KUALA LUMPUR (Dec 15): The High Court on Friday has allowed the Inland Revenue Board's (IRB) application to enter a summary judgment on senior lawyer Tan Sri Muhammad Shafee Abdullah's income tax case.
However, the sum the senior counsel has to pay will only be determined on Monday, following further calculations on the matter.
Judicial Commissioner (JC) Roz Mawar Rozain ruled that she was bound by the principle of stare decisis following the Federal Court’s decision in former prime minister Datuk Seri Najib Razak’s tax case.
She said the principle was applicable to ensure stability in the law.
Stare decisis is a Latin term that means “to stand by things decided”.
Roz Mawar said the court was bound by the principle as it plays a crucial role as Najib’s case had considered the same argument brought forward by the parties in this case, and the apex court had made a decision on the former PM's case two months ago.
Citing Najib’s case, the JC said the court is not abrogating its judicial power in not wanting to hear the case, when tax is considered chargeable on a person.
Roz Mawar said the amount not recovered from Shafee has become a debt due to the government as the payment period had lapse, and the decision to have a summary judgement was to avoid a full-blown trial.
She added the provision in the Income Tax Act (ITA) has been satisfied that the time prescribed for Shafee to pay had lapsed.
Hence, the court, as in Najib’s case decided by the Federal Court, ruled that it did not offend Article 121 regarding the court not having jurisdiction to hear the matter.
“In the circumstances, the summary judgement is entered on the defendant,” Roz Mawar ruled.
And, as mentioned, the sum Shafee has to pay will be determined on Monday, as it had to be calculated further.
Decision made after no settlement reached
In Najib’s tax case, the Federal Court, in the summary judgement entered against the former PM, ruled in October that he had to pay the amount owed to the government.
This follows the apex court having dismissed the former PM’s contention that Section 106(3) of the ITA was invalid, as his lawyers argued that it contravened Article 121, which pertains to the powers of judiciary.
Section 106 deals with the powers of the IRB to recover tax arrears and penalties from taxpayers.
Federal Court judge Tan Sri Nallini Pathmanathan, who wrote the judgement, said the powers under Section 106 of the ITA is to fulfil the purpose of recovery or collection only.
“It is not undertaking a full judicial adjudicatory role,” she said.
Earlier, the court had heard submissions from Shafee’s counsel Datuk Seri Rajan Navaratnam and senior revenue counsel Norhisham Ahmad, after parties failed to reach a settlement.
Rajan argued that his client was not agreeable to paying the 15% penalty imposed in a bid to settle as the High Court (criminal division) had acquitted Shafee of money laundering and income tax charges, and the prosecution had withdrawn the appeal.
Norhisham, however, argued that a criminal matter was different from a civil matter.
“The issue is whether Shafee had received notice of further assessment, and we say that he has duly received and should act on it, which he has not. Following this, the Inland Revenue Board is instituting the summary judgement,” he said.
“The Federal Court has also determined that Section 106 of the ITA does not usurp the judicial power under Article 121,” he added.
The Malaysian government through the IRB had in September 2021 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.
This came after the IRB had filed the suit against Shafee in May 2021 over five years of alleged unpaid taxes from 2011 to 2014 and 2016.
The IRB said it had sent additional assessment notices to Shafee 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.
Shafee had denied the IRB's claim relating to the notices of additional assessment for the period, saying it was inaccurate, unlawful and tainted with mala fide (in bad faith). He added that he had submitted a revised capital statement as final consideration for tax settlement.