Ltd. v. Trisa Burstenfabrik AG Triengen and another 2023 SCMR 1502 and Commissioner Inland Revenue, Zone-II, Regional Tax Office (RTO), Mayo Road, Rawalpindi and another v. Messrs Sarwaq Traders, Adamjee Road, Rawalpindi 2022 SCMR 1333 rel. Barrister Atif Rahim Burki for Petitioner. Imran Javed, Shahid Jan and Nadia Gul for Respondent. Date of hearing: 6th February, 2025. JUDGMENT SYED MUDASSER AMEER, J.- Introduction: 1. This and the connected eight reference applications have been filed by the Director General Khyber Pakhtunkhwa Revenue Authority (DG, KPRA) under Section 71 of the Khyber Pakhtunkhwa Sales Tax on Services Act, 2022 against similar orders of the same date, i.e., 16.06.2022 raising the same question of law pertaining to limitation for adjudication and interpretation of Sections 40 and 68 of the Khyber Pakhtunkhwa Finance Act, 2013. Since the same questions of law and interpretation are involved, we intend to decide all the 09 reference applications through this consolidated judgment. 2. The details of the connected reference applications are given below; S. No. Case No. Title 1. Sales Tax Ref. No.95/2022 DG KP Revenue Authority v. M/s Bee Line 2. Sales Tax Ref. No.96/2022 DG KP Revenue Authority v. M/s Haleem Telecom 3. Sales Tax Ref. No.97/2022 DG KP Revenue Authority v. M/s Reyan Telecom 4. Sales Tax Ref. No.98/2022 DG KP Revenue Authority v. M/s Ideal Trader and Developers 5. Sales Tax Ref. No.99/2022 DG KP Revenue Authority v. M/s Jadoon Communications 6. Sales Tax Ref. No.100/2022 DG KP Revenue Authority v. M/s Blue Dot 7. Sales Tax Ref. No. 101 / 2022 DG KP Revenue Authority v. M/s Ashrafia Communication 8. Sales Tax Ref. No.102/2022 DG KP Revenue Authority v. M/s Haroon Traders Facts of the Case: 3. In all these cases, the adjudication was concluded apparently beyond the statutory limitation period prescribed by law. However, if the days attributable to adjournments sought by the taxpayer are excluded from the computation of the prescribed period, the adjudication would then fall within the legally provided timeframe. The determination of whether the adjudication is time-barred thus hinges upon the exclusion of the period of delay caused by the taxpayer's own requests for adjournments, as permissible under the applicable legal provisions. 4. It is also pertinent to highlight that adjudication under the Khyber Pakhtunkhwa Finance Act, 2013, may be conducted either under Section 40 or Section 68, with each section providing distinct parameters for the exclusion of time attributable to adjournments sought by the taxpayer. The applicability of these provisions directly impacts the computation of the statutory limitation period, thereby determining whether the adjudication falls within the legally prescribed timeframe. Legal Framework: 5. Since the matter involves the interpretation of Sections 40 and 68 of the Khyber Pakhtunkhwa Finance Act, 2013, it is appropriate to reproduce the text of these provisions for ready reference; "40. Assessment of tax.---(1) Where on the basis of any information acquired during an audit, inquiry, inspection or otherwise, an officer of the Authority is of the opinion that a registered person has not paid the tax due on taxable services provided by him or has made short payment, the officer shall make an assessment of the tax actually payable by that person and shall impose a penalty and charge default surcharge in accordance with sections 64 and 65. (2) No order under subsection (1) shall be made unless a notice to show-cause is given to the person in default within five years from the end of the tax period to which the assessment relates specifying the grounds on which it is intended to proceed against him and the said officer shall take into consideration the representation made by such person and provide him an opportunity of being heard if the person so desires. (3) An order under subsection (1), shall be made within one hundred and twenty days of issuance of the show-cause notice or within such extended period as the officer may, for reasons to be recorded in writing, fix: Provided that such extended period shall ordinarily not exceed sixty days. (4) In computing the period specified in subsection (3), any period during which the proceedings are adjourned on account of a stay order or proceedings under section 89 or the time taken through adjournments by the person shall be excluded. (5) An order passed under subsection (1), may be further amended as may be necessary when on the basis of any information acquired during an audit, inquiry, inspection or otherwise, the officer is satisfied that- (a) any tax has been under-assessed or assessed at a low rate; or (b) any taxable service provided by the person has escaped assessment. (6) The Collector may amend, or further amend any order passed under subsection (1) or (5), if he considers that the order is erroneous or prejudicial to interest of Justice. (7) The provisions of subsections (2), (3) and (4) shall be applicable to an order passed under subsections (5) and (6). (8) Notwithstanding anything contained in this Act, the Authority may prescribe thresholds, parameters, standards and basis for assessment of supply value and the assessment of tax. ... 68. Recovery of tax not levied or short-levied.---(1) Where by reason of inadvertence, error, misconstruction or for any other reason, any tax or charge has not been levied or has been short levied, the person liable to pay such amount of the tax or charge shall be served with a notice, within three years of the relevant tax period requiring him to show cause for non-payment of the amount specified in the notice. (2) Where by reason of some collusion, abetment, deliberate attempt, mis-statement, fraud, forgery, false or fake documents- (a) any tax or charge has not been paid or is, short paid, the person liable to pay such tax shall be served with a notice within five years of relevant tax period, requiring him to show cause for non-payment of such tax; and (b) Any amount of the tax is refunded which is not due, the person obtaining such refund shall be served with a notice within five years of the receipt of such refund to show cause against the recovery of such refund. (3) The officer shall, after considering the objections of the person served with a notice under subsection (1) or (2) or if the objections are not received within the stipulated period, determine the amount of the tax or charge payable by him and such person shall pay the amount so determined. (4) Any order under subsection (3) shall be made within one hundred and twenty days of issuance of the notice to show-cause or within such extended period as the officer may, for reasons to be recorded in writing, fix provided that such extended period shall not ordinarily exceed sixty days. (5) In computing the period specified in subsection (4), any period during which the proceedings are adjourned on account of a stay order or proceedings under section 89 or the time taken through adjournments by the petitioner not exceeding thirty days, shall be excluded." (Underlining supplied) 6. In the Khyber Pakhtunkhwa Finance Act, 2013, Section 40 and Section 68 outline distinct procedures for tax assessment and recovery, each applicable under specific circumstances. Section 40 of the KP Finance Act, 2013 empowers the tax authorities to conduct audits of registered persons to ensure compliance with the Act. If discrepancies or non-compliance are identified during the audit, the authorities can issue an assessment order to recover any unpaid taxes. The process is initiated by a show-cause notice to the taxpayer, and providing an opportunity for the taxpayer to respond before any assessment is finalized. Section 68 on the other hand addresses situations where a taxpayer fails to submit the required tax return. In such instances, the tax authorities are authorized to make an assessment based on the available information and proceed to recover the assessed tax. This provision ensures that tax obligations are enforced even when taxpayers do not fulfill their duty to file returns. 7. The key distinction between Sections 40 and 68 of the Khyber Pakhtunkhwa Finance Act, 2013, lies in their scope, applicability, and procedural framework. Section 40 governs tax assessments that arise from audit proceedings, whereas in contrast, Section 68 pertains to cases where a taxpayer fails to file a tax return within the prescribed timeframe. This fundamental difference dictates how and when each section is invoked. Section 40 applies post-audit, following an investigative process, whereas Section 68 is triggered by non-filing, allowing for an ex parte determination of liability in case no reply/objection is received. 8. A particularly significant procedural distinction arises between subsection (4) of Section 40 and subsection (5) of Section 68, both of which regulate the exclusion of time consumed due to adjournments obtained by the taxpayer in the computation of the statutory limitation period. Section 40(4) provides for an unrestricted exclusion of time for adjournments sought by the taxpayer. This provision reflects the legislative intent to prevent taxpayers from exploiting procedural delays to evade assessment. On the other hand, Section 68(5) imposes a restrictive ceiling, explicitly capping the maximum permissible exclusion of time due to taxpayer-sought adjournments at thirty days. This limitation recognizes the distinct nature of best judgment assessments, balancing administrative efficiency with taxpayer rights. The erroneous application of the thirty-day restriction provided under Section 68(5) to an audit-based assessment under Section 40 not only misconstrues the statutory framework but also frustrates the legislative intent, resulting in a miscalculation of the limitation period and an incorrect legal determination. Therefore, any assessment arising from audit proceedings must strictly adhere to the procedural mechanism outlined under Section 40, and any deviation that introduces an extraneous limitation period warrants judicial correction. Principle of Limitation in Tax Law: 9. The principle of limitation is a crucial component of tax law, designed to ensure certainty, finality, and procedural discipline in legal proceedings. It prescribes the statutory time frame within which legal actions, including tax assessments and recovery proceedings, must be initiated. The primary objective of limitation laws is to prevent undue delay, eliminate uncertainty, and protect taxpayers from indefinite exposure to liability. However, courts have clarified that limitation does not operate in an absolute manner in all circumstances and must be interpreted in light of the governing statute. 10. The Hon'ble Supreme Court of Pakistan in the case titled Messrs Tri-Star Industries (Pvt.) Ltd. v. Trisa Burstenfabrik AG Triengen and another reported as 2023 SCMR 1502 held that; "7. In order to comprehend the true spirit of any provision, whether it is mandatory or directory, the conception, acumen and stratagem of the Act and the enabling Rules should be considered for proper resolution. If we virtually converse in the differentiation and eccentricity flanked by 'mandatory' and 'directory' provisions, then we have to scrutinize the pith and substance and not exclusively the form. Sometimes a provision in the legislation seems to be mandatory, but substantially it is directory and, inversely, sometimes a provision seems to be directory but in quintessence it is found to be mandatory for compliance therefore, for all practical purposes, it is the fundamental nature which counts and should take preference and affinity more than the form. If a provision gives a power as well as a duty, it is mandatory and the enabling text of law and rules should be interpreted as obligatory so that the underlying principle and raison d'etre is not contravened or flouted. ... 10.5. Province of Punjab through Secretary, Excise and Taxation Department, Lahore and others v. Murree Brewery Company Limited and another (2021 SCMR 305). This Court referred to some foreign precedents that the test to determine whether a provision is directory or mandatory is by ascertaining the legislative intent behind the same. The general rule expounded by this Court is that the usage of the word 'shall generally carries the connotation that a provision in mandatory in nature. However, other factors such as the object and purpose of the statute and inclusion of penal consequences in cases of non-compliance also serve as an instructive guide in deducing the nature of the provision. If the provision is couched in prohibitive or negative language, it can rarely be directory, the use of peremptory language in a negative form is per se indicative of the interest that the provision is to be mandatory." 11. Similarly, in the case titled Commissioner Inland Revenue, Zone-II, Regional Tax Office (RTO), Mayo Road, Rawalpindi and another v. Messrs Sarwaq Traders, Adamjee Road, Rawalpindi reported as 2022 SCMR 1333, the apex Court while discussing the interpretation of fiscal statues, held; "5. The rationale, as we understand, for prescribing a time frame is to ensure that tax matters be resolved at the earliest, within the relevant tax year, so that the taxpayer satisfies its liability and the Department is able to collect revenue, within the relevant tax year. This is important because taxes pay for public goods and services and is one of the main sources of revenue for the State. Consequently, the intent of the legislature is to obligate the Commissioner (Appeals) to decide the appeal within 180 days. The question is whether this obligation is mandatory or is it directory. We find that its mandatory as the first time frame given under section 45-B(2) is 120 days, which is extendable, meaning that, the Commissioner can exercise discretion and extend the time where required. The only caveat is that reasons have to be given in writing, so that the discretion is not misused and is not exercised arbitrarily. The second time frame under section 45-B(2) is for extending 120 days by 60 days and nothing beyond 60 days. With the help of negative language, the legislature has created an obligation on the Commissioner (Appeals) to decide the appeal in a total of 180 days where the appeal is not decided within 120 days. This obligation renders the section mandatory as the Commissioner (Appeals) cannot go beyond 180 days, as the Commissioner's discretion is curtailed if the time needs to be extended beyond 120 days. Consequently, the obligation fixed on the Commissioner (Appeals) to decide the matter within 180 days is mandatory and not directory. 6. Now, the question is what happens if the Commissioner (Appeals) does not decide the matter within the 180 days. To our mind, since this is a mandatory provision, if a decision is made beyond the 180 days as prescribed under section 45- B(2) of the Act, then such a decision made beyond the prescribed period is an invalid decision. This is because the statute requires the appeal to be decided within 180 days, hence, it has to be decided in the prescribed period. A similar view has already been taken in the case of Messrs Mujahid Soap and Chemical Industries (Pvt.) Limited v. Customs Appellate Tribunal, Bench-I, Islamabad and others (2019 SCMR 1735) where the provision under consideration was Section 179 of the Customs Act, 1969, which is pari materia to the provisions under consideration under the Act, which reads as follows: "S. 179(3) The cases shall be decided within one hundred and twenty days of the issuance of show-cause notice or within such period extended by the Collector for which reasons shall be recorded in writing, but such extended period shall in no case exceed sixty days." This Court concluded that the understanding of law is for the taxing authority to decide the matter within the prescribed 180 days. In another case, reported as The Collector of Sales Tax, Gujranwala and others v. Messrs Super Asia Mohammad Din and Sons and others (2017 SCMR 1427), this Court has held that the ultimate test to determine whether a provision is mandatory or directory is that of ascertaining the legislative intent. The Court found that while the use of the word 'shall' is not the sole factor which determines mandatory or directory nature of a provision, it is certainly one of the indicators of legislative intent. Other factors include the presence of penal consequences in case of non-compliance, but perhaps the clearest indicator is the object and purpose of the statute and the provision in question. The Court concluded that it is the duty of the Court to garner the real intent of the legislature as expressed in the law itself. 7. In this case, the intent of the legislature is clear, to regulate and control the time frame within which an appeal must be decided. The second proviso to section 45-B(2) of the Act limits the discretion of the Court, by providing that the extension period cannot be extended beyond 60 days. The restrictive words used, restricts the powers of the Commissioner and also shows that the intent of the legislature was mandatory and not discretionary. We also note that where the law regulates the manner in which public officials have to exercise power vested in them, then such provisions have to be interpreted in its legislative context. In this case, where the public authority is empowered to create a liability against a taxpayer, then such exercise of power must be performed within the prescribed time. This Court has already dealt with a similar issue on whether a provision is directory or mandatory in the case reported as Province of Punjab through Conservator of Forest, Faisalabad and others v. Javed Iqbal (2021 SCMR 328) where the Supreme Court concluded that the intent of the legislature was relevant and to ascertain if its non-compliance causes injustice or inconvenience. The Court also finds that negative language used in a statute where it imposes a statutory duty on a public official means that the provision is mandatory even if no penalty is prescribed for it." 12. The principle of limitation in tax law serves as a critical safeguard against arbitrary and indefinite proceedings, ensuring procedural fairness and adherence to statutory mandates. The interpretation of limitation provisions depends on legislative intent and statutory language. Where tax statutes prescribe a definitive time frame using prohibitive or restrictive language, such provisions are deemed mandatory, rendering any action beyond the prescribed period invalid. This approach prevents tax authorities from exercising unfettered discretion in initiating or concluding proceedings outside the statutory framework. Analysis of Limitation in Sections 40 and 68: 13. Sections 40(4) and 68(5) of the Khyber Pakhtunkhwa Finance Act, 2013, govern the exclusion of time due to adjournments sought by the taxpayer, yet they contain distinct provisions with significant legal implications. Section 40(4) explicitly stipulates that the entire period consumed due to adjournments sought by the taxpayer shall be excluded from the computation of the prescribed limitation period, without any restriction on the number of days that may be excluded. In contrast, Section 68(5) introduces a specific limitation by capping the maximum period that may be excluded due to adjournments obtained by the taxpayer at thirty days. This distinction is of critical legal significance, as it delineates separate frameworks for the computation of limitation under different proceedings. However, in the present case, the Appellate Tribunal KPRA erroneously applied the thirty-day cap prescribed under Section 68(5) to a matter governed by Section 40, which does not impose any such restriction. This misapplication of law resulted in an incorrect computation of the limitation period, ultimately leading to an erroneous decision. Such an incorrect interpretation not only contravenes the express legislative intent behind these provisions but also vitiates the adjudicatory process, warranting rectification of the legal error. Doctrine of Substantive Justice v. Procedural Compliance: 14. The legal system operates on two fundamental doctrines, Substantive Justice and Procedural Compliance. While both are essential for maintaining the rule of law, they serve distinct purposes and often come into conflict when courts are called upon to decide cases involving procedural irregularities. The Doctrine of Substantive Justice prioritizes fairness, equity, and the real intent behind the law over rigid procedural requirements. It ensures that justice is not denied due to mere technical lapses and emphasizes the actual rights and entitlements of parties rather than their ability to comply with legal formalities. On the other hand, the Doctrine of Procedural Compliance underscores the importance of following established legal procedures to maintain uniformity, predictability, and order in the legal system. It ensures that legal processes remain structured, preventing arbitrary decision-making and upholding the principle that laws must be applied consistently. Procedural rules serve as safeguards against bias, errors, and abuse of power, guaranteeing that all parties are treated equally under the law. However, a rigid application of procedural compliance can sometimes result in injustice, particularly when minor procedural lapses lead to the dismissal of meritorious claims. 15. The tension between these doctrines arises when courts must decide whether to prioritize procedural regularity or substantive justice. In many cases, courts attempt to strike a balance, recognizing that while procedures are necessary for an orderly legal system, they should not become barriers to delivering justice. In the case at hand, the Appellate Tribunal KPRA accepted the taxpayer's appeal by treating the assessment under section 68 instead of section 40, despite the Show-Cause Notice indicating that it was issued as a result of audit proceedings. Strict procedural adherence would necessitate that the assessment be conducted under Section 40 of the KP Finance Act, 2013, as the Show Cause Notice was issued following an audit. However, the Appellate Tribunal's decision to treat the assessment under section 68, which is typically invoked when a taxpayer fails to file a return, suggests a departure from strict procedural norms. Nonetheless, it is crucial to recognize that while Substantive Justice seeks fair outcomes, it should not undermine the importance of Procedural Compliance. Procedures are established to ensure fairness, transparency, and consistency in the application of the law. Deviating from these procedures without compelling justification can lead to unpredictability and may set a precedent that could be misused in future cases. 16. The Appellate Tribunal's misapplication of Section 68(5) to a case governed by Section 40 of the KP Finance Act, 2013 demonstrates a fundamental error in legal interpretation, where procedural compliance was compromised in an attempt to achieve a purportedly fair outcome. However, the doctrine of Substantive Justice cannot be invoked to override clear legislative provisions, particularly where statutory language unambiguously prescribes distinct procedural frameworks. Procedural Compliance serves as the backbone of a just and predictable legal system, ensuring that adjudication is conducted within the bounds of statutory mandates. By imposing a limitation period that does not exist under Section 40, the Tribunal departed from the express intent of the law, thereby undermining the legitimacy of the adjudicatory process. Correcting this error is essential not only to uphold legal certainty but also to reinforce the principle that justice must be administered within the confines of the law, rather than through an erroneous application of equitable considerations. Consequently, the Tribunal's decision warrants reversal to restore procedural and legal correctness. Conclusion and Decision: 17. The upshot of the above discussion is that the statutory provisions governing the exclusion of time due to adjournments sought by the taxpayer are enshrined in Sections 40(4) and 68(5) of the Khyber Pakhtunkhwa Finance Act, 2013. Although both provisions share similar language in principle, a fundamental distinction exists: Section 68(5) explicitly imposes a maximum cap of thirty days on the exclusion of time due to such adjournments, whereas Section 40(4) does not prescribe any such limitation. This distinction is pivotal in determining the correct computation of the limitation period in each case. 18. The Appellate Tribunal KPRA, while interpreting Sections 40 and 68 of the Khyber Pakhtunkhwa Finance Act, 2013, failed to consider that the Show-Cause Notice issued to the taxpayer stemmed from an audit, which falls within the ambit of Section 40 rather than Section 68 of the said Act. Consequently, by applying the thirty-day cap on the exclusion of time due to adjournments obtained by the taxpayer, the Tribunal has misinterpreted the law. The correct legal approach required the Tribunal to assess the matter under Section 40, wherein no such cap is prescribed, and the period consumed due to adjournments sought by the taxpayer is to be excluded in its entirety. Thus, the Tribunal's reasoning is flawed as it improperly applied a statutory cap to section 40 adjudication that is only applicable under Section 68, thereby rendering its decision legally unsustainable. 19. When the findings of the Appellate Tribunal are examined in light of the correct interpretation of the relevant legal provisions, it becomes evident, albeit based on the limited documentation available, that the assessment was made within the prescribed limitation period. Thus, for the reasons stated above, the instant reference applications are allowed, and the matter is remanded to the Appellate Tribunal KPRA for reconsideration. The Tribunal is directed to re-evaluate the case while duly accounting for all relevant documentation in computing the limitation period in accordance with the applicable provisions of the Khyber Pakhtunkhwa Finance Act, 2013, and where found to be in time, proceed to decide the cases on merit. MH/66/P Case remanded.

Summary: (a) Customs Law – Jurisdiction of Directorate General Intelligence & Investigation (DG I&I) – Authority to Seize Goods ----DG I&I is not empowered to seize goods on the basis of non-application of a valuation ruling or alleged short payment of customs duties, sales tax, or income tax----Jurisdiction of DG I&I is limited to preventing smuggling and detaining goods liable to confiscation under Sections 15 and 16 of the Customs Act, 1969----Misdeclaration related to valuation or intended use does not, by itself, render goods liable to seizure under Section 168 of the Customs Act. Cited Cases: M/s Meerab Enterprises vs. Federation of Pakistan (2021 PTD 1764) Saadat Khan vs. Federation of Pakistan (2014 PTD 1615) Shahzad Ahmed Corporation vs. Federation of Pakistan (2005 PTD 23) (b) Customs Valuation – Application of Valuation Ruling – Section 32 of the Customs Act ----Non-application of a valuation ruling issued under Sections 25 and 25A of the Customs Act does not amount to misdeclaration under Section 32----Valuation rulings are valid for a limited period (90 days), and reliance on outdated rulings for assessing duty and taxes is unlawful----No penal proceedings can be initiated under Section 32(1) solely based on non-application of a valuation ruling. Cited Cases: S.T. Enterprises vs. Federation of Pakistan (PTCL 2009 CL 330) Sadia Jabbar vs. Federation of Pakistan (2018 PTD 1746) Messrs Ayesha Impex vs. Federation of Pakistan (2012 PTD 1) (c) Customs Adjudication – Confiscation of Goods – Requirement of Conviction ----Customs officials, including the Additional Collector (Adjudication), cannot order confiscation of goods under Section 180 read with Section 32(1) of the Customs Act without a prior conviction by a Special Judge under Section 185----Confiscation is a penalty and cannot be imposed through executive action without due process and judicial determination. Cited Cases: Muhammad Yasin vs. Federation of Pakistan (PLD 2012 SC 132) Muhammad Ashraf Tiwana vs. Pakistan (2013 SCMR 1159) (d) Assessment of Sales Tax and Income Tax by Customs Authorities – Lack of Jurisdiction ----Customs authorities are not empowered to assess or recover alleged short levies of sales tax or income tax under Section 179(1) read with Section 32(2) of the Customs Act once goods have been cleared and are out of charge----Such assessments fall exclusively within the domain of the Inland Revenue authorities under the Income Tax Ordinance, 2001, and the Sales Tax Act, 1990. Cited Cases: Gulistan Textile Mills Ltd. vs. Federation of Pakistan (2019 PTD 353) Nestle Pakistan Ltd. vs. Federal Board of Revenue (2023 PTD 527) (e) DG I&I’s Role as an Intelligence Agency – Limited Authority in Post-Clearance Cases ----DG I&I’s functions are limited to intelligence gathering and targeted anti-smuggling operations----It does not have the authority to conduct post-clearance audits or reassessments once customs duties and taxes have been assessed and goods have been released. Cited Cases: Shahzad Ahmed Corporation vs. Federation of Pakistan (2005 PTD 23) Saadat Khan vs. Federation of Pakistan (2014 PTD 1615) Disposition: Petition allowed. The impugned seizure report, recovery notice, and show cause notice were declared void ab initio. The security deposited for the release of goods was ordered to be refunded immediately.