Challenging suo motu proceedings initiated by the Ombudsman in dozens of cases to establish the legality of jurisdiction
ISLAMABAD:
The Islamabad High Court (IHC) has issued notices to respondents on a petition filed by the Federal Board of Revenue (FBR) challenging suo motu proceedings initiated by the Federal Tax Ombudsman (FTO) in dozens of cases, in a case that may decide the legal contours of the Ombudsman’s jurisdiction over the tax authorities.
A single bench comprising Justice Khadim Hussain Soomro heard the FBR petition in which the Revenue Division and the Revenue challenged the FTO’s assumption of jurisdiction in 43 suo motu cases initiated during 2022-2023, arguing that the cases fell outside the statutory scope of the Ombudsman.
Revenue Division and FBR were represented by Hafiz Ahsaan Ahmad Khokhar.
During the proceedings, counsel for the petitioners submitted that the Federal Tax Ombudsman, although 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 nature did not fall within the legal definition of “S-administration” (2) Ordinance.
It was argued that instead of addressing administrative lapses or abuse of authority, the cases ventured into key tax and adjudicatory domains, including tax assessments, liability determination, appellate 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 excludes intervention in proceedings relating to assessment, judgment and determination of tax liability where statutory remedies such as appeal, revision or revision are available under the Income Tax Ordinance, 2001.
The counsel submitted that the FTO’s assumption of jurisdiction in such cases 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 Ordinance.
Counsel further argued that while the President recognized the existence of a jurisdictional bar under s 9(2), the concurrent observation that the stay clause was “not absolute” was legally inconsistent, self-contradictory and contrary to the plain language of the statute.
It was submitted that where Parliament has expressly excluded jurisdiction, no executive authority can dilute, reinterpret or partially negate such exclusion.
The petitioner argued that both the FTO’s recommendations and the President’s orders suffered from fundamental legal defects, including misreading, failure to read and misapprehension of Sections 2(3), 9(1) and 9(2) of the Executive Order.
The lawyer maintained that jurisdictional deficiencies go to the root of the matter and cannot be remedied through approval, ratification or subsequent implementation actions.
It was further argued that the case did not involve any kind of “fault or negligence” contemplated under 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.
Instead, the impugned actions related to policy-oriented tax issues and statutory tax processes are governed by an entirely adjudicative framework under tax law that falls outside the Ombudsman’s statutory competence.
The petitioners also argued that the impugned procedure undermined the independence, finality and statutory sanctity of tax adjudication mechanisms, including decisions of the Commissioners Inland Revenue (Appeals) and other competent fora.
By creating what was described as a parallel supervisory structure, the FTO had allegedly overstepped its statutory mandate and intervened in areas exclusively reserved for the tax authorities under the law.
An important aspect of the challenge also relates to implementation orders issued by the FTO during 2025-2026, through which earlier recommendations were sought to be operationalized.
According to the petitioners, these implementing directives went beyond the advisory recommendations and sought enforcement through audits, compliance monitoring, checking of institutional records, verification of financial transactions and directives affecting ongoing tax cases.
The petitioners argued that such actions amounted to direct interference with statutory and quasi-judicial functions vested exclusively in the revenue authorities and appellate forums established under the Act.
For these reasons, the Revenue Division and FBR requested the Islamabad High Court to declare the President’s orders dated 17 and 21 December 2025 along with the recommendations of the FTO dated 27 November 2023, 24 October 2023 and 15 December 2023, as illegal and of no legal effect.
The petitioners further sought the setting aside of all recommendations issued in connection with the 43 suo motu cases initiated during 2022-2023, along with all consequential enforcement orders issued in 2025-2026.
They also prayed that the entire proceedings be declared ultra vires, coram non judice and void ab initio and sought restraint against any enforcement or coercion under the impugned framework.
After hearing the arguments, the Islamabad High Court issued notices to the respondents and adjourned the hearing to June 8.
According to the petitioner’s counsel, the case is now set for 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 actions taken under the impugned scheme.
