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2024 MarsdenLR 1321
COURT OF APPEAL PUTRAJAYA
HASHIM HAMZAH, JCA
KIND ACTION (M) SDN BHD – Appellant
Versus
KETUA PENGARAH HASIL DALAM NEGERI – Respondent
[Civil Appeal No: J-01(A)-70-02-2022]
Judicial review is permissible even with alternative remedies available when clear illegality is demonstrated, particularly in cases of double taxation without proper discharge of prior assessments.
Headnote:(A) Income Tax Act 1967 - Section 4(a) - Real Property Gains Tax Act 1976 - Judicial review application - Appeal against additional assessments for income tax on proceeds from land disposal - Respondent's actions deemed illegal due to double taxation without discharging prior assessments. (Paras 5, 12, 28, 44)
(B) Judicial Review - Availability of alternative remedies - Existence of an appeal process does not bar judicial review; courts retain discretion to entertain applications in cases of clear illegality. (Paras 21, 25)
Facts of the case:
The Appellant acquired land from its parent company, disposed of the lots, and was subsequently assessed for additional income tax by the Respondent, despite having cleared taxes under RPGTA 1976. (Paras 3-4)
Findings of Court:
The Respondent acted illegally by imposing additional income tax without discharging prior RPGTA assessments, leading to double taxation. (Paras 28, 36)
Issues: The main issues were whether the Respondent's actions constituted double taxation and if the Appellant was entitled to judicial review despite having an alternative remedy. (Paras 14, 20)
Ratio Decidendi: The court ruled that the Respondent's failure to discharge the RPGTA assessments before imposing income tax assessments was illegal, and the existence of an alternative remedy did not bar the judicial review application. (Paras 28, 50)
Result: Appeal allowed with costs; judicial review application granted. (Paras 52)
Introduction
[1] This is the Appellant's appeal against the decision of the learned Judicial Commissioner ("JC"), who had dismissed the Appellant's application for judicial review against the decision of the Respondent.
Background Facts
[2] Briefly, the facts leading to the present appeal are as follows.
[3] The Appellant, as part of the Synthomer Group, acquired three plots of land ("the Land") from its immediate parent company, Revertex Malaysia Sdn Bhd ("RMSB"), in a transfer that was part of the group's strategy. This transfer was executed through a sale and purchase agreement dated 24 May 2004 ("the SPA").
[4] The Appellant subsequently subdivided the Land into smaller lots ("the Lots") and disposed of them between 2007 and 2017 at the total price of RM338,037,337.33. For the disposal of the Lots, the Appellant paid taxes under the Real Property Gains Tax Act 1976 (" RPGTA 1976") and was issued a certificate of clearance.
[5] However, in the course of a tax investigation which began in 2019, the Respondent adopted the position that the proceeds arising from the disposal of the Lots were subject to additional income tax under s 4(a) of the Income Tax Act 1967 (" ITA 1967") as a business income on the basis that the Appellant's activities of realising its investments were through the nature of trade.
[6] The Appellant, after having been notified by the Respondent of the audit findings, responded by disagreeing with the Respondent's decision. The Respondent rejected the Appellant's explanation and justification and proceeded to issue the Notices of Additional Assessment for years of assessment ("Y/A") 2010, 2015 and 2018 dated 3 December 2020 ("Disputed Notices").
[7] The Appellant then filed a judicial review application against the decision of the Respondent before the High Court . After hearing both parties, the learned JC dismissed the Appellant's application for judicial review. Aggrieved with the decision of the learned JC, the Appellant filed this appeal.
Findings Of The Learned JC
[8] The learned JC was of the view that there was no merit in the Appellant's application for judicial review against the Respondent based on the following findings.
[9] Firstly, the learned JC agreed with the Respondent that the Disputed Notices for Y/A prior to 2015 were not statutorily time-barred and found that it was the Appellant who had negligently (though not fraudulently) failed to furnish the proper information and to make the proper declaration. The learned JC was of the opinion that the plea of limitation should be raised before the SCIT.
[10] Secondly, the learned JC found that the Respondent was not bound by the RPGTA 1976 assessments and certificate of clearance as s 91 of the ITA 1967 vested the power in the Respondent to impose additional income tax.
[11] Thirdly, the learned JC found that the issue of double taxation did not arise as the Respondent had made the necessary adjustments by considering the payment under RPGTA 1976 made by the Appellant in the additional assessments and imposition of the penalty under the ITA 1967. The learned JC also found that there was nothing sinister or bad faith on the part of the Respondent's action in issuing the additional notice of assessment, as the Respondent was empowered to do so under the 1967.
[12] Having found that the Respondent had acted within the powers conferred by the ITA 1967 and the RPGTA 1976, in the Court 's view, the Respondent had not acted in bad faith or breached any rules of natural justice.
[13] In a nutshell, the learned JC was of the view that all the issues and contentions raised by the Appellant were related to findings of fact that warranted the Special Commissioners of Income Tax ("SCIT") to be the proper forum for resolution.
Issues
[14] The Appellant raised a total of 48 grounds of appeal through its additional memorandum of appeal. However, with respect to the learned JC and the Respondent for this appeal, we are inclined to uphold the content
