THE Federal Court today denied former prime minister Najib Razak and his son Nazifuddin’s appeals on their summary tax judgments for RM1.69 billion and RM36.7 million respectively.

The five-person Federal Court bench chaired by P. Nallini unanimously dismissed their appeal over income tax arrears to present their statements of defence against the Inland Revenue Board’s (IRB) tax suits.

Justice Nallini said those who owed IRB must settle the outstanding amount before making an appeal before the Special Income Tax Commissioner. 

“Collecting tax is the sovereign function of the goverment,” she said.

Their appeal hinged on their contention that section 106(3) of the Income Tax Act 1967 is invalid for contravening article 121 of the Federal Constitution. Article 121 is in relation to the powers of the judiciary in the country. 

Section 106, in general, empowers the IRB to institute a civil action in court to recover tax arrears and penalties from taxpayers.

Section 106(3) specifically states that in relation to IRB civil actions to recover taxes, 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”.

The government had filed the suit against Najib in June 2019, and on July 22, 2020, Najib was ordered by the court to pay the IRB RM1.7 billion in unpaid taxes for the years 2011 to 2017.

Last year, the Federal Court granted both defendants leave to appeal to set aside the judgment.

In civil cases, litigants must first obtain leave before they can proceed with the appeals in the Federal Court. – October 16, 2023.