KUALA LUMPUR (April 13): The High Court has dismissed senior lawyer Tan Sri Muhammad Shafee Abdullah's application for leave to file a counterclaim against the Inland Revenue Board (IRB) in his case involving purported unpaid taxes of RM9.414 million.
In delivering her decision on Thursday (April 13), High Court Judicial Commissioner Roz Mawar Rozain said Shafee's counterclaim was against parties who are not part of the case, namely the Malaysian Anti-Corruption Agency (MACC) and the Attorney General's Chambers (AGC).
She added that the court found that Shafee's counterclaim does not arise from recovery of taxes, but alleged mala fide acts (in bad faith) by the MACC and the AGC, which do not fall within the ambit of the rule prohibiting a counterclaim.
Morever, she said that where it concerns this type of proceedings, the prohibition to file such counterclaim is absolute in law.
Roz Mawar said whatever dissatisfaction over calculations of the taxes could be dealt with before the Special Commissioners of Income Tax (SCIT).
She added that Shafee's claim that tax assessments were "concocted mala fide" by the MACC and the AGC, and can be dealt with another avenue.
'Pay first, talk later predominant principle in M'sia'
She said that there were a slew of case laws which indicated that the whole scheme of tax law in Malaysia is that payment demanded must be paid notwithstanding appeals, and that the principle of "pay first, talk later" is predominant.
"There may be appeals before the SCIT, but payment must be made or become debts due to the [IRB] of which [they] are legally empowered to recover," she said.
She added that Shafee was not the first taxpayer who wished to file a counterclaim in these types of proceedings.
Roz Mawar also ordered Shafee to pay cost of RM5,000.
During the brief proceedings on Thursday, senior counsel Al-Hummidallah Idrus, Norzilah Abdul Hamid and Muhammad Faqrol Syazreen Mohd Ghause appeared for the IRB, while Shafee was represented by Muhammad Farhan Muhammad Shafee and Datuk Seri Rajan Navaratnam.
In September 2021, the IRB applied for a summary judgement to be entered against Shafee, wanting the court to make a decision based on affidavits and legal documents without the matter going to a full trial.
The court has set July 26 to hear the IRB's application, and case management on June 22.
Suit filed against Shafee in 2021, senior lawyer claims suit tainted in mala fide
The IRB filed the suit against Shafee in May 2021 for alleged unpaid taxes for the years 2011, 2012, 2013, 2014 and 2016.
In its statement of claim, the IRB said that it had sent additional assessment notices to Shafee's Bukit Tunku address between May 27 and May 30, 2019 for the amounts of RM621,191.85 (2011), RM978,854.11 (2012), RM3.58 million (2013), RM1.74 million (2014) and RM1.83 million (2016), but they remained unpaid.
In his defence statement and counterclaim, Shafee denied the IRB's claim relating to the notice of additional assessment for the years 2011 to 2016, saying it was inaccurate, unlawful and tainted with mala fide. He added that he had submitted a revised capital statement as final consideration for tax settlement.
Shafee also said that the suit and the assessment raised were part and parcel of a continued attack against him as political victimisation, for accepting the brief to defend former prime minister Datuk Seri Najib Razak.
Shafee claimed that on Aug 10, 2018, two days after the 1Malaysia Development Bhd charges were levelled against Najib, and after he issued a series of press statements critical of the Pakatan Harapan government, he was called in by the MACC to give a statement on the receipt of the RM9.5 million.
Following the statement to the MACC, Shafee alleged that a meeting was held in September 2018 among the IRB, the MACC and the AGC to discuss a plan of action to oppress and persecute him, with the aim of discouraging him from acting as Najib's counsel.
More recently, in October last year, Shafee was acquitted of all four charges of money laundering involving RM9.5 million allegedly received from Najib and for making false declarations to the IRB.
High Court judge Datuk Muhammad Jamil Hussin said that the prosecution had failed to prove a prima facie case. The prosecution is appealing against this decision.