Feb 16 next year hearing of tax-linked appeal leave bid by Najib, son

 

The Federal Court has set Feb 16 next year to hear an appeal leave application by Najib Abdul Razak and his son Mohd Nazifuddin over tax-related rulings against them.

Lawyer Wee Yeong Kang, who acts for the former prime minister and Nazifuddin, said that the hearing date was fixed by the Federal Court registry during case management today.

“The Federal Court set Feb 16 next year to hear the leave to appeal application by Najib and Nazifuddin,” the counsel said when contacted. He added that a case management date has also been fixed for Feb 8 next year.

Najib and Nazifuddin are appealing against a Court of Appeal dismissal of their appeal to quash High Court summary judgment rulings in the RM1.69 billion and RM37.6 million tax suits against each of them, respectively.

Last year, two separate benches of the High Court in Kuala Lumpur allowed the Inland Revenue Board’s (IRB) application for summary judgment in the tax suits. In effect, this allowed the lower courts to rule in favour of the IRB in the tax suits against Najib and Nazifuddin, without needing full trial, which could have considered the duo’s possible defence.

Relying on the summary judgment rulings, the IRB has since commenced bankruptcy proceedings against Najib and Nazifuddin to recover the tax arrears.

However, on Oct 21, the Court of Appeal allowed an application by Najib and Nazifuddin to stay the tax-related summary judgments against the duo, pending their appeal to the Federal Court.

Merits of the appeal

Under Malaysian law in regard to civil action matters such as the tax-related ones by Najib and Nazifuddin, any such appeal to the Federal Court would require the apex court’s leave beforehand. If leave is granted, the apex court would later set a date to hear the merits of the appeal.

One of the central issues in the appeals is whether Section 106(3) of the Income Tax Act 1967 (ITA) is invalid for contravening Article 121 of the Federal Constitution.

Section 106, in general, empowers the IRB to institute a civil action in court to recover tax arrears and penalties from taxpayers.

Section 106 (3) specifically states that when in relation to IRB’s civil action to recover taxes, the court “shall not entertain any plea that the amount of tax sought to be recovered is excessive, incorrectly assessed, under appeal or incorrectly increased”.

Article 121 is in relation to the powers of the judiciary in Malaysia.

In their appeals, Najib and Nazifuddin’s legal team contended that Section 106(3) is unconstitutional as it takes away the court’s power (as per Article 121) to consider the defence of a taxpayer against the IRB’s civil actions to recover the tax.

M'sian Bar allowed to assist apex court

Meanwhile, Wee said that the Federal Court has allowed the Malaysian Bar’s bid to assist it during the hearing of the appeals by Najib and his son.

The lawyer said that the apex court, through a letter on Oct 21, informed the Bar of the greenlight.

Previously, it was reported that the Bar was applying to be amicus curiae (friend of the court), namely one who is not a party in the appeal who assists the apex court by providing information, expertise or insight that has bearing on issues in the matter.

Through the application letter, the Bar said that this is the first time that the Federal Court would decide on the issue of the validity of Section 106(3), which could have a major effect and widespread impact on all taxpayers in the country. - Mkini