Challenges the suo motu procedures initiated by the Mediator in dozens of cases, in order to determine the legality of the jurisdiction
ISLAMABAD:
The Islamabad High Court (IHC) has issued notices to the respondents following 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 issues, in a case that could 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 petition, in which the Revenue Division and the Tax Authority challenged the FTO’s assumption of jurisdiction in 43 suo motu proceedings initiated in 2022-23, arguing that the issues did not fall within the statutory scope of the ombudsman’s mandate.
The Revenue Division and FBR were represented by Hafiz Ahsaan Ahmad Khokhar.
During the proceedings, the petitioners’ lawyers argued that the Federal Tax Ombudsman, while purporting to act under section 9(1) of the Federal Tax Ombudsman Ordinance, 2000, had initiated a wide range of suo motu proceedings during 2022-2023 which, in their true legal nature, did not fall within the statutory definition of “maladministration” under section 2(3) of the Order.
It was argued that instead of addressing administrative lapses or abuse of power, the proceedings were venturing into key tax and jurisdictional areas, including tax assessments, determination of liability, appellate functions, audit mechanisms, withholding tax compliance, digital tax systems and the FBR’s internal regulatory processes.
According to the petitioners, these 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 where legal remedies such as appeal, review or revision are available under the Income Tax Ordinance, 2001.
The lawyer argued that the assumption of jurisdiction by the FTO in such matters was coram non judice, ultra vires and without legal authority, rendering the entire proceedings void ab initio.
The petitions also challenged the Consolidated Presidential Orders dated December 17 and 21, 2025, passed under Section 32 of the Order.
Counsel further contended that although the President acknowledged the existence of a jurisdictional bar under Section 9(2), the concurrent observation that the exclusion clause was “not absolute” was legally inconsistent, contradictory and contrary to the plain language of the law.
It has been argued that where Parliament has expressly excluded the jurisdiction, no executive authority can dilute, reinterpret or partially overturn that exclusion.
The petitioner argued that the FTO recommendations and Presidential Orders suffered from fundamental legal infirmities, including misreading, non-reading and misinterpretation of Sections 2(3), 9(1) and 9(2) of the Order.
Counsel argued that the jurisdictional defects go to the root of the problem and cannot be corrected by subsequent approval, ratification or implementing measures.
It was further submitted that the proceedings did not involve any actionable “maladministration” within the meaning of Article 2(3), which requires demonstrable elements such as negligence, abuse of power, undue delay or inaction of public officials.
Instead, contested actions related to policy-oriented tax issues and legal tax processes are governed by a comprehensive jurisdictional framework under tax laws, falling outside the legal jurisdiction of the mediator.
The petitioners also claimed that the impugned proceedings undermined the independence, finality and sanctity of tax settlement mechanisms, including decisions made by the Commissioners of Inland Revenue (Appeals) and other relevant bodies.
By creating what has been described as a parallel oversight structure, the FTO is said to have exceeded its legal mandate and encroached on areas reserved exclusively for tax authorities under the law.
A major aspect of the challenge also concerns the implementation orders issued by the FTO during the period 2025-2026, through which the earlier recommendations were to be operationalized.
According to the petitioners, these implementation guidelines went beyond advisory recommendations and were intended to be enforced through audits, compliance checks, review of institutional records, verification of financial transactions, and directives affecting ongoing tax procedures.
The petitioners argued that such actions amounted to direct interference with the statutory and quasi-judicial functions vested exclusively in the domestic revenue authorities and appellate bodies established under the Act.
On these grounds, the Revenue Division and the FBR requested the Islamabad High Court to declare the Presidential Orders dated December 17 and 21, 2025, as well as 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 the quashing of all recommendations issued in respect of the 43 suo motu proceedings initiated in 2022-2023, as well as all consequent implementation orders issued in 2025-2026.
They also requested that the entire proceedings be declared ultra vires, coram non judice and void ab initio, and requested restraint against any coercive or coercive action in the disputed 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 case is now pending judgment and is expected to determine the constitutional contours of the Federal Tax Ombudsman’s jurisdiction over statutory tax authorities, as well as the legal validity of enforcement measures taken under the contested scheme.
