DONG JIAO ZONG HIGHER LEARNING CENTRE BHD PEGUAM NEGARA

WA-25-343-10/2021 Kand. 44 19/12/2022 22:09:57 DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR (BAHAGIAN KUASA-KUASA KHAS) PERMOHONAN SEMAKAN KEHAKIMAN NO: WA-25-343-10/2021 Dalam perkara suatu permohonan yang telah dibuat kepada Responden menurut Seksyen 135 dan Seksyen 127(3A) Akta Cukai Pendapat 1967 yang bertarikh 6.10.2021 Dan Dalam perkara Aturan 53 Kaedah-Kaedah Mahkamah 2012 ANTARA DONG JIAO ZONG HIGHER LEARNING CENTRE BHD …PEMOHON DAN MENTERI KEWANGAN MALAYSIA …RESPONDEN JUDGMENT [1] The applicant was incorporated in 1994. The objective of the applicant’s establishment is to provide a community-funded tertiary education. In the same year, the applicant applied to the Ministry of Education (“MOE”) to establish New Era College (“NEC”). The MOE approved the establishment of NEC on 28.5.1997. [2] The NEC was upgraded to the status of University College in 30.12.2016 by the Ministry of Higher Education (“MOHE”). It was then known as New Era University College (“NEUC”). With the upgrading, NEUC was allowed to confer undergraduate and post- graduate degrees. [3] The NEUC is a partly community-funded institution and partly funded through its collection of fees. It is registered as a non-profit entity. S/N 8hLequneIkM9azJx2yKA 1 **Note : Serial number will be used to verify the originality of this document via eFILING portal [4] On 21.1.2020, the Inland Revenue Board (“the Revenue”) requested the applicant to provide the applicant’s audited accounts, tax computation and supporting documents for the Years of Assessment (“YAs”) 2016 to 2018. [5] The Revenue requested additional information from the applicant vide its email dated 9.7.2020. The documents include the management fees paid by the applicant to New Era Edu Sdn Bhd (“NEESB”) and the payroll list of the members of the staff and lecturers of NEUC. In the same email, the Revenue also invited the applicant for a meeting at the Revenue’s office in Bangi. [6] The applicant complied. [7] After a further exchange of correspondences and submission of documents, the Revenue eventually issued its tax findings for YAs 2016 to 2018 to the applicant on 28.6.2021. Despite further explanations proffered by the applicant, the Revenue vide an email dated 20.7.2021 maintained its audit findings. The email also indicated that additional assessments would be issued in the near future. [8] On 4.8.2021, the Revenue issued the Additional Assessments (“NAAs”) dated 30.7.2021 for YAs 2016 to 2018 to the applicant totalling RM10,145,642.05. The details are as follows: (a) YA 2016 : RM7,153,386.42 (b) YA 2017 : RM1,064,072.59 (c) YA 2018 : RM1,928,183.04 Total : RM10,145,642.05. [9] Dissatisfied with the NAA and vide its letter dated 6.10.2021, the applicant requested the putative respondent, the Minister of Finance (“the Minister”), to issue a direction under s 135 of the Income Tax Act 1967 (“ITA”). Alternatively, the applicant sought to be exempted from the taxes in the form of the NAAs under s 127(3A) of the ITA, which the applicant insisted were arbitrarily raised by the Revenue. [10] In its letter to the Minister, the applicant’s asserted that its main grievance is the conduct of the Revenue in treating the donations received by the applicant as income. In short, the Revenue alleged that the donations should be subjected to income tax. The applicant S/N 8hLequneIkM9azJx2yKA 2 **Note : Serial number will be used to verify the originality of this document via eFILING portal intimated to the Minister that the Revenue had failed to take into account that the donations do not fall within the purview of the ITA. [11] The Minister did not respond to the said letter from the applicant. The application for leave for judicial review [12] Aggrieved by the failure of the Minister to respond to the said letter (“the impugned Decision”), the applicant commenced this application for leave for judicial review. The applicant seeks, inter alia, for an order that the Minister to exercise his power under s 135 or, alternatively, under s 127(3A) of the ITA to set aside or exempt the NAAs on the grounds that the NAAs are illegal or otherwise unlawful. [13] The applicant also seeks a declaration that the donations received by the applicant from YAs 1996 to 2018 are exempted from income tax. [14] In para 2 of the application, the applicant seeks an order that all proceedings against the enforcement of the NAA be stayed pending the final determination of this judicial review. [15] The grounds of the application for leave can be summarised as follows: (a) The Minister had committed an error of law in failing to acknowledge that the Revenue had acted arbitrarily and exceeded its authority when it imposed taxes on the donations received by the applicant. In any event, the donations received were wholly used to fund the NEUC's upkeep and grant scholarships. (b) The impugned decision is so unreasonable that no reasonable decision-maker could have arrived at it in that the Minister had taken into consideration irrelevant matters or had failed to consider relevant matters. (c) The impugned decision constituted a denial of the legitimate expectations of the applicant. S/N 8hLequneIkM9azJx2yKA 3 **Note : Serial number will be used to verify the originality of this document via eFILING portal [16] S 135 of the ITA empowers the Minister to issue directions of the general character to the Director General of the Inland Revenue (“DGIR”) in accordance with the ITA and such directions shall be given effect by the DGIR. The objections from the Attorney General [17] The Attorney General (“AG”) is objecting to this application for leave. [18] The grounds for the objection made by the AG are as follows: (a) The application for leave is frivolous and vexatious as the Minister made no decision, action or omission within the meaning of O 53 r 2(4) of the Rules of Court 2012 (“ROC”). (b) Ss 135 and 127(3A) of the ITA do not have the nexus to set aside the NAA issued by the DGIR. (c) The applicant failed to exhaust the domestic remedy provided under the ITA. [19] Before me, the learned Senior Federal Counsel (“SFC”), who represents the AG, submitted that the applicant could not arbitrarily assume that the Minister had made a decision when the applicant received no reply within 9 days from the letter dated 6.10.2021. This application for leave for judicial review was filed 9 days after the said letter was sent. [20] The learned SFC took exception to the applicant’s action in imposing a timeline for the Minister to consider the applicant’s request. My attention was then drawn to the judgment of the Court of Appeal Abdul Rahman bin Abdullah Munir & Ors v. Datuk Bandar Kuala Lumpur & Anor [2008] 6 MLJ 704 CA. In delivering the judgment of the Court, Abdull Hamid Embong JCA (later FCJ) held that: The appellants' interpretation towards the first respondent's non-response to their letter makes no sense and far stretching one's imagination. This would give rise to an artificial meaning to the word decision. The date of the decision too becomes fictitious which makes the S/N 8hLequneIkM9azJx2yKA 4 **Note : Serial number will be used to verify the originality of this document via eFILING portal computation of the statutory time limit under O 53 of the RHC indeterminable. [21] It is also contended by the learned SFC that the subject matter in question is the NAA issued by the DGIR. According to the learned SFC, the NAA is the actual impugned decision. It was issued by the DGIR and not by the Minister. Since the Minister, as the putative respondent, is not the decision making body, leave does not lie against the non-existent decision. In support of the said proposition, the learned SFC referred me to the judgment of the Federal Court in Members of the Commission of Enquiry on the Video Clip Recording of Images of A Person Purported to be an Advocate and Solicitor Speaking on Telephone on Matters of Appointment of Judges v Tun Dato’ Seri Ahmad Fairuz bin Dato’ Sheikh Abdul Halim [2011] 6 MLJ 490 FC. [22] Secondly, the learned SFC submitted that nothing in ss 135 and 148 of the ITA that gives the power to set aside the notice of assessment issued by the DGIR. In any event, according to the learned SFC, the direction sought from the Minister is not of “general character” within the ambit of s 135. [23] The learned SFC further submitted that in urging the Minister to exercise his purported power under s 135 of the ITA, the applicant had attempted to circumvent the specific provision under s 99 of the ITA that would be able to address its grievance. S 99 of the ITA provides that a person aggrieved by an assessment made in respect of him may appeal to the Special Commissioners of Income Tax (“SCIT”) against the assessment by the DGIR. It is a specific provision under the ITA, whereas s 135 is a general provision. [24] The SFC then urged this Court to apply the maxim of generalia specialibus non derogant and submitted that s 99 takes precedence over s 135 of the ITA. [25] According to the learned SFC, the failure to appeal to the SCIT at first instance amounts to an abuse of process. [26] As to s 127(3A) of the ITA, it provides that the Minister may exempt any person from all or any of the provisions of the Act, either generally or in respect of any income of a particular kind or any class of income of a particular kind. The learned SFC contended that s 127(3A) has no application to the applicant’s case. According to the S/N 8hLequneIkM9azJx2yKA 5 **Note : Serial number will be used to verify the originality of this document via eFILING portal learned SFC, the reason is this. The applicant is not seeking an exemption under s 127(3A) but strenuously contending that they should not, in the first place, be subjected to tax under the ITA. [27] Thirdly, the learned SFC submitted that the applicant’s application for judicial review is frivolous and vexatious. The learned SFC contended that the applicant should have exhausted the remedy available under s 99 of the ITA if, indeed, it is dissatisfied with the NAA. [28] My attention was then drawn to the judgment of the Federal Court in Ketua Pengarah Hasil Dalam Negeri v. Alcatel-Lucent (M) Sdn Bhd & Anor [2017] 2 CLJ 1 FC. In that case, Zainun Ali FCJ, in delivering the supporting judgment of the apex Court, remarked that if the 1st respondent was dissatisfied with the notice of assessment issued by the DGIR, the 1st respondent ought to have exercised its right to appeal under s 99 of the ITA, to make known of its dissatisfaction to the SCIT. [29] For the aforesaid reasons, the learned SFC urged this Court to dismiss the application for leave. Analysis [30] Let me begin by highlighting that the judgment of the Court of Appeal in Abdul Rahman bin Abdullah Munir was based on the former O 53 r 2(4) of the Rules of High Court 1980 (“RHC”). It states as follows: Any person who is adversely affected by the decision of any public authority shall be entitled to make the application. However, the new O 53 r 2(4) of the ROC provides as follows: Any person who is adversely affected by the decision, action or omission in relation to the existence of the public duty or function shall be entitled to make the application. [31] As can be seen from the new O 53 r 2(4) of the ROC, the phrase “action or omission” was added to the word “decision”. In short, with the introduction of “action and omission”, the subject matter that is amenable to judicial review is not limited to the impugned decision S/N 8hLequneIkM9azJx2yKA 6 **Note : Serial number will be used to verify the originality of this document via eFILING portal only. It encompasses a non-response, a non-decision, an inaction or an omission to make any decision at all. [32] To my mind, the omission or a non-decision of a public authority is amenable to judicial review. In Zainal bin Haji Nasiruddin v The Registrar of Societies [2013] 7 BLR 704, the applicant applied for registration of PAKAR under the Societies Act 1966. The decision to register or otherwise is within the discretion of the Registrar under the Societies Act 1966. The Registrar is enjoined by the Societies Act to consider the application and make a decision. However, the Registrar had failed to make a decision – one way or the other. Ravinthran Paramaguru JC (now JCA) held that: In my opinion, the inordinate and continuing delay without good reason in the instant case is equivalent to refusal to make a decision. As the applicant has sufficient legal interest in the duty of the Registrar to make a decision on the application to register PAKAR, I hold that the refusal to make a decision is unlawful and ultra vires the Societies Act 1966. [33] Applying the said proposition to the facts of the case, the applicant urged the Minister to exercise his power under the ITA in its favour. The Minister may or may not agree with the request made by the applicant. After all, s 135 of the ITA employs the word “may”. [34] In that sense, the Minister is at liberty to refuse to accede to the request for so long as he has reasonable grounds to do so. [35] Under s 103 of the ITA, the tax payable under the NAA shall be due and payable on the due date whether or not that person appeals against the assessment. Under s 106, the government may recover the tax due and payable by civil proceedings as a debt due to the Government. [36] In view of the urgency of the matter, the applicant sought for the Minister to interfere. The Minister is at liberty to refuse to accede to the request for so long as he has reasonable grounds to do so. S/N 8hLequneIkM9azJx2yKA 7 **Note : Serial number will be used to verify the originality of this document via eFILING portal [37] But not to make any decision, in the context of the urgency of the time frame, would amount to an omission within the context of O 53 r 2(4) of the ROC and I so hold. The Minister’s inaction is now the subject matter of leave for judicial review. It is not the issuance of the NAA by the DGIR. [38] I take cognisance that the learned SFC took pains to canvass on the issue that s 99 should prevail over s 135 of the ITA. To my mind, whether the maxim of generalia specialibus non derogant applies or whether the Minister was justified in his inaction goes to the merits of the application, which ought to be determined at the substantive stage. [39] The same applies to the interpretation of s 127(3A) of the ITA. So, the question of whether the Minister should have exercised his discretion to exempt the applicant under s 127(3A) should be ventilated at the substantive stage. [40] As to the argument that the applicant should have exhausted the domestic remedy that is housed under s 99 of the ITA, it is to be reiterated that this application for leave for judicial review does not concern the NAA issued by the DGIR. The application for leave is to challenge the inaction of the Minister. [41] The case of Alcatel-Lucent is therefore distinguished. Even in Alcatel-Lucent, the grievance was against the DGIR, not the Minister. Therefore, s 99 is not applicable in the instant case. It does not arise. Findings [42] As was said by the Federal Court in Members of the Commission of Enquiry, at the leave stage, the threshold for granting such leave is very low. Leave is normally granted if the application is neither frivolous nor vexatious and justifies further argument on a substantive motion. [43] Based on the reasons stated herein, the applicant has crossed the low threshold. S/N 8hLequneIkM9azJx2yKA 8 **Note : Serial number will be used to verify the originality of this document via eFILING portal [44] Leave is hereby granted with no order as to costs. Tarikh: 19 Disember 2022 (WAN AHMAD FARID BIN WAN SALLEH) Hakim Mahkamah Tinggi Kuala Lumpur. Pihak-pihak: Bagi Pihak Pemohon : S Saravana Kumar, Ng Kar Ngai Amira Mohd Rafie, Dharshini Sharma a/p Rohit Kumar Sharma, Tetuan Rosli Dahlan Saravana Partnership Bagi Pihak Responden : Nur Idayu binti Amir SFC Nik Isfahanie Tasnim Ab Rahman SFC Liyana Muhammad Fuad FC Jabatan Peguam Negara, Putrajaya S/N 8hLequneIkM9azJx2yKA 9 **Note : Serial number will be used to verify the originality of this document via eFILING portal