YAYASAN BUAH PINGGANG KEBANGSAAN MALAYSIA Ketua Pengarah Hasil Dalam Negeri

BA-25-78-09/2020 Kand. 42 27/10/2022 10:50:51 DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN, MALAYSIA PERMOHONAN SEMAKAN KEHAKIMAN NO.: BA-25-78-09/2020 Dalam perkara suatu keputusan responden seperti yang dinyatakan melalui surat responden bertarikh 17.6.2020 yang membatalkan kelulusan pengecualian cukai di bawah Seksyen 44(6) Akta Cukai Pendapatan 1967; Dan Dalam perkara suatu permohonan untuk antara lain suatu perintah certiorari; Dan Dalam perkara Peraturan 53, Kaedah- Kaedah Mahkamah 2012; ANTARA YAYASAN BUAH PINGGANG KEBANGSAAN MALAYSIA …PEMOHON DAN KETUA PENGARAH HASIL DALAM NEGERI …RESPONDEN JUDGEMENT [1] This is an application for leave to commence judicial review proceedings. This court allowed this application for leave. This is the grounds for this court’s decision. Background [2] The Applicant, Yayasan Buah Pinggang Kebangsaan Malaysia, is a foundation which aims to be a charitable organization. 1 S/NBA-25-78-09/2020 PBr/Asdfek2pqJPFwcQYFQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [3] The Director General of Inland Revenue (DGIR) is the Putative Respondent who has the statutory obligations for the care and management of the Income Tax Act 1967 (ITA1967). [4] The subject matter in dispute relates to the DGIR’s letter dated 17.6.2020 and notices of assessment for the years of assessment (“YA”) 2017 and 2018 dated 22.6.2020 had withdrawn the tax exemption status granted to the Applicant under subsection 44(6) of the ITA 1967 as there had been found non-compliance of the conditions of tax exemption granted. [5] Consequently, the Applicant had filed the Judicial Review Application on 17.9.2020. Brief Facts [6] The facts of this case as derived from the Applicant’s Affidavit in Support are that the DGIR had pursuant to a letter dated 11.3.2019 informed the Applicant that the DGIR would be carrying out an audit on the Applicant. The purpose of this audit was to ensure compliance with regards to the Applicant’s Financial Statement which have been made pursuant to the ITA 1967 and other Income Tax Rules. [7] The DGIR had also instructed the Applicant to prepare all the necessary documents for the purpose of the audit. [8] The audit was carried out on 8.4.2019. [9] Pursuant to a letter dated 24.5.2019, the DGIR informed the Applicant that DGIR had found non-compliance of the conditions of approval of tax exemption under subsection 44(6) of the ITA 1967. [10] The Applicant had pursuant to a letter dated 12.6.2019 provided the DGIR with an explanation on the issue/findings raised by the DGIR. [11] Vide a letter dated 29.8.2019 the DGIR informed the Applicant that the Applicant had failed to comply with the conditions of the approval of the tax exemption under subsection 44(6) of the ITA 1967 and the DGIR had withdrawn the tax exemption granted on the Applicant as a result of the non-compliance. [12] After several other correspondences, DGIR vide a letter dated 17.6.2020 informed the Applicant that the Applicant is subject to income tax under the ITA 1967 and is responsible for forwarding the “Borang 2 S/NBA-25-78-09/2020 PBr/Asdfek2pqJPFwcQYFQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Nyata Cukai Pendapatan” to the DGIR pursuant to sections 77 and 77A of the ITA 1967. [13] Following the letter dated 17.6.2020, the DGIR had pursuant to a letter dated 22.6.2020 raised tax assessments for YA 2017 and 2018 on the Applicant. [14] Dissatisfied with the decision of the DGIR, the Applicant filed this Application for Leave to commence judicial review. This Judicial Review [15] The decision of the DGIR as contained in the impugned letter is now the subject matter of this judicial review. [16] The Applicant in this case is aggrieved against the decision of the DGIR where the DGIR had withdrawn the Applicant’s tax exemption status under subsection 44(6) of the ITA 1967 which led to the issuance of the notices of assessments for the YA 2017 and 2018 on the Applicant. [17] The main reliefs sought by the applicant are: “a) An order for Certiorari to quash the Respondent’s decision in the form of a letter dated 17.6.2020 withdrawing the Applicant’s tax exemption status under Section 44(6) of the Income Tax Act 1967 on the grounds that the said Decision of the Respondent in this respect was illegal, void, unlawful and/or in excess of authority, had been irrational and/or unreasonable, and resulted in a denial of the Applicant’s legitimate expectations; b) A Declaration that the Respondent is not entitled in law to impose arbitrary and unilateral conditions on a charitable organization such as the Applicant when such conditions are not contained in the approval letter and/or communicated to the Applicant; and c) A Declaration that the Applicant is a tax-exempt charitable organization pursuant to Section 44(6) of the Income Tax Act 1967.” Objection by Putative Respondent [18] There were several grounds raised by the DGIR to oppose this application for leave for judicial review. These grounds are: (a) The Applicant has failed to make full and frank disclosure of the facts of the present matter; 3 S/NBA-25-78-09/2020 PBr/Asdfek2pqJPFwcQYFQ **Note : Serial number will be used to verify the originality of this document via eFILING portal (b) An application for a judicial review is premised on the decision-making process that have been tainted with illegality, unlawful, irrational and unreasonableness wherein the Applicant had failed to prove; (c) The existence of a domestic remedy before the Special Commissioners of Income Tax (“SCIT”) by virtue of section 99 of the ITA 1967 bars the Applicant from pursuing for a relief by way of judicial review; (d) The Applicant has failed to demonstrate “exceptional circumstances” for this court to intervene the decision of the DGIR; and (e) The judicial review application filed herein is an abuse of process of this court. Principles relating to leave for Judicial Review [19] The guiding principles for leave for judicial review is that the Applicants must show prima facie that the application is not frivolous or vexatious and that there is some substance in the grounds supporting the application. In this regard, reference was made to the case of WRP Asia Pacific Sdn Bhd v. Tenaga Nasional Bhd [2012] 4 CLJ 478 which stated as follows: “[12] For purposes of its application, the appellant had alluded to the statutory route of O.53 of the Rules. Under this order two stages are anticipated, with the leave stage being the first, to be followed closely by the substantive hearing after successfully obtaining leave at the High Court. At the leave stage on a quick perusal of the material available, if the court thinks that subsequently at the substantive hearing stage an arguable case may be disclosed, and the relief sought may be granted, leave should be granted (IRC v. National Federation of Self-Employed and Small Business Ltd [1982] AC 617). In Malaysia, the Federal Court in Mohd Nordin Johan v. The Attorney-General, Malaysia [1983] 1 CLJ 130; [1983] CLJ (Rep) 271 when allowing the appeal, opined that ‘the point taken was not frivolous to merit refusal of leave in limine and justified argument on a substantive motion for certiorari’. Without the need to go into depth of the abundant authorities, suffice if we stage that leave may be granted if the leave application is not thought of as frivolous, and if leave is granted, an arguable case in favour of granting the relief sought at the substantive hearing may be the resultant outcome. A rider must be attached to the application though ie, unless the matter for judicial review is amenable to judicial review absolutely no success may be envisaged.” 4 S/NBA-25-78-09/2020 PBr/Asdfek2pqJPFwcQYFQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [20] The Supreme Court in Association Of Bank Officers, Peninsular Malaysia v. Malayan Commercial Banks Association [1990] 1 CLJ Rep 33 (SC) stated as follows on the requirement for the application to challenge an Industrial Court Award to show, prima facie, that it is not frivolous or vexatious and there is substance in the proposed challenge: “At the outset of the hearing of the appeal before us, we indicated to the parties that we would hear submissions on the issue of leave only… The guiding principles ought to be that the applicants must show prima facie that the application is not frivolous or vexatious and that there is some substance in the grounds supporting the application. On the evidence in this case we found that the appellants had prima facie an arguable case for the granting of the relief they were seeking. Their application was not frivolous or vexatious. There were grounds to consider the allegations made by the appellants and which could only be properly heard and determined on the substantive application for an order of certiorari after leave has been granted.” [21] Founded on these principles, this court will consider the application for leave. Analysis [22] In relation to the existence of a domestic remedy before the Special Commissioner of Income Tax by virtue of section 99 of the ITA 1967, this court alluded to the decision in the case of Almurisi Holding Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri [2020] 1 LNS where Her Ladyship Evrol Marriete Peters JC (as her Ladyship then was) state: “[14] Although I appreciated the Respondent's arguments on this point, I was bound by the decisions of the Court of Appeal and Federal Court in QSR Brands Bhd v. Suruhanjaya Sekuriti & Anor [2006] 2 CLJ 532; [2006] 3 MLJ 164, and Chin Mee Keong & Ors v. Pesuruhjaya Sukan [2007] 5 CLJ 363, in holding that the existence of a domestic remedy only falls to be decided at the merits stage of proceedings, and not at the leave stage.” [23] The Applicant argued that the SCIT’s jurisdiction is limited to hearing appeals against assessment of income tax in accordance with subsection 99(1) of ITA 1967. Reference was made to Ketua Pengarah Jabatan Hasil Dalam Negeri v Rheem (Far East) Pte Ltd [1998] 2 CLJ Supp 351 and 5 S/NBA-25-78-09/2020 PBr/Asdfek2pqJPFwcQYFQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Korea Development Corporation v Government of Malaysia & Anor [1986] 2 MLJ 53. [24] Subsection 99(1) of the ITA provides: “99.(1) A person aggrieved by an assessment made in respect of him may appeal to the Special Commissioners against the assessment by giving to the Director General within thirty days after the service of the notice of assessment or, in the case of an appeal against an assessment made under section 92, within the first three months of the year of assessment following the year of assessment for which the assessment was made (or within such extended period as regards those days or months as may be allowed under section 100) a written notice of appeal in the prescribed form stating the grounds of appeal and containing such other particulars as may be required by that form.” [Emphasis added] [25] Section 2 of the ITA 1967 in turn, defines assessment as any assessment or additional assessment made under this Act. [26] In this regard, having considered the provisions of subsection 99(1) of the ITA 1967 and the facts of this application, this court is of the considered view that the appeal to the SCIT would not be applicable in this case. In this case, the facts reveal that the DGIR had withdrawn the tax exemption granted on the Applicant as a result of the non-compliance. This led to the respondent to inform the Applicant that the Applicant is subject to income tax under the ITA 1967 and is responsible for forwarding the “Borang Nyata Cukai Pendapatan” to the DGIR pursuant to sections 77 and 77A of the ITA 1967. Hence, in the considered view of this court the decision in issue is the withdrawal of the tax exemption which led to the income in assessment. Therefore, the provision of the appeal to the SCIT would, in the view of this court, not be applicable in this instance. [27] In relation to the other grounds raised by the DGIR in his objection to this application for leave, this court is of the considered view that these grounds can be ventilated at the substantive stage of the judicial review hearing. [28] At this juncture of the proceedings, this court is only required to consider if there is a prima facie case. This court is satisfied that a prima facie case has been made out by the applicant and that the application for judicial review is not frivolous and vexatious. 6 S/NBA-25-78-09/2020 PBr/Asdfek2pqJPFwcQYFQ **Note : Serial number will be used to verify the originality of this document via eFILING portal [29] The DGIR also submitted that this application for leave is out of time and therefore the application for leave should be dismissed. [30] Order 53 rule 3(6) of the Rules of Court 2012 specifically states that a judicial review application must be filed within three months of the date of the decision. It states: “An application for judicial review shall be made promptly and in any event within three months from the date when the grounds of application first arose or when the decision is first communicated to the applicant.” [31] The time frame in filing a judicial review application is within three months. The Applicant had filed the Judicial Review Application on 17.09.2020. The decision was communicated via the DGIR’s letter dated 17.6.2020 and notices of assessment for YA 2017 and 2018 dated 22.6.2020. [32] In the view of this court, the application for judicial review was made within the time period stipulated in Order 53 of the Rules of Court 2012. Decision [33] Bearing in mind the threshold for leave for judicial review is low, that is the guiding principles ought to be that the Applicants must show prima facie that the application is not frivolous or vexatious and that there is some substance in the grounds supporting the application, this court finds this application not to be frivolous or vexatious. This court further finds that there is some substance in the grounds supporting the application. [34] For the abovementioned reasons, this court grants leave for judicial review with no order as to cost. Date: 26 October 2022 (SHAHNAZ BINTI SULAIMAN) Judge High Court of Malaya, Shah Alam 7 S/NBA-25-78-09/2020 PBr/Asdfek2pqJPFwcQYFQ **Note : Serial number will be used to verify the originality of this document via eFILING portal Counsels: For the Applicant: Saravana Kumar a/l Segaran, Nur Hanania binti Mohd Azham, Tetuan Rosli Dahlan Saravanan Partnership Level 16, Menara 1 Dutamas, Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur. enquiry@rdslawpartners.com +6 03 6209 5400 For the Respondent: Ahmad Isyak bin Mohd Hassan Mohammad Danial bin Ahmad, Ibu Pejabat Lembaga Hasil Dalam Negeri, Bahagian Rayuan Khas, Jabatan Undang-Undang, Menara Hasil, Aras 16, Persiaran Rimba Permai, Cyber 8, 63000 Cyberjaya, Selangor. +6 03 8313 8865 8 S/NBA-25-78-09/2020 PBr/Asdfek2pqJPFwcQYFQ **Note : Serial number will be used to verify the originality of this document via eFILING portal