Najib, son win another bid to challenge RM1.7bil tax arrears order

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PUTRAJAYA: Najib Razak and his son Nazifuddin will have another attempt in court to set aside the Inland Revenue Board’s (LHDN) summary judgment to recover more than RM1.7 billion in tax arrears from them.

This follows today’s decision by a three-member Federal Court bench, chaired by Chief Justice Tengku Maimun Tuan Mat, to allow their leave application to appeal against a Court of Appeal ruling last year.

“The questions of law posed have met the requirements under Section 96 (a) and (b) of the Courts of Judicature Act,” Tengku Maimun said in a unanimous ruling.

Sitting with her were judges Nallini Pathmanathan and Mary Lim Thiam Suan.

Under Section 96, the Federal Court would proceed to hear the merit of the appeal only if an applicant succeeds in showing that the legal or constitutional questions posed are novel and of public advantage

Lawyer Shafee Abdullah was the lead counsel for the former prime minister and Nazifuddin.

Revenue lawyer Hazlina Hussain appeared for LHDN. The Bar Council which was allowed the status of an amicus curiae (friend of the court), was represented by Anand Raj.

Lawyer Wee Yeong Kang, a member of the legal team for Najib and Nazifuddin, said they would file a notice of appeal as soon as possible although the deadline was 30 days.

“We will prepare the appeal records that include the Court of Appeal judgment to facilitate the Federal Court to hear the merit of this case,” he told FMT after today’s online proceeding.

On Sept 9 last year, a three-member Court of Appeal panel chaired by Abdul Karim Abdul Jalil said the Income Tax Act 1967 provided a scheme on how assessment and tax collection should be made.

In taxation law, he said, outstanding tax must be paid after an assessment was made and notice sent to taxpayers within a specified time.

“Although a taxpayer makes an appeal to the Special Commissioner of Income Tax, the government through its director-general can continue to collect the outstanding tax under Section 106 of the Act,” he said.

He said the court’s limitation on this matter was “settled law” following a number of Federal Court rulings since 1967.

Najib and Nazifuddin filed nine questions of law, including one on whether Section 106 was unconstitutional and if it usurped the power of judges.

Section 106 states that a person must “pay first and talk later”, and LHDN could obtain summary judgment.

They had also before another Court of Appeal bench obtained a stay to halt the summary judgment that ordered them to pay the tax arrears.

In 2020, High Court judge Ahmad Bache ruled that Najib had to pay LHDN RM1.69 billion, inclusive of additional tax and penalties for the assessment years from 2011 to 2017.

Separately, High Court judge Ahmad Zaidi Ibrahim ordered Nazifuddin, a businessman, to pay RM37.6 million in unpaid taxes from 2011 to 2017.

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