Court of Appeal dismisses Najib and son’s appeal on tax suit

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A three-member bench unanimously dismissed the appeals brought by Najib and his son in connection with the IRB’s suit after hearing on the constitutional issues involving Section 106(3) of the Income Tax Act.

Datuk Seri Najib Razak and his son Datuk Mohd Nazifuddin today failed in their appeal to quash the High Court’s decision compelling them to settle RM1.69 billion and RM37.6 million in unpaid taxes and penalties, respectively.

The former prime minister and his son had appealed against the High Court’s summary judgment against them in the Inland Revenue Board’s (IRB) suit over taxes they purportedly owed the board.

A three-member bench led by appellate judge Datuk Abdul Karim Abdul Jalil unanimously dismissed the appeals brought by Najib and his son in connection with the IRB’s suit after hearing on the constitutional issues involving Section 106(3) of the Income Tax Act.

In the unanimous decision, Abdul Karim said the High Court judge did not make an error in the decision on the summary judgment.

On the legality of Section 106(3) of the Act, Abdul Karim said the panel was of the opinion that it was not unconstitutional as argued by the appellants, noting that the legal status of the law has been clear, as consistently determined by both the High Court and Federal Court.

“Overall, we found that there are no merits in both appeals and no misdirections made by both High Court judges that need to be remedied by this court.

“Both appeals are dismissed with costs of RM10,000 each,” he said during a virtual hearing which lasted almost five hours.

Section 106(3) provides that the courts cannot entertain any plea when it is argued that the amount of tax sought to be recovered is an excessive one, incorrectly assessed, under appeal or incorrectly increased while Article 121 deals with the judicial power of the federation.

The other judges who presided were Datuk Vazeer Alam Mydin Meera and Datuk Supang Lian.

The court, however, allowed an application by lawyer Tan Sri Muhammad Shafee Abdullah, who represented both the appellants, for an interim stay of the effect of the decision as they will be appealing against the decision at the Federal Court.

Najib and Nazifuddin were also represented by counsels Muhammad Farhan Shafee, Wee Yeong Kang, Mohamed Reza Rahim and Hannah Kam Zhen Yi, while senior revenue counsel Dr Hazlina Hussain and revenue counsel Norhisham Ahmad and Al Hummidallah Idrus appeared for the IRB.

Both Najib and Nazifuddin are appealing against the decisions of two separate High Courts which allowed the Inland Revenue Board’s (IRB)’s applications to enter summary judgment to recover tax arrears of RM1.69 billion from Najib and RM37.6 million from Nazifuddin, respectively.

On July 22, last year, High Court judge Datuk Ahmad Bache allowed the IRB’s application for a summary judgment to be entered against Najib in its suit to recover the RM1.69 billion in taxes from the latter for the period between 2011 and 2017.

Najib lost his bid in the High Court on June 14 this year to obtain a stay of execution on the summary judgment.

The Malaysian government through the IRB also filed bankruptcy proceedings against the former premier at the High Court in April this year, around the time of his conviction appeal on the SRC International Sdn Bhd conviction was being heard.

Najib had been sentenced to 12 years’ jail and fined RM210 million after being convicted of abuse of power, criminal breach of trust and money laundering in relation to SRC International by the High Court in July 2020.

As for Nazifuddin, High Court judge Ahmad Zaidi Ibrahim, had on July 6 last year, ordered him to pay RM37.6 million in unpaid tax to IRB after allowing IRB’s application to enter a summary judgment against him in its (IRB) tax arrears suit seeking to recover the unpaid amount from him (Nazifuddin) between 2011 and 2017.

He was served with a bankruptcy notice on April 30, this year over failure to pay the amount.