The newly appointed Federal Tax Ombudsman (FTO) has clarified that the FTO office is not an adjudicating forum for taxpayers and does not have the authority to determine tax liabilities.
In a recent order, the FTO outlined the scope and limitations of its jurisdiction, emphasizing that the office does not rule on tariff or regulatory policies under NEPRA, nor does it decide substantive tax matters. Instead, it may refer to issues for administrative resolution to prevent inconsistent treatment and repeated grievances.
The order highlighted that the dispute in question involves the overlap between fiscal provisions and the regulatory framework governing net metering. Under Section 9 of the FTO Ordinance, the Ombudsman cannot determine tax liability or issue directions that would conflict with NEPRA’s approved billing structure or regulatory policies.
The case revealed that different practices are being followed across the country in the taxation of net metering bills. While one distribution company applies taxes in a specific manner, others reportedly adopt different approaches. This lack of consistency has led to complaints from consumers, particularly those of K-Electric.
However, the FTO noted that the allegation of discrimination was not supported by evidence of deliberate bias by tax authorities. Instead, the issue stems from the absence of uniform implementation and clarity at the national level.
The order further observed that distribution companies (DISCOs) and K-Electric primarily act as billing and collection agents within the legal framework. Issues requiring nationwide consistency in fiscal treatment cannot be resolved through fragmented regional practices or isolated remedies, especially when policy-level decisions are involved.
Although the Federal Board of Revenue (FBR) had previously issued clarifications on the tax treatment of net metering bills, these instructions appear not to have been implemented uniformly across jurisdictions. The reasons for this inconsistency remain unclear.
Given the need for national coordination and administrative coherence, the FTO concluded that the matter requires resolution at the FBR’s policy level rather than continued operational discrepancies.
The complaint was disposed of with recommendations that the FBR address the issue at the appropriate policy and administrative level, in consultation with relevant stakeholders, to ensure uniform tax treatment for net metering cases across all jurisdictions. The FBR was also directed to ensure that any clarifications or instructions are properly communicated and implemented by all field formations to prevent further inconsistencies.
The FBR has been asked to submit a compliance report, along with copies of the relevant instructions issued for uniform implementation, to the FTO office within 60 days.
