no conn 18 320 [1995] 1 LNs 323 ° [1996] 5 LI 626 GOVERNMENT OF MALAYSIA v. DATO" MAHINDAR SINGH HIGH COURT, KUANTAN ARIFIN ZAKARIA: J cIvie SUIT NO 21 OF 1991 15 JULY 1985 CIVIL PROCEDURE - Summary judgment - Income Tax - Assessment ~ Sul er payment of income Tax = Application to sign final judgment ~ Whether triable issues may be raised before court - Whether there wos ‘norinate delay in applying fr suremary judgment Income Tax Act 1967 8 106(3) LIMITATION -Incomo Tax - Whothor assessment statute-barred - Whether High Court hes power to entertain ‘uch plea - Income Tax Act 1967 8 91(1) & (3) REVENUE LAW - Income Tax - Summary judgment - Delay in application - Whether delay was inordinate and Unreasonable Revenue Law - Income Tax = Assosement- Notice of - Whether notices of assessment propery ‘sonved REVENUE LAW income Tax - Paymont of Tax - Agrooment for payment by instalment - Whether such Agreement provaied over ceriicate issued under s 142 of Income Tax Act 1967 Income Tax Act 1967 8 142 (Case(s) refered to: ‘Comptroter of Ince Tax vA Company Ltdf1966] 2 ML 262, Comptralle- General ef niand Revenue, Malaysia v Weng Lok Mining Co Ltd1969] 2 ML.i 08 First Malaysia Finance Bhd v Yoow Bon Chonghigh Court, Kuala Lumpur (unreported) C 7958 (1985) (Ci! ‘Sui No C 7956 (1985) High Court, Kuala Lumpur (unreported) Kerajaan Melaysia v Dato’) Ghani Gliong(1996) 2 MLI #19 NTS Arumugam Pill v Goverment of Malaysia(1976] 2 MLJ 72 Legislation referred to: Government Proceedings Act 1956 = 42(2)(0\) ‘Income Tax Act 1967 ss 99, 103(1), (4), (6), (GA), 105(2X¢),106(3), 136(4), 1422). 145(2) Rules ofthe High Court 1980 0 14, 0 73 4(1) Counsel: ‘Kok Keng Fal (Serler Federal Counselor the plait. ato’ Mahindar Singh (Mahindar & Co) in person. fin Zakaria J The wt By wit dated 25 January 1901, the plain, the Government of Malaysia, caims against the defendant the {otal sum of RMA#2_349.43 being "ax for the years of assessment from 1075 to 1985. Since the dafondart failed to pay the sid sum within the time stipulated under sub-ss(4) and (BA) of@ 103 of the Income Tax Act 1967 (the Act), tho plainit claims a further Increase In the amount due and poyable by 10% end §% a6 provided for inthe same subsections. The total amount which te plaintif now claims as due and payable by {he defendant is hesumof RMS10,913.53. The plain also calms Inlerest of 8% per annum fom ine date ot Judgment to the dato of realization and costs one ll com areca as martes Prt pCa S200 SSRGea‘zoio cose 005 1 Ls 70 Defence and counterclaim ‘The cefendant fled is defence end counterciaim on 21 February 1991 which was followed by the plaints reply and defence tothe counterclaim. However the pains reply and defence to counterclaim was ony fied ‘on 28 August 1991 after having oblainod the cour order for extension of time lo fa the sare, Enclosure 1A: Order 14 application (On 26 August 1991 the plaintif made an application under O 14 of the Rules of the High Court 1980 (the RHC 1980) for eave ofthis cour fo enter fil judgment against the defendant fr the ‘otal sum claimed, Tis application was supported by the effdavt of Mohamad Asad bin Haj Said a tax exanirer attached to tro iKuantan branch of the Departmont of Inland Revenve affimod on 26 August 1991. In his afidavt, Mohamad ‘Assad aloged thatthe defendant had boon duy served with al the nolices of aseessmert through Messrs Coopers & Lybrand Taxation Services which was. duly appomnted by the. defendant as his tax agent as ‘evidenced by his later {exh MAHS0), The pain, vide the aftdavt of Mohamad Arsad, alleged That the Rolices of assessment for te relovant years had not been ralumed to the deparmort undaivored and therfore by vituo of s 1452) of the Act they are deemed to have been received by the defendant the ‘ofencant was dissatisfied withthe assessment the defendant was given the right of appeal under s 89 of the ‘Act. However, th plaintif contended that by vitue of 103(7) ofthe Ac, the assessed taxbecomes due and Ppayatie as s00n as the notice of assessment is srved on the taxpayer, notwititanding eny appedl against the said assessment. Further, the plan contended tht by vitue of § 106(3) ofthe Ac, te court should not ‘ontertin any psa that the tax sought to be racoveres ts excessive or ncorecty assessed under appoal Ot incorrectly increased under 8 103(4, (5) or (5A) ofthe Act. The plant also relied on tie provisions of 3 142(2) of te Act which provides that In @ suit under & 106, te production of a certfate signed by the director general giving the name and address ofthe defendant and tho amount of the tax due ftom him shall be sufcent evidenceot tho amount s0 due and sufcient authority for the court ta give judgment for tha ‘amount and such a ceifcate is altached tothe affidavit of Monamad Asad as exh MAH (This power of he di rctor generals exercisable by an assistant director of inlandrevenue under 8 136(4 ofthe Acs) On the above promises the plain contended that there was no defence to the plaints claim and that the defence ‘lod was merely to delay tho payrmant of tax “The defendant put in lengthy sfidavt in reply, objecting tothe plaints application on a numberof grounds, ‘The frst objection raised by the defendant Is the delayon the part ofthe pain In making this application which was fled some six months after the defendant fled is defence, The defendant omtended that the Piaintif had not anywhere inthe affidavit in support ofthis application, given any explaraton forthe said ‘olay. This, the defendant submited Is fata othe plaints application. It isnot in dispute that there was in fact a lapse of six months between the time the defendant fled his ‘fence and the time this application was made. Tho issue however is whether the delay may be considered inordinate or unreasonabia, 20 as to arth plain from making this epplication, This | thnk would depend (on the crcamstances of each case. In this cate, afer the defendant fed in his defonce and countercaim, the Plaintif ci not flets reply and defence to the countercialm unt 23 August 1991, fe eter having obtained the ‘court's order for extension of time to flo the same. This application was flee on 26 August 199, 6 months ‘and 18 days ator the enty of appearance. From tho everis that had takon place tis lent the case where there had been no action taken during the siemonth period or so. An application for extension of tme was fled by th paint and afer having obtained th said extension of timo, the paint forthwit fled ts rply and dolence to tne counterclaim and three days lator the lant fed this application, No explanation was given by the palo for the delay. The queston is, shoud this failure on the par of the plant to profer an ‘explanation forthe delay oad to tho dismissal ofthsapplcaton. Tho lew on this pohnt that delay per seo ‘only one of he factors to be considera In an application under O'4 but delay one own can never form the bests of a dismissal of such an application. In this case there had boon Interlocuory steps taken by the plaintf during the period ofthe delay and this coupled witn the fact het there had bean ne allegation of any projucce to have been done to the defendant, the delay alone would not werrant the dlsmissalf the plaints pplication. The above propeattion of law found support in the case of Fist Malaysia Finance Bh v Yeow Bon ‘Ghong( Givi Sut No C 7956 (1885) High Court, Kuala Lumpur (unreported). In Compirolor Gonoral of Inland Revenue, Malaysi av Wong Lok Mining Co Lif 1968] 2 MLJ 98 Raja Azlan Shah (as he then was) held that a delay of three months by th plant in meking the application for O 14 was not norinateand didnot wwarract dismissal ofthe applet. In view of what I'm going fo sayonthe queston of neil, [hod tt the delay of six months In tho circumstances ofthis case shoud not hamper the plaintifeentilement {0 & ‘summary judgment. (On the ments the defendant submited that there were 3 number of table leeuse that ought to go for tal namely (1) whether the notices of assessment ware property served on the defendant pein tom yom nz my enbaPanCaespcCarle 225007 SASua TNA asmacs cone N28 (2) whether pat of the plaints caim is time-barred; (8) whether these additional assessments reer to race betting Income and 2 such are not ‘taxable; (4) whether he assessmants wor ilogal, wrongful and an abuse ofthe plaintiffs power and were ‘malcous and done In bad fat and (©) whether there was agrosment for the settlement of the sum due and payable between the alti and the defendant Let me deal frsty with the quostion of whether the notices of assessment were property served on the defendant. As t appears inthe noUoes of assassmont annexed to the aidavit of Mohamed Arsad bin Haji Said In support of this eppleaton, the notices of aseasement were al addressed to clo Nessrs Coopers & Lybrand Taxation Services Sdn Bnd, PO Box 234, 25720 Kuantan. The defendant contended thatthe notices ‘of assossment should propery be served on Messrs. Coopors & Lybrand of tat Floor, Hock Bee Building, ‘Jalan Besar, Kuantan a8 stated in his letter (exh MAHS 10). On that basis he contended tat he had not been Properly served with the notces of assessment as required by $ 105(2\(c) of tho Act whic sttos that Inthe ‘case ofan individual, the noice of assossrmant must be sent fo his ast known address. | tink the defendant 's trying to confuse the Issue here because in the frst pace It was the defendant who Insvucted thepsintit Vide letior (exh MAHS'0} to forward al return, notices and corespondence to Messrs Coopers & Lybrand 28 fis tax agent I is tue thet the dotondant referred to Messrs, Coopers & Lybrand, 1st Floor, Hock Bee Bulging, Jalan Besar, Kuantan in his letter (exh MAHS10), not Messre Coopers & Lybrand Taxation Services to which the notes of assessment were addressed. However, the defendant never a Plaintt thatthe address used by te paint was wrong or thatthe notices wore sant tothe wrong party. The Sotondert instead appesied against the assessment fo special commissioners under s 98 of lve Acc The dofendart or his tax agent in the ccumslances must have been sarvad with the notices of assessment, ‘otherwise how could the defendant appeal against the same. I therefore hold that i Is notopen to the defendant to say that he had not Boos properly served with tho notices of assess {han an attempt on the part of tho detencant to confuse the issue in order todeeat the piaintifs application. In fact, te defendant had never denied receipt of the notices of assessment. He merely alegedtnat Messrs Coopers & Lybrand Taxation Services Sen Ghd isa diferantenty trom MossreCoopors & Lybrand which isa Dartnesship. On the above promisos, /hold that the defendants contention herein is Gevold of any mati {As forthe issues raised in (2), (3) and (4) above, for convenience, they may be dealt with together. On the issue cf lintation the answer may be oblained from tho judgment of thaFederal Court Inthe cae of Keraiar Malaysia v Dato’ Ghani Giong( 1995] 2 NILJ 18 .Inhat case, Edgar Joseph Jr, FCJ ater considering the decision of Gil CJ in NTS Arumugam Pilal v Goverment of Malaysia 1976) 2 MLJ'T2 . came tothe folowing conclusion at p 127; In our view, the High Court has no power entertain a plea of Imitation under s @1(1) and (3) of ‘he Act advanced by a taxpayer. However the special commissioners have such power, Our ‘reasons for those concusions now foliow. If counsel for the taxpayer were correct in his contention thatthe plea of limitation based on s 84(1) and (3) of the Act's avallabl fo him in proceedings for recovery of tax brought in court a8 Wel asin proceedings befor the special commissioners, then a decision by the High Court on ‘he question of limitation would prevent the special commissioners from deciding the sama {uestion a8 they would regard themselves as bound by the decsion of the High Cout, thereby Abdicating thor fac fnding function of determining whether tere has been fraud or wiful def Within the meaning of s81(3Xa) of the Ack. Aleratvaly, even lf the special commissioners do nct regard themselves ae £0 bound, i could load to inconelstent decisions by te high Court ad the Special commissionors on the kientical question of Imation. These would not be reasonable ‘eeults and, what Is unreasonable, cannot be the lav. |nmy view thet completely answers the question oflmtaion raised by the defendant, In oation to the other two issues, th short answer to them is that these Issues sinilely could ony be raised before te special commissioners and not before te cour in an application for summary judgment under © 1 of ha RHC 1980. Tho lv Is clear that once an assessment is made, the Inland Revenue Department con invoke 88 103 and 106 of the Act which maks tho lax payable under te assessment due and payable atthe lace spectiad in the noice of assessment upon service on the taxpayer oF tha ralice Whather or not the ‘axpayer appeals against the assessment. Tho taxes so due and payable may be recovered by the {government by civil proceedings es a debt due fo the goverment. Under & 106(3), the cour fs debarred from ‘ntortaing any plea which claims thet the amount of taxes sought to be recovered is excessive, incorrecly oi coe my anbarsPrsp ae 2600 7DASAN-TUNSEAY as‘nore nn 98510 29 ‘assessed under appeal or incorrectly increased under 8 108(4), (6) oF (5A). By ¢ 142 a cetficate signed by the drector general, which incudes, te deputy rector genera, assistant rector general, senior assistant direcior and aesisiont drecor, giving the nam and address of the defendant and the amount of tax due trom him shall be sufcent evidence ofthe amount so due and sufficient authonty forthe cour to give judgment fr that amount. Such a certieate is exhibited hereln as exh MAHS13, If may cte the words of Choor Singh vin CComptrollr of income Tax v A Company Lt 1988] 2 ML 282 where he ea A taxpayer has no right to by-pass theBloard of Review and take his complaint direct to Court. ‘And whan the Comptroller Of Income Tax sues a taxpayer fo recover tax due under a noice of ‘assessment, the axpayer canriot be heard to say thatthe assesement on which tax has been levied was nol made in accordance wih the provisions ofthe ordnance. Such a complaint must inthe frst instanco be iand before the Board of Revi. The provisions of Order XV ofthe Rules fhe Supreme Cour must be ad together withthe provisions ofthe Income Tax Ordinance. if this is net done, every unwiling taxpayer wil refuse to pay lax and when sued in Cour, wil challenge the mers ofthe assessment, thus causing considerable Gey inthe callcton of tha tax, The proper course for everyagarieved laxpayor isto pay Ris tax and prosont his argument against the assessment made upon him before the Board of Review. Its tobe noted thatthe board of review i he equivalent ofthe special commissioners under the Ack (On the lst issue raised by te respondent, otha thre had been an agreement reached between the partes, {for payment by instalment of tho arears of tx, | hod that this could not eland inthe face ofthe verificale Issued under s 142 of the Act. The sad cortiicata is expressly provided to be sulfcient evigence of the ‘amount of taxes due from the defendant and gives the court suiciont authorty to give judgment forthe jour. The infeniion ofthe legislature Is Geary to evercome any plea by any taxpayer ass now raised by the defendant herein n order to delay the paymantof te tax. For the court to entetam such a plea would be {0 go against the express words ofthe Ack On the above premises | tharefore grant an ordr in terms ofthe plaints prayers in encl 1A Enclosure 894: Application for striking off By summons in chambers, the pint? apples to have the countercaim by the defendant struck off on the ‘round thats contrary 0 7314 (1) ofthe RHC 1880 which provides that (4)(1) Nothwithstanding © 18 ¢2 and 0 18 717 and 18, a person may notin any proceedings by the goverment make any countorcaim or plead a set-off the proceedings are fr the recovery of, or the countercaim of set off arsas out ofa right or claim to repayment ln respect of, any takes, duties orpenalies, ‘Tho said 0 73 « (1) was mat 1956 which toad at flows: 42 Rules of cour. (2) Provision shall be made by rules of cour with respect fo the following maters: (offor provcing: (that a person shall not be entitled to avail himslf of any set-off or Counterclaim in any proceedings bytne Government Tor the Tecovery of taxes, duties or penalties ? Pursuant othe provisions of s 42(2\(eX\) of the Government Proceedings Act ‘The claim by the plant in this case is beyond dispute e acim in raspectof taxes duo and payable by the defendant and as such it fais squarely within the ambit of © 73 4(1) of the RHC 1980, On that premise | therefore, azow the plainttTs application as par enc! S9A with costs. Enclosure 308: Appeal against the registrar's decision Finally 1 also agree wth the plaints submission tha n the event | were to grant an order in terms of encl 5A, which | just di, thorefore, the defendants appeal agaist the regisvars decision as per ent 308 fs no longer relevant and accordingly I make no order as regards ancl 30A. reve] 5 ms 626 sinew com oyna um arbre pearl 20H 7SASaaeNTUNIZA 4sano conn 1s 220 Disclsimas | Pivecy Policy | “Tenns Tada | ‘sans & Conditions of Uae | Licance Agtesmant | 2) ‘Stemep Copyright ©2019 CLI Logal Network Sdn Bhd, Emaionguiisaotlew.com Te: 603-4270 6421 Fax: 603-4270 5402 sso ern bare gilt APRONS TUNA