Investigation into ‘sale of non-customs-paid goods’: FBR delays implementation of FTO’s recommendations

ISLAMABAD: The Federal Board of Revenue (FBR) has further delayed implementation of the binding recommendations of the Federal Tax Ombudsman (FTO) directing a detailed investigation into an alleged nationwide racket in the sale of non-customs paid goods.

It has been alleged that the racket was run “with the connivance of Customs and Inland Revenue officials”.

The matter arose from a complaint by Waheed Shahzad Butt against the Secretary of the Revenue Division.

The complainant alleged that tax fraud gangs were issuing invoices for non-customs paid products while misusing mobile SIM cards and bank accounts.

He also alleged that FBR ignored repeated written requests backed by evidence, including a sting operation carried out to unmask the gang.

The FTO directed FBR to investigate and report within one month. The FBR did not respond. No one appeared on behalf of FBR, and no comments were filed.

In his findings, the FTO observed that the record revealed huge online transactions requiring thorough investigation. He held that FBR’s failure to pay any heed to the matter amounted to maladministration.

FBR was directed to initiate disciplinary proceedings under the E&D Rules 2020 against the officers responsible, direct the Directorates of Intelligence & Investigation (Customs and IR) to conduct a detailed investigation.

Later, the FBR filed a review petition. Significantly, FBR sought withdrawal of only para 6(i), the disciplinary proceedings, and did not challenge the directions for investigation, follow-up action and compliance reporting. Departmental representative tendered an unconditional apology and assured the FTO that FBR would be careful in future.

The 90-day compliance deadline has expired, yet no investigation report has been shared with the complainant or placed before the FTO, and no action has followed.

Butt further added that the directions for investigation were never challenged by FBR itself.

They are final and binding. Non-implementation means “the corrupt elements in field formations continue to sell non-customs paid goods openly and without any fear of accountability”.

They deprive the exchequer of customs duty, sales tax and income tax, and they make a mockery of the Ombudsman’s institution.

“The FTO must initiate defiance proceedings forthwith and make the investigation report public so that the officials who shielded this racket are brought to account,” Waheed added.

Copyright Business Recorder, 2026