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2023 MarsdenLR 2213
HIGH COURT MALAYA KUALA LUMPUR
PUNCAK NIAGA CONSTRUCTION SDN BHD – Appellant
Versus
MENTERI KEWANGAN MALAYSIA; KETUA PENGARAH HASIL DALAM NEGERI (I.... – Respondent
[Judicial Review Application No: WA-25-357-12/2020]
Judicial review applications must follow statutory avenues; failure to appeal to the proper authority renders the application frivolous and non-justiciable.
Headnote:(A) Income Tax Act 1967 - Sections 127(3A), 135, and 44A(1) - Judicial review application dismissed - Applicant sought to challenge additional assessments made by the Director General of Inland Revenue (DGIR) through the Minister instead of the Special Commissioners of Income Tax (SCIT) - Court held that the Minister did not make a decision and had no power to set aside assessments under the ITA - The proper avenue for appeal was not pursued, rendering the application frivolous and vexatious. (Paras 19, 20, 46, 52)
(B) Judicial Review - Leave application - Established test requires an arguable case for the relief sought - The applicant failed to demonstrate an arguable case as the Minister's non-response did not constitute a decision subject to review - The nature of relief sought was in the form of mandamus, which could not be granted as the Minister's powers were discretionary. (Paras 14, 24, 36)
Facts of the case:
The applicant, a construction company, sought judicial review against the Minister for Finance to set aside additional tax assessments made by the DGIR for the years 2017 and 2018, claiming the assessments were unlawful. The applicant did not utilize the statutory appeal process available against the DGIR's decision. (Paras 1, 5, 20)
Findings of Court:
The court found that the Minister did not exercise any decision-making power regarding the assessments and the application bypassed the proper statutory remedy, leading to its dismissal. (Paras 19, 52)
Issues: Whether the Minister's non-response constituted a decision amenable to judicial review and whether the relief sought was appropriate. (Paras 19, 20)
Ratio Decidendi: The court ruled that the Minister had no authority to set aside the assessments as the proper remedy lay with the SCIT and that the application was frivolous as it did not follow the statutory process. (Paras 19, 46)
Result: Application for leave dismissed.
| Table of Content |
|---|
| 1. judicial review application dismissed. (Para 1 , 2 , 3) |
| 2. test for granting leave for judicial review. (Para 4 , 14 , 15 , 16) |
| 3. applicant's claims regarding tax assessments. (Para 5 , 6 , 7 , 8 , 9 , 11) |
| 4. arguments against leave for judicial review. (Para 12 , 18 , 20) |
| 5. minister's non-decision does not warrant judicial review. (Para 19 , 22 , 24) |
| 6. mandamus cannot compel discretionary powers. (Para 25 , 27 , 29) |
| 7. refusal to make a decision addressed. (Para 30 , 31 , 33) |
| 8. minister lacks power to exempt illegal tax. (Para 44 , 50) |
| 9. application for leave dismissed. (Para 52) |
Introduction
[1] On 22 January 2024, I dismissed the application for leave to commence judicial review proceedings brought by the applicant, Puncak Niaga Construction Sdn Bhd against the Minister for Finance ("the Minister") for the following reliefs (enclosure 1):
(i) an order that the Minister exercise his powers under s 135 and/or s 127(3A) of the Income Tax Act 1967 (" ITA ") to set aside or exempt the Director General of Inland Revenue's ("DGIR") assessment in the form of notices of additional assessment for the Years of Assessment ("YA") 2017 and 2018 on the ground that the assessments made were illegal, void, unlawful, in excess of authority, irrational, unreasonable and/or which resulted in a denial of the applicant's legitimate expectation ("the impugned assessments"); and
(ii) a declaration that the applicant is entitled to surrender the losses in the YA 2017 and YA 2018 amounting to RM2,292,182.64 and RM1,988,472.96 respectively to Puncak Niaga Management Services Sdn Bhd ("PNMSB") pursuant to the Group Relief Scheme provided under s 44A(1) of the Income-tax Act 1967 (" ITA ").
[2] It is to be noted that the impugned assessments were made by the DGIR. There are specific provisions in the ITA that expressly provide an aggrieved taxpayer an avenue of appeal against such assessments to the Special Commissioners of Income Tax ("Special Commissioners").
[3] In the instant case, instead of resorting to the statutorily appeal avenue against the impugned assessments made by the DGIR, the applicant approached the Minister by letter to do the following: (a) for a direction to be made under s 135 of the ITA directing the DGIR to set aside the impugned assessments; and/or (b) to exempt the tax assessed by the DGIR under s 127 of the .
[4] My reason for dismissing the application for leave to commence judicial review proceedings was the failure of the applicant to satisfy the test for granting leave established by the Federal Court WRP Asia Pacific Sdn Bhd v. Tenaga Nasional Bhd ; .
The Background Facts
[5] The facts pleaded by the applicant are as follows. The applicant is in the business of construction projects. In the course of carrying out its projects, losses were surrendered to PNMSB. The DGIR disallowed the surrendered losses on the basis that the losses arose from uncompleted projects. It was contended that the DGIR's decision was wrong as the ITA does not provide restrictions of such nature.
[6] On 10 January 2020, the DGIR informed the applicant of its audit findings and the taxes due. The applicant informed the DGIR by letter dated 28 February 2020 that it had sufficient adjusted loss to be surrendered after excluding the estimated losses from the uncompleted projects for the YA 2017 and YA 2018. On 2 September 2020, the DGIR informed of its final audit findings and disallowed the group relief surrendered by the applicant to PNMSB on the basis that the projects were not completed and the actual loss was yet to be ascertained.
[7] On 15 September 2020, the applicant by letter gave its reasons for disagreeing with the DGIR on the following grounds:
(a) the applicant as a surrendering company would still be in an adjusted loss position after deducting the estimated loss and have sufficient adjusted loss to surrender to PNMSB;
(b) having disregarded the estimated loss from the D44 project and BALB, the applica
