What is the religious ruling on purchasing smuggled and confiscated goods and then selling them at public auction? And what are the consequences for someone who buys these goods?

It is not permissible for the state to levy taxes and customs duties on the trades and goods of Muslims, unless the state's public revenues do not suffice the needs of the Ummah and the interests of the people, and there is no mismanagement in the expenditure of public funds. If taxes and levies are collected while the state's revenues and wealth are sufficient for the purpose, or if there is mismanagement in the expenditure of public funds, then those engaged in trade are permitted to evade paying these taxes. As for the state prohibiting the entry of goods, if it is for a legitimate and recognized interest, then it is permissible; but if it is not for an interest, then it is not permissible. Whoever purchases from such goods must return the right to its rightful owners. If he is unable to identify them, then he must give the money in charity on behalf of its owner.