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2021 MarsdenLR 905
HIGH COURT SABAH & SARAWAK KOTA KINABALU
GUGUSAN DOMINASI SDN BHD & ANOR – Appellant
Versus
THE GOVERNMENT OF MALAYSIA – Respondent
[Civil Appeal No: BKI-12ANCvC-10/11-2020]
The service of Notices of Assessment under the Income Tax Act is a prerequisite for tax liability, and doubts surrounding this service create triable issues.
Headnote:(A) Income Tax Act 1967 – Sections 103, 142(1), and 145 – Appeal against summary judgment for tax recovery – Court established that service of Notices of Assessment is a condition precedent for liability; doubts about proper service creates triable issues – Respondent's lack of evidence showing proper service on last known address leads to appeal being allowed. (Paras 33, 42, 46)
Facts of the case: Appellants contested Notices of Assessment for tax years 2015 and 2016, claiming lack of receipt and service which led to the appeal against summary judgment for damages.
Findings of Court: Appeal allowed due to serious doubts regarding the service of tax Notices.
Issues: Main issues include whether the Notices of Assessment were properly served and the validity of the certificate under section 142 (1) of the ITA.
Ratio Decidendi: Court ruled that the uncertainty regarding proper service of the Notices of Assessment presents triable issues warranting a trial.
Result: Appeal allowed with no order as to costs.
[1] This is an appeal against the decision of the learned Sessions Court Judge delivered on 13 November 2020 (the decision) which allowed the Respondent's application for summary Judgment against the 1st and 2nd Appellants (the Appellants) for the following orders:
a) The Plaintiff's Application Summary Judgment entered against the Defendant be granted to recover the taxes due and payable amounting to RM188,426.51 for the Years of Assessment 2015 and 2016;
b) Inclusive of statutory interest at the rate of 5% per annum on RM188,426.51 from the date of Judgment until the date of realization of the said RM188,426.51;
c) Costs; and
d) Such further and other relief as this Honourable Court deems fit and proper.
[2] As this is an appeal against an order for summary Judgment made by the Sessions Court, it is trite that the appeal shall be by way of rehearing. In Malayan Insurance (M) Sdn Bhd v. Asia Hotel Sdn Bhd, ; [1987] CLJ (Rep) 182, the Supreme Court held:
"[1] The Appellate Court should not regard the appeal as a reviewing of the exercise of the Judge's discretion but should in practice approach the appeal as a rehearing."
Brief Factual Background
[3] On 13 November 2020, Session's Court Judge allowed Respondent's application for Summary Judgment to be entered against the Appellants pursuant to O 14 r 1 of Rules of 2012 for taxes due and payable, interests and all costs. The decision and grounds of decision referred herein at the pp number 7-26 of the Supplementary Record of Appeal.
[4] The Appellants at the commencement of this action has allegedly been fairly and truly indebted to the abovenamed Respondent for a sum of RM188,426.51 which is an income tax for the Years of Assessment 2015 and 2016 including increases under the Income Tax Act 1967 (hereinafter referred to as "the said ITA "). The particulars of the said claim are contained in the endorsement on the Plaintiff's Writ Summon and Statement of Claim (Encl 1) in this action (Refer pp 4-12 of the Record of Appeal).
[5] The Notices of Assessment for Years of Assessment 2015 and 2016 both dated 22 February 2019 had allegedly been sent to the 1st Appellant's last known address by ordinary post on 25 February 2019 and the said Notices of Assessment had never been returned undelivered to the Respondent and therefore it was contended that the said Notices of Assessment shall be deemed to have been duly served on the Appellants in accordance with subpara 145(2)(c) of Income Tax Act 1967 .
[6] There is no dispute that the Respondent had satisfied the 3 preliminary requirements for summary judgment enunciated by the Federal Court in National Company for National Company For Foreign Trade v. Kayu Raya Sdn Bhd , . The burden shifts to the Appellants to show that there are triable issues. In Kerajaan Malaysia v. Nooryana Najwa Dato Sri Mohd Najib , , the High Court held:
"(5) The exception to the general rule in summary judgment is that a defendant may not raise triable issues in summary judgment applications for proceedings by the Government for recovery of tax due under s 106(1) of the ITA . However, the summary judgment rules regarding evidence of the amount claimed and 'no defence' still applies."
[7] In Kerajaan Malaysia v. Wong Seng Fook, the High Court held:
"On the above grounds I concluded that if there were probable legal questions yet left unresolved then this case would be unsuitable to be dealt with summarily under O 14 of the Rules of the High . I thus allowed the appeal."
[8] After perusing the Affidavits and submissions filed by the parties, it is observed that the Appellants has raised the following issues:
(i) Whether the Notices of Assessment were served to Appellants by the Respondent; and
(ii) Whether the Certificate under s 142 (1) of the ITA is not signed by the Director General.
Contention Of The Parties
[9] The Appellants in the Defence and Affidavit strictly deny having been served with the said documents and put the Respondent to strict proo
