THE Kuala Lumpur High Court has dismissed a stay application by Najib Razak in the Inland Revenue Board’s (IRB) lawsuit seeking RM1.69 billion in unpaid taxes.

The former prime minister sought the stay pending his tax reassessment appeal to the IRB appeals board.

Justice Ahmad Bache today ruled that the former prime minister has no strong grounds for the application.

“Generally, the scheme of tax law in this country provides that the tax must be paid first, in other words, ‘pay first and talk later’. This is regardless of any dissatisfaction on the part of the taxpayer,” the judge said in his judgment.

He said Sections 103 and 106 of the Income Tax Act 1967 empowers the IRB to proceed with the recovery proceedings of unpaid taxes by Najib.

Section 103 states that taxes under an assessment shall be due and payable, whether or not a person appeals against the assessment while Section 106 states that the court shall not entertain any plea that the amount of tax is incorrect or under appeal.

“If stay of proceedings is granted, it would give a huge impact on the tax recovery process,” said the judge.

“It will set a bad precedent whereby it will enable other taxpayers to use various grounds to avoid paying taxes,” he added.

He said Najib has failed to prove the existence of “special circumstances” to stay the proceedings.

The judge also ruled that IRB has the monetary ability to compensate Najib should he succeed in its appeal at the Special Commissioner of Income Tax.

He also said Najib failed to provide a “cogent explanation” that staying the proceeding would be unfair to his ongoing criminal trials.

“The defendant’s application for stay not only includes the disposal of this tax recovery appeal but includes the many ongoing criminal trials being heard and yet to be heard.

“If stay is to be granted, this would mean that the hearing of the present suit will be postponed indefinitely.

“This is against public interest whereby a case of this nature and magnitude involving public figures like the defendant, must be heard and disposed of speedily.”

After delivering his judgement, Ahmad said a date will be fixed later for case management for a summary judgment application by IRB. 

Farhan Shafee, who appeared for Najib, told reporters that he will consult his client on further appeals. IRB was represented by senior revenue counsel Norhisham Ahmad.

The government, through the IRB, filed the suit in June last year against Najib seeking RM1.69 billion in unpaid taxes, at a 5% interest rate per year from the date of judgment, with costs and reliefs deemed fit by the court.

The suit was initiated after Najib failed to act on IRB’s initial demand in March last year for additional tax assessments of RM1.47 billion.

This resulted in a 10% hike of RM147 million in April and another compounded 5% hike of RM80 million in May.

The 10% increase was imposed under Section 103 of the Income Tax Act after Najib failed to pay the initial RM1.47 billion within 30 days of the date the assessment notice was issued.

In a Facebook post in July last year, Najib alleged the sum in question was obtained through donations, which were tax deductible.

Najib faces 42 criminal charges in five cases linked to 1Malaysia Development Bhd, with three ongoing trials. – February 28, 2020.