IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: 
MR. JUSTICE MIAN SAQIB NISAR, HCJ 
MR. JUSTICE UMAR ATA BANDIAL 
MR. JUSTICE FAISAL ARAB 
 
CIVIL PETITION NO. 1638 OF 2014 
(On 
appeal 
against 
the 
judgment 
dated 
10.06.2014 passed by the Peshawar High Court, 
Peshawar in ST.R No. 105/2010) 
 
Pakistan State Oil Company Ltd.(PSO), through its Deputy General 
Manager, Legal Affairs, PSO House, Khyaban-e-Iqbal, Clifton, 
Karachi. 
… Petitioner 
VERSUS 
 
Appellant Tribunal Inland Revenue, Peshawar Bench, Peshawar, 
through its members and others. 
 …Respondents 
 
 
For the Petitioner:  
Mr. Samad Mehmood, ASC 
 
 
 
 
Syed Rifaqat Hussain Shah, AOR 
 
 
For the FBR: 
 
Dr. Farhat Zafar, ASC 
Mr. Khiyal Muhammad, Deputy Director 
(Customs)  
 
 
 
 
 
For the NAB: 
Mr. Nasir Mehmood Mughal, Senior 
Special Prosecution 
 
 
 
 
Mr. Mumtaz Shoukat, A.D. FPSC 
 
Date of Hearing:  
10.02.2017 
 
 
JUDGMENT 
 
 
 
 
FAISAL ARAB, J.-The subject matter of the present 
proceedings is eighteen consignments of petroleum comprising of 
596,000 Liters of PMG-8 that were meant for export to 
Afghanistan. Upon scrutiny of the records of PSO as well as of 
Customs Station, Torkham at Pak-Afghan border, the Director 
General, Intelligence & Investigation (Customs, Sales Tax and 
Central Excise), Islamabad, sometime in 2004 detected that these 
CIVIL PETITION NO. 1638 OF 2014 
2
consignments that were loaded from the oil depot of Pakistan State 
Oil Company Limited (PSO) located in Karachi on twenty-one 
tankers between February to September, 2003, were never 
exported to Afghanistan but were clandestinely supplied in the 
local market. This fraud caused a loss of Rs.9.5 million to the 
government exchequer in the shape of the Central Exercise Duty, 
Sales Tax and Petroleum Development levy. These levies are not 
chargeable when the petroleum product is exported but chargeable 
only when they are meant for domestic consumption.  
 
2. 
 
The conclusion with regard to evasion of levies was 
based on following disclosures:-  
 
(i) 
On thirteen ARs (Application for removal of Goods) 
stamps and signatures of the customs officials were 
affixed showing exports to Afghanistan from Customs 
Station, Torkham whereas the export register showed 
that the shipping bill numbers quoted on the said ARs 
pertain to some other consignments. 
 
(ii) 
The date of dispatch of the disputed consignments for 
Afghanistan from the warehouse of PSO reflected that 
the consignments were exported even before their 
dispatch date. For example, the consignment covered 
under AR 1245 dated 27.02.2003 was shown to have 
been exported via Customs Station Torkham on 
25.02.2003 i.e. two days earlier.  
 
(iii) 
The consignments pertaining to four ARs meant for 
export to Afghanistan did not bear the certificate of 
exportation nor stamps and signatures of the customs 
officials. 
 
(iv) 
Shipping bills under which the said consignments 
were said to be exported to Afghanistan though  
requisitioned telephonically from Mr. A.H. Siddiqui, 
General Manager, New Business/Afghan Export, PSO 
House, Clifton, Karachi but the same were not 
provided on the pretext that the same were not 
available.  
 
 
CIVIL PETITION NO. 1638 OF 2014 
3
 
3. 
 
The evasion of levies in the garb of export led to 
issuance of Show Cause Notice dated 07.12.2004 to the appellant 
and others on charges that were punishable under Sections 156(I), 
(9.i) (14), (77), (84) and (90) of the Custom Act, 1969 and Section 
33 of the Sales Tax Act, 1990 read with the relevant provisions of 
the Central Excise Act, 1944, Petroleum Products (Development 
levy) Ordinance, 1961, the Imports and Exports (Control) Act, 1950 
and Afghan Export Policy declared under SRO No.1379-I)/2002 
dated 07.03.2002.  
 
4. 
 
Threatened by the action stated in the Show Cause 
notice, the functionaries of PSO put forward an institutional 
defence that it was the mischief on the part of the owners of the 
tankers, to whom the petroleum was entrusted for transportation 
to Afghanistan, who indulged in the fraudulent act. The 
functionaries of PSO then scrambled to ensure that the evaded 
duties and charges are deposited in the treasury. The entire 
amount of evaded taxes and levies were promptly deposited into 
the government treasury said to have been recovered from the 
owners of the tankers. Upon such deposit, the functionaries of PSO 
sought withdrawal of the proceedings pending before the 
Additional Collector (Adjudication), Peshawar. However, the 
Additional Collector (Adjudication), Peshawar vide order dated 
17.03.2005 imposed on PSO a penalty, five times of the evaded 
amount of Central Excise duty under Section 9(b) of the Central 
Excise Act, 1944, additional tax at the rate of one percent and 
penalty at the rate of 3% of the sales tax under Sections 33(2)(cc) & 
CIVIL PETITION NO. 1638 OF 2014 
4
34 respectively of the Sales Tax Act, 1990. Being aggrieved by the 
decision of the Additional Collector, the petitioner challenged the 
order dated 17.03.2005 in appeal before the Appellate Tribunal 
Inland Revenue, Peshawar. The same was dismissed vide order 
dated 04.05.2010. The petitioner then filed Sales Tax Reference No. 
105/2010 before the Peshawar High Court, Peshawar, which also 
met the same fate. Hence this petition.  
 
5. 
 
In our view, the prompt deposit of the evaded levies 
after its disclosure is nothing but an attempt to prevent the 
responsible officers of Customs as well as of PSO, who might have 
acted as facilitators in the commission of the crime, from being 
subjected to criminal and disciplinary action. Not only this, the 
evaded levies may have been promptly returned with the intention 
to stall further investigation that might have led to involvement of 
other persons as well as disclosure of similar other acts of evasion. 
When crime of such a nature is detected then upon being 
established in appropriate proceedings not only it leads to recovery 
of the evaded taxes and levies but the perpetrators are to be visited 
with imprisonment, penalties and fines. Over and above this, it 
also triggers in-house disciplinary action against the concerned 
government or semi government functionaries, the facilitation of 
whom may have been instrumental in the commission of the crime.  
 
6. 
 
In view of the material that had come on the record 
with regard to evaded taxes and levies in the manner discussed 
above, we find no justification to interfere with the impugned 
judgment. While holding that no case is made out for our 
CIVIL PETITION NO. 1638 OF 2014 
5
interference in the conclusion as to imposition of fines and 
penalties, we feel that the burden of penalties and fine, which in 
view of the outcome of this decision would initially fall on PSO, 
should ultimately be borne by such functionaries of the Customs 
and PSO who are found to be instrumental in facilitating the 
evasion of levies. In order to take appropriate action against the 
persons responsible for letting the evasion take place, let the 
matter be inquired into by NAB so that the perpetrators of crime 
against whom criminal action was not initiated personally face the 
consequences under the provisions of the National Accountability 
Ordinance, 1999. We also direct the Chairman, PSO and 
Chairman, Federal Board of Revenue to order initiation of 
disciplinary proceedings against their respective officers who may 
have been instrumental in any manner in the evasion of levies that 
are subject matter of these proceedings.  
 
7. 
 
This petition is dismissed in the above terms and leave 
is refused.  
 
 
CHIEF JUSTICE 
JUDGE 
JUDGE 
Islamabad, the 
10th of February, 2017 
Approved For Reporting 
Khurram