President Limits FTO Powers, Accepts 11 FBR Representations

President Asif Ali Zardari has held that the Federal Tax Ombudsman (FTO) is not empowered to act as a revenue maximiser or de facto tax policymaker through interpretive exercises on tax statutes, while accepting in full eleven representations preferred by the Federal Board of Revenue (FBR) against suo motu orders issued by the Ombudsman.

In separate notifications issued by the President’s Secretariat, the President approved the FBR’s challenges and modified the impugned FTO orders accordingly. The suo motu cognizances under review encompassed diverse matters, including sector-specific tax compliance reviews, irregularities in the crediting of withholding taxes, deficiencies in monitoring and payment mechanisms, purported tax evasion within the banking industry, the standard of amended assessment orders, supervisory lapses by tax officials, and inconsistencies in the levy and realisation of electricity duty.

In a representative case, the FTO had directed the Inland Revenue Service to institute an automated digital integration system linking data from manufacturers, lessors, and registration authorities for real-time verification and accurate crediting of advance tax deductions to lessees. The FBR contested these directives on grounds of jurisdictional overreach.

Following detailed submissions, the President ruled that the FTO’s authority remains circumscribed by the Federal Tax Ombudsman Ordinance, 2000, and must be confined to addressing instances of “maladministration” as statutorily defined. Although the definition is of an inclusive nature, it cannot be expansively construed to encompass statutory interpretation of tax laws, formulation of fiscal policy, or issues falling within the appellate competence of tax adjudication forums.

The President emphasised that recommendations directed towards administrative or governance enhancements lie exclusively within the executive’s prerogative. The FTO cannot assume the role of a policymaking body or an instrument for revenue augmentation.

Consequently, the challenged orders have been modified to permit the FBR to pursue appropriate departmental proceedings in accordance with law and principles of fairness where justified, while the Federal Tax Ombudsman has been directed to confine the exercise of its jurisdiction strictly within the bounds prescribed by the enabling statute.