FTO finds E&T depts police seizing NCP vehicles under provincial laws

ISLAMABAD: The Federal Tax Ombudsman (FTO) has found that provincial Excise & Taxation departments and Police authorities have been intercepting and disposing of Non-Customs-Paid (NCP) vehicles under provincial laws instead of the Customs Act, 1969.

In a significant move to uphold the constitutional jurisdiction of Pakistan Customs and also safeguard the Federal revenues, the Federal Tax Ombudsman (FTO) has initiated an own-motion investigation under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000.

The probe was triggered by credible information received from multiple whistleblowers and preliminary inquiries conducted by the FTO Secretariat, revealing that some provincial Excise & Taxation departments and Police authorities have been intercepting and disposing of Non-Customs-Paid (NCP) vehicles under provincial laws instead of the Customs Act, 1969.

According to the O.M, a large number of NCP and tampered vehicles have been impounded by the provincial authorities, leading to non-realization of legitimate Customs duties and allied taxes chargeable on such vehicles. These actions, carried out under provincial rules such as the Balochistan Road Checking, Seizure and Disposal of Motor Vehicles Rules, 2025 and the Khyber Pakhtunkhwa Road Checking, Seizure and Disposal of Motor Vehicles Rules, 2015, are hit by Article 143 of the Constitution of Pakistan, 1973, and in violation to the Customs Act, 1969.

The FTO’s investigation highlights that the Customs Act, 1969 vests exclusive authority with Pakistan Customs to detain, seize, adjudicate, and dispose of smuggled or non-duty-paid vehicles.

Section 170 explicitly mandates that when NCP vehicles are impounded by the Police, such cases must be reported and vehicles handed over to the nearest Custom House. Any deviation from the said legal provision constitutes an offence punishable under Section 156(1)(83) of the aforesaid Act.

The investigation further highlights that despite clear constitutional provisions and judicial directives — including landmark judgments of the Supreme Court of Pakistan in Criminal Petition No 802 of 2015 and the Peshawar High Court in Writ Petition No.1428-P/2013, some provincial authorities continue to exercise powers outside their legal domain.

The practice of granting superdari of NCP vehicles to Police under Section 550 of the Criminal Procedure Code, 1898 is in negation to the provisions of Customs Act, 1969 besides inflicting colossal loss to the national Exchequer.

The FTO observed that Customs Collectorates across the country have been repeatedly approaching provincial authorities seeking handing over of detained/seized NCP and tampered vehicles yet compliance remains negligible. The investigation reveals that there is lack of coordination between the Customs department/FBR and relevant provincial authorities.

Citing Article 143 of the Constitution, which makes federal law supreme in case of inconsistency with provincial legislation, the FTO has observed that the under reference provincial rules are unconstitutional and contrary to the provisions of Customs Act, 1969.

The findings of O.M underline that matters relating to customs duties fall exclusively within the legislative competence of the Parliament, in terms of clause 43 of Fourth Schedule to the Constitution of Islamic Republic of Pakistan, 1973, as such, any provincial legislation or rules framed in this regard, are void.

The FTO’s findings concluded that the impugned provincial rules are also in sheer violation of various judgements of the superior court, resulting in erosion of jurisdiction of Customs/FBR.

The O.M emphasizes that the Federal Board of Revenue (FBR) has not yet taken any concrete measures to rectify these anomalies, despite persistent legal and operational challenges being faced by Customs field formations. The said position falls within the ambit of Maladministration in terms of section 2(3)(i)(a)(b) and (ii) of the FTO Ordinance, 2000.

With a view to enforce Federal authority in its true spirit and ensure compliance of law, the FTO has directed the Secretary, Revenue Division for issuing necessary instructions to Member, Customs (Ops) FBR as under:

1. The FBR to approach Federal Secretary Law for annulment of the Balochistan and KPK Rules and other Rules issued by the provincial authorities which are in conflict with Constitution and the Customs Act, 1969.

2. The FBR to issue formal communications to all Chief Secretaries of provinces, Provincial Directors General of Excise & Taxation, and Inspectors General of Police, requiring immediate surrender of all seized NCP and tampered vehicles to the nearest Custom Houses in accordance with Section 170 of the Customs Act, 1969.

The FTO has further directed Secretary, Revenue Division to instruct Member, Legal (Customs) FBR to propose amendment in Section 170(2) of the Customs Act, expanding the provision to include officers of provincial Excise Departments, and also to request the Supreme Court of Pakistan to invoke Article 184(3) for seeking guidance and issuing appropriate orders in this regard.

The FTO has desired compliance report of above instructions within 90 days.

The FTO’s action underscores the institution’s proactive role in rectifying the legal anomalies, bridging the governance gaps, protecting Federal revenues, and reinforcing the supremacy of Constitution.

Copyright Business Recorder, 2025