BELUX HOLDINGS SDN BHD KETUA PENGARAH HASIL DALAM NEGERI

DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR DALAM WILAYAH PERSEKUTUAN MALAYSIA (BAHAGIAN KUASA-KUASA KHAS) PERMOHONAN BAGI SEMAKAN KEHAKIMAN NO: WA-25-226-08/2020 Dalam perkara mengenai Borang-Borang JA bertarikh 28.7.2020 yang dikeluarkan oleh Ketua Pengarah Hasil Dalam Negeri kepada Pemohon; Dan Dalam perkara mengenai seksyen- seksyen 4, 4C, 22, 113, 152 Akta Cukai Pendapatan 1967; Dan Dalam perkara mengenai Aturan 53 dan Aturan 92 kaedah 4 Kaedah-Kaedah Mahkamah 2012; Dan Dalam perkara mengenai Seksyen 25 Akta Mahkamah Kehakiman 1964. ANTARA BELUX HOLDINGS SDN. BHD. (NO. SYARIKAT: 40650-X) ... PEMOHON Page 1 of 28 DAN KETUA PENGARAH HASIL DALAM NEGERI ... RESPONDEN Judgment Introduction 1. The Applicant on 12.8.2020 filed an application for leave to commence judicial review proceedings under Order 53 of the Rules of Court 2012 (ROC) seeking inter alia, the following orders:- (a) (b) that leave be granted to the Applicant to commence judicial review proceedings for an order of certiorari to quash 2 Forms JA dated 28.7.2020 issued to the Applicant that had imposed additional assessment of income tax (including penalty) of RM405,275.71 and RM/7,867,984.00 respectively for the years of assessment 2017 and 2015 (Additional Assessment); an order that all enforcement actions for the payment of the Additional Assessment be stayed entirely, including but not limited to — (i) commencement of any civil proceedings for the recovery of the Additional Assessment; Page 2 of 28 (ii} imposition of any further penalty for non-payment of the Additional Assessment within the prescribed time limit; and (iii) presenting a notice according to section 465 of the Companies Act 2016 and consequently, presenting any winding-up petition against the Applicant. - until full and final determination of the proceedings herein. (c) the Applicant be given liberty to apply for any other orders as may be deemed necessary and appropriate; and (d) costs of this application to be made as to costs in the cause of the substantive judicial review application. Background Facts 2. — The brief facts of this case can be summarised as follows:- 2.1 the Respondent raised notices of assessments for the Years of Assessment (YA) 2017 and 2018, both dated 28.7.2020, on the gains of RM22,231,435.21 received by the Applicant; 2.2 both the notices of assessment are the subject matter of dispute in the present Application; Page 3 of 28 2.3 the Respondent had taxed the gains received by the Applicant from a compulsory acquisition under section 4C of the Income Tax Act 1967 (ITA); and 2.4 effective from the Year of Assessment 2014, any amount receivable from a compulsory acquisition is taxable under section 4C of the ITA. Case for the Applicant 3. The Applicant submits that the Respondent's basis for the issuance of Forms JA based on the compensation received from compulsory acquisition of portions of the Applicant’s lands under the Land Acquisition Act 1960 was illegal and unlawful, because section 4C of the ITA does not apply to all compensations from compulsory acquisition. 4. Section 4C of the ITA only applies when the lands acquired are stock in trade of the taxpayer, which applies to property developers on property development. The Applicant has an arguable case that warrants further arguments at the substantive hearing because the lands belonging to the Applicant were never the Applicant’s stock in trade. 5. — This Honourable Court is invited to review the audited account which has consistently stated in the clear term that the Applicant is an “investment holding company”, with the land to be held as a fixed asset under the “Investment Properties’. Page 4 of 28 It is the Applicant’s submission that the argument of whether an alternative remedy is a bar to judicial review should more appropriately be canvassed and considered at the substantive hearing stage and not at the leave stage. The Respondent had unlawfully applied section 4C of the ITA to the Applicant when issuing Forms JA added with an unwarranted penalties allegation of incorrect return within Section 113(2) of the ITA. The Applicant invited this Court to exercise its discretion in allowing this case to be deliberated and disposed of via judicial review. According to the Applicant, this matter involved purely an interpretation of the law, namely section 4C which prima facie applies only to a property developer, has now been unlawfully used by the Respondent to collect tax on the Appellant, an investment holding company. Case for Putative Respondent 10. 11. The Applicant has the statutory right of appeal to Special Commissioners of Income Tax (SCIT) under section 99 of the ITA. The Applicant’s attempt to bypass the SCIT is a blatant failure to comply with the rule of law regarding the exhaustion of domestic remedies. Furthermore, the issue raised by the Applicant goes into the merit of the assessment. It involved the question of facts that must be Page 5 of 28 12. ventilated before the SCIT. Before the SCIT, the witness is called, and documents are tendered. In other words, evidence and witnesses are the questions of facts established before the SCIT. According to the Putative Respondent, the Applicant has failed to demonstrate any exceptional circumstances and establish an arguable case. The Law 13. 14. The Federal Court in WRP Asia Pacific Sdn Bhd v. Tenaga Nasional Bhd [2012] 4 CLJ 478; [2012] 4 MLRA 257; [2012] 4 MLJ 296 at 303, speaking through Suriyadi Halim Omar FCJ (as he then was) held: “.,.Leave may be granted if the leave application is not thought of as frivolous, and if leave is granted, an arguable case in favor of granting the relief sought at the substantive hearing may be the resultant outcome. A rider must be attached to the application though i.e. unless the matter for judicial review is amenable to judicial review absolutely no success may be envisaged.” The test laid down for leave to commence a judicial review in WRP Asia Pacific Sdn Bhd (supra) are as follows: (i) | whether the subject matter is amenable to judicial review; and if so (ii) from the materials available, whether the application is frivolous and if not thought as frivolous, to consider that the Page 6 of 28 15. 16. 17. applicant has an arguable case to obtain the relief sought at the substantive hearing. The principles governing applications for leave to commence judicial review proceedings have also been set out in Tang Kwor Ham & Ors v. Pengurusan Danaharta Nasional Bhd & Ors [2006] 1 MLRH 507; [2006] 1 CLJ 927; [2006] 5 MLJ 60 at 69 where Gopal Sri Ram JCA (as he then was) held: [10]"...the High Court should not go into the merits of the case at the leave stage. Its role is only to see if the application for leave is frivolous... So too will the court be entitled to refuse leave if it is a case where the subject matter of the review is one which by settled law (either written law or the common law) is non-judiciable.” It is trite that the Applicant will have to satisfy the tests propounded in the abovementioned cases to secure the leave to commence the judicial review proceedings. At this stage, the court need not go into the merits of the case, but only to see if the subject matter is amenable to judicial review or whether the application for leave is frivolous. In any event, a judicial review is the discretion of the court, the application for leave to commence judicial review may be allowed in exceptional circumstances as explained by the then Supreme Court in Government of Malaysia & Anor v. Jagdis Singh [1987] 2 MLJ 185; [1986] 1 MLRA 207; [1987] CLJ REP 110 which held: Page 7 of 28 “Held: allowing the appeal: (1) the discretion is still with the courts to act by way of judicial review but where there is an appeal provision available to the applicant, certiorari should not normally issue unless there is shown a clear lack jurisdiction or a blatant failure to perform some statutory duty or in appropriate cases a serious breach of the principles of natural justice.” The decision of the Court Whether the availability of domestic remedy in a judicial review application can be raised at the leave stage 18. 19. It is my view that the availability of domestic remedy in a judicial review application can be raised at the leave stage based on the decisions of the Federal Court in Majlis Perbandaran Pulau Pinang v. Syarikat Bekerjasama-sama Serbaguna Sungai Gelugor Dengan Tanggungan [1999] 1 MLRA 336; [1999] 3 CLJ 65; [1999] 3 AMR 3529; [1999] 3 MLJ 1 the Court of Appeal’s decisions in Chin Mee Keong & Ors v. Pesuruhjaya Sukan [2007] 6 MLJ 193; [2007] 2 MLRA 1; [2007] 5 CLJ 363; Zakaria Bin Abdullah & Ors v. Lembaga Perlesenan Tenaga Atom & Ors [2013] 6 MLRA 522; [2013] 5 MLJ 206 and Ta Wu Realty Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri & Anor [2008] 2 MLRA 151; [2008] 6 CLJ 235; [2009] 1 MLJ 555. The Federal Court in Majlis Perbandaran Pulau Pinang (supra) had decided on the availability of alternative remedy at paragraphs g—I|at page 91 and paragraphs a — b at page 92 as follows:- (2) The Alternative Remedy Point Page 8 of 28 20. Did the existence of the statutory remedy of appeal and its non- exercise, in this case, exclude Judicial Review? Before considering this question, we should like to make a preliminary observation regarding the stage at which the question of alternative remedies should be dealt with. There is no hard and fast rule about this. As we have said, the case of R. v. Secretary of State for the Home Department ex p., Swati (ibid) shows that the existence of alternative remedies would be a ground for refusing leave to apply for judicial review. It is also a ground for setting aside a grant of leave given earlier. (R. v. Secretary of State for the Home Department ex p. Davendranath Doorga [1990] COD 109). Again, the alternative remedies argument may be considered at the inter partes stage, even if leave had been granted and not challenged (R. v. Brentford General Commissioners, ex p. Chan [1986] STC 65. At the final hearing stage, the court can consider the alternative remedies objection as a preliminary point (R. v. Chief Adjudicating Officer, ex p. Bland, The Times 6 February 1985) or at a later stage. (See, e.g. R. v. Epping and Harlow General Commissioners, ex p. Goldstraw [1983] 3 All ER 257).” (emphasis added) The Federal Court in Majlis Perbandaran Pulau Pinang (supra) ‘had referred to the UK Court of Appeal’s decision in R. v. Secretary of State for the Home Department, ex parte Swati [1986] 1 All ER 717 where the Court of Appeal, in this case, had refused leave to apply for judicial review based on the availability of alternative remedy where Stephen Brown LJ held at paragraph b page 726 as follows:- “The statutory appeal procedure to an adjudicator and, with leave, to the immigration Appeal Tribunal is clearly the appropriate method of Page 9 of 28 21. challenging the immigration officer's decision. It is a procedure which enables the full facts to be ascertained. The process of judicial review is not appropriate for a purely factual challenge. | am satisfied that there is no basis on which Mr Swati should be granted leave to apply for judicial review.” (emphasis added) The Court of Appeal decision in Chin Mee Keong & Ors (supra), had recognized that the argument of the existence of alternative remedy may be argued during the leave stage of a judicial review application. James Foong JCA (as he then was) had stated at paragraphs 29 — 31 as follows:- “Is the Appellants’ Case Frivolous And Vexatious To Merit The Refusal Of Leave In Limine? [29] So the question to be asked in our instant case is whether the appellants’ Application is frivolous and vexatious to justify refusal of leave in limine. The learned Judicial Commissioner answered this in the affirmative based primarily on the fact that there exist an alternative domestic remedy for the Applicant to appeal against the decision of the Respondent under s. 21(1)(c) of the SD Act. But does the availability of this remedy alone justify the refusal of leave to apply for an order of certiorari? [30] | am aware that this court in QSR Brands Bhd v. Suruhanjaya Sekuriti & Anor [2006] 2 CLJ 532, has gone as far as to declare: In the light of these weighty authorities, it is manifestly clear that it is only at the hearing of the substantive motion for judicial review that the existence of an alternative remedy becomes relevant. A fortiori, it is a matter which does not fall to be considered on a leave application. Page 10 of 28 22. [31] “[15] But | am not inclined to accept such a wide proposition in the light of the authorities disclosed. This is too broad an interpretation given to the cases cited. To summarily assign this issue of an alternative remedy to a subsequent stage for consideration after leave has been granted would, in my view, mean that even cases which are bound to fail in limine on the issue of availability of an alternative remedy would automatically be permitted at leave stage. It must be reminded that there are only limited exceptions to the general rule that judicial review is not available where there is an alternative remedy by way of appeal. And to ignore this at leave stage and allow all cases of such nature to proceed to the second stage after leave is granted would go beyond established principles particularly that of Mohamed Nordin bin Johan v. Attorney General, Malaysia (supra) which is a Federal Court case and the Supreme Court decision in J. P. Berthelsen v. Director-General of Immigration, Malaysia & Ors [1986] 2 CLJ 409; [1986] CLJ (Rep) 160 which repeatedly states that the test is whether the Application for leave is frivolous to merit the refusal of leave in limine. In my view, if the issue of an alternative remedy is raised at leave stage, it must still be considered in the light of this established test rather than leaving it completely for evaluation at the substantive hearing of the motion of certiorari after leave has been granted.” (emphasis added) Furthermore, in the case of Zakaria Bin Abdullah (supra), the Court of Appeal had also recognized that the argument of the existence of alternative remedy may be argued during the leave stage whereby _Anantham Kasinather JCA (as he then was) held at paragraph 15 as follows:- In conclusion, we are compelled to address two issues raised by learned counsel for the appellants. The first is learned counsel’s submission Page 11 of 28 23. that there is a distinction to be drawn between the leave stage and the substantive stage in determining the impact of an alternative remedy on an application for judicial review. At this preliminary stage, according to counsel, all that is required to be showed is that the claim is frivolous. The case of QSR Brands Bhd v. Suruhanjaya Sekuriti & Anor [2006] 3 MLJ 164 was cited in support of this proposition. With respect, we are unable to agree with this submission as the Federal Court in Majlis Perbandaran Pulau Pinang v. Syarikat Bekerjasama-sama Serbaguna Sungai Gelugor dengan Tanggungan [1999] 3 MLJ 1 acknowledged that ‘there is no hard and fast rule’ concerning the stage at which the question of alternative remedy should be dealt with after citing the case of R. v. Secretary of State for the Home Department; ex p Swati [1986] 1 All ER 717 as authority for this proposition.” (emphasis added) In a tax case in Ta Wu Realty Sdn Bhd (supra), the Court of Appeal had affirmed the decision of the High Court that dismissed the Application for leave to commence judicial review for certiorari to quash a notice of assessment under the ITA. Suriyadi Halim Omar JCA (as he then was) had ruled at paragraphs 34 and 35 as follows:- ‘[34] To wind up the matter, with there being a presumption that the administration exercises its powers in good faith and for public benefit, what with the learned Judge having found no failure of performance of some statutory duty, followed by learned counsel for the Appellant submitting outside the periphery of his pleadings, compounded further by the fact that the pleaded ground has no place in a judicial review application, it was no surprise that the learned Judge had dismissed this Application. Page 12 of 28 [35] With the failure by the Appellant to establish that an exceptional circumstances exists, the legal precept that a local remedy is available, and have yet to be exhausted, thereupon will return to the forefront for consideration. The inevitable outcome, after considering all the facts again, is that the leave application must be dismissed as no arguable case had been made out by the Appellant. It will be pointless to grant leave, even if the Appellant were to have sufficient interest over the matter, if it is crystal clear that its case is a hopeless one on its merits; or the Appellant's case rests only on non- justiciable issues. Founded on the above grounds we had no compunction in dismissing the appeal with costs. The High Court decision was affirmed and the deposit ordered towards account of taxed costs.” (emphasis added) 24. Thus, based on the decision of the cases referred above, it is clear that the availability of domestic remedy in a judicial review application can be raised at the leave stage Whether the Applicant may commence this judicial review without having to exhaust the remedy of an appeal under section 99 of the ITA 25. On this issue, there are a plethora of cases which decided that parties need to exhaust the internal remedy provided by the statute before bringing the matter to court including commencing with judicial review application. 26. In this regard, it is instructive to refer to the Federal Court case of Robin Tan Peng Heng @ Muhamad Rizal bin Abdullah (suing as public officer at Penang Turf Club) v. Ketua Pengarah Page 13 of 28 Kesatuan Sekerja Malaysia & Anor [2010] 2 MLRA 571; [2010] 9 CLJ 505; [2011] 2 MLJ 457, where it states: ‘[16] The second question could better be described as a consequence of the [17] first question. Section 71A has provided a remedial mechanism within the framework of the trade union legislation, that is a specific procedure whereby an appeal lies to the Minister. The second question relates to another matter, that is since s. 71A(1) is applicable to an employer does it still permit the employer to have an option not to appeal, and additionally, instead have recourse to a court of law in order to challenge the registration. The declaratory orders sought by the appellant would have the effect of negating the decision of the first respondent. By praying for the declaratory orders the appellant is in effect appealing against the decision of the first respondent while a specific procedure has been lain down in the Act 262. By statute a second tier has been established whereby an appeal lies to the Minister. The word used in s. 71A(1)(b) is ‘may’. In construing the word ‘may’ generally, it could be contended that the word is permissive in relation to the person who is given the right to appeal! in the sense that it gives the person a choice to prefer an appeal against the decision of the registrar or not to. But in relation to the person who is to be affected by the appeal we do not see this as directory. The declaratory orders sought seen to reverse the decision of the registrar. Hence in that sense if an employer wishes to refute recognition then it is the mandatory procedure that is laid down that has to be resorted to for the legislation has identified the specific procedure whereby any person who is dissatisfied is to seek further recourse with the Minister if that person wishes to negate the decision of the registrar. In our opinion the legislation by stipulating that the decision of the Minister is to be final is itself indicative that when there is already stipulated a second tier identified in the legislation, courts are not Page 14 of 28 27. 28. authorized to interfere for the statutory right that has accrued is not purely formal but mandatory. In other words, the statutory right has to be exhausted.” (emphasis added) Next, the Court of Appeal in the case of Pengarah Kastam Negeri Johor & Anor v. Kedai Makan Kebun Teh (Sutera Utama) Sdn Bhd & Ors and another appeal [2014] 5 MLRA 324; [2014] 4 MLJ 377; [2014] 3 CLJ 733, had this to say on this issue: [18] Having perused that provision, we would agree with learned SFC that such recourse could only be had after the respondent taxpayer had exhausted the available remedy as provided for by Parliament within the four corners of the Sales Tax Act 1972. That would necessarily mean that the respondent taxpayer must have exhausted its appeal remedy with the Director — General of Customs in respect of the impugned notice as envisaged under s. 68 of the Sales Tax Act 1972 (supra). While s. 141N seems to suggest that the aggrieved party go to the High Court, it does not expressly say that the aggrieved taxpayer may do so without first exhausting its remedy by appealing to the Director — General.” (emphasis added) Apart from the abovementioned cases, the Court of Appeal in Ketua Pengarah Kastam dan Eksais v. Coach Malaysia Sdn Bhd [2019] 2 MLRA 377; [2019] 4 CLJ 454; [2019] 2 MLJ 716, further explained this issue as follows: [34] We further agreed with the learned senior federal counsel that the appeal should be allowed on another ground, and that is, the respondent's application for judicial review was premature as there was an Page 15 of 28 29. [35] [36] alternative remedy available to it under s. 124 of the GST Act. The provision was couched in the following language: 124 Application for review (i) Any person may apply to the Director General within thirty days from the date the person has been notified of any decision made by an officer of goods and services tax for the review of the decision and provided no appeal has been made on the same matter to the. Tribunal or court. (ii) Where an application has been made under subsection (1), the Director General shall make a decision and notify the person within sixty days from the date of the application is received or within the time practicable. (iii) An application under subsection (1) shall be made in the prescribed manner and prescribed form. What the provision meant was that any person aggrieved by the decision of the DG may apply, within thirty days of the notification of the decision, for a review of the decision, provided no appeal was made to the tribunal or to the court within that period. This was not done by the respondent. In our view the intention of the legislature then was clear, and that was for the person aggrieved by the decision of the DG to first exhaust the internal remedy before appealing to the tribunal or to the court.” (emphasis added) Likewise, in the Federal Court case of Ketua Pengarah Hasil Dalam Negeri v. Alcatel — Lucent Malaysia Sdn Bhd & Anor [2017] 1 MLRA 251; [2017] 2 CLJ 1; [2017] 1 MLJ 563, the same Page 16 of 28 issue has been explained by Suriyadi Halim Omar (FCJ) (as he then was) in the following words: “[58] To dispel any fear of a taxpayer, merely because he has to face such an [60] 161] awesome body in the form of the government, Gill FJ in Sun Man Tobacco Co. v. Government of Malaysia [1973] 2 MLJ 163 had occasion to state: The doors of justice are not shut to him merely because its claimant is the Government, but he has to enter the doors of the Special Commissioners first to raise the plea of non-observance of the principle of natural justice or to establish that the Director - General acted arbitrarily and in a non-judicial manner. It is only after he has availed himself of that remedy as laid down by the law that he has a right to come to the courts. Had the respondents filed an appeal before the Special Commissioners, where the onus is on the respondents to establish their position, they will be accorded every opportunity to show where the appellant went wrong. The respondents may request for the attendance of witnesses to give evidence on oath and request any witness to produce any books, papers or documents which is in his custody or his contro! necessary for purposes of the appeal. Therefore, before the Special Commissioners, the respondents will have all the opportunity to ventilate his disgruntlement, with every opportunity to undo what the appellant determined (see Director — General of Inland Revenue v. Lahad Datu Timber Sdn Bhd [1977] 1 LNS 26; [1978] 1 MLJ 203). At. the completion of the hearing of the appeal, the Special Commissioners shall give their decision in the form of an order known as a deciding order, and which in certain circumstances may be final. Page 17 of 28 30. [62] [63] Either party to the proceedings before the Special Commissioners may appeal on a question of law against a deciding order, or may request the Special Commissioners to state a case (generally known as case stated) for the opinion of the High Court. Any dissatisfied party may appeal only up to the Court of Appeal (Tio Chee Hing v. United Overseas Bank (Malaysia) Bhd [2013] 2 CLJ 910; Koperasi Jimat Cermat dan Pinjaman Keretapi Bhd. v. Kumar Gurusamy [2011] 3 CLJ 241; Ketua Pengarah Hasil Dalam Negeri v. Syarikat Jasa Bumi (Woods) Sdn Bhd (Civil Application No. 8 — 31 — 99 (S) (Unreported). By filing an appeal before the Special Commissioners, the respondents would have had that opportunity to challenge the decision of the appellant as to whether the payments were indeed royalties. Likewise, the respondents would have had the chance to rebut s. 15A of the ITA. Section 15A provides that certain income, including the likes of services rendered by the second respondent to the first respondent, shall be deemed to be derived from Malaysia. By circumventing the Special Commissioners, from resolving these issues, and unwittingly leaving the deeming provision unrebutted, the first respondent's payments to the second respondent are thus income derived from Malaysia..... (emphasis added) Zainun Ali FCJ (as she then was) has also held on the same note that: [127] A party who is dissatisfied with an assessment or administrative decision issued by the Revenue under section 109 and 109B is not left without any remedy. In the circumstance of this case, if it is dissatisfied with assessment or notice of assessment issued by the appellant, the 15* Respondent ought to have exercised its right to appeal under Page 18 of 28 31. 32. section 99 of the Act. Before the Special Commissioners, the 1% Respondents would have an opportunity to make known its dissatisfaction. It will have the opportunity to tender exhibits and give evidence if necessary.” (emphasis added) Having perused the cause papers filed by the Applicant, | am of the view that the issues raised by the Applicant in this judicial review application go into the merit of the assessment which is best determined by the SCIT. In Ketua Pengarah Hasil Dalam Negeri v. Mudah.My Sdn Bhd [2017] 2 MLJ 197; [2017] MLRAU 80; [2017] 5 CLJ 283, Idrus Harun JCA (as he then was) held at pages 217 — 218 as follows:- “81] [32] It is to be emphasized that the dispute raised by the Respondent could be dealt with by the Special Commissioners of Income Tax like any other appeals on assessment. The merits of this Application significantly involve disputes of facts and being as such, it is our opinion that the Special Commissioners of Income Tax being judges of facts and the best for hearing and deciding on tax grievances. The position of the Special Commissioners of Income Tax as judges of fact has been confirmed by the Federal Court in Kerajaan Malaysia v. Dato Haji Ghani Gilong [1995] 2 MLJ 119; To decide by way of judicial review that the appellant was right or not in its finding is in truth question the merits of the matter. The proposition that a question pertaining to the merits of assessment is a matter better reserved for the Special Commissioners was deliberated in the case of Ta Wu Realty Sdn Bhd, wherein this Court held that the Special Page 19 of 28 33. 34. 35. Commissioners of Income Tax were the proper forum to decide on the merits of an assessment. [33] _ It is evident that the Special Commissioners of Income Tax have the power to hear a question of mixed facts and law. (emphasis added) The Federal Court in Bintulu Lumber Development Sdn Bhd v. Director General of Inland Revenue (Civil Application No: 01 (F) — 28 — 10/2019 (Q) had on 26.8.2020 dismissed the taxpayer's appeal and decided that the DGIR’s decision to reject the tax payer's claim for the Reinvestment Allowance under Schedule 7A of the ITA was lawful and as such there was no error of law committed by the DGIR. The Federal Court decision in Bintulu Lumber (supra) has strengthened the rule of law when there is a domestic remedy available to a taxpayer under the statutory provision of the ITA, the Applicant must demonstrate “exceptional circumstance” before the Court would intervene to review the decision — making process by the DGIR. In any event, as judicial review is the discretion of the court, the application for leave to commence judicial review may be allowed in the exceptional circumstances as explained by the then Supreme Court in Government of Malaysia & Anor v. Jagdis Singh (supra) which held: | Page 20 of 28 36. “Held, allowing the appeal: (1) the discretion is still with the courts to act by way of judicial review but where there is an appeal provision available to the applicant, certiorari should not normally issue unless there is shown a clear lack of jurisdiction or a blatant failure to perform some statutory duty or in appropriate cases a serious breach of the principles of natural justice;” (emphasis added) On this issue of exceptional circumstances, the Court of Appeal in Iskandar Coast Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2019] 6 MLRA 219: [2019] 5 MLJ 236; [2019] 7 CLJ 143; [2019] 4 AMR 317, explained in the following words: “[(17] Exceptional means ‘unusual: not typical’: see Concise Oxford English Dictionary 17 Edition. Very exceptional circumstances therefore means very unusual circumstances. What amounts to very unusual circumstances must depend on the factual matrix of each case. [22] There is nothing exceptional about the appellant’s case to entitle it to by-pass the domestic appeal process prescribed by section 99 of the ITA. Nor could we find ‘very exceptional circumstances’, in the sense that there was a clear lack of jurisdiction, or a blatant failure to perform some statutory duty, or a serious breach of the principles of natural justice that the respondent can be said to the guilty of when he issued the Notices of Assessment. {23] The dispute was over the decision of the respondent to issue the Notices of the Assessment for years of assessment 2008, 2009 and 2013, for which the appellant’s remedy lies in appealing to the Special Commissioners in accordance with section 99 of the ITA. That would be the proper avenue for the appellant to challenge the Page 21 of 28 37. 38. 39. 40. decision of the respondent: Ketua Pengarah Hasil Dalam Negeri v. Alcatel — Lucent (M) Sdn Bhd & Anor [2017] 2 CLJ 4: [2017] 1 MLJ 563.” (emphasis added) The Applicant, in this case, had filed Form Q under section 99 of the ITA on 12.8.2020 with regards to the Notice of Assessment raised by the Putative Respondent. There have been overwhelming judicial precedents that support my view that the leave application should be dismissed and that since the Applicant had filed Form Q to the SCIT, the Applicant should pursue his appeal and ventilate his grievance to the SCIT. Referring to the case of Ta Wu Realty Sdn Bhd v. Director General of Inland Revenue [2004] 6 MLJ 53, Low Hop Bing J (as he then was) had rejected the request for permission for judicial review, among others, held: [30] Further, | am also of the view that the concurrent filing of the instant application and applicant's appeal before the Special Commissioners certainly constitute a duplicity of proceedings and is indeed frivolous, vexatious and an abuse of the process of the court.” In the case of Keysight Technologies Malaysia Sdn Bhd v. Director General of Inland Revenue [2018] MLJU 66, Azizah Nawawi J (now JCA) also ruled: [38] Therefore, | am of the considered opinion that there are no special ~ circumstances, namely a lack of jurisdiction, abuse of power or breach of natural justice that would merit this case to be reviewed by this Court Page 22 of 28 41. 42. 43. under Order 53 ROC 2012, when there is already an appeal process under section 99 of the ITA 1967. [39] Added to that, since the Applicant has filed an appeal to the SCIT under section 99 of the ITA 1967, it is an abuse of the court process to maintain this Application.” (emphasis added) Likewise, in the instant case, the intention of the legislature in enacting section 99 of the ITA was clear that any person aggrieved by the decision of the DGIR must first exhaust the internal remedy before commencing with the judicial review application. Based on the above, it is my view that the Applicant cannot bypass the SCIT. The correct avenue for the Applicant is to file a notice of appeal in Form Q (which was filed on 12.8.2020). The SCIT being - the Judges of facts is the proper forum to hear the Applicant's appeal. After careful perusal of the Applicant's Statement and Affidavit in Support, | find that the Applicant is asking the Court to grant leave for the following orders:- (a) that leave be granted to the Applicant to commence judicial review proceedings for an order of certiorari to quash 2 Forms JA dated 28.7.2020 issued to the Applicant that had imposed additional assessment of income tax (including penalty) of RM405,275.71 and RM7,867,984.00 respectively for the years of assessment 2017 and 2015 (Additional Assessment); Page 23 of 28 44. 45. 46. 47. 48. The Applicant also in his submission had submitted that this case involved purely an interpretation of the law, namely section 4C of the ITA. From the above, it clearly shows that the Applicant is not only challenging purely a question law as submitted by the Applicant but also the assessment raised by the Putative Respondent. It is my view if it is dissatisfied with the assessment or notice of assessment issued by the Putative Respondent, the Applicant ought to have exercised his right to appeal under section 99 of the ITA. At the SCIT, the Applicant would have had that opportunity to challenge the decision of the Putative Respondent as to whether the assessment or notice of assessment was correctly issued by the Putative Respondent. It will have the opportunity to tender exhibits and give evidence, if necessary. Further, in the case of Kerajaan Malaysia v. Dato Haji Ghani Gilong [1995] 1 MLRA 360; [1995] 3 CLJ 161, the Federal Court held that: “"... We say so because the Special Commissioners are the judges of fact, and have the jurisdiction to consider not only a plea of limitation based on sub-sections 1 and 3 of s. 91 of the Act but also other issues such as whether the amount of tax sought to be recovered is excessive, incorrectly assessed or incorrectly increased, all of which are issues which the Court in proceedings for recovery of tax by suit is prohibited by s. 106(3) of the Act from entertaining.” (emphasis added) Page 24 of 28 49. 50. 51. 52. In the present case, | find that the Applicant was allowed to submit an objection to the findings of the audit before the Putative Respondent finally finalized the decision to raise the additional tax assessment on the Applicant. The Applicant in fact, on 12.8.2020 filed an appeal under section 99 of the ITA to question the notice of assessment. Even if | were to agree with the Applicant's submission that the issue in the present case is a pure question of law involving interpretation of the law, namely section 4C of the ITA, | am of the considered opinion that interpretation of law does not form a basis of special circumstances for allowing judicial review application. | find support in my view by referring to the case of Bandar Nusajaya Development Sdn Bhd v. Ketua Pengarah Hasil Dalam Negeri [2016] MSTC 30 — 117, where the Court of Appeal held that:- “Charging a subject based on its erroneous interpretation of the ITA shows a lack of jurisdiction on the part of the Revenue and is a special circumstances justifying the Court’s exercise of its discretion to allow the judicial review application.” However, the Federal Court in Rayuan Sivil No. 01(f)-5- 02/2015(W) upon appeal by the Revenue had reversed the decision of the Court of Appeal. Thus, the issue of interpretation of the law does not form a basis of a special circumstances for allowing judicial review application. Page 25 of 28 53. 54. 55. 56. 57. | am of the view that the present case is an example of a disagreement or dispute over facts and interpretation of the law and how taxation or assessment should be done. Therefore, the Applicant has a statutory right of appeal envisaged under the ITA. | am of the view that to ignore the specific appeal machinery under the ITA and replace it with judicial review would be a mockery of the appeal provisions under the ITA and would render the Act of the Parliament to be in vain. To me, the differences in interpretation of the law should not be construed as “exceptional circumstances” that justify an application for judicial review. If the Applicant does not agree with the Putative Respondent's decision, it must be appealed and affirmed before the SCIT. Therefore, | view that these issues need to be referred to and decided by the SCIT who is specifically established by the statute to handle tax appeal cases raised under the ITA and other relevant tax laws by the taxpayers. The SCIT as a special court in dealing with tax appeal cases should be referred to resolve this issue before further appeals can be forwarded to the High Court and the Court of Appeal. Conclusion 58. Premised on the aforesaid reasons, | am of the view that there are no special circumstances namely a lack of jurisdiction, error of law, Page 26 of 28 59. 60. blatant failure to perform some statutory duty, abuse of power or breach of natural justice that would merit this case to be reviewed by this court. . Further, since the Applicant has filed an appeal to the SCIT under section 99 of the ITA, it is an abuse of the court process to maintain this judicial review application. © Based on the above, | dismissed the Applicant's application for leave to commence judicial review proceedings (Enclosure 1) with RM1,500.00 to the Putative Respondent. Dated: 25 January 2022 Ahmad Kamal bin Md. Shahid Judge High Court Kuala Lumpur Page 27 of 28 Counsels For the Applicant: For the Putative Respondent: Cik Karen Lee Foong Voon (Cik Cheah Kha Mun with her) Tetuan Wong Kian Kheong, Peguambela dan Peguamcara, D1-U5-01, Solaris Dutamas, No. 1, Jalan Dutamas 1, 50480 Kuala Lumpur. [Ruj. Tuan: 10426/2020] Dr. Hazlina bt Hussain Peguam Kanan Hasil (En. Zul-Hasymi and Pn. Marvianna Zainol with her) Lembaga Hasil Dalam Negeri Malaysia, Jabatan Undang-Undang, Menara Hasil, Aras 11, Persiaran Rimba Permai, Cyber 8, 63000 Cyberjaya, Selangor. Page 28 of 28