FORMER prime minister Najib Razak was ordered by the court today to pay the Inland Revenue Board RM1.69 billion in unpaid taxes for the years 2011 to 2017.

Kuala Lumpur High Court judge Ahmad Bache ruled in favour of IRB’s application for a summary judgment, which bypasses a full trial including testimony by witnesses.  

In his summary judgment, which took more than 30 minutes to read, the judge said Najib had failed to pay the total amount, including late payment penalties, and that the defendant must face “the same penalty as everyone is equal before the law.”

Ahmad agreed with IRB’s submission that under Section 106(3) of the Income Tax Act 1967 (ITA), the court shall not entertain any plea for such as whether the amount of tax sought was excessive, incorrectly assessed or under appeal.

“This provision of ‘pay first, talk later’ may arguably be a harsh one, but it is an intentional provision of the legislature, having regard to the incidence of tax evasion,” Ahmad said.

The judge also dismissed and described as “misconceived” the constitutional arguments by Najib’s lawyers that Section 106(3), and other tax provisions usurped the judicial powers of the courts.

“If the taxpayer wishes to win any legal dispute, he must take his case to the Special Commissioner of Income Tax (SCIT),” Ahmad added. 

Najib, who turns 67 tomorrow, was not present in court.

His lawyer, Farhan Shafee, informed the court that appeals have been filed on the constitutional issues.

IRB’s legal team was led by deputy revenue solicitor Abu Tariq Jamaluddin.

Ahmad awarded RM15,000 in costs to IRB.

IRB filed its recovery action under ITA last year against Najib, who was also finance minister, for the payment of additional income tax for the assessment years 2011 to 2017.

The amount sought – RM1,692,872,924.83 – included late-payment penalties.

Najib argued that a substantial amount of the income was from contributions from an Arab donor, and that some of the purported donations were returned.

The Pekan MP also submitted that the donations received were not taxable, as such payments are not defined as income under ITA.

He said Section 106(3) of ITA does not restrict the court’s power to make an independent judgment of the sums claimed, as the judicial power vested in the court by virtue of Article 121 of the federal constitution supersedes it.

Ahmad, reading out his 36-page ruling, said the issues are questions of facts.

“From the line of authorities cited above, this court holds that the merits of the assessment that involve questions of facts should be heard by SCIT, as the court is not the appropriate quorum to decide on issues of assessment. SCIT are judges of fact.”

He cited the landmark case of Arumugam Pillai v Government of Malaysia (1980), where the Federal Court ruled that tax legislation “clearly intends” that the tax as assessed should be paid first, prior to appeals, due to incidence of tax evasion. – July 22, 2020.