Back
2025 MarsdenLR 3842
HIGH COURT MALAYA SHAH ALAM
CENTRALFIELDS SDN BHD – Appellant
Versus
KETUA PENGARAH HASIL DALAM NEGERI – Respondent
[Judicial Review No: BA-25-54-08/2023]
The court established that declarations of unconstitutionality apply prospectively unless exceptional circumstances exist, emphasizing the need for legal certainty and the validity of actions taken under the law prior to its invalidation.
Headnote:(A) Income Tax Act 1967 - Section 4C - Judicial Review - The Federal Court ruled in Wiramuda (M) Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri that the provision is unconstitutional - The Applicant sought tax refund for RM7,692,569.04 based on this declaration - Court found s 4C valid at the time of assessment; thus, the application must be dismissed as the law was in force when taxes were levied, and the judgment is to be applied prospectively. (Paras 1, 9, 50)
(B) Judicial Review Principles - Jurisdiction of court under Order 53 involves assessing legality, irrationality, and procedural impropriety - Ground for review lies when an administrative body misapplies its legal powers or fails to follow lawful procedures. (Paras 12-13)
(C) The retrospective application of judicial decisions is discouraged unless exceptional circumstances warrant such action, emphasizing legal certainty and fairness. (Paras 44-46)
Facts of the case:
The Applicant was subject to tax under s 4C of the ITA without appeal to the Special Commissioner of Income Tax after tax return submission for Year of Assessment 2016, wherein the Federal Court subsequently declared this section unconstitutional. (Paras 5, 10)
Findings of Court:
The application for judicial review was dismissed due to the validity of s 4C during the assessment period; the Federal Court's ruling will have only prospective effect. (Paras 50)
Issues: Whether the Federal Court's decision in Wiramuda applies retrospectively and the validity of taxes assessed under s 4C prior to this ruling.
Ratio Decidendi: The court held that the declaration of unconstitutionality applies prospectively, preserving the integrity of prior transactions made under valid law and ensuring fairness; thus, the application for refund lacks merit.
Result: Application for judicial review dismissed.
| Table of Content |
|---|
| 1. judicial review application concerning tax refund. (Para 1 , 2 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 2. various reliefs sought by the applicant. (Para 3) |
| 3. principles of judicial review outlined. (Para 12 , 13 , 14 , 15) |
| 4. application of retrospective vs prospective effect. (Para 17 , 18 , 19) |
| 5. restitution rights after declaration of unconstitutionality. (Para 20 , 21 , 22 , 23) |
| 6. respondent's position on prospective application. (Para 25 , 29) |
| 7. limitations and deadlines for tax refund claims. (Para 30 , 31 , 32 , 33 , 34) |
| 8. respondent's counterarguments concerning validity of application. (Para 35 , 36 , 37 , 38 , 39) |
| 9. judicial restraint on retrospective invalidation. (Para 44 , 46 , 48 , 49) |
| 10. final ruling dismissing the application. (Para 50) |
Introduction
[1] This application for judicial review relates to s 4C of the Income Tax Act 1967 (" ITA ") which the Federal Court in Wiramuda (M) Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri ; ; held to be unconstitutional.
[2] The only issue before this Court for determination is whether the Respondent had committed an error of law in disallowing the Applicant's application for refund of taxes paid under s 4C of the ITA .
Reliefs Sought
[3] The reliefs sought by the Applicant in this application are reproduced below:
"(i) A Declaration that the taxes collected by the Director General of Inland Revenue ("DGIR") pursuant to s 4C of the Income Tax Act 1967 (" ITA ") is unconstitutional pursuant to the decision of the Federal Court in Wiramuda (M) Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri ; ; (Civil Appeal No.: 01(f)-38-08/2022 (W));
(ii) A Declaration that the taxes amounting to RM7,692,569.04 collected by the DGIR from the Applicant under s 4C of the ITA are illegal and unlawful;
(iii)A Declaration that the taxes amounting to RM7,692,569.04 collected by the DGIR under s 4C of the ITA from the Applicant constitute an unjust enrichment;
(iv)An Order that the DGIR shall return to the Applicant within 14 days from the order of this Honourable Court the taxes amounting to RM7,692,569.04 collected from the Applicant under s 4C of the ITA ; and
(v) An Order that the DGIR shall pay interest accruing at the rate of 8% on the sum of RM7,692,569.04 (being the taxes that DGIR is to return to the Applicant) from the date the said sum was paid in full by the Applicant to the DGIR (i.e on 15 March 2018) until the date of the said sum is returned in full to the Applicant;
(vi)THAT all necessary and consequential directions and orders be given;
(vii)THAT the costs of this application be costs in the cause; and
(viii) ALL other and further relief which this Honourable Court deems fit and proper."
Factual Background
[4] Centralfields Sdn Bhd is engaged in property development and investment. On 31 May 2016, it received compensation from the Selangor State Authority for land (PT 3790, HSD 155803, Mukim Sungai Buloh, Daerah Petaling) under s 16 of the Land Acquisition Act 1960 . The land was held as stock-in-trade by the company.
[5] On 21 August 2017, the company submitted its tax return (Borang C) for the Year of Assessment 2016 in compliance with s 77A of the Income Tax Act 1967 .
[6] The Applicant declared in its YA 2016 tax return that the compensation from the compulsory land acquisition was taxable under s 4C of the Income Tax Act 1967 .
[7] As the tax return was filed, the assessment for YA 2016 is deemed to have been made under s 90 of the same Act.
[8] No appeal was lodged by the Applicant to the Special Commissioner of Income Tax (SCIT) against the assessment raised on 21 August 2017 for YA 2016 under s 99 of ITA 1967.
[9] On 9 December 2022, the Federal Court ruled in the Wiramuda (M) Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri ; ; case that s 4C of the Income Tax Act 1967 is unconstitutional.
[10] Citing this decision, the Applicant wrote to the Respondent on 27 June 2023 requesting a tax refund for YA 2016 and demanded a response by 25 July 2023, failing wh
