A valid Interim Stay Order prevents the enforcement of tax assessments, rendering claims based on those assessments unsustainable and avoiding conflicting judicial decisions.

JUDGMENT

(Enclosure 5)

Khadijah Idris J:

Introduction

[1] The Plaintiff's claim against the Defendant is for recovery of debt due and payable under the Income Tax Act 1967 (" ITA ").

[2] On the application of the Defendant, this Court allowed the Defendant's application to strike out the Plaintiff's claim on the grounds stated below.

Salient Facts

[3] Pursuant to the Notices of Additional Assessment all dated 30 July 2021 for the Year of Assessment 2016 (Additional), 2017 (Additional) and 2018 (Additional) the additional assessment raised by the Director General of Inland Revenue ("DGIR") is RM7,153,386.42, RM1,064,072.59 and RM1,928,183.04 respectively.

[4] The Defendant's failure to pay the income tax stated above within 30 days from the service of the Notices of Assessment has caused a 10% tax increase imposed on the additional assessment pursuant to s 103 of the ITA . Thus the sum RM715,338.65, RM106,407.25 and RM192,818.30 was imposed on Year of Assessment 2016 (Additional), 2017 (Additional) and 2018(Additional) respectively.

[5] This makes the total tax due and payable for Year of Assessment 2016 (Additional), 2017 (Additional) and 2018 (Additional) is RM11,160,206.24. The Defendant failed to pay the said sum. Plaintiff filed this writ action to claim the said sum in accordance with s 103 of the Income Tax Act 1967 (" ITA ") read together with s 106 of the same, and interest.

[6] The Defendant filed the following applications:-

(a) enclosure 5 to strike out the Plaintiff's Writ and Statement of Claim (collectively referred to as "Plaintiff's Claim"). Alternatively if striking out is refused, an order that this writ action be stayed until disposal of the Defendant's application for judicial review in the Kuala Lumpur High Court No. WA-25-343-10/2021 ("Judicial Review Suit"); and

(b) enclosure 9 for an extension of time to file their defence until disposal of enclosure 5.

[7] The Plaintiff filed encl 19 seeking summary judgment be entered against the Defendant for the sum RM11,160,206.24 and interest.

[8] After considering the pleadings, affidavits and submissions this Court allowed the Defendant's application in encl 5. Thus the Plaintiff's Claim is struck out, rendering encl 9 and 19 no longer necessary to be heard.

Enclosure 5

[9] Enclosure 5 is filed pursuant to O 18 r 19(1)(b) and(c) of the Rules of 2012 ("RoC 2012") on the basis that the Plaintiff's Claim is scandalous, frivolous or vexatious and / or otherwise it constitutes an abuse of the process of the Court .

Defendant's Contentions

[10] It is the Defendant's contention that the Plaintiff's Claim is obviously unsustainable as an interim stay order dated 24 November 2021 ("Interim Stay Order") upon the enforcement of the Additional Assessment had already been granted by Court in the Judicial Review Suit. The Interim Stay Order which expired on 13 December 2021 was extended until 14 January 2022 and was further extended until 6 April 2022.

[11] On the day of hearing of encl 5 ie on 2 December 2022 learned counsel for the Defendant informed the Court that the Interim Stay Order was further extended until 12 January 2023. This was not disputed by learned counsel for the Plaintiff.

[12] The Defendant contends this civil action is scandalous, frivolous or vexatious for the following reasons:-

(a) it is wholly unreasonable and prejudicial to the Defendant because pursuant to the Interim Stay Order, the Defendant has a right not to pay the DGIR until the Defendant's application for leave is heard;

(b) the Interim Stay Order is binding on the Plaintiff unless the said order is struck out or set aside. The Plaintiff is estopped from commencing another suit on the same subject matter against the Defendant; and

(c) the Plaintiff's action filing this writ action could be held in contempt of Court for failure to abide by the Interim Stay Order.

[13] It is also contended that the Plaintiff's Claim is an abuse of the process of the Court on the following grounds:-

(a) this writ action c