President Asif Ali Zardari has ruled that the Federal Tax Ombudsman (FTO) cannot assume the role of a revenue maximiser or tax policymaker by interpreting tax laws, while accepting 11 representations filed by the Federal Board of Revenue against the ombudsman’s suo motu findings.
According to a news report, the president approved the FBR’s representations in 11 separate cases and modified the corresponding orders of the Federal Tax Ombudsman, orders issued by the President’s Secretariat read.
The suo motu notices had covered issues including sector-wise tax analysis, inconsistencies in crediting withholding taxes, gaps in monitoring and payment systems, alleged tax evasion in the banking sector, the quality of amended orders passed by tax officers, supervisory conduct, and discrepancies in the charging and collection of electricity duty.
In one such matter, the FTO had directed the Inland Revenue wing to implement a digital system integrating data from manufacturers, lessors and registration authorities to automatically verify advance tax payments and ensure correct crediting to lessees. The FBR challenged these directions, arguing that the ombudsman had exceeded statutory jurisdiction.
After hearing arguments at length, the President held that the powers of the FTO are limited by the Federal Tax Ombudsman Ordinance, 2000, and must be assessed against the definition of “maladministration” under the law. While the definition is inclusive, he noted, it cannot be extended to cover policy formulation, interpretation of tax statutes, or matters falling within the appellate jurisdiction of tax authorities.
The President maintained that recommendations aimed at improving governance fall within the executive domain and that the ombudsman cannot function as a policymaker or revenue-enhancing authority.
Accordingly, the impugned orders were modified to the extent that the FBR may initiate departmental action in a lawful and fair manner where warranted. Beyond this, the President directed that the Federal Tax Ombudsman must exercise jurisdiction strictly within statutory limits.
