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Leave for Shafee’s counterclaim over RM9.41m tax calculation denied
This came when the civil court ruled that the Special Commissioners of Income Tax (SCIT) is the proper forum to raise the allegation that MACC and the Attorney-General’s Chambers (AGC) cooked up the malicious RM9.41 million tax calculation against the veteran lawyer...
The High Court in Kuala Lumpur this morning dismissed the leave application by Muhammad Shafee Abdullah to mount a counterclaim against the government over the allegation that the RM9.41 million tax suit against him was made out of bad faith.
This came when the civil court ruled that the Special Commissioners of Income Tax (SCIT) is the proper forum to raise the allegation that MACC and the Attorney-General’s Chambers (AGC) cooked up the malicious RM9.41 million tax calculation against the veteran lawyer.
A short while after the government filed the civil action against Shafee (above) in 2021, the lawyer mounted a counterclaim to seek damages from the government over the allegation that the computation of the tax amount and penalties were done in bad faith and with the involvement of the MACC and the AGC.
Through the counterclaim, Shafee claimed the tax suit was instituted against him due to him acting as a lawyer for former prime minister Najib Abdul Razak, who faced numerous criminal cases linked to 1MDB.
‘Tax payment must be made first’
Judicial Commissioner Roz Mawar Rozain said that Malaysia’s whole scheme of tax law is that tax payment must be made first, regardless of whatever appeal a taxpayer may have with the SCIT on the computation of the tax amount.
Roz Mawar said that the present laws encompassing the Income Tax Act and the Government Proceedings Act do not allow a taxpayer to even mount a defence against any tax suit filed in the civil court.
She said the avenue the taxpayer has to complain about the tax amount computation can only be made at the SCIT, which is not part of the judiciary.
“It is the pay first talk later principle in the country. Payment must be made first as the plaintiff (government) is empowered to collect (the tax arrears).
“Any overpayment that may be adjudicated in appeal before the SCIT may be refunded later (to the taxpayer),” Roz Mawar said, ordering Shafee to pay RM5,000 in costs to the government.
She then set July 22 to hear the tax authority’s application to obtain summary judgment against Shafee to recover the RM9.41 million.
Under the law, a summary judgment is one that is entered against the defendant without his defence being heard.
Roz Mawar also set June 22 for case management of the matter.
Senior counsel Al-Hummidallah Idrus appeared for the government, which is the plaintiff, while lawyer Rajan Navaratnam represented Shafee.
On May 6, 2021, the government filed the lawsuit in the High Court in Kuala Lumpur to recover RM9.41 million in tax arrears from Shafee.
According to the cause papers filed by the Inland Revenue Board, the government is seeking alleged tax arrears for the assessment years 2011 to 2014 and 2016.
The government is seeking a total of RM9,414,708.32, which was calculated from the assessment years as well as incurred penalties from alleged non-payment of the arrears.
The plaintiff also seeks interest on the RM9.41 million calculated at 5 percent from the date of judgment to date of full realisation; costs; and any other relief deemed fit by the court.
Back on May 18, 2021, Shafee told the media that the tax action against him was a “political move”.
Incidentally, on June 14 this year, the apex court is set to hear the merits of an appeal by former finance minister Najib and his son Mohd Nazifuddin to quash a summary judgment against them to pay up tax arrears of RM1.69 billion and RM37.6 million respectively.
Najib is currently serving a 12-year jail sentence over a corruption case involving RM42 million from SRC International, a former subsidiary of 1MDB that later became fully owned by the Minister of Finance Incorporated (MOF Inc).
1MDB is also a Malaysian sovereign wealth fund fully owned by MOF Inc.
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