Challenges ex officio procedures initiated by the Ombudsman in dozens of cases, to determine the legality of the jurisdiction
ISLAMABAD:
The Islamabad High Court (IHC) has issued notices to the respondents on a petition filed by the Federal Board of Revenue (FBR) challenging the suo motu proceedings initiated by the Federal Tax Ombudsman (FTO) in dozens of matters, in a case that may determine the legal contours of the ombudsman’s jurisdiction vis-à-vis statutory tax authorities.
A single bench comprising Justice Khadim Hussain Soomro heard the FBR’s petition, in which the Revenue Division and the tax authority challenged the FTO’s assumption of jurisdiction in 43 suo motu proceedings initiated during 2022-2023, arguing that the matters fell outside the legal scope of the ombudsman’s mandate.
Revenue Division and FBR were represented by Hafiz Ahsaan Ahmad Khokhar.
During the proceedings, counsel for the petitioners submitted that the Federal Tax Ombudsman, while purporting to act under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000, initiated a wide range of suo motu proceedings during 2022-2023 which, in their true legal character, did not fall within the legal definition of “maladministration” under Section 2(3) of the Ordinance.
It was argued that instead of addressing administrative failures or abuse of authority, the proceedings ventured into core fiscal and adjudicative domains, including tax assessments, determination of liability, appeal functions, audit mechanisms, withholding tax compliance, digital tax systems and internal regulatory processes of the FBR.
According to the petitioners, such matters are expressly excluded from the jurisdiction of the FTO under Section 9(2) of the Ordinance, which prohibits intervention in matters relating to assessment, adjudication and determination of tax liability when legal remedies such as appeal, review or revision are available under the Income Tax Ordinance 2001.
Counsel contended that the assumption of jurisdiction by the FTO in such matters was coram non judice, ultra vires and without legal authority, thereby rendering the entire proceedings null and void ab initio.
The petitions also challenged the Consolidated Presidential Orders dated December 17 and 21, 2025, passed under Section 32 of the Ordinance.
Counsel further argued that although the President recognized the existence of a jurisdictional bar under Article 9(2), the simultaneous observation that the expulsion clause was “not absolute” was legally inconsistent, contradictory and contrary to the plain language of the statute.
It was held that where Parliament has expressly excluded jurisdiction, no executive authority can dilute, reinterpret or partially deny such exclusion.
The petitioner argued that both the FTO recommendations and the Presidential orders suffered from fundamental legal deficiencies, including misinterpretations, non-readings and misinterpretations of Articles 2(3), 9(1) and 9(2) of the Ordinance.
Counsel argued that jurisdictional defects strike at the root of the matter and cannot be cured by endorsement, ratification or subsequent implementing actions.
It was further held that the proceeding did not involve any actionable “maladministration” as contemplated in Section 2(3), which requires demonstrable elements such as negligence, abuse of authority, undue delay or failure to act on the part of public officials.
In contrast, contested actions related to tax matters oriented to statutory tax policies and processes are governed by a full adjudication framework under tax laws, falling outside the legal mandate of the ombudsman.
The petitioners also claimed that the impugned procedures undermined the independence, finality and legal sanctity of tax adjudication mechanisms, including decisions handed down by the Inland Revenue Commissioners (Appeals) and other competent forums.
By creating what was described as a parallel supervisory structure, the FTO had allegedly exceeded its legal mandate and encroached on areas reserved exclusively for tax authorities under the law.
An important aspect of the challenge also concerns the implementation orders issued by the FTO during 2025-2026, through which it sought to implement previous recommendations.
According to the petitioners, these implementation directives went beyond advisory recommendations and sought compliance through audits, compliance monitoring, scrutiny of institutional records, verification of financial transactions, and directives affecting ongoing tax procedures.
The petitioners argued that such actions amounted to direct interference in statutory and quasi-judicial functions vested exclusively in the Treasury authorities and the appellate forums established by law.
For these reasons, the Revenue Division and the FBR moved the Islamabad High Court to declare the Presidential Orders dated December 17, 2025 and December 21, 2025, along with the FTO recommendations dated November 27, 2023, October 24, 2023 and December 15, 2023, as illegal, without legal authority and without legal effect.
The petitioners further requested that all recommendations issued in relation to the 43 suo motu proceedings initiated during 2022-2023 be set aside, together with all consequent implementation orders issued during 2025-2026.
They also asked that the entire proceedings be declared ultra vires, coram non judice and void ab initio, and called for restraint against any enforcement or coercive action under the impugned framework.
After hearing the arguments, the Islamabad High Court issued notices to the respondents and adjourned the hearing till June 8.
According to the petitioner’s lawyer, the matter is now ready for trial and is expected to determine the constitutional contours of the jurisdiction of the Federal Tax Defender vis-à-vis the statutory tax authorities, as well as the legal validity of the enforcement measures adopted under the challenged regime.
