Najib, son fail to get Federal Court to hear constitutional issues on tax appeals

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The Court of Appeal in Putrajaya today disallowed an application by lawyer Muhammad Shafee Abdullah, appearing for Najib Razak and his son Mohd Nazifuddin, to refer constitutional issues involving Section 106(3) of the Income Tax Act 1967 to the Federal Court.

A three-member bench led by Justice Abdul Karim Abdul Jalil decided to proceed with the appeal proper brought by the former prime minister and his son in connection with the Inland Revenue Board’s (IRB) suit over recovery of income tax arrears.

“We are not with you in respect of this application in bringing the matter to the Federal Court to determine the alleged constitutional issues of Section 106(3),” Karim told Shafee.

Karim said the court would prefer to proceed with the appeal proper, which would cover the constitutional issues as well as other issues.

Karim, who presided with Justices Vazeer Alam Mydin Meera and Supang Lian subsequently fixed September 9 to hear the appeals.

Shafee applied for interim stay of the high court order pending the appeal hearing but Karim said the court could not give an interim stay.

In today’s online proceedings, Shafee sought the Court of Appeal to refer five questions of law, including the validity of Section 106(3), saying it was an important issue.

He said he would seek the Federal Court to sit on a quorum of five or seven to finally decide on the constitutional issues including a question on whether Section 106(3) is unconstitutional and ultra vires as it usurps the judicial power of the court guaranteed by Article 121 of the federal constitution.

However, senior revenue counsel Dr Hazlina Hussain disagreed, saying there was no ambiguity on the interpretation of Section 106(3), adding that there was nothing unconstitutional of that section.

Section 106(3) states that in any proceeding under this section, 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.

Both Najib and Nazifuddin are appealing against the decisions of two separate high courts, which allowed 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 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 board had on February 4 this year, issued a bankruptcy notice against Najib following the Pekan lawmaker’s failure to pay the amount, as the summary judgment was not stayed.

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 tax arrears suit against Nazifuddin.

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

A summary judgment is when the court decides a particular case summarily, without calling witnesses to testify in a trial.