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2022 MarsdenLR 1255
HIGH COURT MALAYA PENANG
GOVERNMENT OF MALAYSIA – Appellant
Versus
LOW TAEK JHO – Respondent
[Civil Suit No: PA-21NCVC-1-01/2021]
Taxpayers must settle the assessed tax as a debt due to the government, irrespective of challenges to the assessment, as outlined in the Income Tax Act.
Headnote:(A) Income Tax Act 1967 – Sections 3, 77, 90, 91, 96, 97, 106, 142, and 145 – Plaintiff (LHDN) seeks summary judgment for RM1,053,972,936.58 for unpaid taxes for the years of assessment 2013 and 2014. Defendant failed to submit tax returns by 30th April and did not pay within 30 days of the Notices of Assessment. The LHDN established the basis of the tax claim under the Act, with penalties applied for late payment. (Paras 2-4, 6-8, 19, 30-31, 32-33)
(B)
Summary Judgment – The Court evaluates if triable issues exist or any other reason to warrant a trial. It holds that there are no such issues or reasons that necessitate a trial in the context of a statutory tax claim, given the clarity of the provisions of the Act and the binding case law supporting the LHDN's actions. (Paras 22-30, 130-131)
(C)
Findings of the Court: The Defendant's arguments relating to various defenses including limitation periods, legality of assessments, service of notices, and the argument concerning the 1MDB suit were found to be unsubstantiated for failing to raise triable issues as required under the provisions governing summary judgments. (Paras 45, 53-113)
(D)
The LHDN's application for judgment was granted with interest; RM1,053,972,936.58 with costs awarded to LHDN. (Paras 130-131)
JUDGMENT
(Plaintiff's Application For Summary Judgment)
A. Prelusion
[1] This is a tax claim-for RM1,053,972,936.58. The Plaintiff (LHDN) seeks a summary judgment for this amount. Should summary judgment be entered against the Defendant?
B. Key Asserted Facts
[2] The LHDN asserts that the Defendant failed to submit tax returns for the years of assessment 2013 and 2014, by the prescribed annual statutory deadlines. Tax returns must be submitted not later than 30th April in the year following the year of assessment. As a result, the LHDN issued Notices Of Assessment to the Defendant for the sums of RM202,575,166.56 for 2013 and RM755,582,048.52 for 2014.
[3] The Defendant did not pay the tax assessed within the prescribed 30-day time limit. As a consequence, a 10% increase was imposed on the assessed tax amount. The respective increases were RM20,257,516.65 for 2013 and RM75,558,204.85 for 2014.
[4] The eventual total tax payable for 2013 and 2014 was RM1,053,972,936.58. The Defendant failed to pay this amount. Hence this tax claim.
[5] The Defendant denies that he is liable to pay the tax.
C. The Pertinent Income Tax Act Provisions
[6] It is necessary that I first set out the pertinent provisions of the Income Tax Act 1967 (the Act) to understand the LHDN's case and the Defendant's Defence. This will also explain the Malaysian tax regime and its procedure for recovery.
[7] Section 3 provides that income tax will be charged on a taxpayer's income which is "accruing in or derived from Malaysia or received in Malaysia from outside Malaysia". For reference, s 3 is set out here:
Section 3 . Charge of income tax.
Subject to and in accordance with this Act, a tax to be known as income tax shall be charged for each year of assessment upon the income of any person accruing in or derived from Malaysia or received in Malaysia from outside Malaysia.
[Emphasis Added]
[8] Section 77 provides that every person (a taxpayer) must submit a "return of income" (a tax return) for every year of assessment. The relevant portions of s 77 are here:
Section 77 . Return of income by a person other than a company, limited liability partnership, trust body or co-operative society.
(1) Every person, other than a company, limited liability partnership, trust body or cooperative society to which s 77A applies, shall for each year of assessment furnish to the Director General a return in the prescribed form:
(a) in the case of that person who is carrying on a business, not later than 30 June in the year following that year of assessment; or
(b) in any other case than the case in paragraph (a), not later than 30 April in the year following the year of assessment:
Provided that that person has:
(a) chargeable income for that year of assessment; or
(b) no chargeable income for that year of assessment, but has chargeable income or has furnished a return or has been required under this Act to furnish a return, for the year of assessment immediately preceding that year of assessment.
(4) For the purposes of this section, a return for a year of assessment shall:
(a) specify the chargeable income and the amount of tax payable (if any) on that chargeable income for that year; and
(b) contain such particulars as may be required by the Director General.
[Emphasis Added]
[9] Section 90 provides that if a taxpayer does not submit a tax return, the LHDN will assess the tax amount that the taxpayer has to pay. The relevant portions of s 90 are here:
Section 90 . Assessments generally.
(1) Where a person has furnished a return in accordance with s 77... to the Director General for a year of assessment, the Director General shall be deemed to have made, on the day on which the return is furnished, an assessment in respect of that person in the amount of tax on the chargeable income, the tax and the chargeable income being the respective amounts as specified in the return.
(2) For the purposes of this Act, where the Director General is deemed to have made an assessment under subsectio
