Pakistan’s Federal Board of Revenue (FBR) has introduced a new electronic auction system for selling seized and confiscated goods, aiming to establish a more transparent and structured process for disposing of such items. Under the revised framework, bidders must pay a minimum one-time registration fee of Rs25,000, while online bidding will remain open for 72 hours.
The changes have been introduced through SRO 1889(I)/2026, issued on October 22, 2026, amending the Sales Tax Rules, 2006. The notification outlines procedures for registering bidders, determining the value of goods, conducting online auctions, collecting payments and releasing sold items.
Who Can Participate in the Online Auctions?
Under the new rules, individuals possessing a valid Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) can apply for registration through the FBR’s electronic auction platform.
Applicants must pay a one-time registration fee of at least Rs25,000. Once approved, each participant will receive a unique identification number, with registration confirmation sent through their registered email address or mobile phone number.
The authorized officer may verify the information submitted by applicants and reject an application if valid reasons exist. Any rejection must be supported by written grounds, including non-compliance with applicable procurement requirements.
Which Goods Will Be Sold Through the System?
The electronic auction mechanism will cover confiscated goods and seized items that have been cleared for disposal through an adjudication order.
Officials responsible for holding these goods must upload detailed inventories, photographs and relevant documentation to the online platform. They are also required to ensure the safe custody of the items and arrange inspections for interested bidders.
Before an auction is announced, the authorized officer must confirm that the goods can legally be sold. This includes checking for court-imposed restrictions, pending stay orders, applicable release or redemption options and other legal requirements.
Goods covered by an active judicial stay cannot be auctioned until the relevant restriction is lifted or otherwise ceases to apply.
How Will Reserve Prices Be Determined?
The FBR has established a valuation mechanism to determine the minimum prices at which auction lots can generally be sold.
A valuation committee comprising an additional commissioner, deputy commissioner and assistant commissioner of Inland Revenue will recommend the reserve price for each lot. Technical or valuation experts may also be consulted when necessary.
The committee may consider several factors when assessing the value of goods, including their age, physical condition and remaining shelf life. Depending on the nature of the items, the assessment may rely on sales tax invoice prices from the previous three tax periods, printed retail prices, customs-assessed values or prevailing market quotations.
If goods fail to sell in three consecutive auctions, the committee may reduce the reference reserve price by up to 10% at a time.
Online Bidding to Remain Open for 72 Hours
Auction notices will be published on the electronic platform, providing information about the available goods, reserve prices, inspection procedures, applicable taxes and duties, and the conditions governing delivery.
The online bidding period will run for 72 hours from the receipt of the first bid. During this period, the platform will display the highest valid offer and maintain records of bids, including their timestamps and bidder identification details.
After bidding closes, the authorized officer will process the highest offers and decide whether to accept or reject them. The rules require the highest qualifying offer to be accepted within 72 hours after the bidding period ends, subject to the applicable conditions.
Lower Offers May Be Accepted in Certain Cases
Generally, successful bids must meet or exceed the reserve price established for the relevant goods.
However, the rules provide an exception under which the Commissioner Inland Revenue may approve an offer below the reserve price, provided it is at least 80% of that price. Such approval may be considered after taking into account factors such as the physical condition and remaining shelf life of the goods.
This provision offers some flexibility in cases where the condition or marketability of auctioned items may affect their value.
Successful Bidders Must Pay Within Seven Days
Participants whose bids are accepted must pay the entire accepted amount within seven days of receiving the electronic acceptance notification.
The payment must also cover all applicable taxes, duties, fees and other charges associated with the purchase. Payments will be made through electronically generated challans and designated payment channels.
The FBR has made full payment verification a condition for releasing auctioned goods. Once the amount has been received and verified, an electronic release order will be issued to the custodian, allowing the goods to be handed over to the successful bidder.
Penalties for Failure to Complete Payment
Bidders who fail to pay within the prescribed deadline may face several consequences. Authorities can cancel the sale, confiscate bid security where applicable, offer the goods to the next highest valid bidder or arrange a fresh auction.
The rules also allow defaulting participants to be suspended from future auctions for up to six months after being given an opportunity to present their case. Other suspension periods may apply where specified under the relevant procurement rules.
These provisions are intended to discourage unsuccessful payment commitments and help ensure that auction proceedings are completed efficiently.
FBR Retains Powers to Cancel Auctions and Recover Goods
The revised framework gives the Commissioner Inland Revenue authority to cancel, suspend or recall auction proceedings and disqualify bidders in appropriate circumstances.
Where fraud, misrepresentation or a loss of government revenue is established, authorities may also recover goods even after they have been delivered to a purchaser.
Certain prohibited items, including arms and ammunition, narcotics and counterfeit goods, will generally remain outside the auction process unless the FBR issues specific directions permitting their disposal.
How Will Auction Revenue Be Distributed?
The rules also establish an order for distributing the proceeds generated through the sale of seized and confiscated goods.
First, the proceeds will be used to meet lawful expenses incurred in conducting the sale. Applicable taxes, duties, penalties, surcharges and other government dues will then be settled.
Any remaining amount payable to the original owner will be handled in accordance with section 40F of the Sales Tax Act, 1990.
What the New Rules Mean for Prospective Buyers
The electronic auction system introduces a formal online process for individuals interested in purchasing goods seized or confiscated by the authorities. Participants will have access to auction information through the electronic platform and will be able to submit bids without relying exclusively on conventional auction procedures.
However, prospective buyers should carefully review the terms of each auction, inspect goods where possible, consider the applicable taxes and charges, and ensure that funds are available before bidding. The seven-day payment deadline leaves limited time for arranging the full purchase amount after a bid is accepted.
Overall, the new framework establishes detailed procedures for registering bidders, valuing goods, conducting auctions and completing sales. Its practical impact will depend on how effectively the FBR implements the system and ensures compliance with the prescribed rules.
This article is based on the provisions described in SRO 1889(I)/2026. Readers should consult the official notification for the complete legal text and applicable conditions.