Cir Multan vs Dg (Legal), President's Secretariat (Public) etc.

Stereo HCJ DA 38

JUDGMENT SHEET

IN THE LAHORE HIGH COURT,

MULTAN B E N C H , M U L T A N

JUDICIAL DEPARTMENT

Writ Petition No.16990 of 2022

Commissioner Inland Revenue V/S Director General (Legal) President’s Secretariat etc.

JUDGMENT

Date of hearing 14.09.2026 Petitioner(s) by Mr. Muhammad Sulaman Bhatti, Advocate.

Respondent(s) by Rana Muhammad Javed Iqbal, Assistant Attorney General.

JAWAD HASSAN, J. This writ petition in terms of Article 199 of the Constitution of Islamic Republic of Pakistan, 1973 (hereinafter referred to as “Constitution”) was filed by the Petitioner with the prayer to set aside orders dated 24.08.2022 and 31.12.2021 passed by the Respondent No.1 and 2 respectively. Factual Matrix

2.The facts, briefly stated, are that pursuant to credible secret information regarding Respondent No.3’s alleged involvement in the sale and storage of illicit, non-duty-paid and counterfeit cigarettes, the Director, Directorate of Intelligence & Investigation (Inland Revenue), Multan, constituted an inspection team vide Order No.DIR/I&I/MN/361 dated 13.08.2021, duly authorized under Rules 62 to 67 of the Federal Excise Rules, 2005 (the “Rules”), read with section 38 of the Sales Tax Act, 1990 (the “Act, 1990”). On 16.08.2021, a search warrant was obtained under section 25 of the Federal Excise Act, 2005 (the “Act, 2005”), read

with sections 96/98 Cr.P.C., whereupon the premises/godown of Respondent No.3 were searched with police assistance and 641 cartons of illicit, non-duty-paid and counterfeit cigarettes were recovered and seized, as the representative of Respondent No.3 failed to produce any invoice, record or other documentary evidence evidencing payment of the requisite duties and taxes. The seized stock was thereafter forwarded to the Commissioner Inland Revenue, Multan Zone, for proceedings under the relevant provisions of the “Act 2005”, the “Act, 1990” and the rules framed thereunder, pursuant to which a Show Cause Notice dated 26.11.2021 was issued to Respondent No.3. Instead of responding to the Show Cause Notice and availing the statutory adjudicatory mechanism, Respondent No.3 invoked the jurisdiction of the Federal Tax Ombudsman (the “FTO”) under section 10(1) of the Federal Tax Ombudsman Ordinance, 2000 (the “Ordinance, 2000”), alleging delay in adjudication of the seized goods. The petitioner-department contested the complaint, inter alia, on the ground that the FTO lacked jurisdiction under section 9(2)(b) of the “Ordinance, 2000”, the matter relating to statutory adjudication and determination of tax/duty liability. The FTO, however, vide impugned order dated 30.12.2021, entertained the complaint and directed that adjudication of the seized goods be undertaken by the appropriate legal forum. Being aggrieved by the impugned order/findings, the Petitioner filed representation before the President of Pakistan which was dismissed vide impugned order dated 24.08.2022, hence this petition.

Petitioner’s Submissions

3.Learned counsel for the Petitioner contended that the both the forums below failed to appreciate that the proceedings before the “FTO” were without jurisdiction in terms of Section 9(2)(b) of the “Ordinance 2000” to adjudicate upon the complaint of the respondent No.3 rather the remedies under the “Act 2005” was available to him.

Respondents Submissions

4.Learned law officer, on the other hand, filed report and parawise comments and defended the impugned orders passed by the respondents.

5.We have heard the arguments and perused the record. Determination

6.The controversy involved in the instant petition essentially revolves around the jurisdiction of the “FTO” to entertain the complaint of Respondent No.3 in circumstances where proceedings relating to the seized goods were pending before the competent authorities under the “Act 2005”. The record reflects that pursuant to the search conducted at the premises/godown of Respondent No.3, 641 cartons of illicit, non-duty-paid and counterfeit cigarettes were recovered and seized. Thereafter, the seized stock was forwarded to the Commissioner Inland Revenue and a Show Cause Notice dated 26.11.2021 was issued to Respondent No.3. Instead of responding to the said Show Cause Notice and availing the statutory mechanism available under the “Act 2005”, Respondent No.3 approached the “FTO” under Section 10(1) of the “Ordinance 2000”, alleging delay in adjudication. The relevant extract of the application reads as under:

“The applicant, a registered cigarette dealer at Khanewal, purchased Aroma and Pine Gold cigarettes from Ali Traders, Swabi, a registered manufacturer/distributor, against duly duty-paid and tax-compliant transactions. On 16.08.2021, officials of the Directorate of Intelligence & Investigation (Inland Revenue), Multan, intercepted and confiscated the consignment and prepared a report. However, despite lapse of considerable time, no effective proceedings have been initiated, nor has the applicant been provided the relevant documents or afforded a meaningful opportunity of hearing. The applicant asserts that the cigarettes are genuine and duty- paid and alleges that the prolonged departmental inaction has caused financial loss and exposed the

goods to deterioration. He accordingly seeks resolution of the matter in accordance with law and fixation of responsibility for the delay”.

7.Without expressing any opinion on the merits, the first question to be examined is the jurisdiction and lawful competence of Respondent No.3 to entertain the complaint and pass the order dated 30.12.2021. Since jurisdiction goes to the root of the matter, an order passed without lawful authority or coram non judice is void ab initio and cannot be sustained. The “FTO” is established under the “Ordinance 2000”, to diagnose, investigate, redress and rectify any injustice done to a person through maladministration by functionaries administering tax laws. Section 9 of the “Ordinance 2000” delineates the jurisdiction of the “FTO” as follows:

9.Jurisdiction, functions and powers of the Federal Tax Ombudsman: (1) Subject to Sub – section (2) the Federal Tax Ombudsman may on a complaint by any aggrieved person, or on reference by the President, the Senate or the National Assembly, as the case may be, or on a motion of the Supreme Court or a High Court made during the course of any proceedings before it or of his own motion, investigate any allegation of maladministration on the part of the Revenue Division or any Tax Employee.

(2)The Federal Tax Ombudsman shall not have jurisdiction to investigate or inquire into matters which—

(a)are sub judice before a court of competent jurisdiction or tribunal or board or authority on the date of the receipt of a complaint, reference or motion by him; or

(b)relate to assessment of income or wealth, determination of liability of tax or duty, classification or valuation of goods, interpretation of law, rules and regulations relating to such assessment, determination, classification or valuation in respect of which legal remedies of appeal, review or revision are available under the Relevant Legislation”

(3)Notwithstanding anything contained in sub- section (1), the Federal Tax Ombudsman shall not accept for investigation any complaint by or on behalf of a Tax Employee concerning matters relating to the Revenue Division in respect of any personal grievance relating to his service.

(4)For carrying out the objectives of this Ordinance and, in particular for ascertaining the causes of corrupt practices and injustice, the Federal Tax Ombudsman may arrange for studies to be made or research to be conducted and may recommend appropriate steps for their eradication.

(5)The Federal Tax Ombudsman may set up regional offices as, when and where required.

Underlining for emphases

The provision of law, referred to above, crystalizes the jurisdiction, functions and powers of the “FTO” primarily empowering him to investigate complaints alleging maladministration by the Revenue Division or any tax employee, whether made by an aggrieved person, referred by specified constitutional authorities, or taken up suo motu. At the same time, this provision clearly circumscribes such jurisdiction by excluding matters that are sub judice before a competent court, tribunal, board or authority, as well as matters relating to assessment of income or wealth, determination of tax or duty liability, classification or valuation of goods, or interpretation of tax laws, rules and regulations where the statutory remedies of appeal, review or revision are available. The object and purpose of the provision is to provide an independent and expeditious remedy against maladministration and administrative injustice, without allowing the “FTO” to assume the jurisdiction of statutory appellate or adjudicatory forums. In essence, Section 9 of the “Ordinance 2000” confers jurisdiction over maladministration but expressly preserves the statutory scheme of appeal, review and revision and bars the “FTO” from adjudicating matters falling within the exclusive domain of other competent forums.

8.The ultimate question is not whether the allegation of delay made by Respondent No.3 could, in isolation, constitute maladministration, but whether such allegation could confer jurisdiction upon the “FTO” in respect of a matter which, by its very nature, was pending adjudication before the competent statutory authorities and involved determination of the legality of the seized goods as well as the consequential liability of duties and taxes. A perusal of the complaint filed by the Respondent No.3 reveals that his grievance essentially relates to the confiscation of cigarettes, their alleged duty-paid status and the failure of the tax authorities to finalize the proceedings. These matters directly involve the determination of tax/duty liability and the legality of the departmental action, for which remedies are available under the relevant tax laws. Section 9(1) of the “Ordinance 2000” undoubtedly empowers the “FTO” to investigate allegations of maladministration on the part of the Revenue Division or any tax employee; however, such power is expressly circumscribed by subsection (2) of section 9 of the “Ordinance 2000”. The latter provision operates as an ouster clause in respect of matters relating, inter alia to assessment of income or wealth and determination of liability of tax or duty where the law provides a remedy of appeal, review or revision. The mere formulation of a grievance as one of “delay” or “maladministration” cannot, by itself, enlarge the statutory jurisdiction of the “FTO” where the substance of the complaint pertains to a matter reserved for adjudication by a competent statutory forum. The question of jurisdiction has already been settled by this Court in the case of “Messrs Z & J HYGINIC PRODUCTS (PVT.) LTD. versus FEDERATION OF PAKISTAN and others” (2018 PTD 419) wherein the Court, while examining the scope of sections 2(3) and 9(2)(b) of the “Ordinance, 2000” in the context of proceedings under the Income Tax Ordinance, 2001, has held that where a specific remedy of appeal, review or revision is available under the relevant fiscal law, the jurisdiction of the “FTO” stands

excluded. The Court further held that the power of the “FTO” under section 9(1) is not absolute and remains subject to the limitation contained in section 9(2) of the “Ordinance 2000”, which expressly bars investigation or inquiry into matters relating to determination of tax liability where statutory remedies are available. This view was further affirmed by the Supreme Court of Pakistan in the case of “Messrs KANPUR OLD BOYS ASSOCIATION versus Messrs KARACHI METROPOLITAN CORPORATION and another” (2024 SCMR 1361), relevant portion reads as under:

“6. We are of the considered view that the Ombudsman did not have jurisdiction and the petitioner's complaint was not maintainable, as what was complained of did not constitute maladministration. The petitioner had asserted purported transgression or non-fulfilment of its contractual rights which the petitioner could only do by the filing of a suit. However, the Ombudsman assumed the powers, which vest in civil court, under section 9 of the Code of Civil Procedure, 1908. The Ombudsman did that which the law neither envisages nor permits. This aspect was not considered by the Ombudsman, and the Governor dismissed KDA's representation on technicalities. Moreover, the complaint was submitted to the Ombudsman seventeen years after KDA had issued its letter dated 21 April 1984. whereas section 10(3) of the Act stipulates a period of three months within which a complaint may be preferred. There is also nothing on the record to show that the petitioner had accepted KDA's offer letter dated 21 April 1984 let alone that it did so within the period of one week mentioned therein. The requisite payment was also not made within the stipulated period, and only half of the occupancy value was ever paid.

7.We are dismayed to observe that the Ombudsman in complete disregard of the provisions of the Act, and the facts noted above, not only assumed jurisdiction but also granted extraordinary and uncalled for relief to the petitioner. The Ombudsman did not have jurisdiction and his decision was coram non judice. The Governor should have set aside the illegal decision of the Ombudsman, but instead dismissed

KDA's representation on technicalities. Therefore, it was left to the High Court to set aside the decision of the Ombudsman and that of the Governor. No illegality with regard to the impugned judgment of the High Court has been pointed out. Therefore, this appeal is dismissed”

9.More recently, the Federal Constitutional Court of Pakistan in the case of “GHULAM ABBAS versus TELEPHONE INDUSTRIES OF PAKISTAN and 2 others” (PLD 2026 Federal Constitutional Court 309) reiterated the settled principle by holding that jurisdiction of the Wafaqi Mohtasib must be found within, and remain confined to, the statute creating the office. Where the relief claimed necessarily requires determination of a matter falling outside those statutory contours, the authority cannot acquire jurisdiction by participation of the parties, by an undertaking, by exhaustion of a representation, or by operation of a statutory ouster clause. Such an order remains open to constitutional judicial review on the recognised grounds of want or excess of jurisdiction, coram non judice action, or violation of law. The Court further observed as under:

“8. The learned counsel for the petitioner has invited our attention to Article 29 of the Order of 1983, which bars the jurisdiction of the Courts in respect of any action taken, order made, or anything done by the Wafaqi Mohtasib under the said Order. On the strength of this provision, he contends that the High Court was not legally justified in interfering with the impugned orders in exercise of its constitutional jurisdiction under Article 199 of the Constitution. We are mindful of the statutory bar contained in Article 29, as well as the settled jurisprudence governing the scope of judicial review in such matters. It is by now well established that a constitutional court may interfere under Article 199 of the Constitution where an order of the Wafaqi Mohtasib suffers from want or excess of jurisdiction, is coram non judice, or has been passed in violation of the law. In this regard, reference may aptly be made to the judgment of the Supreme Court of Pakistan in the case of Pakistan International Airlines Corporation Karachi v. Wafaqi Mohtasib and

others (1998 SCMR 841). There can be no cavil with the above proposition. Since we have already held that the impugned orders of the Wafaqi Mohtasib were passed without lawful authority and in excess of jurisdiction, the High Court was fully justified in setting them aside, notwithstanding the bar contained in Article 29 of the Order of 1983.

10.The aforesaid principles squarely apply to the controversy before us. In the present case, the Show Cause Notice had already been issued by the competent authority and the matter was required to proceed in accordance with the mechanism prescribed under the “Act 2005”, the “Act 1990” and the rules framed thereunder. The grievance of the Respondent No.3 pertains to a matter which was required to be dealt with and adjudicated by the competent authority in accordance with the procedure and remedies provided under the “Act 2005” and in case any order is passed or decision rendered, he has a remedy of appeal under Section 33 of the “Act 2005” which is further appealable before the Appellate Tribunal under Section 34 of the “Act 2005” before which it could raise all questions relating to the seizure, legality of the goods, payment or otherwise of duties and taxes, and any consequential liability. In such circumstances, the “FTO” could not assume jurisdiction merely because Respondent No.3 alleged that adjudication had not taken place within the desired period. It is also significant that the “FTO”, instead of examining its own jurisdiction in the light of the express restriction contained in section 9(2)(b) of the “Ordinance, 2000”, entertained the complaint and directed that adjudication of the seized goods be undertaken by the appropriate legal forum. Such a direction, though apparently requiring the matter to be taken to the competent forum, was itself the consequence of exercise of jurisdiction over a complaint which fell outside the statutory domain of the “FTO”. Once the “FTO” lacked jurisdiction to

entertain the complaint, the consequential direction could not legally sustain.

11.The jurisdiction of this Court under Article 199 of the Constitution is discretionary; however, where the impugned action is shown to have been taken without lawful authority or in excess of jurisdiction, the availability of an alternate remedy does not operate as an absolute bar. In the facts and circumstances of the present case, the very assumption of jurisdiction by the “FTO” is under challenge on the basis of an express statutory exclusion contained in section 9(2)(b) of the “Ordinance, 2000”. Therefore, case laws reported in “Messrs Z & J HYGINIC PRODUCTS (PVT.) LTD. versus FEDERATION OF PAKISTAN and others” (2018 PTD 419), “Messrs KANPUR OLD BOYS ASSOCIATION versus Messrs KARACHI METROPOLITAN CORPORATION and another” (2024 SCMR 1361) and “GHULAM ABBAS versus TELEPHONE INDUSTRIES OF PAKISTAN and 2 others” (PLD 2026 Federal Constitutional Court 309) support the proposition that the “FTO” cannot bypass or supersede the statutory mechanism prescribed under the relevant fiscal law which even otherwise are binding on this Court under Article 189 of the Constitution.

12.In view of the foregoing, this writ petition is allowed and impugned orders dated 24.08.2022 and 31.12.2021 passed by the Respondent No.1 and 2 are set aside.

(ABID HUSSAIN CHATTHA) (JAWAD HASSAN)

JUDGE JUDGE

Approved for Reporting

JUDGE JUDGE

Usman*