Legal challenge to audit regime: SHC hails director (PCA) South assistance
The case involved Karachi-based importer, an Export Facilitation Scheme (EFS) user that imports iron and steel scrap. What began as a standard regulatory audit by PCA South evolved into a legal dispute when the company filed the suit, challenging the audit proceedings.
While the SHC initially issued an interim order preventing 'coercive action,' it notably did not halt the ongoing audit process being conducted by the PCA Directorate.
According to the details, the importer subsequently withheld complete records during the audit, particularly critical stock statements that would verify the status of imported EFS goods.
This non-compliance prompted PCA to issue a second audit notice in October 2024, alongside conducting stock-taking at the EFS premises. The importer, alleging repetitive auditing for the same period, approached the SHC again with a Constitutional Petition that same month.
The court expressed serious concerns about the legality of conducting two simultaneous audits for the same period. A double bench comprising Justice Agha Faisal and Justice Abdul Mobeen Lakho summoned Director PCA South to explain the procedural conduct.
During the hearing on April 23, Director PCA Sheeraz personally appeared before the court and provided a detailed explanation that the second audit notice was issued specifically due to the importer's non-compliance with the first audit notice. He argued that the legal maneuvers by the said importer appeared to be tactical delays aimed at obstructing the legitimate audit process.
Advocate Khalid Rajpar, representing PCA South, reinforced this position by assuring the court that the department would adhere strictly to legal protocols after completing the audit. He highlighted concerns about the importer's apparent use of repetitive court cases as a strategy to derail standard procedural audits.
The SHC acknowledged the thorough explanation provided by PCA director, with the court's commendation representing a significant endorsement of PCA South's persistence despite operational challenges. The court ultimately disposed of the petition, establishing an important precedent for future audit-related litigation.
Legal experts suggested this decision will strengthen confidence in Pakistan Customs regulatory framework for post-clearance audits, potentially deterring similar obstructive tactics in the future.
Copyright Business Recorder, 2025
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