KUALA LUMPUR – Federal Court judge Tan Sri Nallini Pathmanathan expressed opposition to the appeals made by Datuk Seri Najib Razak and his son Datuk Nazifuddin Najib against summary judgments compelling them to pay tax arrears totaling RM1.69 billion and RM37.64 million, respectively.
The judge raised concerns that granting such exceptions would set a precedent and encourage more individuals to dispute their taxes, leading to a flood of similar cases.
During the appeal hearing, Hazlina Hussain, senior revenue counsel for the Inland Revenue Board, argued against granting any exceptions to the former prime minister and his son. Hazlina suggested that payment plans could be arranged if the full amounts could not be paid immediately.
Nallini, as part of a five-judge bench presiding over the appeal, argued that holding a full trial on the assessed tax arrears for the period between 2011 and 2017, as requested by Najib and Nazifuddin, would be unfair to law-abiding citizens who pay their taxes without dispute.
The judge cautioned that allowing every taxpayer to contest the assessed amount and demand a full trial would have detrimental effects on the country, especially considering the importance of tax revenue for income redistribution.
“The country relies on taxes to function. Many impoverished individuals depend on taxes for income redistribution from the wealthy to the poor. If every taxpayer demands a full trial for the assessed amount, the country would come to a standstill, and the B40 group would suffer as there would be no funds,” Nallini said, as quoted by The Edge.
Furthermore, the judge questioned whether the case should be approached from the perspective of national interests rather than solely focusing on the taxpayers’ claim of rights infringement.
Nallini’s remarks were made in response to arguments presented by Najib’s lawyer, Tan Sri Muhammad Shafee Abdullah, regarding Section 106(3) of the Income Tax Act 1967.
Shafee argued that the legislation prevented Najib from defending himself against the order to pay the RM1.69 billion, as the court was prohibited from entertaining pleas related to excessive or incorrectly assessed tax amounts under appeal.
Shafee further contended that Najib’s denial of access to justice in raising this defence deprived him of a fair trial.
The five-member bench, led by Court of Appeal President Tan Sri Abang Iskandar Abang Hashim, included Chief Judge of Malaya Datuk Mohamad Zabidin Mohd Diah and judges Datuk Abu Bakar Jais and Datuk Mary Lim Thiam Suan.
Meanwhile, Hazlina referred to a decision by the Supreme Court of Ghana, stating that those disputing tax sums to be paid must first pay a minimum of 30% of their assessment before filing a civil action against the government.
She also mentioned that if Najib encountered difficulty in paying his taxes, he could request a stay of execution, but only under exceptional circumstances.
Following the arguments presented, Abang Iskandar instructed both parties to submit written submissions for the court’s consideration, reserving judgment on the matter for a later date.
On July 22, 2020, the high court had issued a summary judgment against Najib and Nazifuddin, ordering them to pay the respective amounts owed.
The Court of Appeal upheld the decision on October 21, 2021, but granted a stay of the summary judgment, allowing the arrears to be deferred pending the appeal at the Federal Court. – The Vibes, June 14, 2023
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