The court ruled that the tax assessments issued were illegal as they failed to adhere to the taxpayer's established rights under the Income Tax Act and the Exemption Order.

JUDGMENT

Leonard David Shim JC:

[1] This is an application under O 53 r 4 ROC 2012 by the Applicant (the Taxpayer) for judicial review. The order and reliefs sought are, inter alia, as follows:

(a) (i) a declaration that (1) the Notice of Assessment (Form J) dated 28 October 2020 for the Year of Assessment 2016; (2) the Notice of Assessment (Form J) dated 28 October 2020 for the Year of Assessment 2017; and (3) the Notice of Additional Assessment (Form JA) dated 28 October 2020 for the Year of Assessment 2018, (collectively), "the impugned Assessments"), are ultra vires the Income Tax (Exemption) (No 22 Order 2006 ("the Exemption Order"), s 127(3)(b) of the Income Tax Act 1967 ("the Act") and accordingly null and void in law;

(ii) Consequently, a declaration that the impugned Assessments are ultra viresarts 8 and/or 96 of the Federal Constitution and accordingly null and void;

(iii) an Order of Certiorari quashing the impugned Assessments on the grounds that the impugned Assessments are illegal, in excess of jurisdiction and/or irrational and consequently, null and void; and

(iv) an Order to prohibit the Respondents from taking any steps to enforce and/or execute the impugned Assessments pursuant to the Act and/or otherwise in any manner howsoever;

(b) an Order that the impugned Assessments and any enforcement and/or execution proceedings arising therefrom pursuant to the Act and/or otherwise in any manner howsoever, be stayed until the final disposal of the Applicant's substantive Judicial Review Application ("the stay").

(c) costs of this application and all costs arising from this application are to be costs in the cause of the Judicial Review Application; and

(d) such further declarations, reliefs or orders that this Honourable Court deems fit, proper or just.

[2] The grounds of this application are:

1. The impugned Assessments are illegal as the impugned Assessments are:

(a) ultra vires the Exemption Order and therefore, null and void;

(b) ultra viress 127(3)(b) of the Act and therefore, null and void;

(c) ultra viresart 96 of the Federal Constitution and therefore, null and void;

(d) consequently, illegal and therefore, null and void; and

(e) further and consequently, made in excess of authority and jurisdiction.

2. The impugned Assessments are in breach of the Applicant's legitimate expectations ie (1) that the Facilitation Fund extended by the Government of Malaysia ("the Facilitation Fund") was exempt from income tax; and (2) that the deductability of the expenditures on project cost claimed by the Applicant for YA 2016 to YA 2018 ("the Expenditures") was lawful and valid, which the Applicant had, at all material times, acted and relied upon. The raising of the impugned Assessments amount to an abuse of power and a retrospective deprivation of the Applicant's acquired and vested rights.

3. The impugned Assessments are egregious and oppressive in that no reasonable person could have come to make the impugned Assessments, as the Respondents had, in raising the impugned Assessment, failed to take into account relevantconsiderations ie (1) that the Facilitation Fund is exempt from income tax pursuant to the Exemption Order; and (2) the Applicant, at all material times, acted in good faith, gave full co-operation, made full and frank disclosure and obtained professional advice in managing its finance and tax affairs.

4. There are special circumstances that warrant a stay and it is necessary to preserve the status quo by suspending the impugned Assessment as the Applicant would suffer irreparable harm if a stay of the enforcement and/or execution of the impugned Assessments is not granted. To make the payment of the impugned Assessments of RM14.7M would abruptly halt the business operations of the Applicant indefinitely, and cause loss of jobs of the Applicant's employees, which make up a head count of 52 people, which would consequently, be catastrophic to the employees and their families, during this unprecedented Covid-19 pandemic.

5. Acc