Back
2020 MarsdenLR 873
HIGH COURT MALAYA KUALA LUMPUR
GOVERNMENT OF MALAYSIA – Appellant
Versus
MOHD NAJIB HAJI ABD RAZAK (ENCL 11) – Respondent
[Civil Suit No: WA-21NCVC-35-06/2019]
The obligation to pay taxes under the Income Tax Act prevails despite appeals, and mere financial concerns do not constitute special circumstances for granting a stay of proceedings.
Headnote:(A) Income Tax Act 1967 – Sections 103 and 106 – Application for stay of proceedings against the recovery of income tax – Defendant argued that a stay was necessary due to appeal lodged against tax assessments – Court emphasized the principle of 'pay first, talk later' as per judicial precedents – The Defendant failed to establish 'special circumstances' – Stay application dismissed. (Paras 14, 62)
(B) Legal Principles – Requirement for stay of proceedings – Must demonstrate real special circumstances, not merely speculative fears – Fear of financial damage and potential bankruptcy do not qualify. (Paras 21, 30)
(C) Onus of Proof – The Defendant bears the burden to show just cause for the court to grant a stay – Merely involving a significant sum does not constitute grounding for such. (Paras 22, 28, 36)
Facts of the case: Plaintiff initiated action against Defendant, a former Prime Minister, for RM1,692,872,924.83 in unpaid taxes for several assessment years, including subsequent increases as per the Income Tax Act. The Defendant moved to stay proceedings pending the resolution of appeals against the assessments.
Findings of Court: Court found no special circumstances warranting the stay. Granting a stay could impede statutory recovery processes and set a bad precedent for tax obligations.
Issues: Main issues included whether the Defendant's claims constituted special circumstances justifying a stay and the definitions surrounding inherent court powers.
Ratio Decidendi: The Court ruled against the stay application, reiterating the obligation under tax law and the absence of proven special circumstances despite financial concerns raised by the Defendant.
Result: Application for stay of proceedings dismissed with costs of RM15,000.
[Enclosure (11)] - Stay of Proceeding
Introduction
[1] The Plaintiff vide Enclosure (1) had filed an action against the Defendant, a former Prime Minister and a former Minister of Finance Malaysia for additional income tax which are due and payable. Vide Enclosure (11) the Defendant is making an application to move this Court for a stay of proceeding pending the disposal of the Defendant's appeal to the Dispute Resolution Department of the IRB, the Special Commissioner (SCIT) and completion of other Court cases that the Defendant are facing now. Earlier, vide Enclosure (6), the Plaintiff had filed an application to move this Court for a summary judgment against the Defendant. As logic dictates that I should hear the stay of proceeding first, as it will have a bearing over the Plaintiff's application for summary judgment, hence, I have informed parties of the same. I have thereafter directed parties to submit on the Defendant's application for stay via Enclosure (11). Parties have accordingly submitted at length before me and today is fixed for decision.
Facts Of The Case
[2] According to the Plaintiff, the Defendant is indebted to the Plaintiff for a sum of RM1,692,872,924.83 which is an additional income tax due and payable for the Years of Assessment 2011 (Additional), 2012 (Additional), 2013 (Additional), 2014 (Additional), 2015 (Additional), 2016 (Additional) and 2017 (Additional) including increases under the Income Tax Act 1967 (hereinafter referred to as "the Act"). The particulars of the said claims are as contained in the Plaintiff's Writ of Summons and Statement of Claim in this action.
[3] For the Years of Assessment 2011, 2012, 2013, 2014, 2015, 2016 and 2017, the Defendant was assessed with the additional taxes for the amount of RM116,173,374.12, RM320,929,932.31, RM891,573, 465.46, RM119,144,655.51, RM16,879,500.03, RM643,445.21 and RM346,471.41 respectively through Notices of (Additional) Assess-ment all dated, 20 March 2019 (hereinafter referred to as "the said Notices of (Additional) Assessment").
[4] According to the Plaintiff, the said Notices of (Additional) Assessment were issued and sent by way of registered post to the Defendant on 25 March 2019 to his last known address known to the Plaintiff at that time and had never been returned undelivered to the Plaintiff. Hence, by virtue of s 145(2)(c), the said Notices of (Additional) Assessment shall be deemed to have been duly served on the Defendant.
[5] The Defendant filed an appeal on the said Notices of (Additional) Assessment through Form Q dated 16 April 2019 for all the years in question ie Assessments 2011 (Additional), 2012 (Additional), 2013 (Additional), 2014 (Additional), 2015 (Additional), 2016 (Additional) and 2017 (Additional) which were received by the Plaintiff on 18 April 2019 (hereinafter referred to as "Form Q").
[6] As the Defendant failed to pay the total outstanding sum amounting to RM116,173,374.12 (for 2011), RM320,929,932.31 (for 2012), RM 891,573,465.46 (for 2013), RM119,144,655.51 (for 2014), RM16,879,500.03 (for 2015), RM643,445.21 (for 2016) and RM346,471.41 (for 2017) within thirty (30) days from the date of service of the said Notices of (Additional) Assessment to him as provided under s 103 of the Act, an increase of 10% amounting to RM11,617,337.41, RM32,092,993.23, RM89,157.346.54, RM11,914,465.55, RM1,687, 950.00, RM64,344.52 and RM34,647.14 respectively (hereinafter referred to as "the 10% increase") had been imposed and added respectively onto the total outstanding sum for the Years of Assessment 2011 (Additional), 2012 (Additional), 2013 (Additional), 2014 (Additional), 2015 (Additional), 2016 (Additional) and 2017 (Additional), which remains unpaid.
[7] According to the Plaintiff, the Defendant thereafter still failed to pay the total outstanding tax together with the 10% increase which remains outstanding within 60 days as provided in s 103 of the Act, and therefore, an increase of 5% amounting to RM6,389.
