A. Background: (1) TLQC 2413 of 14.7.23 about Tax Evasion in Real Estate, Tobacco, Tyres, Pharma & Tea Sectors (2) Other relevant QCs in Para D

B. Updated Commentary

Further to KQU 4062 of 31.8.26, being an important matter, we would inform you about FBR Press Releases RTO-II Karachi Launches Major Enforcement Operation Against Illegal Cigarette Manufacturing -Illegal cigarette manufacturing facility sealed; machinery and raw & finished stock worth hundreds of millions of rupees confiscated(Attachment 3715.1) in ensuing paragraph, with emphasis ours in bold & Underline for quick reading.

2. In pursuance of the directions of the Honorable Prime Minister of Pakistan, Chairman FBR, and DGI & Investigation / Chief Coordinator IREN, aimed at curbing the illegal trade and manufacturing of cigarettes and tobacco products, the RTO-II Karachi has carried out a major intelligence-based enforcement operation against an illegal cigarette manufacturing facility in the outskirts of Karachi.

3. The enforcement team of the IRE Squad, RTO-II Karachi / IREN raided an illegal cigarette manufacturing factory located in the Malir area of Karachi. During the operation, the factory was immediately sealed, while its plant and machinery, along with raw and finished stock, were confiscated.

4. The confiscated machinery included cigarette-making machines, packing machines, token machines, filter machines, heavy-duty generators and other associated equipment valuing at Rs. 200 Million approximately. Around 700 kg of raw tobacco was also found at the premises.

5. Preliminary assessment revealed that the installed plant and machinery had a production capacity of approximately 700,000 cigarette sticks per day, translating into an estimated annual production capacity of around 200 million cigarette sticks. The illegal manufacturing activity was consequently causing an estimated revenue loss of approximately Rs. 1.2 billion annually to the national exchequer.

6. The Enforcement Squad took prompt action by sealing the premises and confiscating the entire plant, machinery and stock. Criminal proceedings were subsequently initiated through registration of an FIR against the persons involved before the learned Special Judge (Customs & Taxation), Karachi.

7. Following the confiscation, the entire plant and machinery installed at the factory premises were dismantled and shifted, along with the confiscated raw and finished stock, to the official premises of RTO-II, Karachi, in accordance with the prescribed legal procedure.

8. The operation was conducted by an enforcement team headed by Mr Baqir Ali, DCIR, and coordinated by Dr Aslam Marri, CIR, RTO-II Karachi / Regional Coordinator IREN Sindh & Balochistan, under the supervision of Mr Zafar Rafique, CC, RTO-II Karachi.

9. Criminal investigation into the illegal manufacturing operation and the persons involved is currently underway.

10.The Regional Tax Office-II, Karachi, reaffirmed its commitment to taking strict and sustained enforcement action against illegal cigarette manufacturing, illicit tobacco trade and tax evasion, in order to safeguard Government revenue and ensure compliance with the applicable tax laws.

C.  KC Views & Recommendaitons

Given the above and similar matters in para D, we expect that similar Operations is likely be done in other sectors, areas, etc.

If your business is affected by any such illicit business/tax evasion and you are tax compliant, you can lodge an anonymous complaint in a plain envelope to the Ministry of Finance, etc.  

D. List of Relevant TLQCs samples

(a) TLQC 3695 of 25.8.26 Exemption Certificates likely Rs 1.1 Trillion Evaded - Senate seeks FIA action against 108 Companies

(b) TLQC 3133 of 22.5.25 about Shops being Sealed for Tax Evasion - Hope that U are Compliant

(c) TLQC 2744 of 20.5.24 about Curbing tax evasion, smuggling, counterfeiting & illegal trade of Trillions

(d) TLQC 2519 of 12.10.23 about Evasion & Government Difficulties in Target achievement

E. Further Details & Services

Should you require any clarification or explanations in respect of the above or otherwise, or require Income Tax, Federal & Provincial Sales Tax or Withholding Tax Statement, Advisory, Return Filing or Review services, please feel free to email Mr Amsal at amsal@kasbati.co with CC to info.kasbati@professional-excellence.com, asif.s.kasbati@professional-excellence.com.

Best regards for Here & Hereafter
Asif S Kasbati (FCA, FCMA & LLB)

Managing Partner 

Kasbati & Co (1400+ Tax, Levies, Companies, Economy, Inflation, HR, Banking, Finance, etc

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