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2024 MarsdenLR 119
HIGH COURT MALAYA KUALA LUMPUR
GOVERNMENT OF MALAYSIA – Appellant
Versus
MAJU HOLDINGS SDN BHD – Respondent
[Civil Suit No: WA-21NCvC-232-11/2021]
The court cannot entertain pleas regarding incorrect assessments in tax recovery actions under section 106(3) of the Income Tax Act 1967.
Headnote:(A) Income Tax Act 1967 - Sections 90, 106(3) - Summary judgment for tax recovery - Plaintiff sought to recover RM5,307,041.22 from Defendant for unpaid taxes for assessment year 2019 - Defendant's arguments regarding penalties and COVID-19 pandemic were found insufficient - Court ruled it cannot entertain pleas regarding incorrect assessments under s 106(3) - Summary judgment granted in favor of Plaintiff. (Paras 16, 34, 36)
(B) Summary Judgment - The court found that the Defendant failed to raise any triable issues that would warrant dismissal of the Plaintiff's application - The case of Chong Woo Yit was cited to clarify that under ITA 1967, typical rules for triable issues do not apply. (Paras 17, 33)
Facts of the case:
The Plaintiff filed for tax recovery against the Defendant for failure to pay assessed income tax. The Defendant conceded to the submission of the Income Return Form but argued against penalties due to financial distress caused by the pandemic.
Findings of Court:
The Defendant's arguments about penalties and financial distress were not sufficient to warrant dismissal of the Plaintiff's application.
Issues: Whether the Defendant's financial difficulties and arguments about penalties constituted a triable issue.
Ratio Decidendi: The court ruled that under s 106(3) of ITA 1967, it could not entertain pleas regarding the correctness of assessments.
Result: Summary judgment granted in favor of the Plaintiff.
JUDGMENT
(Enclosure 8 — Order 14 of the Rules of 2012)
Introduction
[1] As Benjamin Franklin wrote, "In this world nothing can be said to be certain, except death and taxes." Such is the woeful nature of this case, despite the Defendant's best efforts to fight against this tax recovery action.
[2] In this case, Inland Revenue Board ("IRB") of Government of Malaysia ("the Plaintiff") had filed this suit ("this Suit") against Maju Holdings Sdn Bhd ("the Defendant") for its failure to pay its income tax for assessment year 2019 totalling RM5,307,041.22 ("Total Amount") inclusive of penalties accorded under the Income Tax Act 1967 (" ITA 1967") on the principal amount assessed.
[3] The Plaintiff then filed Encl 8, namely a summary judgment application ("this Application") under O 14 r 1 of the Rules of 2012, to summarily recover the Total Amount.
[4] An affidavit in support of this Application was affirmed by one Nani Suhana binti Mohd Lazim who is an assistant director of the Inland Revenue Board (Encl 9). Subsequently, the Defendant filed an affidavit in reply opposing this Application, which was affirmed by one Mohamed Roslan bin Mohamed Shariff, the group chief executive officer for the Defendant (Encl 10). This was responded to in the Plaintiff's affidavit in reply affirmed by the same Nani Suhana binti Mohd Lazim (Encl 11).
[5] The parties then filed in their written submissions and a reply by the Plaintiff in writing, together with their respective oral submissions before me.
The Plaintiff's Submissions
[6] The Plaintiff's submissions are premised on three key points:
(a). Firstly, in summary judgment actions under ITA 1967, the normal rules for triable issues do not apply because of the provisions of 1967.
(b). Secondly, that the Plaintiff's claim is based on the declarations made, self-assessed, and confirmed by the Defendant within the prescribed Income Return Form for assessment year 2019.
(c). Thirdly, that the plea raised by the Defendant cannot be entertained by this Court by virtue of s 106(3) of ITA 1967.
[7] For the first point, the Plaintiff relied on the decision of Gunn Chit Tuan SCJ in the Supreme Court case of Chong Woo Yit v. Government of Malaysia ; [1989] 1 CLJ (Rep) 9 approving the dictum of Arulanandom J (as he then was) at p 13:
"We would agree and approve the following dictum of Arulanandom J (as he then was) in the case when he said:
When proceedings are commenced under O 14 the normal rules for triable issues do not apply to cases of this nature because of the provisions of the Income Tax Act. Normally when defence raised triable issues it is a rule of law that unconditional leave to defend should be given but under s 106(3) of the Income Tax Act it clearly states that in any proceedings commenced by the Government under s 106(1) of the Act for the recovery of tax by civil proceedings as a debt due to the Government the Court shall not entertain any plea that the amount to tax sought to be recovered is excessive, incorrectly assessed, under appeal, or incorrectly increased under s 103(4) or (5).".
[Emphasis Added]
[8] On the second point, the Plaintiff forwarded the argument that it was an annual obligation on the Defendant under ITA 1967 to submit a return form to the Director General of Inland Revenue (DGIR). As Malaysia utilises a self-assessment system, the law provides that the Defendant self declares its own income. This was evidenced in the form of a submitted Income Return Form for assessment year 2019 from the Defendant to the Plaintiff. It was then, under s 90 of 1967, deemed assessed that the tax due and payable was RM5,127,098.40. Thus, the obligation to pay the assessed amount arose under s 103, whether or not the taxpayer appealed against the assessment, before 31 July 2020.
[9] The Plaintiff also submitted that the date of the Income Return Form was deemed by law to be the date of the income tax assessed by the DGIR and should be treated as the date of the for
