BANDAR BARU MAJIDEE DEVELOPMENT SDN. BHD. PEGUAM NEGARA MALAYSIA

WA-25-278-08/2021 Kand. 57 02/03/2023 17:43:59 DALAM MAHKAMAH TINGGI DI KUALA LUMPUR (BAHAGIAN KUASA-KUASA KHAS) PERMOHONAN SEMAKAN KEHAKIMAN NO: WA-25-247-07/2021 Dalam perkara suatu permohonan yang telah dibuat kepada Responden menurut Seksyen 135 dan Seksyen 127(3A) Akta Cukai Pendapatan 1967 yang bertarikh 2.7.2021; Dan Dalam Perkara Aturan 53 Kaedah-Kaedah Mahkamah 2012 ANTARA SYARIKAT KAPASI SDN BHD …PEMOHON DAN MENTERI KEWANGAN MALAYSIA …RESPONDEN DIDENGAR BERSAMA DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR (BAHAGIAN KUASA-KUASA KHAS) PERMOHONAN SEMAKAN KEHAKIMAN NO: WA-25-257-07/2021 Dalam perkara suatu permohonan yang telah dibuat kepada Responden menurut Seksyen 135 dan Seksyen 127(3A) Akta Cukai Pendapatan 1967 yang bertarikh 9.7.2021 Dan Dalam perkara Aturan 53 Kaedah-Kaedah Mahkamah 2012. ANTARA SRI SELTRA SDN BHD …PEMOHON DAN MENTERI KEWANGN MALAYSIA …RESPONDEN 1 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal DIDENGAR BERSAMA DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR (BAHAGIAN KUASA-KUASA KHAS) PERMOHONAN SEMAKAN KEHAKIMAN NO: WA-25-278-08/2021 Dalam perkara suatu permohonan yang telah dibuat kepada Responden menurut Seksyen 135 dan Seksyen 127(3A) Akta Cukai Pendapatan 1967 yang bertarikh 26.7.2021 dan Keputusan Responden yang dianggap dibuat pada 30.7.2021; Dan Dalam perkara suatu permohonan untuk antara lain, suatu Perintah Certiorari; Dan Dalam perkara Aturan 53 Kaedah-Kaedah Mahkamah 2012. ANTARA BANDAR BARU MAJIDEE DEVELOPMENT SDN BHD …PEMOHON DAN MENTERI KEWANGAN MALAYSIA …RESPONDEN DIDENGAR BERSAMA DALAM MAHKAMAH TINGGI DI KUALA LUMPUR (BAHAGIAN KUASA-KUASA KHAS) PERMOHONAN SEMAKAN KEHAKIMAN NO: WA-25-285-08/2021 Dalam perkara suatu permohonan yang telah dibuat kepada Responden menurut Seksyen 135 dan Seksyen 127(3A) Akta Cukai Pendapatan 1967 yang bertarikh 6.8.2021; Dan Dalam Perkara Aturan 53 Kaedah-Kaedah Mahkamah 2012 2 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal ANTARA WESTPORTS MALAYSIA SDN BHD …PEMOHON DAN MENTERI KEWANGAN MALAYSIA …RESPONDEN JUDGMENT [1] There are four separate applications before me for leave for judicial review which, by consent of the parties, are heard together. They are WA-25-247-07/2021 (“JR No. 247”), WA-25-257-07/2021 (“JR No.257”), WA-25-278-08/2021 (“JR No. 278”) and WA-25-285- 08/2021 (“JR No. 285”). WA-25-247-07/2021 [2] The background facts for JR No. 247 are as follows. The applicant company is in the business of property development and investment. Before 1982, the applicant company had acquired two pieces of land (“the Lands”) from the Government of Sabah. [3] The Lands are known as Kota Kinabalu Times Square 1 and 2 (KKTS). The Lands were classified as the Applicant’s Fixed Asset under development properties in the audited accounts from the day it was first acquired. [4] On 9.6.1997, the Lands were revalued to RM190,000,000 by the applicant company. The revaluation exercise was conducted by Messrs Rahim & Co and adopted by the board of directors of the applicant company. [5] Between the years 2005 to 2010, the Lands were developed into KKTS 1 and 2 comprising commercial shops which were sold. However, the car parks were retained by the applicant company. Thereafter, during the financial years 2011 to 2016, the applicant commenced the business of operating the said car parks. 3 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal [6] The Inland Revenue Board (“Revenue”) conducted an audit on the applicant company. Pursuant to the audit exercise, the Revenue disallowed the costs of Lands claimed by the Applicant. The letter from the Revenue, which is dated 11.8.2020 inter alia, states as follows: Adalah dimaklumkan kos tanah bagi projek pembangunan Kota Kinabalu Times Square (KKTS) adalah tidak boleh diterima kerana maklumat yang kami perolehi Tanah berkenaan diperolehi secara terus daripada Kerajaan Negeri Sabah kepada Syarikat Kapasi Sdn Bhd oleh itu tiada kos pemerolehan tanah wujud. [7] The applicant, through its tax agent, AG Legal Tax Services Sdn Bhd, explained that the applicant disagreed with the Revenue in taking the gain on the disposal of the car parks at KKTS 1 and 2 as business income. The letter from AG Legal Tax Services dated 14.10.2020 states inter alia as follows: As mentioned in our appeal letter dated September 23, 2020, Land KKTS 1 and KKTS 2 has always been classified as Fixed Asset of SKSB under development properties account at cost amounting to M10,876,258 and with a net book value of RM190,000,000 in the audited account as at March 31, 1998. [8] The IRB raised assessment in Form JA for YA 2015 (“NAA”) and Form J (“NA”) for YA 2016 dated 30.6.2021 amounting to RM28,137,411.66. [9] The applicant is of the view that the issuance of the NAA and NA is wrong in law since it should have been assessed under the Real Property Gain Tax Act 1976 and not under the ITA. [10] Aggrieved, the Applicant submitted a request dated 2.7.2021 (“the impugned letter”) to the putative respondent (“the Minister”) to give directions to the Director General of Inland Revenue (“DGIR”) under s 135 of the ITA or to exempt the taxes raised under s 127(3A) of the ITA. The Applicant requested for the Respondent to reply by 9.7.2021. [11] There was no response from the Minister by the said date (“the impugned decision”). 4 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal [12] The applicant then commenced this application for leave for judicial review on 12.7.2021, seeking the Minister to exercise his power under s 135 or s 127(3A) of the ITA to set aside or exempt the NA and NAA dated 30.6.2021. Application for Leave [13] This application for leave to commence judicial review is supported by the affidavit of Dato’ Mustapha bin Buang in Encl 9 (“AIS-9”). Dato’ Mustapha is the director of the applicant company. [14] As is the requirement under O 53 r 3(3) of the Rules of Court 2012 (“ROC”), copies of the cause papers were lodged at the Attorney General’s Chambers (“AGC”). The objection from the Attorney General [15] The Attorney General (“AG”) objects to this application for leave. [16] The grounds of objection of the AG can be summarised as follows: (a) No decision, act or omission was made by the Minister under O 53 of the ROC. (b) The NA and NAA were raised by the DGIR, but the DGIR was not named as a party to this action. (c) The applicant sought a relief which, in effect, is a mandamus. However, the applicant failed to establish a legal duty on the Minister’s part. (d) S 135 and s 127(3A) of the ITA do not have nexus to set aside the NA and NAA issued by the DGIR. (e) The applicant has failed to exhaust the domestic remedy provided under s 99 of the ITA. 5 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal [17] First, on whether the Minister had made a “decision”, the learned SFC contended that the applicant cannot arbitrarily assume that the Minister had made a decision when the Minister failed to reply to the applicant’s letter requesting the Minister to exercise his discretion under the ITA. [18] A “deemed decision”, according to the learned SFC, is not a decision within the ambit of O 53 r (2)(4) of the ROC. My attention was then drawn to the judgment of the Court of Appeal in Abdul Rahman bin Abdullah Munir & Ors v. Datuk Bandar Kuala Lumpur & Anor [2008] 6 MLJ 704. The Court of Appeal held that a non-response to a letter could not be construed as a deemed decision. According to the Court of Appeal, such an approach would give rise to an artificial meaning to the word decision. [19] Secondly, the learned SFC submitted that by challenging the NA and NAA, the applicant company, in essence, is challenging the decision made by the DGIR. [20] However, the applicant failed to name the DGIR in this application for judicial review. [21] The learned SFC further submitted that by not naming the DGIR, the instant application is frivolous and vexatious since the proper impugned decision is the issuance of the NA and NAA. The decision maker of the proper impugned decision is not Minister but the DGIR. [22] Thirdly, the nature and effect of the prayer sought by the applicant are for the Minister to exercise his power under the ITA. The learned SFC submitted that such a relief cannot be granted because there is no legal duty imposed against the Minister to set aside the NA and NAA. This Court is then urged to conclude that in the absence of such legal duty, the relief sought shall not lie against the Minister. [23] The learned SFC then referred me to the judgment of the Court of Appeal in Peguam Negara Malaysia v. Micheal Jeyakumar Devaraj [2012] 1 MLJ 179 CA. The Court of Appeal held that before the Court can grant an order of mandamus, an applicant must establish the existence of a duty of a public nature, the performance of which is imperative and not optional or discretionary. 6 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal [24] In short, it is the contention of the learned SFC that mandamus can only be granted if the applicant can establish the existence of a legal duty imposed on the Minister and that the applicant has the legal right to compel the performance of that duty. [25] Fourthly, under s 135 of the ITA, the Minister may give the DGIR “directions of a general character” (not inconsistent with the ITA) as to the exercise of the functions of the DGIR under the Act. [26] According to the letter from the applicant, the applicant stated that as the DGIR had misapplied the law, the applicant then requested the Minister to direct the DGIR to review his exercise of power and functions so that “the law is applied correctly and fairly”. The learned SFC argued that the Minister is not required to give a direction of a general character to the DGIR. This is so, the learned SFC submitted, because there is already a built-in mechanism under the ITA in the form of an appeal to the Special Commissioner of Income Tax (“SCIT”) in the event that the applicant is dissatisfied with the issuance of the NA and NAA. [27] In any event, according to the learned SFC, the general provision under s 135 cannot defeat the specific provision to appeal against the decision of the DGIR under s 99 of the ITA. The maxim of generalia specialibus non derogant applies. [28] The learned SFC then referred me to the judgment of the Court of Appeal in Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLJ 719 CA. The Court of Appeal held that where there are two provisions of written law, one general and the other specific, then, whether or not these two provisions are to be found in the same or different statutes, the special or specific provision excludes the operation of the general provision. [29] The case for the putative respondent is that the applicant’s action in writing to the Minister and seeking for a general direction pursuant to s 135 of the ITA defeats the specific provision provided in the same Act, which had laid out the scheme for challenging the notice of additional assessment by an aggrieved party. [30] Finally, if indeed the applicant is dissatisfied with the issuance of the NA and NAA, it should have filed an appeal to the SCIT under s 99 of the ITA. 7 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal Analysis [31] What is the implication of the non-response from the Minister to the impugned letter? Can it be considered a “deemed decision” within the ambit of the judgment of the Court of Appeal in Abdul Rahman bin Abdullah Munir? In that case, the Court of Appeal rejected the appellants’ argument that there was a “deemed decision” by the Datuk Bandar Kuala Lumpur (“Datuk Bandar”) made on 5.1.2005 when he failed to revert to the appellant's letter of 22.12.2004. [32] The Court of Appeal held that the appellants' interpretation towards Datuk Bandar’s non-response to their letter makes no sense and far stretches one's imagination. In short, the Court of Appeal was of the view that a mere non-response by a public authority could not be construed as a decision that is amenable to judicial review. [33] It is my respectful opinion that the decision of the Court of Appeal in Abdul Rahman bin Abdullah Munir must be viewed in the context of the former O 53 r 2(4) of the Rules of High Court (“RHC”) on which the judgment was based. [34] The former O 53 r 2(4) of the RHC 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. [35] 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 only. It encompasses a non-response, a non-decision, an inaction or an omission to make any decision at all. The question of a “deemed decision” is no longer relevant since an omission would suffice. 8 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal [36] In the light of the new O 53 r 2(4) of the ROC, the omission or a non- response of a public authority is amenable to judicial review. If any authority is needed to support the aforesaid proposition, it can be found in the judgment of the High Court in Zainal bin Haji Nasiruddin v The Registrar of Societies [2013] 7 BLR 704. In that case, 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. [37] 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. [38] In the instant 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”. In the circumstances, in the exercise of his discretion, the Minister is at liberty to refuse to accede to the request for so long as he has reasonable grounds to do so. That is perfectly within the power of the Minister. [39] However, s 135 of the ITA is not a stand-alone provision. It has to be read in the context of other provisions of the ITA. 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. [40] In view of the urgency of the matter, the applicant sought for the Minister to interfere. The non-response from the Minister would expose the applicant company to possible civil action. The applicant would be prejudiced. The non-response 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. 9 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal [41] Lest it be mistaken, 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. The applicant is seeking for the Minister to exercise his power under s 135 of the ITA to give directions of a general character to the DGIR that is not inconsistent with the Act. Whether or not the Minister has such power is not to be decided or resolved at this leave stage. [42] Since the Minister’s non-response is now the subject matter of challenge, there is no need for the DGIR to be made a party. The DGIR is not part of the decision or rather non-decision of the Minister. [43] For the same reason, the question of any appeal under s 99 of the ITA does not arise. In Ketua Pengarah Hasil Dalam Negeri v. Alcatel-Lucent (M) Sdn Bhd & Anor [2017] 2 CLJ 1 FC, Zainun Ali FCJ, in delivering the supporting judgment of the Federal Court remarked that if the 1st respondent, in that case, was dissatisfied with the notice of assessment issued by the DGIR, the 1 st respondent ought to have exercised its right to appeal under s 99 of the ITA and made known of its dissatisfaction to the SCIT. [44] However, as can be seen in the factual matrix of Alcatel-Lucent, the grievance was against the DGIR and not the Minister. Therefore, under the circumstances, it was only proper for the Federal Court to direct the 1st respondent to exhaust the domestic remedy available under s 99 of the ITA. [45] The case of Alcatel-Lucent is therefore distinguished. [46] Finally, the learned SFC cited the judgment of the Court of Appeal in Micheal Jeyakumar Devaraj and submitted that the applicant company must establish the existence of a duty of a public nature, the performance of which is imperative and not optional or discretionary. [47] In Micheal Jeyakumar Devaraj, the respondent, a Member of Parliament for Sungai Siput, made an application for the allocation of funds from the Federal Consolidated Funds to fund certain projects for the constituency of Sungai Siput. The Director of the Perak State Development Office ('the director') informed the respondent that a total of 56 projects valued at RM1.72m had already been approved for Sungai Siput, while other applications 10 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal would be given due consideration. Dissatisfied with this decision, the respondent applied under O 53 of the RHC for leave for judicial review of the director's decision. The respondent's motion sought, inter alia, an order of mandamus to compel the appellants to disclose information in respect of the projects for which the allocation will be granted for the Sungai Siput constituency and an order of mandamus to compel the director to grant his application. The High Court granted the respondent's leave application. The appellants appealed. [48] On appeal, the Court of Appeal held that it was clear that the director would not approve all applications and disburse funds from the allocation but would consider each application in accordance with the guidelines for that purpose. Thus, the approval and disbursement applications involved an exercise of discretion, which could only be decided by the director in line with policy considerations and management prerogative. [49] In the instant case, the statutory power given to the Minister to give a direction to the DGIR not inconsistent with the ITA cannot be construed as a policy consideration, as in Micheal Jeyakumar Devaraj. The power of the Minister is housed in the ITA. It is a statutory power. It is not a power based on policy consideration of the government of the day. [50] The learned SFC submitted that ss 135 and 127(3A) of the ITA are not designed to empower the Minister to set aside the NAA and NA raised by the DGIR. My respectful view is that this is an issue that goes to the merits of the application. It can only be addressed at the substantive stage. The same goes for whether the maxim of generalia specialibus non derogant applies. It should be ventilated at the substantive stage. [51] In CMMT Investment Ltd v Menteri Kewangan Malaysia [2022] MLJU 360, my learned sister Noorin J in addressing a similar application for leave, remarked as follows: Further, if a decision on a competent matter is so unreasonable that no reasonable authority could have arrived to it then the courts can interfere (see: Associated Provincial Picture Houses, Limited v Wednesbury Corporation [1948] 1 KB 223). Unreasonableness is a conclusion which may be applied to a decision 11 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal which lacks evidence and intelligible justification (see: Ong Ah Hooi v Pentadbir Tanah Larut, Matang dan Selama & Anor [2017] 2 MLJ 256). It is therefore a triable issue whether the Respondent has acted unreasonably when he fails to give any valid justification, reason or basis for the Decision not to exempt the alleged arbitrary Assessment. [52] At this leave stage, this Court should not go into the merits of the case. My role is only to see if the application for leave is frivolous; Tang Kwor Ham & Ors v. Pengurusan Danaharta Nasional Bhd & Ors [2006] 1 CLJ 927 CA. In view of the reasons aforesaid, this application for leave is not frivolous and ought to be further ventilated at the substantive stage. [53] Leave is granted with costs in the cause. [54] As to the application for stay, Noorin J in CMMT Investment was of the view that a stay in a judicial review application is not the same as a stay of execution after judgment in judicial proceedings. I respectfully agree. To my mind, preserving the status quo pending the determination of the judicial review application, which as a result, will not deny the applicant the full benefit of a successful challenge against the Minister’s non-response to the impugned letter. [55] I therefore allow the stay application pending the determination of the application of this judicial review. [56] For the same reasons stated herein, the application for leave to commence judicial review in JR No.257, JR No. 278 and JR No. 285 is also allowed. Tarikh: 28 Februari 2023 (WAN AHMAD FARID BIN WAN SALLEH) Hakim Mahkamah Tinggi Kuala Lumpur. 12 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal Pihak-pihak: Bagi Pihak Pemohon : S Saravana Kumar, Yap Wen Hui, Ng Kar Ngai, Nur Hanina binti Mohd Azham, Gan Ee Ling Tetuan Rosli Dahlan Saravana Partnership Bagi Pihak Responden : Nur Idayu binti Amir SFC Nik Isfahanie Tasnim Ab Rahman SFC Krishna Priya a/p Veenagopal @ Venugopal FC, Jabatan Peguam Negara, Putrajaya 13 S/N ThNOwcIASUmg45gMvg8iGA **Note : Serial number will be used to verify the originality of this document via eFILING portal